Applied Industrial Technologies and CBRE have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 27, 2023 – Zacks Equity Research shares Applied Industrial Technologies AIT as the Bull of the Day and CBRE Group CBRE as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. NVDA, Block Inc. SQ and Coinbase Global, Inc. COIN.
Here is a synopsis of all five stocks.
Bull of the Day:
Applied Industrial Technologies is a leading industrial distributor that provides critical components, equipment, and value-added services to a wide range of industries, from manufacturing to utilities. With a vast network of suppliers and locations, AIT offers its customers access to a broad product portfolio, including bearings, power transmission components, fluid power components, and industrial supplies.
Applied Industrial Technology currently enjoys a Zacks Rank #1 (Strong Buy) rating, indicating upward trending earnings revisions and improving the near-term odds of a move higher in the stock. However, AIT stock has put up incredible returns over the long-term as well.
Over the last 25 years Applied Industrial Technology stock has compounded at an annual rate of 16.2%, double the average annual return on the S&P 500, and many multiples of total return.
Earnings Estimates Climb
Applied Industrial Technologies’ earnings estimate have been on a steady climb higher over the last three years, along with its stock price.
Over the last two months, current quarter earnings estimates have been revised higher by 0.5% and are expected to grow 5.1% YoY to $2.07 per share. FY23 earnings estimates have been increased by 1.3% over that same period and are forecast to climb 4.3% YoY to $9.13 per share.
Compelling Free Cash Flow
In the chart below we can see that AIT has an FCF yield of 5.3%, which is above the industry average of 3.5% and a relatively high percentage in general. Furthermore, AIT has shown that it has maintained a history of positive free cash flow indicating financial discipline. The company has grown its annual FCF by a CAGR of 12.5% annually.
Relative Strength
In what has developed into an increasingly more challenging and choppy market, AIT is showing considerable relative strength against the broad market. While the S&P 500 and leading stocks have been trading sideways to lower since mid-summer, Applied Industrial Technologies continues to hold up well, and has outperformed the market by almost 20% over that time.
Valuation
Applied Industrial Technologies is trading at a one year forward earnings multiple of 16.7x, which is below the industry average and in line with its 10-year median. Additionally, the company pays a dividend yield of 0.9% and has raised the payment by an average of 3.1% annually over the last five years.
Bottom Line
Applied Industrial Technologies is an incredibly durable company with a very long history of earnings growth. Since 1994 it has increased its EPS from $0.34 per share to $8.75, an incredible compound annual growth rate of 11.9%. Because it creates products that have been, and will continue to be used for many decades, the earnings growth can be expected to persist.
Thus, any investor looking for a conservative investment, that also has near term bullish catalysts should most certainly consider Applied Industrial Technologies.
Bear of the Day:
CBRE Group is a global commercial real estate services and investment firm, headquartered in Dallas, Texas. It stands as the largest commercial real estate services company in the world. CBRE offers a broad range of services, including property management, investment management, and appraisal. The company serves clients across multiple sectors, including healthcare, retail, residential, and industrial. Known for its extensive market knowledge and expertise, CBRE operates through a network of offices in key cities around the globe, providing comprehensive solutions to real estate investors, owners, and occupiers.
Although a very large and impressive firm, CBRE Group has not avoided the troubles in the commercial real estate market, an issue most investors have become all too familiar with in the last year. Fortunately for them, as more of a service provider than an investor they have been a bit less exposed to the issues in the industry, however they have been hit, nonetheless.
Because of these developments CBRE Group has received consistent earnings estimate downgrades over the past year, giving it a Zacks Rank #5 (Strong Sell) rating. I think until earnings revisions begin to trend higher again, or the commercial real estate market finds a bottom, investors should avoid CBRE.
Earnings Estimates
Analysts following CBRE Group have unanimously downgraded the stock, with the current quarter seeing some significant revisions lower. Current quarter earnings estimates have been lowered by -18.8% and are forecast to fall -42.5% YoY to $0.65 per share. FY23 earnings estimates have been revised lower by -10.7% and are projected to decline -31.1% YoY to $3.92 per share.
The company will manage to keep sales growth positive though, with current quarter expected to grow 1.35% YoY to $7.6 billion and FY23 to grow 2.2% to $31.5 billion.
Technical Breakdown
Further bearish confirmation can be seen on CBRE Group’s stock chart. After trading lower all of 2022 and then trading in a wide consolidation all year, the price has moved below the key level of support at $66.50. If CBRE holds below this level, and closes the week and month down here, it could signal further downside.
Bottom Line
While CBRE Group is likely to eventually recover from this downtrend in stock price and earnings estimates, there may have to be some sort of event or catalyst to end it. For the time being, with interest rates as high as they are, the real estate market is going to be challenged, and CBRE will have to remain vigilant to stick around in this environment.
Additional content:
3 Stocks to Buy as Bitcoin Hits 18-Month High
The Bitcoin (BTC) rally, which had stalled two months back after making a solid turnaround earlier this year, once again rebounded on Oct 24. The cryptocurrency jumped nearly 6% to $34,872 to hit its highest level in almost one-and-a-half years on growing speculation that Blackrock’s spot bitcoin exchange-traded fund (ETF) will soon be a reality.
Tuesday’s rally followed a 10% surge in Bitcoin on Oct 23, when it crossed the $35,000 mark. The enthusiasm surrounding Bitcoin sent other related stocks and major cryptocurrencies like Ethereum (ETH) on a rally. Ethereum prices jumped 4.5% on Oct 23 to $1,786.30, hitting its highest level since August.
Investors Optimist about Bitcoin ETF
The approval of a Bitcoin-backed exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) is expected to boost demand as it would enable more conservative investors to own Bitcoin and other cryptocurrencies via traditional stock markets.
The approval is also likely to attract new investments into the crypto sector, which could further boost demand.
Cryptocurrencies made a solid rebound in 2023 after suffering majorly last year as the Federal Reserve launched an aggressive monetary tightening campaign to curb multi-decade high inflation, which saw the central bank hiking interest rates by 525 basis points since March 2022.
Moreover, a couple of unfortunate events, the Terra Luna crash and a major fraud leading to the bankruptcy of FTX, saw a slump in the crypto market.
Cryptocurrencies staged a solid rebound this year, with Bitcoin hitting $31,000 in early July before the rally came to a halt. Bitcoin price has since been rangebound and hovering around the $25,000 mark as investors struggled to gauge the Fed’s next move with its interest rate hike policy.
However, renewed optimism among investors sent Bitcoin prices up last week after the Securities and Exchange Commission (SEC) decided not to appeal its loss against Grayscale Investments in the D.C. Circuit court.
Speculation is now rife that the modification made to the Registration Statement for the Ishares Bitcoin Trust, submitted to the SEC on Oct 18, suggests that Blackrock might buy Bitcoin this month to provide initial capital for its upcoming spot Bitcoin ETF.
This definitely bodes well for the crypto market.
Our Choices
NVIDIA Corp. is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence, and the mining or production of cryptocurrencies.
NVIDIA’s expected earnings growth rate for the current year is 221.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the last 60 days. NVIDIA presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Block Inc. is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.
Block has an expected earnings growth rate of 69% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days. SQ currently carries a Zacks Rank #2 (Buy).
Coinbase Global, Inc. offers financial infrastructure and technology to support the global cryptocurrency economy. COIN provides a main financial account for consumers in the crypto space, a marketplace with liquidity for institutional crypto asset transactions, and technology and services for developers to build crypto-based applications and accept cryptocurrencies securely as payment.
Coinbase Global’s expected earnings growth rate for the current year is 85.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last 60 days. Coinbase currently has a Zacks Rank #2.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com
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
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
Block, Inc. (SQ) : Free Stock Analysis Report
CBRE Group, Inc. (CBRE) : Free Stock Analysis Report
Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
