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Smith & Wesson, JinkoSolar, Macy's, Urban Outfitters and DICK'S Sporting Goods highlighted as Zacks Bull and Bear of the Day

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·14 min read
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For Immediate Release

Chicago, IL – June 30, 2021 – Zacks Equity Research Shares of Smith & Wesson Brands, Inc. SWBI as the Bull of the Day, JinkoSolar Holding Co., Ltd. JKS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Macy’s, Inc. M, Urban Outfitters, Inc. URBN and DICK’S Sporting Goods, Inc. DKS.

Here is a synopsis of all five stocks:

Bull of the Day:

Smith & Wesson Brands is a Zacks Rank #1 (Strong Buy) that has an A for the Value Style Score and an A for the Growth Style Score.  As the aggressive growth stock strategist here at Zacks, I always lean to the growth side of things and when I see a strong growth score I know I am already on the right path.  Let’s take a deeper look at this stock in this Bull of the Day article.

Description

Smith & Wesson Brands, Inc. designs, manufactures, and sells firearms worldwide. Smith & Wesson Brands, Inc. markets its products through independent dealers, retailers, in-store retails, and direct to consumers; print, broadcast, and digital advertising campaigns; social and electronic media; and in-store retail merchandising strategies. The company was formerly known as American Outdoor Brands Corporation and changed its name to Smith & Wesson Brands, Inc. in June 2020. Smith & Wesson Brands, Inc. was founded in 1852 and is based in Springfield, Massachusetts.

Former Bull Of The Day

Before I get too deep into this Bull Of The Day article, I want to mention that I wrote SWBI as the Bull on May 10.  That was well before the most recent earnings report and I want to show how things have changed since the most recent report.

Clearly there was a big beat… and maybe those of you that are new to the Bull Of The Day will see that as much as this article is about the beat it is also a tool to learn how the Zacks Rank works.  It can also help you find great stocks that have the potential to outperform.

Earnings History

The first thing I do when I look at stock is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has been able to communicate to the market.  A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For SWBI, I see a good history of beating the Zacks Consensus Estimate.  There are four beats over the last four quarters.

The most recent quarter saw the company report EPS of $1.71 when $1.07 was expected.  The $0.64 beat translates into a positive earnings surprise of 59%.

The average positive earnings surprise over the last fours quarters works out to be 58%, which means that they are posting results that are more than what is expected.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher.  For SWBI, I see estimates moving higher.

This quarter has moved from $1.00 0 to $1.26.

Next quarter it jumped from $0.81 to  $1.05.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is even better for those numbers.

I see 2022 moving from $2.20 to $4.40 over the last 30 days.

The 2023 number has moved from $1.63 to $2.71 over the same time horizon.

Positive movement in earnings estimates like that are the reason that this stock is a Zacks Rank #1 (Strong Buy).

Valuation

Good growth is hard to find these days, but SWBI has it.  I see 38% topline growth in the most recent quarter and analysts are calling for more of the same.  That wrapped up a strong growth year, but now we are in a new fiscal year and the expectations have changed quite a bit.  The top line is expected on contract, not grow, by 18% this year and 28% next year.  Something like that, if Wall Street were to believe those estimates, would send the valuation much lower.

We do see the forward earnings multiple shrinking from 9x to 7x over the last month… but before we cast judgement, let’s look at the other metrics as well.  Price to book of 6x is more than the 4.6x level it was the last time I wrote about SWBI.  Price to sales has also moved higher to 1.3x from 1x since I wrote on the company.

If you believe that people are not looking to buy guns… then this isn’t a stock for you.  That said, many an ammunition name like Ammo (POWW) would be something you might be interested in.  As for me, I believe the growth estimates aren’t set in stone and demand for guns is still rather high.

Bear of the Day:

JinkoSolar Holding Company, a Zacks Rank #5 (Strong Sell), is seeing its stock price move higher after an earnings beat… but earnings estimates are moving lower. Let’s take a look at why that is the case in this Bear of the Day article.

Description

JinkoSolar Holding Co., Ltd. is a solar product manufacturer with operations based in Jiangxi Province and Zhejiang Province in China. JinkoSolar has built a vertically integrated solar product value chain from recovered silicon materials to solar modules. JinkoSolar's principal products are silicon wafers, solar cells and solar modules which are all along the photovoltaic value chain, with a global network spanning across Europe, North America and Asia.

Earnings History

The first thing I do when I look at stock is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has been able to communicate to the market.  A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of JKS, I see two beats, one miss and one quarter that didn’t have a Zacks Consensus Estimate.  This alone does not make the stock a Zacks Rank #5 (Strong Sell). 

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For JKS, I see estimates fluctuating.

This quarter has moved from $0.93 to $0.21.

Next quarter has seen a similar increase from $1.05 to $0.64.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is negative for those numbers.

There is no 2021 consensus number on the Zacks website.

The 2022 number has moved from $3.26 to $3.00 over the last week.

Negative movement in earnings estimates like that are the reason that this stock is a Zacks Rank #5 (Strong Sell).

Additional content:

3 Undervalued Retailers with Strong Zacks Ranks

This doesn’t seem like a time for value, does it? The pandemic is on its last legs and stocks are at new all-time highs. With pent-up demand and super accommodative monetary policies, who wants to invest in value right now?

Smart investors, that’s who.

Undervalued stocks may not stay undervalued for long, especially if they’ve got a high Zacks Rank. These are the stable names that could be among the biggest beneficiaries of a return to normal. And we’ve got a screen that will help you find them.

The Undervalued Zacks #1 Rank Stocks screen will help you find names that may be overlooked while most investors seek out growth. Take a look at three names that recently passed this screen. However, these positions can change quickly, especially in such hectic times, so make sure to also look at the full list for a broader view of the landscape.

Macy’s

Reports that department stores are dead seem to be greatly exaggerated. If they’re really pushing up daisies, then how can the retail – regional department stores space be in the top 2% of the Zacks Industry Rank? And how could Macy’s  deliver such a strong fiscal first quarter performance despite all the challenges from the pandemic and the Amazonification of retail?

Well, to be fair, it’s not all business as usual. M and other department stores need to evolve to stay relevant. That’s what the ‘Polaris Strategy’ is all about. The three-year plan is meant to better adapt to the new retail ecosystem by strengthening customer relationships, expanding assortments, accelerating digital growth, optimizing stores and cutting costs. And so far, it’s working!

Shares of M are up approximately 166% over the past 12 months, including nearly 70% this year alone. It has beaten the Zacks Consensus Estimate in each of the past seven quarters with an average surprise of nearly 162% over the past four.

Last month, M helped to cap off an extraordinarily strong earnings season with a fiscal first quarter report that really got the market’s attention. It reported earnings per share of 39 cents, which topped the Zacks Consensus Estimate by 195%.

Net sales of $4.7 billion jumped 56% year over year while also easily beating the Zacks Consensus Estimate at just under 4.5 billion. Perhaps most importantly, digital sales rose 34% in the quarter and contributed 37% to net sales. That’s how you compete with Amazon and a pandemic!

But perhaps the best evidence of a strong future for M is the raised outlook for 2021, which is still a pretty rare and noteworthy development in the waning days of covid. It now expects adjusted earnings between $1.71 and $2.12, instead of the previous guidance of 40 cents to 90 cents. Net sales are now seen at $21.73 billion to $22.23 billion, compared to the previous range of $19.75 billion to $20.75 billion.

Given the new outlooks, it’s no wonder that the Zacks Consensus Estimate for this year (ending January 2022) jumped 183% over the past 60 days to $2.15. Expectations for next year (ending January 2023) have improved more than 71% to $1.92 with plenty of time to continue growing moving forward.  

Urban Outfitters

Now that things are finally opening up, it’s time to buy some new clothes for the new normal. You don’t want a friend to see you for the first time in over a year wearing some old rags from 2019. That’s why a lot of retailers are reporting solid quarterly reports, including Urban Outfitters.

The company is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts. Its brands include Urban Outfitters, Anthropologie, Free People, BHLDN and Terrain. As part of the Retail – apparel & shoes space, URBN is in the top 16% of the Zacks Industry Rank.

Shares are up 135% over the past 12 months, including more than 57% so far in 2021.

Impressively, URBN showed sales growth across all brands and segments in its fiscal first quarter results, as its younger clientele are among the most impatient to get back to normal. Net sales in the quarter reached $927.4 million, which improved 57.6% from last year and beat the Zacks Consensus Estimate by more than 3%.

Comparable Retail segment net sales jumped 10%, thanks to strong double-digit growth in digital channel sales.

Earnings per share in the quarter reached 54 cents, which blew the doors off the Zacks Consensus Estimate of 16 cents. The positive surprise was more than 237%, bringing the four-quarter average surprise to just under 130%.

Analysts are feeling pretty good about the company’s future, given its focus on spend-thrifty younger consumers, the re-opening economy and the URBN’s track record of success. The Zacks Consensus Estimate for this year (ending January 2022) is now $2.47, which is up 30% over the past 60 days. Expectations for next year (ending January 2023) are $2.74, accounting for an advance of more than 20% over the past two months and year-over-year profit growth of 10.9%.  

DICK’S Sporting Goods

There were plenty of sports and outdoor activities that people could have enjoyed during the pandemic, including golf, tennis, cycling, fishing, rock climbing and, of course, barbequing. And you know what’s the best part of all these sports/activities? They’re going to be just as popular post-Covid… maybe even more so!

And in addition to all that, the closer contact sports that require face offs, huddles and jump balls will be getting back to business in schools and playgrounds all over the country. Therefore, whether we have to be socially distant or not, DICK’S Sporting Goods has everything you need to stay active.

The company operates as a major omni-channel sporting goods retailer with 730 stores in 47 states as of May 1. As part of the retail – misc space, it’s in the top 15% of the Zacks Industry Rank. Shares are up 151% over the past 12 months, including more than 83% so far this year.

DKS has also beaten the Zacks Consensus Estimate for four straight quarters now with an average surprise of more than 136% over that time. Most recently, earnings per share of $3.79 squashed the Zacks Consensus Estimate by 264%.

Likewise, net sales of $2.9 billion topped our expectations by approximately 31% and improved 119% year over year. Same-store sales were up 115%, which included an increase in eCommerce sales of 14%.

But perhaps the most telling aspect of DKS’ potential moving forward is its raised guidance for the year. The company now expects non-GAAP earnings of $8 to $8.70, which is quite a hike from the previous outlook of $4.40 to $5.2. Net sales are now seen at $10.515 billion to $10.806 billion, instead of somewhere between $9.544 billion and $9.935 billion.

Given such an upgrade in earnings expectations, the Zacks Consensus Estimate has seen some healthy advances over the past 60 days. Expectations for this year (ending January 2022) rose 66% to $8.25, while next year (ending January 2023) are up 25% to $6.63.

+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities

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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.


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JinkoSolar Holding Company Limited (JKS) : Free Stock Analysis Report
 
Macys, Inc. (M) : Free Stock Analysis Report
 
Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
 
DICKS Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
 
Smith & Wesson Brands, Inc. (SWBI) : Free Stock Analysis Report
 
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