U.S. Markets closed

Steelcase, Apollo Global Management, Lennar, Constellation Brands and Bed Bath & Beyond highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
Northrop Grumman's (NOC) Triton UAS supports a wide range of missions, including maritime ISR patrol, signals intelligence, and search, rescue and communications relays.

 

For Immediate Release

Chicago, IL – January 7, 2019 – Zacks Equity Research Steelcase SCS as the Bull of the Day, Apollo Global Management APO as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Lennar Corporation LEN, Constellation Brands STZ and Bed Bath & Beyond Inc. BBBY.

Here is a synopsis of all five stocks:

Bull of the Day:

Steelcase is a Zacks Rank #1 (Strong Buy) and it is the Bull of the Day.  Let's take a look at how this stock became a Zacks Rank #1 (Strong Buy) and why I think this play belongs in your portfolio.

Description

Steelcase Inc. is a designer and manufacturer of products used to create high-performance work environments. Its product portfolio includes furniture systems, seating, storage, desks, casegoods, interior architectural products, technology products and related products and services. The company reports two geographic furniture segments: North America and International.

Recent Earnings

On December 18, the company reported earnings that beat estimates.  I see EPS of $0.36 coming in $0.06 ahead of the Zacks Consensus Estimate for a 20% positive earnings surprise.

Importantly, the company will not report again until March, thus removing the chance of an earnings blow up in the coming weeks as earnings season gets started again.

This was the second straight beat of the Zacks Consensus Estimate, as the company reported a solid 24% positive earnings surprise in the previous quarter.

Estimates

Following the recent beat, I see the Zacks Consensus Estimate for fiscal 2019 moving from $1.13 to $1.17.  That upward movement is what the Zacks Rank is looking for.

The 2020 Zacks Consensus Estimate moved from $1.31 to $1.34.  Again, just what the rank likes to see.

I also wanted to point out that there is some solid implied earnings growth.  Add to that a good history of beating the number and higher estimates and you can see how this stock became a Zacks Rank #1 (Strong Buy).

Valuation

I see a 13x forward PE and that is really good considering there is nearly 17% topline annual growth. That means we are getting a good price here. I see a 2x price to book, so the value players love that too.

A 0.5x price to sales is the only thing that I don’t like here as I like that number to be closer to 1x. I see margins as being rather thin, 3.5% 6 months ago and inching higher to 3.6% and 3.99% over the next two reports.

End of the day, this is a conservative play with good value and an improving financial picture.

Bear of the Day:

Apollo Global Management is a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.   Let's take a look at how this stock became a Zacks Rank #5 (Strong Sell) and where it could be headed

Description

Apollo Management, L.P. operates as an alternative asset manager globally. The Company operates in three business segments: private equity, capital markets and real estate. It raises, invests and manages funds on behalf of pension and endowment funds, as well as other institutional and individual investors. Apollo Management, L.P. is headquartered in New York, New York.

Recent Earnings

On October 31, the company reported earnings that missed estimates.  I see EPS of $0.81 coming in $0.05 below of the Zacks Consensus Estimate for a 5.8% negative earnings surprise.

This was the third straight miss of the Zacks Consensus Estimate, as the company reported misses of 48% and 650% in previous reports.

Estimates

Following the recent miss, I see the Zacks Consensus Estimate for2018 moving from $1.35 to $1.14.  That downward movement is what the Zacks Rank is looking for and why the stock slipped to a Zacks Rank #5 (Strong Sell)

The 2019 Zacks Consensus Estimate moved from $3.13 to $2.90.  

I also wanted to point out that there is some solid implied earnings growth. Just because a stock is a Zacks Rank #5 (Strong Sell) doesn't mean there are good things to see too!

Additional content:

Upcoming Earnings to Watch: LEN, STZ, BBBY

Stocks whipsawed this week, as market bears raised concerns about sluggish manufacturing activity and Apple’s profit warning, while bulls touted the solid jobs report and trade war progress as reasons to remain optimistic about the economy.

Trade officials from the U.S. and China will meet next week in Beijing, and it feels like Wall Street is expecting the negotiations to go well. This, on top of another reminder that the domestic employment situation is historically strong, could help stocks rip higher.

Another important catalyst will be the upcoming earnings season. The bulk of Q4 reporting is still on the horizon, but next week will see a small wave of notable companies publishing their latest results, and that could help set the tone for the next month or so.

With that said, investors should remember to use the Zacks Earnings Calendar to plan out their schedules for earnings, dividend announcements, and other important financial releases. This handy tool is your perfect one-stop-shop to properly prepare for the market events that will have an impact on your own portfolio.

We have made this task even easier today by selecting a few of next week’s top reports to preview right now. Let’s take a closer look at a few of the earnings announcements due during the week of January 7.

1. Lennar Corporation  

The earnings reports really kick off next with the release of homebuilding giant Lennar’s latest quarterly results on Wednesday morning. The new homes market has faced its own batch of issues lately, and that has dragged LEN shares down more than 40% in the past year. The stock has tested a bottom, though, and it could always mount a recovery on the back of a strong earnings report.

Lennar is expected to post earnings of $1.93 per share and revenue of $6.53 billion, according to our Zacks Consensus Estimates. These results would represent year-over-year growth rates of 49.6% and 72.5%, respectively. Comparisons will continue to be lifted by the acquisition of CalAtlantic earlier this year. In recent weeks, earnings estimates for the current and upcoming fiscal quarters have been revised downward.

2. Constellation Brands  

Beer giant, and minority owner of cannabis producer Canopy Growth, Constellation Brands will also join the fray of earnings reporters on the morning of January 9. Constellation has struggled to generate momentum over the past year, with shares now down more than 28% after strong December selling. Investors will be hoping for the company to mount a new earnings surprise streak after beating estimates in its last quarterly report.

Analysts have Constellation’s results pegged at $2.04 in earnings per share and $1.91 billion in quarterly revenue. These figures would mark growth of 2.0% and 6.2% from the prior-year period, respectively. Investors will be interested in Constellation’s plans to spark new growth in the near future, so look for management to address questions about its cannabis positioning during the earnings conference call.

3. Bed Bath & Beyond Inc.  

In many eyes a relic of retail’s past, the struggling Bed Bath & Beyond will be hoping for some respite when it posts its latest earnings results after the bell on January 9. Down over 45% in the past year and 83% in the past five years, investors are holding on to the last sliver of hope that the retailer can learn to compete in today’s industry environment. BBBY will need to prove that it can with a strong report next week.

Analysts don’t have the most optimistic view of the to-be-reported quarter, with earnings expected to fall 61.4% year over year to reach just $0.17 per share. Revenue is projected to inch 3% higher to touch $3.04 billion for the quarter, according to our consensus estimate.

The Hottest Tech Mega-Trend of All

 Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

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
 
Constellation Brands Inc (STZ) : Free Stock Analysis Report
 
Lennar Corporation (LEN) : Free Stock Analysis Report
 
Apollo Global Management, LLC (APO) : Free Stock Analysis Report
 
Steelcase Inc. (SCS) : Free Stock Analysis Report
 
Bed Bath & Beyond Inc. (BBBY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.