For Immediate Release
Chicago, IL – January 24, 2023 – Zacks Equity Research shares Bumble Inc. BMBL as the Bull of the Day and Stanley Black & Decker SWK as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Freeport McMoRan FCX, Nucor Corporation NUE and Steel Dynamics STLD.
Here is a synopsis of all five stocks:
Bull of the Day:
Bumble Inc. is expected to see double digit revenue growth this year and next as people are still turning to the dating apps. This Zacks Rank #1 (Strong Buy) had a big earnings beat in Q3 2022.
Bumble is the parent company of Bumble, Badoo, and Fruitz. Bumble was founded in 2014 and is one of the first dating apps built with women at the center. It connects users through Bumble Date, Bumble BFF, for those looking for friendship, as well as Bumble Bizz, the professional networking segment.
Badoo was founded in 2006 and is one of the pioneers of web and mobile dating products. Fruitz was founded in 2017 and uses fruit metaphors to encourage open and honest communications during dating.
A Big Beat in the Third Quarter
On Nov 9, 2022, Bumble reported its third quarter results and beat the Zacks Consensus by $0.14. Earnings were $0.14 versus the Zacks Consensus of $0.00.
It was the third meet or beat in a row.
Revenue rose 16.8% to $232.6 million up from $199.1 million a year ago driven by a 27.9% gain in Bumble App Revenue.
Badoo App and Other Revenue was not as bullish, as it declined 10.2% to $52 million.
Total paying users rose to 3.3 million from 2.9 million with total average revenue per paying User "ARPPU" rose to $22.96 from $22.81.
Fourth Quarter Guidance
Bumble gave fourth quarter guidance on revenue of a range of $232 million to $237 million. It does expect to see a $5 million impact to Badoo App and Other Revenue due to the Ukraine War.
Analysts Get Bullish about 2023
Bumble won't report earnings again until March 2023. Meanwhile, analysts are getting bullish with 1 estimate raised for 2022 and 2023 within the last week.
The 2022 Zacks Consensus Estimate has risen to $0.23 from $0.11 in the last 90 days. That's moving in the right direction but it's still down 86.6% from 2022, where the company earned $1.72.
Online dating apps, and all apps, in general, saw surging use during the pandemic which has started to wind down as the economy slows and consumers tighten spending.
But one estimate is also higher in the last week for 2023. The Zacks Consensus is looking for $0.19 in 2023, which is still down 18% from 2022, but it appears that the analysts were a little too pessimistic.
Shares Rally in the Last Month
Bumble shares fell 18.9% in the last year, and are well off their 2021 IPO highs.
Yet the shares have staged a nice rally in the last month, adding 15.7%.
You aren't getting the shares on sale on a P/E basis, however, as they trade with a forward P/E of 126.4.
The Street might have been too pessimistic about Bumble in 2022. If you're looking for an online dating app company where the analysts are raising earnings estimates, then Bumble might be one for the short list.
Bear of the Day:
Stanley Black & Decker is in the midst of a business transformation while it also has to fight inflationary pressures and the challenging macroeconomic environment. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall for the second year in a row in 2023.
Stanley Black & Decker is the world's largest tool company with nearly 50 manufacturing facilities in the United States and more than 100 worldwide.
It produces power tools, hand tools, storage, digital tool solutions, lifestyle products, outdoor products, engineered fasteners and other industrial equipment. It's iconic brands include DEWALT, BLACK+DECKER, CRAFTSMAN, STANLEY, CUB CADET, HUSTLER AND TROY-BILT.
Earnings Estimates for 2022 and 2023 Continue to Fall
Stanley Black & Decker will report fourth quarter and full year results on Feb 2, 2023. What will it guide for 2023?
Last quarter, on Oct 27, 2022, it lowered its full year guidance to a range of $4.15 to $4.65 from $5.00 to $6.00. As you might assume, analysts lowered their estimates accordingly.
But they have continued to cut.
1 estimate has been cut for 2022 in the last 30 days. 2022 earnings are now expected to fall 57.6% from last year to $4.44, down from $10.48.
Analysts are also still bearish on 2023. 2 estimates have been lowered over the last 30 days. Earnings are expected to fall another 5.8% to $4.18. That's down from $6.71 just 3 months ago.
It's because of these earnings estimates cuts that the stock has fallen to a Zacks Rank #5 (Strong Sell). The cuts are bearish.
Shares Plunge Below the COVID Lows
Shares of Stanley Black & Decker have fallen 51% over the last year but even more devastating to long-term investors, the shares are now down 48% over the last 5 years as well.
Yes, the shares have gotten a bid to start 2023, rising 20.7% over the last month but they aren't cheap, with a forward P/E of 20.5.
The good news is that it is still shareholder friendly, paying both a dividend, which it raised for the 55th consecutive year again last year, and doing a share buy back. The dividend is yielding 3.7%.
But there is a lot of uncertainty heading into this earnings report. Investors might want to wait on the sidelines to see what the outlook is for 2023.
3 Basic Materials Stocks to Buy Before Earnings This Week
Many stocks in the Basic Materials sector outperformed the broader market over the last year and provided a much-needed hedge against inflation.
Let's take a look at three highly ranked Basic Material stocks set to report earnings this week that investors may want to consider buying in 2023 as well.
Starting the list is mineral exploration and development miner Freeport McMoRan.
Freeport is set to report fourth-quarter earnings on January 25, with its stock currently sporting a Zacks Rank #2 (Buy).
Freeport McMoRan conducts its operations primarily through its principal subsidiaries' PT Freeport Indonesia, Freeport-McMoRan Corporation, and Atlantic Copper. It is important to note that PT Freeport Indonesia's principal asset Papua, is an Indonesia-based mine that contains the world's largest copper and gold reserves.
With copper prices hitting their highest levels in the last six months on the London Metal Exchange, Freeport McMoRan stock is sticking out with earnings estimate revisions trending higher for fiscal 2023 as the company rounds out FY22 with its Q4 report.
Q4 Preview:The rise in copper prices, primarily attributed to the reopening of China, which is the world's largest copper consumer, is great timing as Freeport McMoRan earnings are expected to have dipped year over year during Q4 after a tough prior-year quarter to follow.
Fourth-quarter earnings are expected to dip -58% to $0.40 a share compared to $0.96 a share in Q4 2021. On the top line, sales are projected at $5.34 billion, a -13% decrease from the prior year quarter. Still, an earnings beat on the company's bottom line is not completely out of the picture.
Earnings ESP:The Zacks Expected Surprise Prediction is a useful tool in indicating which stocks could top quarterly earnings estimates by comparing the Zacks Consensus to the Most Accurate Consensus.
With the Zacks Consensus Estimate for Freeport McMoRan's Q4 earnings at $0.40 a share and the Most Accurate Estimate at $0.42 per share, FCX is expected to beat expectations by 6.96%.
Takeaway:Certainly, a strong earnings beat on Freeport McMoRan's bottom line could lead to more upside in the stock. This could be supported by the company potentially offering better-than-expected guidance in correlation with higher copper prices.
Steel Producer and metal recycler Nucor is another stock investors may want to consider buying ahead of its Q4 earnings on January 26. Nucor stock sports a Zack Rank #1 (Strong Buy) with earnings estimate revisions notably rising for fiscal 2023.
Even better, Nucor stock has been one of the top performers out of the basic materials sector over the last year to largely outperform the S&P 500 and is already up 15% to start 2023.
Q4 Preview:Following an excellent prior-year quarter, earnings are forecasted at $4.18 per share for Nucor's fourth quarter compared to $7.97 a share in Q4 2021. Sales for Q4 are expected at $7.91 billion which would be a -23% YoY decline.
However, with iron and steel prices remaining higher despite cooling off recently, it is quite possible that Nucor will beat earnings expectations for a fifth consecutive quarter.
Earnings ESP: Nucor stock has an ESP of 3.29% as the Zacks Consensus for Q4 earnings is $4.18 a share and the Most Accurate Estimate is $4.32 per share indicating the company could beat on its bottom line.
Takeaway:Despite the year-over-year quarterly drop in earnings, Nucor stock trades at just 11.8X forward earnings which is well below its decade high of 41.4X and a 23% discount to the median of 15.3X.
Nucor's valuation appears to already support the likelihood that the company's earnings could decrease as steel prices move lower which still makes the stock attractive at its current levels with earnings estimates going up.
Rounding out the list is Steel Dynamics, which is set to report its Q4 earnings on January 25. Also sporting a Zacks Rank #1 (Strong Buy), Steel Dynamics FY23 earnings estimates have gone up 36% over the last 60 days to $10.82 per share compared to estimates of $7.94 a share two months ago.
Steel Dynamics is also a leading steel producer and recycler of metal in the United States and one of the most diversified steel companies in the U.S. with a vast range of specialty products.
The performance of Steel Dynamics stock has been incredible over the last year, up +106%, standing out among stocks across any sector.
Q4 Preview:Like Nucor, Steel Dynamics follows a stellar prior year fourth quarter. Steel Dynamics Q4 earnings are anticipated at $3.60 per share compared to $5.98 a share in Q4 2021. Sales for Q4 are expected to be $4.73 billion and down -11% YoY.
Still, it is quite plausible that Nucor will beat earnings expectations for what would be a 13th consecutive quarter dating back to January of 2020.
Earnings ESP:The Zacks ESP for Steel Dynamics indicates the company could once again beat on its bottom line. With the Zacks Consensus for Nucor's Q4 earnings at $3.60 a share, the most accurate estimate of $3.77 per share indicates the possibility of a 4.82% earnings beat.
Takeaway:The top and bottom line growth for Steel Dynamics has been massive over the last few years as steel prices soared, and it is noteworthy that the company has also beaten sales expectations for 12 consecutive quarters.
Steel Dynamics also trades attractively relative to its past at just 9.9X forward earnings which is nicely below its decade high of 24.2X and the median of 12.2X.
With its valuation also supporting the potential drop in steel prices, Steel Dynamics stock could have more upside especially if the company continues its stellar track record of topping quarterly expectations.
After the very impressive top and bottom line growth these basic material stocks had in recent years, investors will definitely want to pay attention to their Q4 earnings. The rising earnings estimate revisions make the possibility of beating Q4 expectations quite plausible for Freeport McMoRan, Nucor, and Steel Dynamic stock and could continue supporting their strong performances.
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