For Immediate Release
Chicago, IL – October 16, 2018 – Zacks Equity Research highlights Control4 Corporation CTRL as the Bull of the Day, Nine Energy NINE as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cloudera Inc. CLDR, j2 Global, Inc. JCOM and Veeva Systems Inc. VEEV.
Here is a synopsis of all five stocks:
Bull of the Day:
Control4 Corporation is a Zacks Rank #1 (Strong Buy) and sports a growth style score of A. As the Aggressive Growth Stock Strategist at Zacks Investment Research, that automatically gets the stock on my radar screen. Let's take a look at why this stock is a Zacks Rank #1 (Strong Buy) in this Bull of the Day article.
Control4 Corporation is engaged in providing automation and control solutions for the connected home. The Company offers home operating system that interacts with various music, video, lighting, temperature, security, and communications. It also provides 4Sight subscription services, which allow consumers to control and monitor their homes remotely from their smartphone, tablet, or laptop. Control4 Corporation is headquartered in Salt Lake City, Utah.
The most recent quarter is what I always look at first when checking out a new stock. In the case of CTRL I see a solid beat of 31.3% ahead of the Zacks Consensus Estimate. That is just what I need to see as it tells me that CTRL left a good taste in the mouths of investors.
Following the beat, estimates have moved higher. In the case of CTRL, estimates have inched higher, and that has come amidst the corrective action in the market. More on that idea later, but let's take a look at the moves in the Zacks Consensus Estimate.
When you post a big beat, the estimates for the full year move up, but what is really important is that estimate for the current and next quarter move higher too. We have just that with CTRL as this quarter and next have seen estimates move higher by a penny each.
The 2018 Zacks Consensus Estimate moved from $1.31 to $1.42 following the beat and that move is what really helps push this to a Zacks Rank #1 (Strong Buy).
The 2019 Zacks Consensus Estimate moved by the same amount, running from $1.44 to $1.55. So with that, we also see some nice implied earnings growth.
Part of the Zacks Rank is looking into the past. In that regard we a good history of CTRL beating the number. Four the last four reports has all been beats which tells us management knows how to deliver a message to Wall Street and then live up to it.
Over the past four quarters, the average positive earnings surprise is hefty 33%.
With the market in a corrective mode, stocks like CTRL are getting cheaper and cheaper. I see the stock now trading at 19x forward and trailing earnings, and that is a good bit lower than where the multiple was a few weeks ago. Even as the stock price slipped, the estimates moved higher, so that makes price to book moved from 5x down to 4x and bump right up against where a value investor likes to see that metric (typically around 3x or less).
Bear of the Day:
The Bear of the Day article is meant to be a post about how a stock became a Zacks Rank #5 (Strong Sell). Most of the time, we see a falling stock price because investors that care about fundamentals see that earnings estimates are falling. It is rare that we see a stock like Nine Energy rising even as estimates are falling.
Nine Energy Service, Inc. provides onshore completion and production services to unconventional oil and gas resource development. The Company's operating segment consists of Completion Solutions and Production Solutions. Completion Solutions segment provides services integral to the completion of unconventional wells. Production Solutions segment provides production enhancement and well work over services. It also offers auxiliary services including casing jacks with hydraulic power source and oil field equipment hauling. The company operates primarily in the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus, Utica and throughout Canada. Nine Energy Service, Inc. is headquartered in Houston, Texas.
The first thing I do when I look at a new stock is check the recent earnings history. For NINE I see only three reports and what looks like a good track record. Earnings history is a smaller part of what drives the Zacks Rank.
NINE has seen 2 beats and 1 miss in those three reports. The miss was the most recent report.
NINE posted EPS of $0.37 when the Zacks Consensus Estimate was looking for $0.38. THat one cent miss equates to a negative earnings surprise of a little more than 2%.
Following the report, estimates moved lower. The 2018 Zacks Consensus Estimate moved from $1.88 to $1.61. That is not what investors want to see.
The 2019 Zacks Consensus Estimate moved from $3.28 to $3.10.
Those moves are the primary reason the stock slid to a Zacks Rank #5 (Strong Sell).
Energy And The Zacks Rank
Often times, an energy play is not moving in lockstep with estimate revisions. This is the case for NINE right here as the estimates are moving lower and the stock is moving higher. Some would say that this is not a sustainable move -- but others would look at the near term prices for energy such as oil and natural gas and see a closer correlation.
3 Cloud Stocks to Buy Right Now
In a matter of just a few years, “the Cloud” has evolved from a budding new tech feature to one of the main factors driving growth in the technology sector. Cloud computing is now an essential focus for software-related companies, and cloud stocks have piqued the interest of many tech-focused investors.
New technologies and changing consumer behavior have changed the shape of the technology landscape, and an industry that was once centered on the personal computer has adapted to survive in the world of mobile computing and the Cloud. The markets have been paying attention, and some of the best tech stocks have been those that are either primarily cloud-based companies, or those that have shown growth in their cloud operations.
With this in mind, we’ve highlighted three stocks that are not only showing strong cloud-related activity, but also strong fundamental metrics. Check out these three cloud stocks to buy right now:
1. Cloudera Inc.
Cloudera is a provider of cloud-based big data solutions. The firm delivers an open-source distribution platform that enables efficient and secure data management and analytics. Cloudera is also focused on being scalable across large organizations, and its client list includes Facebook and Google.
This stock has been a bit of a rollercoaster since debuting in April 2017, but a clear path closer to profitability and strong revenue growth make this look attractive right now. Per share losses are expected to improve 26.1% this year, and the company has a long-term projected earnings growth rate of 8%.
Earnings estimates have also been revised higher recently, lifting CLDR to a Zacks Rank #2 (Buy). Meanwhile, Cloudera is expected to finish the year with revenue growth of 21.7%, according to our Zacks Consensus Estimates.
3. j2 Global, Inc.
j2 Global provides cloud-based communications, storage messaging services, and digital media. Its enterprise services include eFax, eVoice, KeepItSafe, and Onebox, and it owns popular media companies like IGN, Mashable, and PC Mag. The company also provides software-as-a-service communication services and solutions.
JCOM sports a Zacks Rank #2 (Buy) and could be a solid value play right now. Shares are trading at just 11.7x forward earnings, which marks a steep discount to the industry’s average. The stock also has a PEG of 1.5, so investors are getting its earnings growth outlook at an attractive price as well. J2 also pays out a healthy dividend and presents a yield of about 2.3%.
3. Veeva Systems Inc.
Veeva makes cloud-based solutions for the pharmaceutical and life sciences industries. Its main offerings are presented in a software-as-a-service model and delivers industry-specific tools for CRM, content management, and many other enterprise applications. Shares of Veeva currently hold a Zacks Rank #1 (Strong Buy).
VEEV has emerged as a hot growth and momentum stock this year, adding more than 50% before a recent market-wide pullback amid strong earnings improvements. The firm is projected to finish its current fiscal year with earnings growth of 59.1% and has a long-term expected growth rate of 19.3%. Veeva is also generating cash flow growth in excess of 86.6% currently.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
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Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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j2 Global, Inc. (JCOM) : Free Stock Analysis Report
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