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Comcast, Littelfuse, Molina Healthcare and Deluxe highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
Comcast's (CMCSA) second-quarter 2019 results benefit from increasing high-speed Internet subscriber base.

For Immediate Release

Chicago, IL – May 10, 2019 – Zacks Equity Research Comcast CMCSA as the Bull of the Day, Littelfuse LFUS asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Molina Healthcare MOH and Deluxe Corp. DLX.

Here is a synopsis of all four stocks:

Bull of the Day:

Shares of Comcast have climbed 26% in 2019 to crush the S&P 500’s 15% jump and top its industry’s 22% surge. The communications and entertainment giant is coming off a solid first quarter of 2019 and its internet business continued to boom to help counteract declines in cable. Comcast is also ready to launch its own streaming service through its NBCUniversal branch and its Sky acquisition is set to help the firm expand its reach.  

Quick Q1 Recap  

Comcast’s revenue jumped roughly 18% to reach $26.86 billion, with the inclusion of its Sky purchase. This figure came in just below our Zacks Consensus Estimate. At the bottom end of the income statement, CMCSA posted adjusted quarterly earnings of $0.76 per share on April 25, which marked a 17% jump and easily beat our $0.66 estimate.  

Comcast stock has moved mostly sideways since its earnings release and closed regular trading Thursday at $42.92 per share—just below its 52-week intraday high of $43.96 per share.

Business Overview & Growth Plans

Comcast operates cable, internet, wireless, and security businesses, along with NBCUniversal and now Sky. As we touched on at the top, the company’s cable business has lost subscribers as the cord-cutting revolution, driven by the likes of Netflix and Amazon Prime, rages on. For instance, the company lost 121,000 total video customers during the quarter.

Luckily for Comcast, users who have left traditional cable in favor of Netflix, HBO, or any other streaming TV service, still need high-speed internet access. This helped the firm add 375,000 total internet customers in the quarter. Meanwhile, it added 170,000 wireless lines as its Xfinity Mobile business, which launched in 2017, tries to challenge carries such as Verizon and T-Mobile. Comcast’s wireless revenues jumped 21.4%.

In order to help offset its cable business, Comcast’s NBCUniversal unit has laid out its plans to launch a free, ad-supported streaming service for anyone that subscribes to a traditional pay-TV service. This includes rivals such as AT&T and Charter.

The service is projected to launch in early 2020 and will feature 1,500 hours of NBC TV shows, like Parks and Recreation, along with hundreds of hours of Universal movies. Aside from the free ad-supported version, non-pay-TV users will be able to pay around $12 a month for NBCUniversal’s streaming service, which will also have to compete against soon-to-be-launched offerings from Disney , Apple and others.

Bear of the Day:

Littelfuse stock has slipped roughly 6% since the company reported its first-quarter fiscal 2019 financial results on May 1. The circuit protection firm fell short of top-line estimates and it is projected to see its full-year revenue and earnings head in the wrong direction.

Overview

Littelfuse makes circuit protection, power control, and sensing technologies. Its offerings are sold in over 150 countries and can be found in everything from vehicles to medical devices and consumer electronics. The company boasts a market cap of $4.42 billion, and its shares have an average volume of 152,937.

As we mentioned at the top, the Chicago-based company topped quarterly earnings estimates. The firm reported adjusted quarterly earnings of $1.96 per share, which came in $0.03 above our $1.93 per share Zacks Consensus Estimate. However, this still marked an approximately 18% drop off compared to the year-ago period. Meanwhile, the company’s Q1 sales fell 3% to hit $405.5 million, with its automotive unit revenue down 10%.

Littelfuse CEO Dave Heinzmann said in prepared remarks that the firm anticipates soft demand to persist. With that said, the chief executive also noted that Littelfuse executives “continue to expect improving conditions in the second half of the year. We remain confident we will deliver exceptional value for our shareholders by executing on our five-year growth strategy.”

Shares of LFUS closed regular trading Thursday down marginally to $178.66 per share. This marked a 25% downturn compared to its 52-week intraday high of $238.11 a share.

Outlook & Earnings Trends

Looking ahead, our current Zacks Consensus Estimate calls for the company’s second-quarter 2019 revenue to fall 9.3% to reach $416.5 million. For the full-year, Littelfuse is projected to see its revenue fall 3.2% to $1.66 billion. Peeking even further down the road, it is worth noting that the company’s 2020 sales are expected to climb 4.5% above our current year estimate to inch by its 2018 total of $1.72 billion.

At the bottom end of the income statement, LFUS’s adjusted Q2 EPS figure is projected to sink roughly 22.4% to touch $2.08 per share. The company’s full-year earnings are expected to fall by 7.7%. Similarly, Littelfuse’s adjusted full-year 2020 earnings are expected to come in nearly 14% higher than our 2019 projection. This growth would help it top 2018’s full-year earnings.

Clearly, the company’s current-year outlook appears less than inspiring. Plus, Littelfuse has seen some negative earnings estimate revision activity recently. This helped send its overall earnings estimates down in a big way.

Bottom Line

Littelfuse is a Zacks Rank #5 (Strong Sell) at the moment, based, in large part, on recent earnings estimate revision activity. The company also sports a “D” grade for Value and an “F” for Momentum in our Style Scores system. LFUS’ price/sales ratio of 2.6 comes in above its industry’s 1.5 average. The stock’s forward P/E of 20.6X also marks a premium compared to its industry’s 17.6X average.

Therefore, investors might want to stay away from Littelfuse for now. Yet, the company does look poised to return to growth in fiscal 2020 and it has been a strong performer over the last five years. Therefore, some investors might want to bookmark LFUS stock and come back later.

Additional content:

Zacks May Sector/Industry/Company Telescope

At 2,933 on the S&P50 on May 3rd, this market was -1% from its 52-week high at 2,961. Tactics for stock outperformance is at an industry level, not a sector level.

Top sectors are Health Care andIndustrials at Very Attractive, andConsumer Staples and Utilities at Attractive.  3 are defensive. 1 is late cyclical.

What is going on?

The HMO enrollment boom continues, despite Bernie Sander’s “Medicare for All” slogan. Business Products and Aerospace & Defense are big niches for Industrials.  Utilities-Water Supply and Food are new hot industries to look into.

Want more industry ideas inside Market Weight sectors?

  • In Financials, just look into Investment Funds and Investment Banking & Brokering.
  • Info Tech stayed at a Market Weight this month. Yet notably, Computer Software is strong.
  • Energy was a Market Weight. But Exploration & Production looks great.

Finally, Materials marked up an Unattractive showing. But Metals Non-ferrous continues to outperform.

(1) Health Caremoved up one notch to Very Attractive from Attractive. The leader (with strong demographics) is Medical Care again.

TOP ZACKS #1 RANK STOCK: Molina Healthcare

(2) Industrials moved up one notch to Very Attractive from Attractive. The leaders are Aerospace & Defense and Business Products.

TOP ZACKS #1 RANK STOCK: Deluxe Corp.

(3) Communication Services fell back to Market Weight. Telco Services looks average.

TOP ZACKS #1 RANK STOCK: Comcast

(4) Financials fell back to Market Weight. The two leaders are Investment Funds and Investment Banking & Brokering.

(5) Consumer Staplesmoved back up to Attractive from Market Weight. The leaders are Misc. Staples and Food.

(6) Consumer Discretionary remains a Market Weight.  The surprise new leader is Publishing. Apparel and Media are strong too.

(7) Utilities move up to Attractive from Market Weight. Water Supply is the new leader.

(8) Energy stayed at Market Weight. The new leader is Exploration & Production.

(9) Info Techstayed at Market Weight. The best stocks are a strong call on Computer-Software Services and Office Equipment. Semis stayed at a neutral industry rank.

(10) Materials rose to Unattractive from Very Unattractive. Metals Non-ferrous industry is a durable bright spot. Tariffs for steel also appear to play a role for Steel.

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Comcast Corporation (CMCSA) : Free Stock Analysis Report
 
Littelfuse, Inc. (LFUS) : Free Stock Analysis Report
 
Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
 
Deluxe Corporation (DLX) : Free Stock Analysis Report
 
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