Arch Capital Group and Teradyne have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 22, 2022 – Zacks Equity Research shares Arch Capital Group ACGL as the Bull of the Day and Teradyne TER asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Enphase Energy ENPH, Canadian Solar CSIQ and NextEra Energy Partner NEP
Here is a synopsis of all five stocks.
Bull of the Day:
Year-to-date, the Zacks Insurance – Property and Casualty Industry has displayed remarkable relative strength, increasing by nearly 3% in value and easily outperforming the S&P 500.
A company residing in the industry, Arch Capital Group, sports the highly-coveted Zacks Rank #1 (Strong Buy) paired with an overall VGM Score of a B.
Arch Capital Group writes insurance, reinsurance, and mortgage insurance worldwide. Through its wholly-owned subsidiaries, the property and casualty (P&C) insurer provides a wide range of products and services, including primary and excess casualty coverages, professional indemnity, and umbrella liability, to name a few.
Let’s take a closer look at the company.
Share Performance
Year-to-date, ACGL shares have been notably strong, increasing by a solid 6.5% in value and crushing the S&P 500’s decline of nearly 10%.
The strong price action of ACGL shares indicates that buyers have defended the stock all year long, which is undoubtedly a positive. In a market filled with red YTD returns, the sight of green is more than pleasant.
Growth Estimates
Analysts have been bullish across the board over the last 60 days, helping push the stock into a Zacks Rank #1 (Strong Buy).
For the company’s current fiscal year (FY22), the Zacks Consensus EPS Estimate sits at $4.64, penciling in a substantial 30% Y/Y uptick in earnings. And in FY23, ACGL’s bottom-line is projected to expand by an additional 18%.
Top-line projections are also stellar; Arch Capital is forecasted to generate $9.6 billion in revenue throughout FY22, good enough for a 13% uptick year-over-year. Looking ahead, the $11.3 billion Zacks Consensus Sales Estimate for FY23 reflects an additional 18% of growth Y/Y.
Valuation
ACGL’s valuation levels appear rock-solid, further bolstered by its Style Score of an A for Value.
The company’s forward earnings multiple resides at 10.4X, well below its five-year median of 13.2X and reflecting a deep 34% discount relative to its Zacks Finance Sector.
Quarterly Performance
In addition, the company has repeatedly beat bottom-line expectations, exceeding the Zacks Consensus EPS Estimate in eight of its previous ten quarters.
ACGL’s top-line results have left some to be desired, but in its latest print, the company registered a 2% top-line beat.
Bottom Line
One of the best ways investors can find expected winners within the market is by utilizing the Zacks Rank – one of the most potent market tools out there.
A portfolio consisting of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 31 years with an average annual return of 24%.
Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Arch Capital Group would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
The Zacks Computer and Technology Sector has struggled mightily year-to-date, decreasing roughly 20% in value and extensively underperforming the S&P 500.
A hawkish Fed, paired with supply chain and geopolitical issues, has created a dark fiscal cloud above companies in the sector.
A company in the sector, Teradyne, carries a Zacks Rank #5 (Strong Sell) with an overall VGM Score of an F – never a pairing that you want to see.
Teradyne is a leading provider of automated test equipment, primarily focused on the semiconductor test market, which generates the bulk of its revenues.
Let’s take a closer look at the company and why it’s landed itself into such an unfavorable rank.
Share Performance
Teradyne shares have struggled mightily in 2022, losing more than 40% in value and coming nowhere near the general market’s performance.
Even over the last month, when the market has rallied, TER shares have still lagged, decreasing nearly 5% in value.
The poor share performance indicates that sellers have been in control of shares throughout the whole year.
Growth Estimates
Analysts have been overwhelmingly bearish across all timeframes over the last 60 days with 100% agreement.
For the company’s current fiscal year (FY22), the Zacks Consensus EPS Estimate of $3.91 reflects a concerning 35% Y/Y drop in earnings.
TER’s top-line projections indicate some softening as well – the company is forecasted to generate $3.1 billion in sales throughout FY22, penciling in a steep 16% drop-off from FY21 annual sales of $3.7 billion.
Valuation
Pivoting to valuation, TER shares could be considered overvalued, further bolstered by its Style Score of an F for Value.
Teradyne’s forward earnings multiple resides at a steep 25.8X, undoubtedly on the higher side. In addition, the value represents a 3% premium relative to its Zack Sector.
Bottom Line
Teradyne shares have been the victim of a deep double-digit valuation slash year-to-date.
This adverse price action, paired with overwhelmingly negative estimate revisions, paints a grim picture for the company in the short term.
The company is a Zacks Rank #5 (Strong Sell) and a stock that investors will be better off staying away from for now.
Instead, investors should pivot to stocks that either carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) – the odds of reaping considerable gains are much higher within the companies that carry these ranks.
Additional content:
Renewables to Contribute 22% of U.S. Electricity in '22
Thanks to the rapid installation of solar and wind energy systems across the nation in recent times, renewables are now projected to account for 22% of electricity generation in the United States this year, as stated recently by the U.S. Energy Information Administration (EIA). This projection surely reflects an improvement in the country’s clean energy adoption count, with renewable sources accounting for 20% of generation in each of the past couple of years.
No doubt, such an impressive outlook turns the spotlight on prominent renewable stocks like Enphase Energy, Canadian Solar and NextEra Energy Partner, which are expected to gain notably amid the increased contribution of clean energy to electricity generation.
Details of the Latest Forecast
Per EIA’s latest short-term energy outlook, renewable sources are projected to contribute 22% of the country’s electricity generation in 2022 and thereafter 24% in 2023. In fact, the largest increases in U.S. electricity generation in EIA’s forecast came from renewable energy sources, mostly solar and wind.
To this end, it is imperative to mention that the U.S. electric power sector added 13 gigawatts (GW) of utility-scale solar photovoltaic (PV) capacity in 2021, which is expected to increase 53.8% to 20 GW in 2022 and 84.6% to 24 GW in 2023.
On the other hand, according to the American Electric Power Association, during the second quarter of 2022, the industry started construction on 3,964 MW of projects, while 7,000 MW entered advanced development. There are 1,155 projects in the pipeline with a total capacity of 128,889 MW.
Stocks to Gain
Considering the aforementioned discussion, it is obvious that renewable stocks with a keen involvement in solar and wind space should benefit and thus must stay on investors’ watchlist. Some of these stocks are:
Enphase Energy: The company designs, develops, manufactures and sells home energy solutions, which connect energy generation, energy storage and control and communications management on one intelligent platform, apart from being a leading solar microinverter manufacturer. As of Jun 30, 2022, more than 48 million of its microinverters were shipped, while approximately 2.5 million Enphase residential and commercial systems were deployed in more than 140 countries.
The company boasts a long-term earnings growth rate of 47.10%. The Zacks Consensus Estimate for ENPH’s 2022 sales implies an improvement of 63% over 2021’s reported figure.
Canadian Solar: The company designs, manufactures and delivers solar products and solar system solutions for both on-grid and off-grid use to customers worldwide. As of Jun 30, 2022, the company’s global solar project pipeline stood at 26 GWp (gigawatt-peaks), while the storage pipeline expanded to over 31 GWh (gigawatt-hours).
The company boasts a four-quarter average earnings surprise of 154.03%. The Zacks Consensus Estimate for CSIQ’s 2022 sales implies an improvement of 41.2% over 2021’s reported figure.
NextEra Energy Partners:It owns a portfolio of contracted renewable generation assets consisting of wind and solar projects in North America, as well as seven contracted natural gas pipeline assets in Texas. The company owns a competitive clean energy business, NextEra Energy Resources, LLC, which, together with its affiliated entities, is the world's largest generator of renewable energy from the wind and sun and a world leader in battery storage.
The stock boasts a long-term earnings growth rate of 10%. The Zacks Consensus Estimate for NEP’s 2022 sales implies an improvement of 56.4% over 2021’s reported figure.
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 >>
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/performancefor 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
Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
Teradyne, Inc. (TER) : Free Stock Analysis Report
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
NextEra Energy Partners, LP (NEP) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
