For Immediate Release
Chicago, IL – Jan 31, 2018 – Zacks Equity Research highlights United Rentals, Inc. URIas the Bull of the Day, CF Industries Holdings, Inc. CF as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Shutterfly SFLY, Align Technologies ALGN and Advanced Micro Devices AMD.
Here is a synopsis of all five stocks:
Bull of the Day:
United Rentals, Inc. is on a roll as the North American economy heats up. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by over 40% in 2018.
United Rentals is the largest equipment rental company in the world with 997 rental locations in 49 states and every Canadian province.
In 2017, it acquired Neff Corporation for $1.3 billion which has boosted its employee count to 14,800. The company serves construction and industrial customers, utilities, municipalities, the oil and gas sector, homeowners and others.
A Strong Fourth Quarter to Close Out a Record Year
On Jan 24, United Rentals reported its fourth quarter and full year 2017 results. It met on the Zacks Consensus for the fourth quarter, reporting $3.34.
But the earnings meet was only a small part of the story.
Rental revenue rose 26.8% with owned rental revenue jumping 26.5%.
Time utilization increased 70 basis points year-over-year to 70%.
It's saw strength in the Trench, Power and Pump segment, where rental revenue rose 38.7% year-over-year and the rental gross margin improved by 230 basis points to 47.5%.
For the year, rental rates rose 2%. The company exceeded its upper-band of guidance on total revenue, adjusted EBITDA and free cash flow.
Tax Reform Implications
United Rentals is one company that will see a big benefit from the tax reform.
On a net basis, and leaving all other factors unchanged, United Rentals estimates it will benefit by at least $250 million.
It also expects an effective tax rate of about 25% in 2018.
Share Repurchase Program Re-Started
The company has had a $1 billion share repurchase program since November 2015. It was paused in October 2016 due to mergers and acquisitions.
At that time, it had completed $627 million of the program.
In 2017, it bought $28 million worth of stock, leaving $345 million remaining.
In 2018, it intends to complete the program. In other words, it's buying back $345 million in shares this year.
Analysts Are Bullish
There was a lot to like in the fourth quarter report and 2018 outlook.
The analysts are bullish about both 2018 and 2019.
The 2018 Zacks Consensus Estimate jumped to $15.05 from $13.48 after the earnings report. That's earnings growth of 42.1%.
Similarly, 2019's consensus rose to $17.11 from $15.20. That's further earnings growth of 13.7%.
Shares at Multi-Year Highs
Shares have been on a tear the last 2 years, rising 277.8%.
But because the earnings are also rising at a dramatic clip, this stock is still cheap.
Bear of the Day:
CF Industries Holdings, Inc.is trying to recover from unsustainable low fertilizer prices. This Zacks Rank #5 (Strong Sell) is expected to see positive earnings in 2018 after struggling in 2017.
CF Industries was founded in 1946 as a fertilizer brokerage operation. It's now a global leader in the manufacture and distribution of nitrogen products, both for agriculture and industrial customers. It's one of the largest fertilizer producers.
It operates nitrogen manufacturing plants in Canada, the UK and the US and distributes plant nutrients through a system of terminals, warehouses and transportation equipment in the Midwestern part of the United States.
CF Industries also owns a 50% interest in an ammonia facility in the Republic of Trinidad and Tobago.
A Big Beat in the Third Quarter
CF Industries has been battling low fertilizer prices the last few years. That appears to be abating.
On Nov 1, it announced its third quarter results and, for the second quarter in a row, beat the Zacks Consensus.
It reported a loss of $0.39 versus the consensus of a loss of $0.55.
Sales rose to $870 million from $680 million in the year ago period as higher sales volumes more than offset the lower average selling prices across most of its segments.
The lower prices still reflected the increased global nitrogen supply.
The company's average selling price for ammonia was $235 per ton in the third quarter of 2017 compared to $287 per ton in the year ago quarter. The average selling price for urea was $195 per ton compared to $203 per ton in the third quarter of 2016.
Additionally, the average selling price for UAN was also lower, at $144 per ton, in the third quarter of 2017 compared to $157 in the third quarter of 2016.
Price Outlook to Remain Volatile in 2018
In the third quarter of 2017, there was a rapid rise in the global price of urea from the unsustainable lows of the second quarter of the year.
Urea barge prices at New Orleans rose to $245 per ton at the end of the quarter from $160 per ton at the beginning thanks to significantly lower Chinese exports, higher energy and production coasts in parts of the world, a weaker US dollar and strong global demand.
Brazil continued to be a major purchaser of nitrogen with imports through the month of August up 50% year-over-year. India was also a big buyer.
2017 Estimates Still on the Decline
The analysts are still pessimistic about 2017. 1 estimate has been lowered in the last 30 days.
CF Industries is expected to see a loss of $0.34 in 2017 compared to a gain of $0.47 in 2016.
Q4 Earnings Parade from Tuesday: SFLY, AMD & More
Following today's closing bell, we see fresh quarterly earnings results from a host of new companies. As we've seen thus far in Q4 earnings season, results are generally better than expected, in some instances much more so.
For instance, Zacks Rank #1 (Strong Buy)-rated Shutterfly is up 15% in after-hours trading following its big earnings beat reported this afternoon: $3.37 per share ($3.11 allowing for the one-time tax charge) on $593.8 million in revenues easily zipped past the $2.91 per share and $557 million, respectively. This is the 4th straight earnings beat for the photo services company, and its 15% positive surprise in the quarter is improved on the trailing 4-quarter average surprise of +10.35%.
Align Technologies was also up big upon its initial posting of its quarterly results, which showed a 10-cent beat to $1.06 per share on $421.3 million in sales, which was well above the $395.5 million expected. This revenue actual also represents a year-over-year gain of 43.7%, with operating income in the quarter up 60% and Invisalign case shipments up 8% sequentially, 34% year over year.
Advanced Micro Devices also beat on top- and bottom-lines this afternoon, posting 8 cents per share and $1.48 billion in revenues which outpaced the 5 cents and $1.40 billion expected. The Silicon Valley semiconductor firm took a one-time tax credit of $18 million for the quarter, and guidance was up big to $1.55 billion in revenues compared to $1,25 analysts had been looking for. For more on AMD's earnings, click here.
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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.
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Shutterfly, Inc. (SFLY) : Free Stock Analysis Report
United Rentals, Inc. (URI) : Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
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Align Technology, Inc. (ALGN) : Free Stock Analysis Report
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