Huron Consulting and Victoria's Secret have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 15, 2023 – Zacks Equity Research shares Huron Consulting Group HURN as the Bull of the Day and Victoria’s Secret & Co. VSCO as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Magellan Midstream Partners LP MMP, Solaris Oilfield Infrastructure Inc SOI and CVR Energy Inc. CVI.
Here is a synopsis of all five stocks.
Bull of the Day:
Huron Consulting Group, a Zacks Rank #1 (Strong Buy), is an independent provider of financial and operational consulting services. The company’s experienced professionals employ their expertise in accounting, finance, economics, and operations to a wide variety of both financially sound and distressed organizations. Its clients include Fortune 500 companies, medium-sized businesses, leading academic institutions, and law firms.
HURN shares bucked last year’s bear market and have resumed their upward trend in 2023. The highly-rated stock has been widely outperforming the market this year with the backing of a leading industry group. The stock is trading near all-time highs and displaying relative strength as buying pressure accumulates in this market leader.
The diversified consulting company is part of the Zacks Consulting Services industry group, which ranks in the top 44% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Huron Consulting Group provides consultancy services and operates in three segments. Its Healthcare segment provides advisory services to national and regional health systems, hospitals, medical groups, and care providers. The Education segment provides administrative and research services to public and private colleges and universities, research institutes, and other education-related organizations. Its Commercial segment offers digital services and software products to a variety of industries such as financial, energy, manufacturing and utilities.
HURN employs more than 5,000 people and boasts both a domestic and international presence. The company was incorporated in 2002 and is headquartered in Chicago, Illinois.
Earnings Trends and Future Estimates
HURN has built up an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Back in July, the company reported second-quarter earnings of $1.38/share, a 40.82% surprise over the $0.98/share consensus estimate. Q2 earnings surged 66.3% year-over-year, while revenues grew 26.9%.
Management was upbeat regarding the quarterly results and raised its full-year EPS forecast. Huron Consulting has delivered a trailing four-quarter average earnings surprise of 21.75%. Consistently beating earnings estimates is a recipe for success.
Analysts covering HURN are in agreement and have been increasing their earnings estimates lately. For the current fiscal year, analysts have bumped up earnings estimates by 9.44% in the past 60 days. The 2023 Zacks Consensus EPS Estimate now stands at $4.52/share, reflecting potential growth of 31.8% relative to the prior year. Revenues are projected to climb 17% to $1.33 billion.
Let’s Get Technical
HURN shares have advanced nearly 38% this year. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
HURN stock outperformed during last year’s bear market and has continued along that path this year. Both the 50-day and 200-day moving averages are sloping up. The stock has been making a series of higher highs. With both strong fundamentals and technicals, HURN is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Huron Consulting Group has recently witnessed positive revisions. As long as this trend remains intact (and HURN continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
HURN stock is ranked favorably by our Zacks Style Scores, with a top ‘A’ mark in our Growth category and overall ‘B’ VGM score. The future looks bright for this highly-ranked, leading company as earnings estimates are on the rise.
Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why this company is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix.
Bear of the Day:
Victoria’s Secret & Co. operates as a specialty retailer of women’s apparel and beauty products worldwide. The company offers intimate apparel, bras, lingerie, sleepwear, loungewear, athletic attire, swimwear, as well as beauty products like fragrances and mists.
Victoria’s Secret delivers its merchandise through retail stores, websites, and other online channels. The company provides its products and accessories under the Victoria’s Secret, PINK, Victoria’s Secret Beauty, and Adore Me brands.
The Zacks Rundown
Victoria’s Secret, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Leisure and Recreation Products industry group, which ranks in the bottom 11% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has over the past month.
Candidates in the bottom tiers of industries can often be solid potential short candidates. While individual stocks have the ability to outperform even when included in a poorly-performing industry group, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
Despite a rebound in many retail and consumer discretionary stocks this year, VSCO shares have not been gushing lately. The stock has experienced considerable volatility in 2023. Shares recently hit a 52-week low following a disappointing earnings report and represent a compelling short or hedge opportunity.
Recent Earnings Misses and Deteriorating Outlook
VSCO has fallen short of earnings estimates in two of the last three quarters. The intimate apparel company most recently reported second-quarter earnings last month of $0.24/share, missing the $0.27/share consensus EPS estimate by 11.1%. Earnings plunged 78% from the same quarter in the prior year.
Victoria’s Secret has missed earnings estimates by an average of 17.75% over the past three quarters. Consistently falling short of earnings estimates is a recipe for underperformance, and VSCO is no exception.
The company has been on the receiving end of negative earnings estimate revisions as of late. For the current quarter, analysts have decreased estimates by -710% in the past 60 days. The third-quarter Zacks Consensus EPS Estimate now reflects a loss of -$0.81/share, translating to negative growth of -379.3% relative to the same quarter last year. Revenues are expected to drop -4.6% during Q3.
Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
Technical Outlook
VSCO stock is in a sustained downtrend. Notice how shares have plunged below both the 50-day and 200-day moving averages. The stock is making a series of lower lows, with no respite from the selling in sight.
While not the most accurate indicator, VSCO stock has also experienced what is known as a ‘death cross,’ wherein the stock’s 50-day moving average crosses below its 200-day moving average. Victoria’s Secret would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. VSCO shares have fallen more than 57% in the past 7 months alone.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock is not set to hit new highs anytime soon. The fact that VSCO stock is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.
The fact that other retailers and consumer discretionary stocks have done well this year paints a picture of underperformance for Victoria’s Secret. Potential investors may want to consider including this stock as part of a short or hedge strategy. Bulls will want to steer clear of VSCO shares until the situation shows major signs of improvement.
Additional content:
Bet on These 3 Energy Stocks with Juicy Dividend Yields
The price of West Texas Intermediate crude is approaching $90 per barrel. The Organization of the Petroleum Exporting Countries’ prediction of robust global demand growth amid tight supplies is primarily aiding the crude price rally.
The favorable crude price is making the exploration and production business extremely profitable. Higher upstream activities will increase demand for oilfield services since the players will guide explorers and producers in efficiently setting up oil and gas wells.
Increased drilling activities will boost demand for midstream assets as more volumes of the commodities will get transported and stored. Also, the shortage in global distillate fuel oil inventories is putting upward pressure on fuel prices, thereby aiding refiners.
Given the backdrop, it is the ideal time for investors to allocate money to prospective energy stocks offering attractive dividend yields. We are employing our proprietary Stock Screener to zero in on three such names that are well-poised to gain. One of the stocks carries a Zacks Rank #2 (Buy), while the other two sport a Zacks Rank #1 (Strong Buy). All the stocks offer juicy dividend yields that are higher than the energy sector’s 3.4% yield.
3 Stocks in the Spotlight
Magellan Midstream Partners LP has extensive petroleum midstream infrastructures that will be needed in the United States for decades to come. The business model of the Zacks #2 Ranked partnership is resilient to commodity price fluctuations and derives stable fee-based revenues.
The cash distribution yield picture looks bright, with Magellan Midstream’s current yield being 6.1%. The metric has consistently been higher than the sector over the past year. (Check Magellan Midstream’s distribution history here).
Magellan Midstream Partners, L.P. dividend-yield-ttm | Magellan Midstream Partners, L.P. Quote
More patented equipment and systems of Solaris Oilfield Infrastructure Inc will likely be deployed to the prolific oil and gas basins in the United States. This is because favorable commodity prices will likely improve upstream activities, increasing demand for those equipment and systems. Currently, Solaris sports a Zacks Rank of 1 and offers a dividend yield of 4.1%. You can see the complete list of today’s Zacks #1 Rank stocks here. (Check Solaris Oilfield’s distribution history here).
Solaris Oilfield Infrastructure, Inc. dividend-yield-ttm | Solaris Oilfield Infrastructure, Inc. Quote
Having direct access to prolific crude oil fields in the Anadarko and Arkoma Basins, leading petroleum refiner CVR Energy Inc. is well-poised to grow. #1 Ranked CVI is leveraging its strong refining fundamentals, driving its cashflows and earnings momentum. Currently, the stock offers a dividend yield of 5.8%. Its dividends have mostly been higher than the sector over the past year. (Check CVR Energy’s dividend history here).
CVR Energy Inc. dividend-yield-ttm | CVR Energy Inc. Quote
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Magellan Midstream Partners, L.P. (MMP) : Free Stock Analysis Report
CVR Energy Inc. (CVI) : Free Stock Analysis Report
Huron Consulting Group Inc. (HURN) : Free Stock Analysis Report
Solaris Oilfield Infrastructure, Inc. (SOI) : Free Stock Analysis Report
Victoria's Secret & Co. (VSCO) : Free Stock Analysis Report
