Has Marcus (MCS) Outpaced Other Consumer Discretionary Stocks This Year?
Shares of Acxiom Corporation ACXM have climbed about 15.3% in yesterday’s trading session, outperforming the market.
In the year-to-date period, its shares have gained 43.1%, while the industry recorded growth of just 16.4%.
Before we discuss how investors and analysts have reacted of late, let's take a quick look at the most recent fundamentals and trends in order to get a better understanding of the important drivers.
Acxiom recently inked a deal with Interpublic Group IPG to divest its Acxiom Marketing Solutions segment (“AMS”) for $2.3 billion in cash. Post sell-off, the company will change its brand name to LiveRamp and start trading under the new ticker “RAMP”.
Acxiom has been devising methods to maximize the output of its AMS segment. The deal marks an expanded relationship between IPG and LiveRamp. The company now aims to focus on its "LiveRamp" segment which is registering impressive growth and gaining traction.
The company had acquired LiveRamp for approximately $310 million in 2014. We feel the recent divestiture will further enhance the company’s ability to curb operating expenses and generate solid bottom-line growth along with greater financial flexibility.
In the fourth-quarter fiscal 2018 results, revenues in the Marketing Services segment (accounted for 40.4% of total revenues) rose 5.3% year over year to $99 million, while LiveRamp revenues surged 32% year over year. This impressive growth trend bodes well for Acxiom. We believe reinforcing focus on LiveRamp segment holds promise in the longer haul.
Upward Estimate Revisions
In the last 60 days, the Zacks Consensus Estimate for Axciom's current year witnessed upward revisions. For the current year, the Zacks Consensus Estimate is pegged at $1.03 per share, up from earnings of $1.02 per share earlier.
Style Scores Look Great
Axciomcurrently sports an A grade for Growth and B grade for Momentum, lifting its overall VGM score to B.
On the valuation front too, the stock looks attractive. The company currently trades at a forward P/E multiple of 38.5x, significantly lower than the industry average of 64.8x. The ratio, which is obtained by dividing a stock’s current market price with its historical or estimated earnings, measures how much an investor needs to shell out per dollar of earnings. Consequently, lower the P/E of a stock, the better for investors.
Notably, the stock carries a Zacks Rank #3 (Hold). The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 27.7%. Additionally, the stock has long-term earnings per share growth rate of 10%.
In our opinion, the stock deserves a place in investor’s portfolio and we are expecting an impressive return from the stock in the next few months.
Some better-ranked stocks in the broader technology sector include NVIDIA Corporation NVDA and NetApp, Inc. NTAP, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA and NetApp have a long-term expected EPS growth rate of 10.3% and 13.8%, respectively.
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