For Immediate Release
Chicago, IL – June 18, 2018 – Zacks Equity Research highlights The Ensign Group ENSG as the Bull of the Day, Big Lots Inc BIG as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Caterpillar Inc. CAT, United Rentals URI and Terex Corporation TEX.
Here is a synopsis of all five stocks:
Bull of the Day:
A Demographic Shift
It’s undeniable that the U.S. population is aging. This demographic shift will accelerate as increasing numbers of baby-boomers – those born between 1946 and 1964 – reach retirement age. The number of Americans aged 65 and older is projected to more than double from 46 million to over 95 million by 2060 when this age group will be approximately 25% of the population.
Americans are also living longer with life expectancy in the U.S. now topping 79 years old, up from 68 just 50 years ago.
Unfortunately, some of the demographic trends are not positive, with higher rates of obesity and Alzheimer’s disease, along with higher rates of seniors who live alone due to divorce.
Demand for senior care services is rising steadily and there’s every reason to believe that trend will continue for the next several decades.
Demand for Health Services
The Ensign Group is one of the nation’s leading providers of skilled care for aging individuals. The company offers a broad range of services that include inpatient/residential care, occupational and speech therapy, rehabilitation, hospice services and out-call home care for seniors.
Ensign operates 161 skilled nursing facilities, 51 assisted living facilities and 46 home health care businesses, primarily in the Western half of the country. The company receives 68% of its revenues from Medicare and Medicaid, 17% from managed care policies and the remaining 15% from all other sources, including private insurance.
In the senior-care sector, the U.S. Government is the best customer possible, making timely and predictable payments on a wide range of services.
Bear of the Day:
Retail has been one of the hottest sectors in 2018, up 13% for the year versus a return of just over 3% for the S&P 500. High-end retailers have performed especially well as low unemployment and a generally strong economy have left consumers with more disposable income.
(read about luxury retailers here>>)
Some of those gains have come at the expense of discount retailers as shifting consumer tastes and means have customers looking for higher priced goods and a better shopping experience.
Big Lots Inc is the nation’s largest retailer of closeout goods, selling a wide range of home products - primarily furniture and other household goods. In an otherwise strong retail marketplace, they have significantly underperformed the industry with shares declining 26% in 2018.
The catalyst for the declining shares has been disappointing revenues, earnings and guidance.
In their Q1 earnings report on June 1st, Big Lots reported gross sales of $1.27B, considerably lower than the $1.3B in revenues during the same period in 2017. The company reported earnings of $0.95/share, badly missing their own previous guidance of $1.15/share to $1.22/share.
Bog Lots also closed several retail stores during the quarter and declined to buy back any shares under its authorized share repurchase program, even as the share price declined.
The company’s future guidance didn't include any better news with both sales and earnings predicted to be essentially flat for the next quarter and full year 2018. At the end of a record earnings season - especially in the retail sector - the miss and flat guidance had investors running for the exits.
3 Construction Stocks to Buy Right Now
Manufacturing and construction activity boomed last month, and the summer often means even more spending. So let’s take a look at three construction and manufacturing sector stocks that are strong buys at the moment.
The Institute of Supply Management’s manufacturing index popped to 58.7 in May up from 57.3 in April, which topped economists’ expectations of 58.4. Last month marked the 21st straight month of manufacturing expansion.
U.S. construction spending also surged 1.8% to a record high in April, the biggest increase since January 2016, according to the Commerce Department. These gains were due in part to the 4.5% jump in residential construction, the biggest percentage gain since November 1993.
With all that said, let’s take a look at three stocks from the manufacturing and construction sector that investors should think about buying right now.
1. Caterpillar Inc.
Right off the bat, Caterpillar stock looks pretty darn cheap at the moment. Coming into Friday, CAT was trading at 13.6X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to the S&P 500’s 17.3X. Meanwhile, investors should note that Caterpillar stock has traded as high as 32.6X over the last two years, with a two-year median of 22.6X—with CAT currently trading just above it two-year low of 13X.
Meanwhile, our latest Zacks Consensus Estimates are calling for Caterpillar’s quarterly revenues to surge by 21.5% to touch $13.77 billion. At the other end of the income statement, CAT’s adjusted earnings are projected to skyrocket nearly 78% to hit $2.65 per share, while its full-year EPS figure is expected to expand by roughly 56%. Investors should also note that CAT has received 11 upward earnings estimate revisions for its full-year, all within the last 60 days, against zero downgrades. Caterpillar stock is currently a Zacks Rank #1 (Strong Buy) and sits well below its 52-week high.
2. United Rentals
United Rentals, which, as its name suggests, rents an array of industrial and construction equipment, has seen its stock price climb roughly 54% over the last year. URI is also currently a Zacks Rank #1 (Strong Buy) and sports an “A” grade for Value in our Style Scores system. United Rentals stock is currently trading at 10X forward 12-month Zacks Consensus EPS estimates, which comes in far below its industry’s average of 16.7X.
Looking ahead, United Rentals revenues are projected to climb by 12.8% this quarter to hit $1.8 billion, while its full-year revenues are expected to surge nearly 14% to reach $7.56 billion. Meanwhile, the company’s bottom line expansion projections look more impressive. United Rental’s quarterly earnings are expected to hit $3.53 per share and its full-year EPS figure is projected to touch $15.49, which would represent year over year gains of roughly 49% and 46%, respectively.
3. Terex Corporation
Shares of Terex have been trending in the wrong direction lately, but its earnings revisions are headed in the right direction. The lifting and material processing products company has earned 10 full-year upward earnings estimate revisions within the last 60 days, against zero downward revisions. Terex’s adjusted full-year earnings are projected to soar by 114.81% to touch $2.90 per share. The company’s current quarter EPS figure is projected to climb by 76% to touch $0.90 per share. On the top of the income statement, Terex’s quarterly revenues are expected to pop over 18% to $1.40 billion, while its full-year revenues are projected to climb 16% to touch $5.06 billion.
TEX is also currently a Zacks Rank #1 (Strong Buy) that rocks an “A” grade for Momentum in our Style Scores system. Lastly, TEX’s valuation picture looks solid right now. Going into Friday, TEX was trading at 12.3X forward 12-month Zacks Consensus EPS estimates, representing a discount compared to its industry’s 16.4X average. Furthermore, TEX has traded as high as 29.7X over the last year and currently rests right above its 52-week low of 12.2X.
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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
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
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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United Rentals, Inc. (URI) : Free Stock Analysis Report
Terex Corporation (TEX) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
Big Lots, Inc. (BIG) : Free Stock Analysis Report
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