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W.R. Berkley and CarMax have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – November 21, 2022 – Zacks Equity Research shares W.R. Berkley WRB as the Bull of the Day and CarMax, Inc. KMX as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Wingstop Inc. WING, Texas Roadhouse, Inc. TXRH and Dine Brands Global, Inc. DIN.

Here is a synopsis of all five stocks:

Bull of the Day:

The Zacks Finance sector has been relatively strong in 2022, down roughly 12% vs. the S&P 500’s decline of 17%.

A company that many are familiar with residing in the sector, W.R. Berkley, has seen its near-term earnings outlook turn bright over the last several months, helping land the stock into the highly-coveted Zacks Rank #1 (Strong Buy).

W.R. Berkley is one of the nation’s most extensive commercial lines property casualty insurance providers. The company offers various insurance services, from reinsurance to workers’ compensation third-party administrators (TPAs).

Let’s take a deeper dive into how the company currently stacks up.

Share Performance & Valuation

WRB shares have been notably hot year-to-date, tacking on more than 30% in value and crushing the S&P 500’s performance.

And over the last three months, WRB shares have continued on their market-beating trajectory, up nearly 9%.

The favorable price action of WRB shares in 2022 indicates that buyers have been consistently present, something we can’t say for the majority of stocks in a historically-volatile 2022.

Shares currently trade at a 16.8X forward earnings multiple, nicely beneath the 20.2X five-year median and highs of 21.5X in 2021.

W.R. Berkley sports a Style Score of a B for Value.

Growth Outlook

W.R. Berkley’s growth projections are hard to ignore, with earnings forecasted to climb a double-digit 26% in FY22 and a further 10.5% in FY23.

The projected earnings growth comes on top of forecasted Y/Y revenue growth of 16% and 10.3% in FY22 and FY23, respectively.

Dividends

For those who like income, the company pays out a small dividend; WRB’s annual dividend yield comes in at 0.5%, lower than its Zacks Finance sector average.

While the yield may be on the lower end, the company’s dividend growth picks up the slack – WRB has upped its dividend nine times over the last five years, translating to a robust 9.8% five-year annualized dividend growth rate.

Quarterly Performance

WRB has impressed with its quarterly results as of late, exceeding both the Zacks Consensus EPS and Sales Estimates in back-to-back quarters.

In its latest release, the company penciled in a sizable 23.2% bottom-line beat paired with a 2.7% sales surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.

Bottom Line

One of the best ways investors can find expected winners is by utilizing the Zacks Rank – one of the most potent market tools out there that gives investors a massive advantage.

The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.

W.R. Berkley would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).

Bear of the Day:

The Zacks Retail and Wholesale sector has fallen on tough times in 2022, down nearly 25% and lagging behind the general market by a fair margin.

A company residing in the realm, CarMax, Inc., has seen its near-term earnings outlook turn sour over the last several months, pushing the stock into a Zacks Rank #5 (Strong Sell).

CarMax Inc. is the largest retailer of used vehicles in the U.S. and one of the nation's largest operators of wholesale vehicle auctions. The company operates under two reportable segments: CarMax Sales Operations and CarMax Auto Finance.

Let’s take a closer look at the company to see how it shapes up.

Share Performance

KMX shares have tumbled in 2022, down nearly 50% and coming nowhere near the S&P 500’s performance.

And over the last three months, the adverse price action of KMX shares has continued, with shares losing more than 30% in value and again widely lagging behind the S&P 500.

Clearly, sellers have had a tight grip on shares.

Quarterly Performance

CarMax has posted mixed earnings results as of late, falling short of the Zacks Consensus EPS Estimate in three of its last five quarters. In its latest quarter, KMX fell short of earnings expectations by more than 40%.

Revenue results have also left some to be desired as of late, with the company falling short of revenue estimates in back-to-back quarters. Below is a chart illustrating KMX’s revenue on a quarterly basis.

Growth Outlook

The company’s earnings are forecasted to take a sizable hit in its current fiscal year (FY23); the Zacks Consensus EPS Estimate of $4.02 indicates a Y/Y decline of more than 40%.

Still, the company’s top-line is in better standing, with estimates suggesting Y/Y upticks of 0.3% and 1.4% in FY23 and FY24, respectively.

Bottom Line

Negative earnings estimate revisions and weak quarterly results paint a less-than-ideal picture for the company in the short term.

CarMax, Inc. is a Zacks Rank #5 (Strong Sell), telling us it has a weak near-term earnings outlook.

Investors should pivot to stocks that either carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) – these stocks have a much stronger earnings outlook and potential to deliver explosive gains in the short term.

Additional content:

3 Restaurant Stocks to Buy on Continued Growth in Sales

Rising commodity prices haven't deterred Americans from spending at restaurants. While the retail sector has somehow managed to stay afloat amid soaring inflation, the restaurant industry has so far managed to put up a decent show, with sales surging almost every month. This, at the same time, proves that people have once again started spending more on services and less on goods.

Sales at U.S. restaurants are expected to get a further boost during the holiday season as more people will be dining out frequently. Also, the restaurant industry has been making solid job additions over the past few months in order to meet customer demand.

Given this scenario, stocks like Wingstop Inc., Texas Roadhouse, Inc. and Dine Brands Global, Inc. are likely to benefit in the near term.

Restaurant Sales Jump in October

The Commerce Department said on Nov 16 that sales at U.S. bars and restaurants increased an impressive 1.6% in October. This comes as overall retail sales increased 1.3% in October on a month-over-month basis.

The retail sector has been struggling amid soaring commodity prices, which has compelled consumers to cut down on spending. However, the restaurant industry has managed to put up an impressive show, with sales increasing almost every month.

October's jump in restaurant sales follows a 0.5% rise in September.

Since the economy reopened after the COVID-induced lockdown, people have been dining out more frequently, thus the steady increase in sales at bars and restaurants doesn't come as a surprise.

The restaurant industry suffered the most in March and April 2020 as a result of the coronavirus outbreak. After that, sales began to increase again, but the recovery was unstable because COVID-related restrictions remained in place and many people were still reluctant to confidently engage in social interactions.

Sales have finally returned to their pre-pandemic levels and are expected to increase in the coming months, marking the sector's first signs of recovery.

Additionally, consumers spend more on services than on things during normal times. This changed during the pandemic, with people spending more on goods than services as there weren't many options.

However, people are once again spending more on services. Sales at bars and restaurants are the only service category in the retail sales report. This has also been boosting sales at bars and restaurants.

Challenges Aplenty

Rising prices are posing a major threat to sales growth, and restaurant operators are making an attempt to combat these issues. Restaurant owners are emphasizing digital innovation, making efforts to boost sales, and adopting cost-cutting measures, which have been helping the industry's recovery.

Digital innovation is now essential due to the Internet's expanding significance. Revenues have increased as large restaurant chains are regularly using delivery services and online platforms to increase sales.

The sector has also been adding many jobs. According to the Labor Department, the leisure and hospitality sector added 35,000 jobs in October. However, the industry is still 1.1 million jobs below the pre-pandemic level.

That said, more jobs are likely to be added during the holiday season as sales are expected to get a further boost, which will aid in the industry's recovery.

Our Choices

Given this situation, it would be ideal to invest in these four restaurant stocks. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Wingstop Inc. franchises and operates restaurants. WING's operates through the Franchise segment and the Company segment. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.

Wingstop's expected earnings growth rate for the current year is 22.2%. The Zacks Consensus Estimate for current-year earnings has improved 5.1% over the past 60 days. WING currently sports a Zacks Rank #1.

Texas Roadhouse, Inc. is a full-service, casual dining restaurant chain, which offers assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. TXRH operates restaurants under the Texas Roadhouse and Aspen Creek names. Texas Roadhouse also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches.

Texas Roadhouse's expected earnings growth rate for the current year is 16.3%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days. TXRH currently has a Zacks Rank #2.

Dine Brands Global, Inc. is a full-service dining company. DIN operates and franchises restaurants under both the Applebee's Neighborhood Grill & Bar and IHOP brands. Dine Brands Global's Applebee's restaurants offer casual food, drinks, casual dining, and table services and IHOP restaurants provide full-table services, and food and beverage offerings.

Dine Brands Global's expected earnings growth rate for next year is 14.1%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. DIN currently has a Zacks Rank #2.

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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/performancefor information about the performance numbers displayed in this press release.


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DINE BRANDS GLOBAL, INC. (DIN) : Free Stock Analysis Report
 
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
 
Texas Roadhouse, Inc. (TXRH) : Free Stock Analysis Report
 
CarMax, Inc. (KMX) : Free Stock Analysis Report
 
Wingstop Inc. (WING) : Free Stock Analysis Report
 
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