Holley and Corteva have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 14, 2023 – Zacks Equity Research shares Holley HLLY as the Bull of the Day and Corteva CTVA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Gerdau GGB, Crestwood Equity Partners CEQP and Townsquare Media TSQ.
Here is a synopsis of all five stocks:
Bull of the Day:
Holley is a Zacks Rank #1 (Buy) and it sports a B for Value and a C for Growth. This stock just reported a solid quarter and the stock is soaring as a result. Let's explore more about this company in this Bull of The Day article.
Description
Holley is a leading designer, marketer, and manufacturer of high-performance automotive aftermarket products for car and truck enthusiasts. Holley offers the largest portfolio of iconic brands that deliver innovation and inspiration to a large and diverse community of millions of avid automotive enthusiasts who are passionate about the performance and the personalization of their classic and modern cars. Holley has disrupted the performance aftermarket category by putting the enthusiast consumer first, developing innovative new products, and building a robust M&A process that has added meaningful scale and diversity to its platform.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market's expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For Holley, I see two beats of the Zacks Consensus Estimate and two misses over the last calendar year. That is great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).
Earnings Estimates Revisions
The Zacks Rank tells us which stocks are seeing earnings estimates move higher.
Over the last 30 days, earning estimates have increased for HLLY.
The current quarter has seen a move from 2 cents to 3 cents.
Next quarter has held still at 2 cents..
The full year numbers are certainly more important... and they are moving higher.
This year has moved from $0.14 to $0.17
Next year is now at $0.31 move up from $0.26.
Valuation
The valuation is a little high with the stock trading at 44x forward estimates with the industry average coming in at 23x. Price to book of 2.1x is well below the 3.7 industry average. Price to sales is at 1.3x and that is right in line with the industry average.
The stock has really soared after the most recent earnings report. The company beat the Zacks Consensus of $0.06 by $0.08 when they reported $0.14. The valuation is stretched a little here, but the implication is that there will be a lot of growth going forward. Combine that with some margin improvement and the EPS numbers will continue to grow.
Bear of the Day:
Corteva is a Zacks Rank #5 (Strong Sell) has seen earnings estimates slide lower recently despite the fact that it has beaten the Zacks Consensus Estimate in each of the last four quarters. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
Corteva, Inc. provides agriculture products. The company develops and supplies germplasm and traits in corn, soybean and sunflower seed markets. It also supplies products to the agricultural input industry which protect against weeds, insects and other pests, and diseases as well as to enhance crop health. Corteva, Inc. is based in Wilmington, Delaware.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market's expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of CTVA, I see four straight beats of the Zacks Consensus Estimate. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn't make it a Zacks Rank #5 (Strong Sell) either.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For CTVA I see annual estimates moving lower of late.
The current fiscal year consensus number moved lower from $2.99 to $2.87 over the last 60 days.
The next year has moved from $3.53 to $3.36 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
Additional content:
3 Top-Ranked Stocks for Investors Seeking Dividend Income
All major indexes have registered strong gains so far this year, which has helped investors recover from the 2022 slumps and restore confidence in the stock market. The S&P 500, the Nasdaq and the Dow have posted positive returns of 16.4%, 31.3% and 6.1%, respectively, in the year-to-date period. A favorable inflation trend, a boom in the artificial intelligence field which is considered as the fourth industrial revolution, and expectation from the Fed that it will sooner or later end the interest rate hike cycle are some of the significant reasons for the indexes to scale up.
However, unexpected events in August reminded investors to remain cautious. Moody's, on Aug 7, downgraded 10 small and medium-sized lenders and placed six banks on review for a potential downgrade, citing funding risks and weaker profitability. Investors are worried as they have already witnessed the collapse of major U.S banks like the Silicon Valley and Signature Bank earlier this year. The Federal Reserve's aggressive monetary policy tightening to counter inflation has pushed borrowing costs to a 16-year high, resulting in a slowdown in loan demand for businesses and consumers.
The consumer price index for the month of July increased 3.2% year over year, which was higher than the 3.0% growth in June, recorded as the lowest since March 2021. Now all eyes are now on Fed's key interest rate hike decision from the Sep 19-20 FOMC meeting. A cooler-than-expected inflation report in July raised optimism that the Fed will hold interest rate hikes in September.
Also, the already resilient labor market, higher wages, rising crude prices due to the decision by the OPEC+ members to cut production, and a collapsing Chinese economy could trigger inflation pressure.
Thus, prudent investors who wish to bet their money for regular income and capital preservation in such critical situations can invest in dividend stocks. Due to their well-established businesses, these companies pay out regular dividends and remain profitable due to their proven business models. Companies that tend to reward investors with a high dividend payout outperform non-dividend-paying stocks during market volatility. On that note, let us look at solid dividend payers like Gerdau, Crestwood Equity Partners andTownsquare Media.
Gerdau is a steel producer. This Zacks Rank #2 (Buy) company is the largest long steel producer in Latin America that made an important contribution in building the history of the Brazilian industry. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
GGB has a dividend yield of 10.8% compared with the industry average of 1.5%.
Gerdau has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 8.6% over the last 60 days. GGB shares have gained 20.6% over the past year compared to the S&P 500's gain of 6.6%.
Crestwood Equity Partners is a master limited partnership formed in 2001. This Zacks Rank #2 company provides a wide range of fee-based infrastructure solutions in major U.S. shale plays like the Bakken Shale, Delaware Basin, Powder River Basin, Marcellus Shale and others.
CEQP has a dividend yield of 10.3%, compared with the industry average of 7.2%
Crestwood Equity Partners has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 20.0% over the last 60 days, and its shares have gained 7.7% over the past year.
Townsquare Media is a local media and entertainment company. This Zacks Rank 2 company owns and operates radio, digital and live event properties in small to mid-sized markets across the country and specializes in creating and distributing original entertainment, music and lifestyle content.
TSQ has a dividend yield of 7.5% compared with the industry average of 0.0%.
Townsquare Media has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 3.9% over the last 60 days and its shares have gained 8.4% over the past year.
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Gerdau S.A. (GGB) : Free Stock Analysis Report
Crestwood Equity Partners LP (CEQP) : Free Stock Analysis Report
Townsquare Media, Inc. (TSQ) : Free Stock Analysis Report
Corteva, Inc. (CTVA) : Free Stock Analysis Report
Holley Inc. (HLLY) : Free Stock Analysis Report
