Sequans Communications, American Eagle, United States Steel, Nucor and VanEck Vectors Steel ETF highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – May 25, 2017 –Zacks Equity Research Sequans Communications (NYSE: SQNS – Free Report ) as the Bull of the Day, American Eagle (NYSE: AEO – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on United States Steel (NYSE: X – Free Report ), Nucor Corporation (NYSE: NUE – Free Report ) and VanEck Vectors Steel ETF (NYSEARCA: SLX – Free Report ).

Here is a synopsis of all four stocks and one ETF:

Bull of the Day :

Sequans Communications (NYSE:SQNS – Free Report ) is a Zacks Rank #2 (Buy) and has style scores that may have you thinking twice about this stock. The Growth Style Score is a “D” while the Value Style Score is an “F” – which is eerily similar to the grades I used to received when I was in school. I would tell my parents that the D’s and F’s meant I was “Doing Fine” but they didn’t buy it.

Sometimes I don’t buy the style scores, but I always buy what the Zacks Rank is selling. Let’s take a look at this stock and figure out why this is a Zacks Rank #2 (Buy) and if it should be something on your radar.

Description

Sequans Communications is a fabless designer, developer and supplier of 4G semiconductor solutions for wireless broadband applications. Solutions offered by the Company include baseband processor and radio frequency, or RF, transceiver integrated circuits, or ICs, along with signal processing techniques, algorithms and software stacks. Its solutions can be applied in devices like: smartphones; USB dongles; portable routers; embedded wireless modems for laptops, netbooks, tablets, and other consumer multimedia and industrial devices; consumer premises equipment, or CPE, such as residential gateways; and basestations. Sequans Communications S.A. is based in Paris, France.

Recent Earnings

On May 2, the company posted a loss of six cents, but the Zacks Consensus Estimate was looking for a loss of eight cents. The 2 cent beat was good for a 25% positive earnings surprise. As a result, investors pushed shares higher by more than 13% in the session following the report.

This was the second beat in the last three quarters and helped drive analysts to decrease the loss per share they expect for this year.

Estimate Movement

Back in January, the Zacks Consensus Estimate for 2017 was calling for a loss of 21 cents. That kicked higher to 20 cents in February and remained at that level through April. Following the better than expected results, the Zacks Consensus Estimate is now at a loss of 18 cents.

As we are nearly in June, investors are beginning to look more at 2018 numbers and things are looking good in that department for SQNS. In December the Zacks Consensus Estimate was calling for a loss of 3 cents, but the current number is a gain of 2 cents. That is a big swing and investors love to be in the stock as it moves from a loss to a gain on the bottom line.

Valuation

With negative earnings, the forward PE that we tend to rely on is not meaningful. The price to book multiple shows an absurdly highly 27x compared to a 4x industry average. This could be a result of different accounting standards, but more investigation is warranted.

The key to me is the revenue and earnings growth the stock is set to see in 2017 and 2018. Analysts are projecting revenue growth of 45% this year and 55% next year. They are also looking for earnings growth of 45% this year and 108% next year. Both sets of numbers are many, many multiples of the industry average.

With growth like that (for earnings and revenue) I am left to wonder how this stock has such a low style score. In any event, I see the growth coming and so do investors that like low priced stocks like this.

Bear of the Day :

American Eagle (NYSE:AEO – Free Report ) is a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day. Let’s take a look at the recent earnings, estimate moves and valuation.

Description

American Eagle Outfitters is a specialty retailer of all-American casual apparel, accessories, and footwear for men and women between the ages of 16 and 34.

Recent Earnings

On May 17, the company reported earnings of $0.16 and that was 1 cent below the Zacks Consensus Estimate. Despite a solid sales number, investors dumped shares of AEO, sending them lower by more than 16% in the session following the report.

This was the first earnings miss of the Zacks Consensus Estimate for AEO since 2011.

Estimates

The reason for the stock being a Zacks Rank #5 (Strong Sell) is usually found when looking at the earnings estimate moves. AEO had a Zacks Consensus Estimate for 2017 of $1.37 in December but that number slipped to $1.25 in March and is now down to $1.13.

The 2018 Zacks Consensus Estimate has also moved lower. The number was at $1.39 in February and has now dropped to $1.17.

Valuation

Retail stocks have been crushed over the last few months and AEO is no exception. The stock trades at just under 10x forward earnings. The price to book of about 2 is well below the industry average as in the price to sales multiple of 0.5x.

Additional content:

U.S. Steel (X) Gains on Analyst Upgrade: Is "Buy American" Back Again?

Shares of United States Steel (NYSE: X – Free Report ) rose on Wednesday morning following a key analyst upgrade. But are today’s gains a sign that investors have regained confidence in the “buy American” rhetoric, or will U.S. Steel slip again soon?

Last month, U.S. Steel fell off a cliff after it reported abysmal first quarter earnings. The steel company didn’t come close to reaching the Zacks Consensus Estimate of $0.32 per share, instead reporting a loss of $0.83 per share.

On top of that, U.S. Steel has greatly underperformed the Zacks categorized Steel-Producers industry. Its share price has dropped 47.4% over the last three months, while the industry fell just 13.1% overall.

So what is causing today’s mild rebound?

First, Credit Suisse analyst Curt Woodworth upgraded U.S. Steel to an “Outperform.” U.S. Steel was up as high as 4% on the news, but these gains slipped towards 2% as morning trading wore on. Still, traders are moving on the stock, which is trading more than 10 million shares over its normal 19.9 million volume.

Some of the current optimism rests on a buy-low stance. U.S. Steel’s stock rallied for months after Donald Trump was elected president on a pro-American manufacturing and infrastructure spending platform. But much of the steel sector has seen investors lose faith amid the seemingly constant D.C. turmoil.

However, today’s U.S. Steel jump might signal that some investors are renewing their faith that the summer construction season could at least see a small Trump boost. U.S. Steel shipped 3.65 million tons of steel in the first quarter of 2017, up from 3.59 million in the prior quarter.

Fellow steel company Nucor Corporation (NYSE: NUE – Free Report ) is also trading slightly higher on Wednesday. However, the broader VanEck Vectors Steel ETF (NYSEARCA: SLX – Free Report ) is down.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

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