SunTrust Banks, Urban Outfitters, Texas Instruments and Lockheed Martin highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – January 27, 2017 –Zacks Equity Research highlightsSunTrust Banks (NYSE: STI- Free Report ) as the Bull of the Day and Urban Outfitters (NASDAQ: URBN- Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Texas Instruments (NASDAQ: TXN- Free Report ) and Lockheed Martin (NYSE: LMT- Free Report ).
Here is a synopsis of all four stocks:
Bull of the Day :
Bank stocks have been the biggest gainers since Trump’s electoral victory on hopes of higher interest rates and lighter regulations under the new administration. Many investors wonder if the rally can continue going forward.
Looking at the longer-term picture, banks were beaten down for the past eight years as ultra-low interest rates and onerous regulations resulted in a difficult operating environment. Now as economic growth is picking up and interest rates have started rising, banks have further to run and their stocks are still worth a look.
Headquartered in Atlanta, GA, SunTrust Banks (NYSE: STI- Free Report ) is a diversified financial services holding company, which operates through its principal banking subsidiary SunTrust Bank. They have following segments: Consumer Banking and Private Wealth Management segment (constituting 53% of total revenue in 2015), Wholesale Banking segment (37%), Mortgage Banking segment (12%) and Corporate Other (3%).
Solid Fourth Quarter Results
The bank reported on January 20. Net income for the quarter came in at $448 million, or $0.90 per share, beating the Zacks Consensus Estimate of $0.88. Total revenue for the quarter grew 7% year-over-year to $2.19 billion and was above the Zacks Consensus Estimate of $2.17 billion.
Net interest margin was 3.00% in the current quarter, up 2 basis points year-over-year thanks to higher earning asset yields and continued positive mix shift in the loan portfolio. Total non-performing assets were up 25% from prior-year quarter, mainly due to rise in energy-related loans and home equity products. Credit quality is however expected to improve with gradually stabilizing energy sector.
Their capital ratios were well above regulatory requirements.
Rising Estimates
After better than expected results, analysts have raised estimates for the company. Zacks Consensus Estimates for the current and the next year have surged to $3.82 per share and $4.27 per share from $3.72 and $4.11 respectively, before the results.
Bear of the Day :
It has been a very challenging environment for mall based retailers due to declining traffic, rising trend for online shopping and increasing competition from off-price fashion chains. Many of them have seen declining sales of late despite improving labor market.
About the Company
Founded in 1970 and headquartered in Philadelphia, PA,Urban Outfitters (NASDAQ: URBN- Free Report ) is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products.
The company’s merchandises, focused mainly on youth, are generally sold directly to consumers through stores, catalogs, call centers and e-commerce platforms. The company has operations in the US, Canada and Europe.
Weak Holiday Sales
The retailer provided holiday sales update earlier this month. Total sales for the two months ended December 31 increased 3% year-over-year. However, wholesale segment net sales declined 4%. The company expects gross margin to be affected by 1) decrease in store traffic, resulting in lower store sales and increased promotional activity and 2) increase in demand for lower margin items.
They had delivered a negative earnings surprise of 9.1% in the recently reported quarter. Further, the company’s revenues also missed the Zacks Consensus Estimate in the quarter.
Plunging Estimates
Analysts have slashed their estimates for the company after weak results and lower holiday sales update. Zacks Consensus Estimates for the current and next fiscal year have plunged to $1.92 per share and $2.03 per share from $1.99 and $2.15 respectively, 60 days ago.
Declining estimates sent the stock to a Zacks Rank #5 (Strong Sell).
Additional content:
Q4 Scorecard and Research Reports for Friday
Today's Research Daily features an updated scorecard for the Q4 earnings season and fresh research reports on 16 major stocks, including Texas Instruments (NASDAQ:TXN - Free Report ) and Lockheed Martin (NYSE: LMT- Free Report ). To see of all of the 70 or so research reports issued by our analyst team today, click here >>>
Q4 Earnings Scorecard : Including all of this morning's earnings reports, we now have Q4 results from 148 S&P 500 members or 29.5% of the index's total membership. Total earnings for these 148 index members are up +5.9% on +2.3% higher revenues, with 68.2% beating EPS estimates and 55.4% beating revenue estimates. This is better earnings and revenue growth performance than we have seen from this group of 148 S&P 500 members in other recent periods, even after adjusting for the strong growth from the Finance sector. The proportion of companies beating EPS and revenue estimates, however, is tracking moderately below other recent periods.
Looking at Q4 as a whole, combining the actual results from the 148 index members with estimates from the still-to-come 352 companies, total earnings are expected to be up +5.3% from the same period last year on +3.8% higher revenues. This is the best earnings and revenue growth pace in the last 8 quarters.
Strong Buy rated Texas Instruments shares have gained +55% over the last one year, outperforming the Zacks Semiconductor industry which has gained +51.4% over the same period. The company’s fourth quarter revenues and earnings grew year-over-year. The analyst likes the company’s improved margin outlook, secular strength in the auto and industrial markets, a stronger mix of analog and embedded processing products, benefits of restructuring actions and more 300mm capacity coming online. The only negatives at this point appear to be strengthening competition particularly for auto chips given recent market consolidation. (You can read the full research report on Texas Instruments here >> )
Lockheed Martin shares have gained +19.6% over the past year, modestly underperforming the aerospace/defense sector, which has gained +22.6% over the same period. However, Lockheed Martin ended 2016 on a strong note, with its fourth-quarter numbers beating expectations. Driving this momentum is Lockheed Martin’s status as a bellwether for the defense space and the company's impressive cash flow generation abilities which it generously shares with its shareholders. The analyst likes the company's solid outlook, impressive revenue growth and potential share buybacks. However, the threat of sequestration looms large for this company, as it draws a major portion of its revenues from the defense department. (You can read the full research report on Lockheed Martin here >> )
Free Access: All Zacks Research Reports
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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SunTrust Banks, Inc. (STI): Free Stock Analysis Report
Urban Outfitters, Inc. (URBN): Free Stock Analysis Report
Texas Instruments Incorporated (TXN): Free Stock Analysis Report
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
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