Novavax , Harley-Davidson , Goodyear Tire, Penske Auto Group and China Mobile highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 27, 2015– Zacks Equity Research highlights Novavax (NVAX) as the Bull of the Day and Harley-Davidson (HOG) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Goodyear Tire (GT), Penske Auto Group (PAG) and China Mobile ( CHL).
Here is a synopsis of all four stocks:
Bull of the Day:
Novavax (NVAX) saw its stock move higher as Ebola scares gripped the nation. Since then, concerns of drug prices being too high has hurt the entire industry and maybe disproportionately hurt shares of NVAX. Analysts have actually become more bullish on the stock and have raised The increases in earnings estimates have helped push the stock to a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.
Two Recent Quarters
The chart below shows that the company has been able to beat the Zacks Consensus Estimate in each of the last two quarters. Yes they were only beats of one cent, but the market really liked the results.
NVAX posted a loss of $0.10 in the March 2015 quarter with a revenue miss of $1M or 1.23% on the top line. The bottom line beat was enough to push investors to buy the stock, which rose 4.4% in the session following the release.
The following quarter saw a big beat on the top line, and the stock was off to the races. Along with the one cent beat on the bottom line (loss of $0.08 vs a loss of $0.09), the company posted revenues of $14M when the Zacks Consensus was calling for $10M. That topline beat made investors happy, and the result was a stock price that was higher by 28.3% in the session following the release. That was a big move and was just about the top for the stock.
Bear of the Day :
Harley-Davidson (HOG) hasn't been on my radar for a long time. How long? Well last time I thought about Harley as either a trading or investment vehicle, its ticker was HDI. I was surprised to see that the ticker changed, and I sort of like it for the icon maker of motorcycles. HOG's earnings report recently "dropped the bike" a phrase riders use instead of saying "laying it down" or more commonly "an accident." As a result of the miss and lower estimates, HOG is now a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.
Description
If you have to ask, you wouldn't understand. That is a tag line I remember from the old days of when I wanted to buy a Sportster 883 or a Softail. I am a bit older now, and let's face it, my wife simply wouldn't allow it. I get the idea of "potato-potato-potato" and so do millions of other Americans that love their two-wheelers and the wind in their hair. If you can't tell, I love the story of the last American motorcycle manufacturer, which is what Harley-Davidson is.
Personal Note
At one time, when I was slightly less mentally challenged, I owned 3 motorcycles. My friends would ask me to ride them all at once, and what is even dumber, I think I tried to do that. Since none of my bikes were Harleys, I figured it wouldn't be a huge loss if my 250CC or my 750CC water buffalo hit the pavement. To this day I still give the motorcycle wave to most bikers and think of this note as a gentle reminder to share the road and keep an eye out for bikers.
Recent Miss
On October 20, the company reported earnings of $0.69, and that was $0.09 below the Zacks Consensus Estimate. Revenue of $1.140B was also below expectations and as a result the stock fell 16% in the session following the release.
Valuation
Following that miss the valuation for HOG was hit, but the stock still trades at a premium to the industry average. A 13x forward PE is still above the 11.4x industry average and the stock trades at nearly double the industry average multiple for price to book (HOG at 3.9x vs 2x). A price to sales multiple of 1.9x is also well above the industry average of 0.7x, and is at a 3 year low for that metric.
Additional content:
Consumers Don’t Keep Account of GDP Reads
A 2-day U.S. FOMC meeting starts Wednesday. It’s a done deal. Fed Funds sit still in October.
‘New’ news arrives from GDP growth updates instead.
On Tuesday, the U.K. expects real GDP growth to slow from +0.7% in Q2 to +0.5% in Q3. Within this, manufacturing output may fall. Retail sales growth could dip.
On Thursday, big brother U.S. looks for a weaker GDP growth too. Consensus sees an annualized slowdown from +3.9% in Q2 to +1.7% in Q3. U.S. durable goods orders could rise. But ex-transport, it looks weak.
However, the U.S. housing market looks strong -- new homes sales should be up +15% from a year ago. This should accompany a home price rise in Case-Shiller terms of +5.1% y/y. The U.K. house market is similarly strong.
On Friday, Eurozone unemployment rate should remain 11%. Unemployment for under-25s is twice this. HICP inflation could be +0.9% y/y. That shows how far Europe’s continental economy has to go. It is climbing, but the climb is long.
Two stocks bumped to a Zacks #1 Rank show U.S. auto sales remain strong.
Look into Goodyear Tire (GT) and the Penske Auto Group ( PAG). Confirm recent earnings estimate upgrades. The two stocks carry Zacks Value ranks of A. They are priced well.
Finally, check any pessimism on China with a visit to this stock ticker.
Another fresh Zacks #1 Rank is China Mobile (CHL). China’s consumers still talk to friends and family plenty, heedless of great pessimism on China’s GDP growth. Note the Zacks Growth rank at B, Value at B and Momentum at A.
What’s the hidden message? -- Consumers (everywhere) could care less about GDP growth accounting.
Here is the Week Ahead for Global Market Fundamentals—
On Tuesday , the U.K.’s first estimate for GDP comes out. Look for no change at +2.4% y/y.
In the U.S., durable goods orders come out. Look for +1.2% m/m. Ex-transport, look for -0.5%. The S&P Case-Shiller home price index should be up +5.1% y/y.
Japanese retail sales look tepid with +0.5% y/y growth.
On Wednesday , the two-day FOMC meeting starts. The Fed Funds rate is not expected to move from 0.25%.
Over in Europe, the Riksbank in Sweden announces its interest rate decision and monetary policy announcement.
On Thursday , Spain’s flash HICP inflation rate should be +0.3% m/m, in line with the prior +0.4% m/m reading.
Spain’s retail sales should grow +3.0% y/y.
The German unemployment rate should be unchanged at 6.4%.
The Brazilian central bank COPOM releases its minutes. The unemployment rate is 8.7%.
The U.S. first estimate for GDP should be +1.5% q/q, annualized to +1.7%.
U.S. initial claims look very low at 260K.
On Friday , the BoJ issues its policy statement and Governor Kuroda holds a press conference. Housing starts in Japan could be up +6.4% y/y, a little lower than the prior +8.8% y/y reading.
German retail sales look up at +3.4% y/y, from +2.4% y/y prior.
Spain’s preliminary GDP growth looks up, to +3.4% y/y from +3.1% y/y prior.
The Eurozone unemployment rate should hold at 11%. The Eurozone flash HICP inflation rate should be +0.9% y/y.
In the U.S., we get personal income, personal spending, the core PCE price index, and the employment cost index. Look for +0.2% m/m growth out of personal income and personal spending.
The Chicago PMI should be 49.5. University of Michigan sentiment should be 92.2.
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NOVAVAX INC (NVAX): Free Stock Analysis Report
HARLEY-DAVIDSON (HOG): Free Stock Analysis Report
GOODYEAR TIRE (GT): Free Stock Analysis Report
PENSKE AUTO GRP (PAG): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis Report
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