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Tapestry, Brinker International, First Solar, ReneSola and Enphase Energy highlighted as Zacks Bull and Bear of the Day

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·10 min read
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For Immediate Release

Chicago, IL – December 20, 2021 – Zacks Equity Research Shares of Tapestry, Inc. TPR as the Bull of the Day, Brinker International, Inc. EAT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on First Solar, Inc. FSLR, ReneSola Ltd. SOL and Enphase Energy, Inc. ENPH.

Here is a synopsis of all five stocks:

Bull of the Day:

Formerly known as Coach, Inc., Tapestry is a luxury retailer that owns and operates the Coach, Kate Spade & Company and Stuart Weitzman brands. All three offer popular lifestyle products like handbags, clothes, shoes, and fragrance.

Shares Pop 10% on Great Q1 Earnings

Following the release of its fiscal first-quarter earnings report, TPR rallied 10% as investors cheered the better-than-expected results.

Revenue came in at $1.48 billion, up 26% year-over-year and 9% higher than pre-pandemic levels, while digital sales surged an impressive 50% over the prior-year period. Regionally, North American sales grew 40% and Chine sales increased 25%.

Gross profit margin jumped to 72.2% from 70.8%, and adjusted earnings came in at $0.82 per share, easily beating the consensus estimate of $0.69.

Because of the great results across the board, Tapestry’s Board of Directors approved an incremental $1 billion share repurchase program. The retailer also declared a quarterly cash dividend of $0.25 per share, with the goal to return $250 million to shareholders through dividends in 2022; shares now yield 2.43% on an annual basis

Can TPR Surge Higher?

Year-to-date, shares of Tapestry have climbed almost 33%. Estimates have been rising too, and TPR is a Zacks Rank #1 (Strong Buy) right now.

For fiscal 2022, eight analysts have revised their bottom-line estimate upwards over the last 60 days, and the Zacks Consensus Estimate has moved up 16 cents to $3.50 per share. Earnings are expected to grow about 17.8% compared to the prior year, and in 2023, Tapestry’s bottom line is forecasted to increase another 12.2%.

Looking ahead, Tapestry increased its revenue target from $6.4 billion to $6.6 million for the year, which would be a record for the company. Tapestry also upped its EPS range from $3.30 to $3.35 to $3.45 to $3.50.

Over the years, Tapestry’s many brands have built a large customer following. Combined with its bullish guidance for the rest of the year, this brand loyalty will likely help the retailer expand its footprint and grow its market share even as the Covid-19 crisis lingers.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep TPR on your shortlist.

Bear of the Day:

Based in Dallas, TX, Brinker International is a restaurant holding company that owns and operates casual dining establishments like Chili’s Grill & Bar and Maggiano’s Little Italy.

Q1 Earnings Disappoint

Back in October, Brinker reported fiscal 2022 first quarter results that were hampered by a Covid-19 surge in August and industry-wide labor and commodity challenges.

Like many companies in the service industry this year, Brinker struggled to find enough workers to hire since the extended unemployment benefits ended up paying many people more to stay home. Needing to entice workers, Brinker then hiked its pay rate, but last summer’s coronavirus outbreak exacerbated the company’s struggles.

Looking at the numbers, sales rose 18% to nearly $860 million, while operating income increased almost 5% year-over-year.

Brinker posted earnings of $0.34 per diluted share, up from $0.28 in Q1 2021.

Total company-owned comparable restaurant sales rose 17% year-over-year and 8% compared to the same period in fiscal 2020. Traffic at both Chili’s and Maggiano’s was also solid in the first quarter.

However, its restaurant operating margin sank over 10% because labor costs surged 150 basis points and commodity costs rose by 60 basis points.

Bottom Line

EAT is now a Zacks Rank #5 (Strong Sell).

10 analysts have cut their full year earnings outlook over the past 60 days. While Brinker’s bottom line is expected to increase about 16.4% year-over-year, the consensus estimate has significantly fallen, down over one dollar to $3.63 per share, for fiscal 2021. Next year’s earnings consensus has dropped as well, with eight analysts lowering their estimate.

Shares have been volatile so far in 2021. Year-to-date, EAT has fallen more than 37% compared to the S&P 500’s gain of 23%.

In light of last quarter’s challenges, management has taken steps to improve business and its growth outlook. CEO and President Wyman Roberts said that the current staffing and supply chain issues were “good problems to solve because they're largely within our control.”

Brinker is also confident in its strategic initiatives it’s been implementing that will drive traffic and increase top-line growth. The company currently expects annual revenues between $3.75 billion and $3.85 billion for 2022.

But, business may still be rocky for the time being, so investors should be cautious if they decide to add EAT to their portfolio right now.

Additional content:

U.S. Solar Market Sees Record Q3 Installations: 3 Stocks to Gain

 

The U.S. solar market, which witnessed a poor installation trend early last year during the onset of the coronavirus, has been showing improving trends since the third quarter of 2020. With a similar winning streak this year also, investors may keep stocks like First SolarReneSola and Enphase Energy on their watchlist.

Record Q3 Installation

Keeping up its recent robust trend, the U.S. solar market installed 5.4 gigawatts-direct current (GWdc) of solar capacity in the third quarter of 2021, as reported by the Solar Energy Industries Association, in its latest Solar Market Insight Report. The installations reflected a solid 33% increase over the third quarter of 2020 and led to the largest Q3 on record.

America’s residential solar installations exceeded 1 GWdc and more than 130,000 systems in a single quarter for the first time. Moreover, utility-scale solar set another record for third-quarter installations at 3.8 GWdc.

Such impressive statistics should encourage solar investors, considering the fact that with a total of 15.7 GWdc installed so far this year, the U.S. solar market remains on track to easily exceed its 20 GWdc target in 2021.

Looking Ahead

Overcoming crucial challenges like supply chain constraints and the resultant price hike along with project delays, the U.S. solar market has been successful in achieving impressive installation figures. The prospects are bright for U.S. solar stocks, buoyed by some favorable trade-related actions adopted by the government as well as vigorous investments in the solar space from across the world.

For instance, on Nov 10, the U.S. Department of Commerce dismissed petitions to issue anti-dumping and countervailing duties on solar cells from Malaysia, Thailand, and Vietnam. This came as a relief as the duties would have otherwise doubled solar module price in the United States, as predicted by Wood Mackenzie, thereby causing further disruption in the nation’s solar market.

As far as investment in the U.S. solar market is concerned, it is imperative to mention that the U.S. fiscal 2022 budget included an investment plan of $386.6 million in the nation’s solar energy technologies, reflecting a solid 38% improvement over the prior fiscal figure. While robust corporate investments have been a major growth driver, such a solid government-induced investment strategy surely would boost U.S. solar stocks’ growth in the coming days.

Stocks in Focus

Below are given three U.S. solar stocks, each with a Zacks Rank #3 (Hold), that boast solid growth prospects and thus one should keep an eye on them considering the aforementioned developments. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Solar: Based in Tempe, AZ, First Solar is a leading global provider of comprehensive PV solar energy solutions and specializes in designing, manufacturing, and selling solar electric power modules using proprietary thin-film semiconductor technology. As of Sep 30, 2021, First Solar had almost 7.9 GWdc of total installed Series 6 nameplate production capacity across all its facilities, which it projects to double to 16 GWdc in 2024.

Such production ramp-up expectations should enable First Solar to maintain its position as the largest U.S. solar module manufacturer. FSLR stock boasts a long-term earnings growth rate of 10.8%.

ReneSola: Currently based in Stamford, CT, ReneSola is a solar project developer and operator, with robust pipeline projects worldwide. Outside China, the United States continues to be a large and lucrative market for ReneSola. As of Sep 30, 2021, the company had mid-to-late-stage projects of 464 MW in the United States.

Additionally, ReneSola has projects under development in the states of Florida, Pennsylvania, Illinois, and California. The Zacks Consensus Estimate for SOL’s 2021 earnings indicates growth of 166.7% from the prior-year quarter’s reported figure.

Enphase Energy: Based in Fermont, CA, Enphase enjoys a strong position as a leading U.S. manufacturer of microinverter. Apart from microinverters, the company also designs, develops, manufactures and sells home energy solutions, which connect energy generation, energy storage and control and communications management on one intelligent platform.

At the onset of fourth-quarter 2021, Enphase introduced its all-in-one Enphase Energy System with IQ8 solar microinverters for customers in North America. With IQ8 being Enphase's smartest microinverter, so far, this launch surely expands its footprint in the United States. The Zacks Consensus Estimate for ENPH’s 2021 earnings implies growth of 65% from the prior-year quarter’s reported figure.

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Renesola Ltd. (SOL) : Free Stock Analysis Report
 
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