For Immediate Release
Chicago, IL – May 13, 2014– Zacks Equity Research highlights Lions Gate Entertainment (LGF-Free Report) as the Bull of the Day and CalAmp (CAMP-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on HDFC Bank Ltd. (HDB-Free Report), Tata Motors Ltd. (TTM-Free Report) and Dr. Reddy's (RDY-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Lions Gate Entertainment (LGF-Free Report) is a producer of TV shows and movies. A recent blockbuster, Divergent was noted to have surpassed over $250M in global box office receipts. Analysts and investors are looking for even better performance from the sequel and today the stock is the Bull of the Day.
Lions Gate Entertainment is best known for making movies and television shows. Some movie hits include Hunger Games, Twilight and Divergent. On the television side, Mad Men, Anger Management and Nashville are currently running, while past hits like Weeds and Boss still have a strong following on the internet. Lions Gate Entertainment Corp. was founded in 1986 and is headquartered in Santa Monica, California.
LGF topped the Zacks Consensus Estimate in each of the last seven quarters. Some of the recent beats have been impressive with the June 2013 quarter coming in 233% ahead of the Zacks Consensus Estimate. The following quarter saw a beat of 214% ahead of the Zacks Consensus Estimate.
Revenue growth over the last seven quarter has been strong. The most recently reported quarter, saw a increase of 13% from the year ago period. The quarter prior to that did see a decline of 30% in revenues, but that came a year after nearly 100% growth. That large revenue growth percentage was the start of the beat streak.
The Zacks Consensus Estimate for 2014 has moved higher throughout the year. The estimates stood at $1.02 in January and moved higher to $1.10 as expectations rose for "Divergent" The estimate has held still until very recently as it ticked higher to $1.11 in the first week of May.
Bear of the Day:
CalAmp (CAMP-Free Report) is a Zacks Rank #5 (Strong Sell) but it just recently became a #5 after being a Zacks Rank #3 (Hold) for the entire year. A recent earnings miss and lowered guidance has pushed it down and it is the Bear of the Day.
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As a wireless technology solutions provider, CAMP lost a connection with Wall Street following its most recent quarter. The stock dropped more than 25% in the session following the most recent earnings report.
The company missed the Zacks Consensus Estimate and lowered guidance on April 24, 2014. Revenues came in below expectations as well.
CAMP makes wireless technology solutions that deliver data, voice and video for critical networked communications and other applications. The Company has two business segments: Wireless DataCom, which serves commercial, industrial and government customers, and Satellite, which focuses on the North American Direct Broadcast Satellite (DBS) market. CalAmp Corp. was founded in 1981 and is headquartered in Oxnard, California.
CAMP Sees Estimates Moving Lower
CAMP missed earnings and guided lower recently and that has impacted its Zacks Rank. The Zacks Consensus Estimate has move from $0.96 in March to $0.94 in April and skidded lower to $0.90 following the earnings report.
2015 also had a significant drop, as the Zacks Consensus Estimate moved from $1.22 to $1.13.
Following the miss, lowered guidance and significant drop in share price, CAMP is only now trading in line with metrics that investors commonly look to. The trailing PE of 22x is in line with the industry average, but the forward PE still shows CAMP trading at a premium. Visit the Zacks website to see the forward PE multiple of Zacks.
India’s Surging Growth Plays
Key market indexes surged at the end of the world’s largest democratic exercise. As polling ended in India, the Sensex gained 2.42% to end above 23,000. The Nifty posted an even more impressive performance, posting its largest two day gains in nearly three years. Ultimately, the index ended above the 7,000 mark, propelled by expectations that the NDA alliance will form the next government.
The buildup of strong momentum helped around 189 stocks to notch up gains. Banks and manufacturing stocks were among the major gainers, several of which were near one-year highs. This includes names like Axis Bank, Coal India, JSW Steel and Maruti Suzuki.
Among the ADRs to move upwards were HDFC Bank Ltd. (HDB-Free Report) and Tata Motors Ltd. (TTM-Free Report). This is in keeping with gains made by both these companies in recent times. For instance, last Thursday HDFC Bank had gained 1% to close at $41.29 and Tata Motors also gained around 1% to close at $38.12.
The strength in India ADRs was borne out by the massive increase in the Bank of New York Mellon India ADR Index at 10:35 am local time. The index gained 3.2%, coming within striking distance of its highest level in around three years.
Possible Economic Spoilers
Despite optimism arising out of a new dispensation at the center, economic indicators remain worrying. Retail inflation has increased to 8.59%, its highest level in three months. This will possibly make it difficult for the Reserve Bank of India to reduce interest rates when it reviews monetary policy in June.
On the other hand, the index of industrial production or IIP has reduced by 0.5% in March. This is primarily due to a reduction in manufacturing output, with capital goods production declining significantly. Taken together, these are significant downsides for market watchers.
Impact of Exit Polls
Despite these numbers, exit polls which predict a resounding victory for the NDA alliance will continue to drive markets upwards. Several market analysts believe that the Nifty and the Sensex will continue to rally this week riding on exit poll results. Since nearly all exit polls predict a clear majority for the NDA alliance, this momentum is expected to continue going forward.
However, given the complex nature of the elections there is a slim chance that a small number of votes could change the nature of results. This is because it could translate into a large difference which in turn could impact the nature of the new government. If these factors come into play, markets could soon experience a high degree of volatility.
Below we present three Indian stocks which have a track record of consistent performance. Each of them also has a good Zacks rank. These make them ideal choices, since they could capitalize on market momentum. However, in case the market experiences a few jitters they remain solid choices.
Tata Motors Limited
Tata Motors is the largest automobile company in India. It is also the fifth largest truck manufacturer and the fourth largest bus manufacturer in the world. It also provides automotive solutions. Commercial and passenger vehicles are also sold in Europe, Africa, the Middle East, South East Asia, South Asia, Russia and South America.
Tata Motors Limited holds a Zacks Rank #3 (Hold) and has expected earnings growth of 8.6% for the next financial year. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 8.95.
HDFC Bank Ltd.
HDFC Bank is one of the largest banks in India, with a retail network of 3,336 branches and 11,473 ATMs in 2,022 cities as of Dec 31, 2013. The bank enjoys favorable brand equity among Indian consumers and depositors, which enables it to keep its borrowing costs low. It provides a wide range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side.
Currently the company holds a Zacks Rank #3 (Hold) and has expected earnings growth of 24.8% for the next financial year. It has a P/E (F1) of 19.55.
Dr. Reddy's Laboratories Ltd.
Dr. Reddy's (RDY-Free Report) is an integrated global pharmaceutical company engaged in providing affordable and innovative medicines since 1984. The company markets its products in countries like the U.S., U.K., Germany, India, Russia, Venezuela, Romania and South Africa.
Dr. Reddy’s third quarter fiscal 2014 results were impressive with the company beating on both earnings and revenues. Moreover, the company recorded strong year-over-year growth.
Apart from a Zacks Rank #3 (Hold), Dr. Reddy’s has expected earnings growth of 8.5% for the next financial year. It has a P/E (F1) of 19.22.
Given recent political developments, the Indian economy may soon experience a turnaround. This seems to be the most likely scenario despite current weaknesses. This is why these stocks would make good additions to your portfolio.
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