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Levi Strauss, Vail Resorts, Ensign, Owens & Minor and RPM as Zacks Bull and Bear of the Day

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·8 min read
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For Immediate Release

Chicago, IL – October 15, 2020 – Zacks Equity Research highlights Levi Strauss & Co. LEVI as the Bull of the Day and Vail Resorts Inc. MTN as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Ensign Group, Inc. ENSG, Owens & Minor, Inc. OMI and RPM International Inc. RPM.

Here is a synopsis of all five stocks:

Bull of the Day:                                                 

Founded in 1873 in San Francisco, Levi Strauss & Co. is a retail company known around the world for its iconic Levi’s denim brand; Dockers, Denizen, and Signature by Levi Strauss & Co. are also under the company’s umbrella. LEVI first went public back in 1971, but had been a private company up until its market return last year.

Q3 Earnings Recap

Last week, Levi’s reported much-better-than-expected third quarter results, and shares surged as much as 14% the day after its earnings release.

Strong e-commerce growth helped propel the retailer last quarter, and led to adjusted free cash flow of $183 million. Digital revenue made up almost 25% of total sales, double what it was in Q3 2019.

Levi’s e-commerce performance also helped to offset substantial declines in revenue and net income.

Gross margin also improved to 54.3% thanks to price increases and a bigger portion of total sales coming from its direct-to-consumer channel, which has a higher margin.

Like many retailers, LEVI is still dealing with the impacts on its business from the coronavirus pandemic.

But, management is positive about the near-term future, saying in the earnings press release that "trends appear to be improving sequentially, and at a faster pace than previously expected."

CEO Chip Bergh also commented that inventories were well-positioned going into the critical holiday season, and he’s "cautiously optimistic that we're not going to have to go down the rabbit hole on promotions…which I think is good for brand health."

LEVI Breaks Out

Since March 23, shares of Levi Strauss have climbed about 50%. Estimates have been rising too, and LEVI is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, four analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from a loss of $0.24 to $0.17 per share. Earnings are expected to decline compared to the prior year period, but 2021 looks like it could be a rebound year for earnings growth; earnings should see triple-digit year-over-year growth next year.

LEVI looks to be strongly bouncing back from the Covid-19 lows. Management expects its e-commerce division to turn a profit this year, and beyond 2021, more than half of its business is projected to come from direct-to-consumer.

Additionally, Levi’s just launched an online secondhand store, reselling some of their classic vintage styles. This could be big for the company, especially as more and more consumers are prioritizing environmental sustainability.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep LEVI on your shortlist.

Bear of the Day:

Vail Resorts Inc. is a holding company that operates several big-name luxury ski resorts in 15 states and three countries, including Beaver Creek in Breckenridge, CO; Park City in Utah; Whistler Blackcomb in British Columbia; and Perisher, Falls Creek, and Hotham in Australia.

Q4 Earnings Recap

Vail Resorts missed the Zacks Consensus Estimate on both the top and bottom line, with revenue of $77 million and a net loss of $3.82 per share; revenue was down over 68% year-over-year.

Resort Reported EBITDA fell to $503.3 million in fiscal 2020 million compared to $706.7 million in fiscal 2019.

One bright spot of Vail Resorts’ Q4 report was its current liquidity levels: MTN has $360 million in cash on hand as of August 31 and $593 million in revolving credit facilities.

Season-pass sales (through September 18) are up 18% on a unit basis but down 4% on a dollar basis, and while this shows solid volume, it also reflects the hit from discounts offered for renewing season-pass holders following the spring shutdowns.

Bottom Line

MTN is now a Zacks Rank #5 (Strong Sell).

Seven analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen over four dollars to $0.77 per share; earnings are expected to see a double-digit decline for the current fiscal year

Shares are actually up considerably since the March lows, rising almost 68% and outpacing the S&P 500’s 56+% rebound during the same time frame.

Even though shares have run up over the past few months, Vail Resorts will still have a hard road ahead of it. It’s a travel business, and it won’t be able to fully bounce back until the pandemic subsides and a vaccine is made widely available.

Additionally, the company is losing out on the revenue that’s generated from events like weddings and corporate retreats. Until people feel more comfortable traveling again, Vail Resorts’ profitability will take a hit.

There is one thing working in MTN’s favor: it mainly operates outdoor venues, and activities like skiing should have a much lower risk of contracting Covid-19 compared to indoor entertainment options.

Investors who are interested in adding a travel and leisure stock to their portfolio could consider Camping World. CWH is a #1 (Strong Buy) on the Zacks Rank, and shares have jumped over 600% since mid-March.

Additional content:

Top-Ranked Growth Stocks to Buy Today

Here are three stocks with buy ranks and strong growth characteristics for investors to consider today:

The Ensign Group, Inc.: This provider of health care services in the post-acute care continuum and other ancillary businesses, which carries a Zacks Rank #1 (Strong Buy), has witnessed the Zacks Consensus Estimate for its current year earnings increasing 5.9% over the last 60 days.

Ensign has a PEG ratio of 1.30, compared with 0.07 for the industry. The company possesses a Growth Score of A.

Owens & Minor, Inc.: This healthcare solutions company which carries a Zacks Rank #1, has witnessed the Zacks Consensus Estimate for its current year earnings increasing 66.4% over the last 60 days.

Owens & Minor has a PEG ratio of 0.31, compared with 1.66 for the industry. The company possesses a Growth Score of B.

RPM International Inc.: This manufacturer and seller of specialty chemicals, which carries a Zacks Rank #2, has witnessed the Zacks Consensus Estimate for its current year earnings increasing 9.5% over the last 60 days.

RPM has a PEG ratio of 1.57, compared with 2.82 for the industry. The company possesses a Growth Score of A.

See the full list of top ranked stocks here

Learn more about the Growth score and how it is calculated here.

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Owens Minor, Inc. (OMI) : Free Stock Analysis Report
Vail Resorts, Inc. (MTN) : Free Stock Analysis Report
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
RPM International Inc. (RPM) : Free Stock Analysis Report
Levi Strauss Co. (LEVI) : Free Stock Analysis Report
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