Cardinal Health and Humana have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 4, 2024 – Zacks Equity Research shares Cardinal Health CAH as the Bull of the Day and Humana HUM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Taiwan Semiconductor Manufacturing Co. TSM, Apple AAPL and Netflix NFLX.
Here is a synopsis of all five stocks.
Bull of the Day:
Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers, and manufacturers. Analysts have taken a bullish stance on the company’s earnings outlook, landing it into the highly-favorable Zacks Rank #1 (Strong Buy).
In addition to favorable earnings estimate revisions, the company resides within the Zacks Medical – Dental Supplies industry, currently ranked in the top 30% of all Zacks industries. Let’s take a deeper look at the company.
Cardinal Health
CAH shares have been notably strong over the last year, adding +54% and widely outperforming relative to the S&P 500. Better-than-expected quarterly results have helped drive the bullish move, with Cardinal Health exceeding our consensus EPS estimates by an average of 15% across its last four releases.
Concerning headline figures in its latest print, CAH posted a 17% beat relative to the Zacks Consensus EPS estimate and reported sales 1.1% above expectations, reflecting growth rates of 38% and 11.6%, respectively.
Results have been driven by increased profitability across both its segments, with the company’s operational execution providing positive tailwinds. CAH has consistently grown sales over the years.
In addition to earnings momentum, investors stand to reap a passive income, with CAH shares yielding 1.8% annually. The company is a member of the elite Dividend Aristocrats group, whose commitment to shareholders is unmatched.
Shares aren’t overly stretched regarding valuation, underpinned by its Style Score of ‘A’ for Value. Shares presently trade at a 14.4X forward 12-month earnings multiple, above the five-year median but comparing favorably to its respective Zacks industry average.
The company’s growth profile is considerably bright for being non-technology, with consensus estimates for its current year suggesting +25% earnings growth on +11% higher sales, with FY25 expectations suggesting an additional +10% of earnings growth paired with a +9% sales bump.
The stock carries a Style Score of ‘B’ for Growth.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
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.
Cardinal Health would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
Humana is a health care plan provider in the United States. The company provides health insurance benefits under Health Maintenance Organization, Private Fee-For-Service, and Preferred Provider Organization plans.
Analysts have taken a bearish stance on the company’s earnings outlook, landing it into a Zacks Rank #5 (Strong Sell).
In addition, the company currently resides in the Zacks Medical – HMOs industry, which is currently ranked in the bottom 14% of all Zacks industries. Let’s take a closer look at a few other aspects of the company.
Humana
HUM shares have struggled to find their footing over the last year, losing nearly -29% in value and widely underperforming relative to the S&P 500. Shares faced notably strong selling pressure following its latest quarterly release, with the company falling short of the Zacks Consensus EPS estimate by 57%.
The results were hampered by an additional increase in Medicare Advantage medical cost trends, causing the company to give ‘soft’ initial guidance for its FY24. The results snapped a streak of positive EPS surprises, with investors reacting negatively in response.
The company’s profitability is forecasted to take a sizable hit in its current year (FY24), with the $16.05 Zacks Consensus EPS estimate representing a pullback of -38% from FY23. Shares presently trade at a 20.3X forward 12-month earnings multiple, above the five-year median and the respective Zacks industry average.
The stock carries a Style Score of ‘D’ for Value.
Bottom Line
Negative earnings estimate revisions from analysts stemming from increased costs paint a challenging picture for the company’s shares in the near term.
Humana is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content:
2 Leading Tech Stocks to Buy & Hold in March
Today’s episode of Full Court Finance at Zacks dives into why the bulls control the stock market to kick off March. The episode then explores why investors should consider buying these stocks for long-term growth inside two key tech industries.
Wall Street bulls sent the Nasdaq to its first record close since late 2021 on Thursday after PCE data came in line with expectations. The jump to new highs for the tech-heavy industry is another sign the bulls are in complete control.
Investors must remain aware that stocks are likely headed for a healthy pullback at some point soon to shave off excess fat. But fears about a major bubble and comparisons to the Dot-Com era don’t seem valid.
The companies driving tech today churn out massive profits and sit on huge piles of cash while working deeper into every aspect of the economy. The tech sector trades far below its early 2000s levels of 33.9X forward earnings at 26.3X.
Keep your eyes out for the next dip down to the 21-day or 50-day moving averages for the S&P 500 and the Nasdaq—or the 21-week. The bulls might keep buying up all the sizable downturns as Wall Street rides multiple bullish waves, including corporate earnings growth, projected Fed rate cuts, a stable economy, and AI-driven growth and productivity gains.
Taiwan Semiconductor Manufacturing Co.
Taiwan Semiconductor Manufacturing Co, known as Taiwan Semi or TSMC, dominates global chip manufacturing. TSMC’s foundries physically build the most cutting-edge semiconductors that drive AI, smartphones, and nearly every other advanced technology, boasting clients from Apple to Nvidia.
Taiwan Semi is reaping the rewards of its founding principal: manufacturing only. TSMC’s moat is massive considering the institutional know-how and enormous costs needed to lead the world in making the most complex and microscopic tech on the planet.
The company topped our Q4 EPS estimate in January and provided upbeat guidance, “supported by the continued strong ramp of our industry-leading 3-nanometer technology.” TSMC is projected to grow its sales by 23% in FY24 and 20% in FY25, following a cyclical down year in 2023. TSMC averaged 18% revenue growth between FY18 and FY22. Taiwan Semi’s adjusted earnings are projected to climb by 19% and 24%, respectively.
TSM crushed tech over the last 10 years, climbing 615% vs. 280%. Yet it trades below its all-time highs. Taiwan Semi trades at a 25% discount to the tech sector at 20.7X forward 12-month earnings and 40% below its 10-year highs.
The company is expanding beyond Taiwan to diversify its manufacturing amid geopolitical tensions. Taiwan Semi pays a dividend and it is poised to grow for decades as it physically builds the bedrock of all technology, from data centers to AI and the still to come.
Netflix
Netflix forever transformed entertainment. NFLX’s vanguard status and growing content library helps it maintain its lead over Disney, Apple, Amazon and countless other streamers. NFLX shares have roared back over the last year plus after it addressed fears about slowing expansion against growing competition, crushing membership estimates in 2023.
The firm posted blowout fourth quarter results, adding 13.1 million net new paid subscribers to beat Wall Street estimates by 50%. NFLX hit 260.28 million total paid subscribers to crush everyone else in the streaming industry.
Netflix’s lower-cost ad-based tier is gaining traction while it cuts down on people sharing too many accounts. NFLX is also expanding its video game segment and rolling out more live content. The firm in January announced a 10-year deal with WWE that will bring Raw and other popular live wrestling shows to Netflix in the U.S. and elsewhere.
NFLX’s improving earnings outlook helps it grab a Zacks Rank #1 (Strong Buy) right now. Netflix is projected to grow its sales by 15% in FY24 and another 12% next year to boost its adjusted earnings by 42% and 22%, respectively.
Netflix shares have climbed by 850% in the last 10 years, including a 230% run off its 2022 lows. Still, NFLX trades around 10% below its all-time highs. The streaming giant trades at a 90% discount to its highs at 34X forward earnings and 50% below its median.
[Disclosure: Ben Rains owns TSM in his personal portfolio.]
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Apple Inc. (AAPL) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
