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BJ's Wholesale Club, Hanesbrands, Boeing, Airbus and Leidos highlighted as Zacks Bull and Bear of the Day

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Zacks Equity Research
·9 min read
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For Immediate Release

Chicago, IL – January 14, 2021 – Zacks Equity Research Shares of BJ's Wholesale Club Holdings, Inc. BJ as the Bull of the Day, Hanesbrands Inc. HBI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Boeing Company BA, Airbus SE EADSY and Leidos Holdings, Inc. LDOS.

Here is a synopsis of all five stocks:

Bull of the Day:

BJ's Wholesale Club is a membership-only retail club chain that operates primarily on the East Coast, as well as in Ohio and Michigan. Similar to Costco, BJ's offers members a variety of name-brand products at discount wholesale prices across many categories: grocery, household, pet, toys, and more.

Q3 Earnings Recap

Last November, BJ reported better-than-expected third quarter results, impressing Wall Street across the board.

Comparable store-sales grew to 19% for Q3, and while that is a slight slowdown from the prior quarter, it still stacks up favorably against rivals like Costco and Sam's Club.

Operating income rose to $190 million as management controlled selling expenses. This helped push adjusted EPS higher by 120% to $0.88 per share.

Revenue, excluding fuel sales, rose 19%, and online sales soared 200%.

Cash flow was also very strong, increasing to over $800 million compared to $222 million in the year-ago quarter.

"The third quarter was another remarkable quarter with robust comp growth, significant market share gains, and record profitability," CEO Lee Delaney said in a press release.

Shares Are Surging

Since last year's lows, shares of BJ's Wholesale have climbed over 57%. Estimates have been rising too, and BJ is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, 10 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $2.64 per share to $3.01 per share. Earnings are expected to see triple-digit growth for the current fiscal year, up 106%.

BJ's doesn't provide short-term outlooks, but its management team is anticipating elevated sales through this past holiday season and even after the Covid-19 pandemic disappears.

Looking ahead, growing market share will become a huge boon for the wholesale retailer. Last quarter's record performance and cash flow growth will only help BJ's improve its merchandising, e-commerce platform, and supply chain, ensuring that customers keep returning to its stores and website.

BJ's is also expanding its footprint, opening more stores throughout Ohio and Michigan; it wouldn't be surprising if the retailer ends up going national.

If you're an investor searching for a retail stock to add to your portfolio, make sure to keep BJ on your shortlist.

Bear of the Day:

Hanesbrands is a well-known designer and manufacturer of apparel essentials for men, women, and kids. Its brand portfolio includes Hanes, Champion, and Playtex, among others.

Q3 Earnings Recap

Revenue fell 3.1% to $1.81 billion, and adjusted earnings per share slipped to $0.47 per share; both the top and bottom lines, however, beat consensus estimates.

Breaking down by segment, Hanesbrands' Innerwear, which includes underwear and t-shirts, rose 8.4% as consumers continue to spend more time at home.

Activewear plunged 41%. Excluding Target's decision to stop selling the Champion C9 brand, the segment fell 27%. The disappointing performance in Activewear shows that Champion, despite its popularity among Millennials and Gen-Zers, did not benefit from the rise in athleisure last year.

CEO Steve Bratspies said that "I'm pleased with our third-quarter results as we saw significant improvements across our business and exceeded our expectations for sales, profits and cash flow from operations." 

But he acknowledged that some of HBI's brands are underperforming, and management announced a separate in-depth business review to refine long-term growth strategies.

Bottom Line

HBI is now a Zacks Rank #5 (Strong Sell).

One analyst cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen four cents to $1.35 per share; earnings are expected to experience a double-digit decline for fiscal 2020.

Shares are up over 13% in the past one-year period, slightly lagging the S&P 500's 17% rebound during the same time frame.

Despite posting solid returns since last March's lows, Hanesbrands still faces some headwinds.

The company only forecasts Q4 revenue of $1.6 billion to $1.66 billion, representing a 7% decline at the midpoint. EPS is expected in the range of $0.25 to $0.30 (compared to $0.51 in the year-ago period).

This weak guidance shook investors, and HBI plummeted 20% the day of its earnings release.

Current investors will be comforted by the company's 3.75% dividend yield and sufficient cash flow to support these payments. But until the outlook looks brighter, potential new investors may want to stay on the sidelines.

Additional content:

Boeing (BA) Reports Poor Q4 Commercial and Defense Deliveries

The Boeing Company has recently revealed delivery figures for its commercial and defense operations for the fourth quarter of 2020 along with the full-year figures. The figures reflect a sizable 25.3% decline in commercial shipments from the previous year's tally, while defense shipments also plunged 40.4%.

Combining both segments, Boeing's total deliveries in the fourth quarter were merely 93 units compared with 136 units delivered in the year-ago period. In 2020, the company delivered a total of 157 commercial aircraft, while defense deliveries totaled 154 units.

Q4 Commercial Deliveries Details

Boeing reported commercial deliveries of only 59 airplanes in fourth-quarter 2020, declining significantly year over year, primarily due to dismal 787 Dreamliner jet deliveries.

Shipments of the 787 Dreamliner totaled 4 compared with 45 in the year-ago period. The company delivered 10 767 jets during the quarter compared with 11 767 jets delivered in the year-earlier quarter. Shipments for the 777 model totaled 11 compared with 12 in the previous year's fourth quarter. On a brighter note, the company was able to deliver 31 units of its single-aisle 737 jets compared to nine units delivered in the fourth quarter of 2019.

A Brief Look at Boeing's Q4 Defense Deliveries

In its defense and space business, Boeing's deliveries totaled 34 in fourth-quarter 2020, which deteriorated from 57 dispatched in the prior-year period.

Such a drop in delivery figures can once again be attributed to coronavirus-led business restrictions that reduced and, in certain cases, paused shipment activities within the United States as well as across borders.

Boeing vs. Airbus

Airbus remained miles ahead in terms of deliveries made, as the European aircraft giant delivered a total of 147 commercial aircraft in the fourth quarter of 2020 compared with Boeing's 59. Furthermore, Airbus was successful in delivering 566 commercial aircraft in the whole of 2020 compared with Boeing's 157 deliveries.

Evidently, in terms of commercial deliveries, Boeing's arch-rival, Airbus, remained way ahead in 2020 and was able to retain its leading position globally. Interestingly, Airbus' backlog included 7,184 jets at the end of 2020, while Boeing's included only 4,223 jets, down 22% since the end of 2019.

Factors Leading to Poor Delivery Figures

Notably, in December 2020, the company could not deliver a single 787 jet, largely due to the ongoing inspections of the widebody aircraft to ensure that the jet meets Boeing's quality standards, per a company official. Furthermore, as the impacts of the coronavirus pandemic continue to cripple aircraft demand since March 2020, the company had to encounter a significant drop in aircraft deliveries.

Price Performance

Shares of the company have gained 15.8% in the past six months compared with the industry's growth of 6.3%.

Zacks Rank & Key Picks

Boeing currently carries a Zacks Rank #4 (Sell).

One better-ranked stock in the same sector is Leidos Holdings, which carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Leidos came up with an average positive earnings surprise of 17.57% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has increased 0.2% to $6.39 per share in the past 30 days.

Transdigm Group delivered an average positive earnings surprise of 37.24% in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has climbed 1.1% to $11.50 per share in the past 30 days.

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The Boeing Company (BA) : Free Stock Analysis Report
 
BJs Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
 
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Airbus Group (EADSY) : Free Stock Analysis Report
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
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