PACCAR and Ashland have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 17, 2023 – Zacks Equity Research shares PACCAR Inc. PCAR as the Bull of the Day and Ashland Inc. ASH as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Kinder Morgan, Inc. KMI, MPLX LP MPLX and The Williams Companies Inc WMB.
Here is a synopsis of all five stocks:
Bull of the Day:
PACCAR Inc. is a global leader in the design, manufacture, and customer support of high-quality premium trucks. In addition, PACCAR also offers finance and leasing services.
Analysts have taken their earnings expectations higher across the board for PACCAR as of late, helping land the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
The company resides within the Zacks Automotive – Domestic industry, which is currently ranked in the top 21% of all industries thanks to favorable earnings estimate revisions. As many know, roughly half of a stock's movement can be attributed to its group, helping to clarify the importance of targeting industries seeing improved outlooks.
Outside of the favorable earnings outlook, let's take a closer look at a few other characteristics of PACCAR.
Current Standing
The company is forecasted to witness notable growth in its current year, with the Zacks Consensus EPS Estimate of $8.54 implying 50% growth paired with a 20% revenue bump. Growth cools in FY24, with earnings and revenue forecasted to retreat by 20% and 9%, respectively.
Shares could interest those who prefer income, as PCAR shares currently yield 1.2% annually paired with a sustainable payout ratio sitting at 13% of the company's earnings. PCAR has displayed a shareholder-friendly nature, carrying a 5% five-year annualized dividend growth rate.
PACCAR has been firing on all cylinders as of late, exceeding both consensus revenue and EPS expectations in three consecutive quarters.
Just in its latest release on July 25th, the company penciled in a 9% EPS beat and reported revenue 2% ahead of the consensus. Undoubtedly a positive, revenue and net income reflected quarterly records, primarily driven by the company's industry-leading logistics performance.
PACCAR's revenue has recovered from 2020 lows, with sales now eclipsing pre-pandemic levels.
In addition, the company's 29.8% return on equity (ROE) is worthy of a highlight, reflecting a higher efficiency level in generating profits from existing assets relative to peers.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
PACCAR would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
Ashland Inc. is a leading specialty chemicals company serving various consumer and industrial markets, including automotive, construction, architectural coatings, adhesives, energy, food & beverage, and pharmaceutical.
Analysts have taken a bearish stance on the company's earnings outlook across the board, pushing the stock into an unfavorable Zacks Rank #5 (Strong Sell).
In addition, the company resides in the Zacks Chemical – Specialty industry, which is currently ranked in the bottom 22% of all Zacks industries. Let's take a closer look at how the company currently stacks up.
Current Standing
Ashland shares have struggled to find their footing in 2023, down roughly 19% and widely underperforming relative to the general market. Recent quarterly results haven't impressed the market, with ASH shares remaining on a downward trajectory.
Regarding the most recent quarterly release, ASH fell short of the Zacks Consensus EPS Estimate by more than 12% and reported revenue marginally below expectations. It reflected the company's second consecutive quarter of missing on both the top and bottom lines.
Top line growth has remained somewhat stagnant over the last several years.
Shares do pay a solid dividend, currently yielding 1.8% annually paired with a payout ratio sitting at 30% of the company's earnings. Dividend growth is there, too, with the payout growing by an annualized 8% over the last five years.
The company's growth is slated to taper in its current year, with Zacks Consensus Estimates suggesting an 18% pullback in earnings on 7.5% lower revenues. Still, growth resumes in FY24, with expectations suggesting 20% higher earnings and a 5% revenue bump.
Bottom Line
Negative earnings estimate revisions from analysts and recent negative quarterly results paint a challenging picture for the company's shares in the near term.
Ashland is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content:
3 Midstream Stocks to Gain Amid Energy Market Volatility
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, WTI oil price is trading at more than $80 per barrel.
The business model of most energy players, by nature, is exposed to extreme volatility in commodity prices. Hence, it would be wise for investors to keep an eye on midstream stocks like Kinder Morgan, Inc., MPLX LP and The Williams Companies Inc.
Midstream Energy Players to the Rescue
Although the fate of energy players is highly dependent on oil and gas prices, stocks in midstream space have lower exposure to volatility in commodity prices. This is because midstream players generate stable fee-based revenues since the transportation and storage assets are being booked by shippers for the long term. Thus, their business model is relatively low-risk, which indicates considerably less exposure to oil and gas prices and volume risks.
We have employed our Stock Screener to zero in on three stocks belonging to the midstream energy space that are well-poised to gain, and hence, investors should keep an eye on these stocks. All the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
3 Stocks in the Spotlight
Kinder Morgan: With its operating interests in oil and gas pipeline networks spread across 83,000 miles, KMI is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
Kinder Morgan is poised to grow on the back of its business model, which is relatively resilient to volume and commodity price risks.
MPLX: The firm has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflow. With a strong focus on returning capital to unit holders, MPLX repurchased $491 million of common units last year. Under its unit repurchase authorization, the partnership has yet to buy back the remaining $846 million of its units.
The Williams Companies: It is well-poised to capitalize on the mounting demand for clean energy since it is engaged in transporting, storing, gathering and processing natural gas and natural gas liquids.
With its pipeline networks spread across more than 30,000 miles, The Williams Companies connects premium basins in the United States to the key market. WMB's assets can meet 30% of the nation's consumption of natural gas, which is utilized for heating purposes and clean-energy generation.
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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
PACCAR Inc. (PCAR) : Free Stock Analysis Report
Ashland Inc. (ASH) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
MPLX LP (MPLX) : Free Stock Analysis Report
