Amerant and Gulfport Energy have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – December 16, 2022 – Zacks Equity Research shares Amerant Bancorp AMTB as the Bull of the Day and Gulfport Energy GPOR asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Sprinklr, Inc. CXM and Midwest Holding Inc. MDWT.
Here is a synopsis of all four stocks.
Bull of the Day:
The bad news for the market is that J Pow is not letting off our collective necks. The Fed Chair doubled down on the FOMC’s intent to keep rates elevated for an extended period of time. Investors are afraid that he will send the economy careening towards recession. However, there is one industry that benefits greatly from higher interest rates. That is the banking industry.
Higher rates mean a better net interest margin for banks. That is the difference between what they charge you for loans and what they give you in interest on your deposits. One company benefiting from this trend is today’s Bull of the Day, Amerant Bancorp. Amerant Bancorp Inc. operates as the bank holding company for Amerant Bank, N.A. that provides banking products and services to individuals and businesses in the United States and internationally.
Amerant is a Zacks Rank #1 (Strong Buy) in the Banks – Southeast industry which ranks in the Top 8% of our Zacks Industry Rank. The reason for the favorable rank is that three analysts have increased their earnings estimates for the current year and next year over the last sixty days alone. Those bullish moves have pushed up our Zacks Consensus Estimates for the current year from $2.19 to $2.41 while next year’s number is up from $2.54 to $2.73.
That means the stock is trading at 10.9x earnings, about inline with the industry average of 10.5x. The growth estimates are what trump others in its industry. Next year EPS growth is slated to come in at 13.2% whi8le the industry average is just 9.7x.
Bear of the Day:
Oil prices have come down considerably from their highs. The global supply glut has given way to recession fears. Central banks around the world are tightening up, raising rates and staying tough on inflation. That has not only oil prices but oil stocks around the world coming down to Earth. One such stock is today’s Bear of the Day. Why? Well, earnings estimates for the stock are moving in the wrong direction, down. Beware when you see this troubling trend develop in stocks.
Today’s Bear of the Day is Gulfport Energy. Gulfport Energy Corp. engages in the exploration, development, acquisition, production of natural gas, crude oil, and natural gas liquids (NGL) in the United States. Its principal properties include Utica Shale covering an area approximately 187,000 net reservoir acres primarily located in Eastern Ohio; and SCOOP covering an area approximately 74,000 net reservoir acres primarily located in Garvin, Grady, and Stephens. As of December 31, 2021, it had 3.9 trillion cubic feet of natural gas equivalent to proved reserves; and proved undeveloped reserves comprising 8 MMbbl oil and 22 MMBbl NGL, and 1,550 Bcf natural gas.
Gulfport Energy is a Zacks Rank #5 (Strong Sell) in the Oil and Gas – Exploration and Production – United States industry which ranks in the Bottom 35% of our Zacks Industry Rank. The reason for the unfavorable rank is that analysts have been cutting their estimates for the current year and next year. Over the last sixty days, two analysts have dropped their numbers for the current year while three have done so for next year. The bearish moves have brought our Zacks Consensus Estimates for the current year down from $22.35 to $18.36 while next year’s number is off from $27.41 to $23.10.
It's important to note the positive here though. That $18.36 for the current year means a P/E of just 3.82x earnings. That’s below even the industry average of 6.3x. And that is for a company that is still set to growth next year’s EPS by 25.8%.
2 Missed Growth Opportunities as the Fed Raises by Half a Point
You’d think that when we’ve been talking about a 50bp hike for weeks now, the market would be able to absorb the news with a bit of equanimity. But that’s just not happening. The Fed’s hawkish tone, its determination to stick with a 2% inflation target and the acceptance of unemployment rising from the current level of 3.7% to 4.6% have turned out to be too much for the market, which is going belly up temporarily.
Interest rates have jumped 4.25% this year and current expectations are for their further increase to 5% in 2023 before dropping back to 4.1% in 2024. These are, of course, rough estimates and there are many factors in play here.
Globalization is a part of it, supply chains are a part of it and geopolitical factors are now also a part of it. National security and the location of chipmaking are also playing into it. A 2% inflation target may be too ambitious, all things considered, so there just may be a reprieve somewhere down the line. But it will mean that rates will also remain elevated for years ahead. And there will be implications for rate-dependent sectors and stocks.
The Fed sounds definitively pessimistic right now. They’re expecting just 0.5% GDP growth next year. But as the wise investor knows already, every downturn is an opportunity to buy in. So here, I’ve picked a couple of stocks that investors appear to be missing out on. Let’s get some details-
Sprinklr is a technology services provider focusing on customer experience management. The company’s Customer Experience Management platform enables clients to analyze unstructured customer experience data at all stages of the customer journey and across traditional and modern communication channels. Its products help clients plan, create, publish, optimize and analyze their organic/owned marketing content; listen to, triage, engage and analyze conversations on social channels; and listen to, route, resolve and analyze customer service issues.
Zacks #2 (Buy) ranked Sprinklr shares have been beaten down 44.0% this year, which is far greater than the S&P 500’s 17.5% decline. Consequently, the shares are now trading at 3.76X forward sales, a 24.0% discount to their median level over the past year.
However, the company’s performance has been great. Sprinklr has topped the Zacks Consensus Estimate in each of the last four quarters at an average rate of 102.8%. The company has grown revenue steadily in every quarter since 2020 when it began trading. Total revenue has grown nearly 69% during this time. And losses have also been declining through this period. Analysts currently expect the company to generate a small loss in the year ending January 2023 and turn profitable in the following year.
Revenue growth expectations support this view. After growing 25.0% in the current year, analysts are projecting another 14.9% growth in 2024. From a loss of 24 cents in 2022, the company is expected to generate a 4 cent loss in 2023 and a 9 cent profit the following year. That’s 83.3% growth for this year and 320.8% growth for 2024.
Investors appear to be missing an opportunity here as they’ve dumped these shares along with many other riskier tech names.
Midwest Holding Inc.
Midwest Holding is a financial services company offering life and annuity insurance in the U.S. The company has multi-year guaranteed and fixed indexed annuity products through independent distributors comprising independent marketing organizations. It also provides asset management services to third-party insurers and reinsurers; and other services, including policy administration services.
The rising rate environment is generally positive for insurers as market uncertainties push people toward investments with stable returns. The increased focus on distribution and pricing is also paying off as the Midwest is seeing strong business trends. Its investment portfolio is also doing well.
Zacks #1 (Strong Buy) ranked Midwest has still not eclipsed the surge in business during the March quarter of 2020 when the pandemic first hit, but its revenues have surged more than 350% from the plunge in the June 2020 quarter. While business has fluctuated in some quarters, profitability has been relatively stable and growing since then.
There is only one analyst providing estimates, so you might consider cautiously taking the current projections of 87.2% revenue growth and 304.0% earnings growth for 2022, or the 39.7% revenue growth and 16.1% earnings growth for 2023. However, its worth noting that Midwest has solidly beaten the analyst’s estimates in the last two quarters, for a four-quarter positive surprise of 196.0%.
The shares are clearly undervalued on the P/S basis. They are currently trading at 0.76X, which in itself shows that investors are discounting its potential sales. But the multiple is also more than 27% off the median value over the past year, indicating that it is also undervalued relative to its own performance over the past year.
The shares are down 28.7% year to date, as investors appear to have lost steam after accumulating a few shares over the last quarter or so. But the valuation clearly shows that they are missing an opportunity.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Gulfport Energy Corporation (GPOR) : Free Stock Analysis Report
Amerant Bancorp Inc. (AMTB) : Free Stock Analysis Report
Midwest Holding Inc. (MDWT) : Free Stock Analysis Report
Sprinklr, Inc. (CXM) : Free Stock Analysis Report
To read this article on Zacks.com click here.