National Fuel Gas Company and Sun Country Airlines have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 6, 2023 – Zacks Equity Research shares National Fuel Gas Company NFG as the Bull of the Day and Sun Country Airlines SNCY as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil Corp. XOM, Chevron Corp. CVX and ConocoPhillips COP.
Here is a synopsis of all five stocks.
Bull of the Day:
Investors looking for a very promising buy-the-dip candidate after recent market volatility may want to consider National Fuel Gas Company, which is one of the latest utility stocks to garnish a spot on the Zacks Rank #1 (Strong Buy) list and lands the Bull of the Day.
Recently added to the strong buy list on Monday, National Fuel joins 8 other Zacks Utilities sector stocks on the list at the moment. To that point, The Zacks Utilities sector is currently ranked second out of 16 Zacks Sectors with National Fuel’s Zacks Utility- Gas Distribution Industry in the top 29% of over 250 Zacks industries.
Strong Buy Overview
As an integrated gas company, National Fuel has natural gas assets in the Appalachian Basin and oil-producing assets in California with the company’s operations consisting of exploration and production, pipeline and storage, along with gathering, and utility and energy marketing.
National Fuel stock is down -17% year to date to slightly trail the Utility-Gas Distribution Industry’s -12% but makes a very strong case for being undervalued considering its somewhat essential services and the strengthening prospects of the broader utility sector.
Plus, NFG shares are still up +24% over the last three years which is roughly on par with the S&P 500’s +27% while largely outperforming its Zacks Subindustry’s +3%. It’s also noteworthy that when including dividends, National Fuel’s +37% total return during this period has topped the benchmark.
Making National Fuel’s YTD drop more enticing is that annual EPS estimates are still higher over the last two months and NFG shares trade at just 8.5X forward earnings which is a nice discount to the industry average of 13.6X and the S&P 500’s 19.7X.
Respectable Growth & Stellar Dividend
National Fuel’s annual earnings are forecasted to dip -10% in fiscal 2023 but rebound and rise 11% in FY24 at $5.88 per share. Fiscal 2023 earnings estimates are still up 1% in the last 60 days with FY24 estimates up 5%. Furthermore, FY24 EPS projections would be a 101% increase over the last five years with earnings at $2.92 a share in 2020.
On the top line, sales are expected to rise 7% this year and jump another 8% in FY24 to $2.55 billion. Fiscal 2024 sales projections would represent 65% growth over the last five years with 2020 sales at $1.54 billion.
Accompanying National Fuel’s steady growth and more intriguing to investors is its 3.92% dividend yield which trumps its stellar industry average of 3.69% and towers over the S&P 500’s 1.50%.
Bottom Line
Among stocks that look poised for a rebound, National Fuel’s is one of the most intriguing. Now looks like a great time to buy with NFG shares making a strong case for being undervalued and investors are supported by its robust dividend which has led to an impressive total return over the last few years.
Bear of the Day:
With very expansive top and bottom line growth expected over the next few years, investors may be wondering why Sun Country Airlines stock is down -5% year to date.
The answer to this question lies in the trend of earnings estimate revisions which have largely declined, landing Sun Country’s stock a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Brief Overview
Founded in 1982, Minnesota-based Sun Country is an air carrier company that provides scheduled passenger, air cargo, and charter air transportation services primarily in the U.S. and Latin America among other international destinations.
Sun Country’s stock went public in March of 2021 and despite what appears to be very promising growth prospects has now plummeted -58% since its IPO.
Value Trap Concerns
Early investors may undoubtedly have the feeling that Sun Country’s stock is a value trap at the moment. This is because shares of SNCY trade very reasonably at 10X forward earnings with EPS forecasted to skyrocket 252% this year at $1.48 per share compared to $0.42 a share in 2022. Plus, fiscal 2024 earnings are projected to climb another 33% to $1.96 per share.
However, fiscal 2023 earnings estimates are actually down -20% over the last 60 days with FY24 EPS estimates falling -15%. Unfortunately, this alludes to more short-term weakness ahead and reconfirms why value trap concerns may be valid.
Bottom Line
On the surface, Sun Country Airlines stock may look cheap but judging from its performance since going public and the steep decline in earnings estimate revisions it may be wise to be cautious at the moment despite the company’s attractive outlook.
Additional content:
Keep an Eye on These 3 Energy Majors with Fortress Balance Sheets
The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The price of crude oil plunged to a negative $36.98 per barrel on Apr 20, 2020. However, with the rapid developments of vaccines, which led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration.
Currently, the WTI oil price is trading at more than $80 per barrel. The decision of OPEC+ panel to maintain the oil production cut, suggesting tight market supplies, is primarily aiding the crude price.
Thus, it’s pretty apparent that the business model of most energy players, by nature, is exposed to extreme volatility in commodity prices. Energy companies with robust balance sheets will be better positioned to navigate these uncertainties.
Hence, it would be wise for investors to keep an eye on promising stocks like Exxon Mobil Corp., Chevron Corp. and ConocoPhillips. All the stocks carry a Zacks Rank #3 (Hold) and have significantly lower debt exposure than the composite stocks belonging to the respective industries.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chevron and ExxonMobil have strong balance sheets, hence they can withstand adverse business environments. While XOM has a total debt-to-capitalization of 16.7%, the metric for CVX is 11.9%. Compared to the 24.8% debt-to-capitalization of composite stocks belonging to the Zacks Oil & Gas Integrated International industry, ExxonMobil and Chevron are better off.
In fact, both the leading integrated energy companies have been consistently witnessing lower debt-to-capitalization ratios than the industry over the past three years.
ConocoPhillips has achieved a promising production outlook by leveraging its extensive drilling inventory and diversified upstream assets. Compared to composite stocks belonging to the industry, the leading upstream energy company has considerably lower exposure to debt capital. This reflects that the company is better positioned to rely on its strong balance sheet to withstand any adverse business scenario.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
ConocoPhillips (COP) : Free Stock Analysis Report
National Fuel Gas Company (NFG) : Free Stock Analysis Report
Sun Country Airlines Holdings, Inc. (SNCY) : Free Stock Analysis Report
