For Immediate Release
Chicago, IL – March 20, 2014– Zacks Equity Research highlights Federal Signal Corporation (FSS-Free Report) as the Bull of the Day and Clean Harbors (CLH-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Universal Forest Products Inc. (UFPI-Free Report), Potlatch Corp (PCH-Free Report) and Lennar Corp (LEN-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Following a solid Q4 beat and encouraging guidance from management, estimates have been rising significantly for Federal Signal Corporation (FSS-Free Report). It is a Zacks Rank #1 (Strong Buy) stock.
While shares have soared since the Q4 report, there is plenty of room to run higher with shares trading at reasonable multiples to earnings and cash flow.
Federal Signal Corporation designs and manufactures products and solutions for municipal, governmental, industrial, and commercial customers. It operates in three segments: Environmental Solutions (56% of net sales), Safety & Security Systems (28%), and Fire Rescue (16%).
Its portfolio of products includes sewer cleaners, vacuum trucks, street sweepers, waterblasters, safety and security systems, and vehicle-mounted aerial platforms. It was founded in 1901 and has a market cap of approximately $950 million.
Federal Signal reported solid fourth quarter results on March 5. Adjusted earnings per share came in at 34 cents, beating the Zacks Consensus Estimate by 10 cents. It was also well above the 9 cents earned in the same quarter in 2012.
Bear of the Day:
Earnings estimates have fallen sharply for Clean Harbors (CLH-Free Report) following its third consecutive earnings miss and disappointing guidance from management.
It is a Zacks Rank #5 (Strong Sell) stock.
With shares trading at high multiples to both earnings and cash flow, investors should consider avoiding this stock at least until its earnings momentum improves.
Clean Harbors provides environmental, energy and industrial services throughout North America. It also provides used oil recycling and re-refining, parts washers and environmental services for the small quantity generator market through its Safety-Kleen subsidiary. The company is headquartered in Massachusetts and has a market cap of $3.3 billion.
Since I last wrote about Clean Harbor as the 'Bear of the Day' on September 26, 2013, shares have fallen more than -6% while the S&P has risen almost +10%.
Clean Harbors reported disappointing Q4 results on February 26. Earnings per share came in at 44 cents, missing the Zacks Consensus Estimate by 12 cents.
3 Homebuilding Stocks for Spring Construction Boom
The housing start numbers came in below the street’s expectations this morning, though the shortfall was a bit less pronounced that was the case last month. Like most recent economic data, the Polar Vortexes caused a slump in the overall numbers for January and early February. While new construction dipped from 909,000 in January to 907,000 in February, there was a silver lining in the housing report.
New building permits rose 7.7%, their highest rate since October, and more importantly, to the second highest rate since the middle of 2009. The main catalysts behind the increase in new building permits were condominiums and rental apartment buildings.
The permits gain is reassuring, given recent signs that the housing recovery might be losing steam. Monday’s homebuilder sediment index came in below the 50 level, the dividing line between expanding and contracting activity levels. The weather has no doubt been a major headwind for the sector, though builders seem to be facing other issues as well, like shortage of building lots, skilled labor, and low inventory of new homes for sale. The strong permits number shows that we can expect steady gains in construction activities over the spring and summer months.
Companies to Consider
Universal Forest Products Inc. (UFPI-Free Report) is currently a Zacks Rank #1 (Strong Buy), and has produced an average Positive Earnings Surprise of 661.69% over the past four quarters. UFPI supplies wood and wood alternative products for retail home building centers and other retailers. Universal Forest Products also offers structural lumber and other products for the manufactured housing industry.
Over the past thirty days, UFPI’s earnings estimates have risen from $0.41 to $0.47 for Q1 2014. Moreover, earnings estimates for the fiscal year 2014 have increased from $3.12 to $3.30; which would translate to a 55.66% year over year growth rate.
Potlatch Corp (PCH-Free Report) is a Real Estate Investment Trust with two major segments; the Resource Management division, which owns and manages timberlands, and the Wood Products division, which manufactures the lumber and then sells it to wholesalers for the primary purpose of home building and construction activities.
Currently, Potlatch carries a Zacks Rank #2 (Buy), and has seen their earnings estimates rise over the past sixty days. Q1 2014 earnings estimates have risen from $0.41 to $0.46, and Fiscal Year 2014 earnings estimates have also increased from $1.86 to $1.91. Moreover, Potlatch has produced an average positive earnings surprise of 24.10% over the past four quarters.
Lennar Corp (LEN-Free Report) specializes in homebuilding activities throughout the entire USA. Primarily, LEN develops multifamily rental properties, single family homes, and detached homes. Lennar Corp currently carries a Zacks Rank #2 (Buy), and has produced four consecutive Positive Earnings Surprises with an average Positive Surprise of 40.44%. Furthermore, over the past sixty days, Fiscal Year earnings estimates have risen from $2.42 to $2.49.
This year’s winter impacted many companies throughout all sectors, and the threat of more inclement weather is not yet behind us. This nasty weather has caused many companies to lower guidance, and overall, we have seen many estimates fall for Q1 2014. But with housing permits increasing over 7%, and spring quickly approaching, the outlook for homebuilders looks promising, with room to grow beyond the spring building fury.
So if you are inclined to invest in the homebuilding segment, you should strongly consider Universal Forest Products, Potlatch Corp, and Lennar Corp.
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