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SunPower, 3M, Apple, Mondelez and Advanced Micro as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release     

Chicago, IL – May 1, 2019 – Zacks Equity Research highlights SunPower (SPWR) as the Bull of the Day and 3M Company MMM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc. AAPL, Mondelez MDLZ and Advanced Micro Devices AMD.

Here is a synopsis of all five stocks:

Bull of the Day:                                              

SunPoweris a Zacks Rank #2 (Buy) stock with a Value Style Score of B and a Growth Style Score of D. This solar name is benefitting from higher oil prices which sends consumers and businesses n search of alternatives. Solar is not a new alternative, but I am seeing a much bigger push to make solar part of your life.

There is of course the solar offering from Tesla, but more lately I have seen partnerships between solar names and places like Comcast, AT&T and a few others. The marketing pushes via those big outlets tell me that supply for the solar panels is there and that was one of the big red flags in this space for a long time.

Earnings History

I see a really good earnings history here with each of the last four quarters coming in ahead of the Zacks Consensus Estimate. The average positive earnings surprise has been 53% so they are beating the number in a big way each time.

Estimate Revisions

A big part of the Zacks Rank is the move in earnings estimates. SPWR has seen numbers move around a lot, with the current quarter looking at a loss of 33 cents, and the full year 2019 coming in at a loss of 41 cents. Next quarter is going to be a loss of 11 cents, which tells me that profitability is coming in the second half of the year.

The 2020 number has moved from a gain of 11 cents 60 days ago to a gain of 20 cents. That is the move that has put the Zacks Rank at a #2.

Valuation

The valuation here isn’t the best, but it isn’t the worst. I know there is a B for Value, but I do not make decisions based on the style scores. There is no PE at the trailing and forward numbers are all negative right now. Price to book comes back as an NA, so we only have the 0.6x price to sales number.

What we do know is that the swing to profitability is coming… and when that happens, stocks tend to lift in a big way as more potential investors will take a deeper look at a name like this.

Bear of the Day:

3M Company has slipped to a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.  The company recently posted earnings and they were not good.  MMM also announced that 2,000 employees would be laid off, and this is the type of thing that can spark a recession.

Description

3M is a diversified technology company which applies science in collaborative ways to improve lives daily. The company's innovation aims to tackle some of the world's most pressing areas of concern: Raw Materials, Water, Energy & Climate, Health & Safety, Education & Development. 3M company conducts operations in Automotive, Commercial Solution, Communications, Consumer, Design & Construction, Electronics, Energy, Energy, Health Care, Manufacturing, Mining, Oil & Gas, Safety and Transportation and other markets. 3M owns substantially all of its physical properties and serves customers worldwide. The Company businesses share technologies, manufacturing operations, marketing channels, and other resources. 3M is headquartered in St. Paul, Minnesota

Recent Earnings

On April 25, the company reported EPS of $2.23, which was $0.27 below the Zacks Consensus Estimate for a negative earnings surprise of 10.8%.  That alone is bad, but it gets worse.

Revenues were $7.86B and below the $8.02B estimate, but of the consensus that made up that estimate, not a single analyst could call that revenue number a strong one.  It was below all of the estimates.

The company also moved to cut 2000 jobs as a result of a slower than expected 2019.  Related to that move, the company will post a pre tax charge of $150M or $0.20 per share.

Guidance

MMM guided Wall Street to FY19 EPS of $9.25 - $9.75, down from $10.45 - $10.90 when the consensus was looking for $10.52.

That number has now slid to $9.85... but could go lower if things get stickier.

Additional content:

Apple (AAPL) Beats & Raises; AMD, Mondelez Also Outperform

Apple Inc. shares leaped 5% in after-hours trading Tuesday following beats on top and bottom lines for its fiscal Q2 earnings release following the closing bell: $2.46 per share was better than the $2.37 expected (though still beneath the $2.73 per share in the year-ago quarter). Sales rose to $58.02 billion from the $57.55 billion expected, even with iPhone sales in the quarter slightly below projections of 31.1 million units.

Services revenues gained 16% year over year, while gross margins posted 63.8%. Business in China was down 22% year over year to $10.22 billion, but CEO Tim Cook explains that the month of March was much stronger than the earlier parts of the quarter, and he remains hopeful for a new trade deal between the U.S. and China. Guidance was bolstered to 37-38 cents in Q3 earnings, with revenues higher than expected at $52.5-54.5 billion.

International food distributor Mondelez reported Q1 earnings after Tuesday's closing bell, with results better than expected: 65 cents per share outperformed the 61 cents in the Zacks consensus, while revenues in the quarter of $6.54 billion surpassed the $6.43 billion estimate. Organic revenue blew past expectations to 3.7% in the quarter from the estimated 2.3%. The Oreos maker saw particular strength in its Emerging Markets category. Shares have shot up nearly 2% in late trading.

Semiconductor major Advanced Micro Devices also outperformed expectations, albeit barely: $0.06 per share beat the Zacks estimate by a penny, while sales in the quarter reached $1.27 billion from the $1.26 billion consensus. Gross margins were in-line expectations at 41% for the Zacks Rank #3 company. Yet shares jumped 6.3% on the news in the aftermarket.

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