For Immediate Release
Chicago, IL – May 26, 2016 – Zacks Equity Research highlights Applied Materials (NASDAQ:AMAT) (AMAT) as the Bull of the Day and Agrium (AGU) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Pfizer Inc. (NYSE:PFE) (PFE) and KB Home (KBH).
Here is a synopsis of all four stocks:
Few companies have managed to surprise this earnings season and soar higher following the release of their results. However, one that definitely was an exception to this rule was Applied Materials (AMAT).
This technology company provides services, manufacturing equipment, and software to companies in the semiconductor, display and solar PV industries around the globe and it edged out earnings estimates for its most recent quarter. The company then saw shares surge by double digits following this bullish release and a solid outlook, which was in stark contrast to many companies this earnings season which beat estimates and actually fell on their reports.
AMAT is now up about 24% in the past three months, which is roughly triple the S&P 500 in the time frame. And with this type of outperformance, investors have to be wondering if this trend can continue heading into the summer.
The price action is definitely a concern for those considering jumping in now, but the PE is still below 16, and the growth outlook remains robust. Additionally, analysts seem to be believers in the stock, as they have been ratcheting up estimates lately, a potentially great sign for AMAT investors.
Recent Estimates
In just the past week, seven estimates have marched higher for the current quarter and the next quarter, while we have seen a similar amount move higher for the full year and the next year time period too. And best of all, not a single estimate has moved lower, suggesting universal agreement from analysts on AMAT’s near term prospects.
But not only have estimates moved higher, but the magnitude of these revisions have also been impressive. In the past week, the current quarter consensus estimate has surged by over 30%, while the full year has seen a 16% move in the past week alone too.
And with a great history in earnings season which includes meeting or beating estimates every time since August 2013, it is pretty clear that AMAT knows how to manage expectations. In fact, that miss in August of 2013 was the only such time that AMAT has failed to meet or beat the consensus estimate in the past five years.
We last wrote up Agrium (AGU) as a ‘Bear of the Day’ about a month ago, and since then, the company has posted a fresh earnings report. The company actually managed to beat earnings estimates in its release a few weeks ago, including a surprise profit.
While this appears bullish, it is important to note that sales struggled in several major segments, and overall gross profit was sharply lower when compared to the year ago time frame. Additionally, AGU ratcheted down expectations for its full year profit, pushing down EPS estimates to between $5.25-$6.25 a share, down from their prior view of $5.50-$7.00 a share. And while AGU boosted the range of crop nutrient sales a tad to the optimistic side, the company did cut full year potash production levels too.
Given these numbers, it shouldn’t be too surprising that AGU finds itself back in bear of the day territory. In fact, analysts have once again embarked on a series of estimate cuts which could continue to spell doom for AGU shares in the near term.
Recent Estimates
In the past thirty days, five estimates have gone lower for the current quarter, while not a single one has been revised higher. We see a similar trend for the current year and next year time frames too, with six estimates going lower in the past thirty days and not a single one higher.
The magnitude of these cuts has also been pretty severe, as the current quarter and current year consensus estimates have fallen by over 7% in the past few months. Meanwhile, the next quarter period is especially poor, with the consensus falling by about 27% in the past two months alone.
Thanks to these big cuts in expectations, current quarter and current year growth rates are expected to come in at -15% for each time period. Additionally, the next quarter period is looking at a nearly 42% drop in earnings, when compared to the year ago time frame.
With this kind of outlook, a strong earnings beat is pretty meaningless as investors are focusing in on the future instead. And it definitely doesn’t seem great for this company, or the industry at large, given that it has a bottom 10% industry rank as well.
No wonder we currently have AGU as a Zacks Rank #5 (strong sell) and are looking for more underperformance from this stock in the near term.
Additional content:
Top Stock Picks for the Week
Zacks strategist Neena Mishra discussed these two stocks to buy for today:
Pfizer Inc. (PFE), is a research-based, global pharmaceutical company that discovers, develops, manufactures, and markets medicines for humans and animals. The Company's diversified global healthcare portfolio includes human and animal biologic and small molecule medicines and vaccines, as well as nutritional products and consumer healthcare products. Pfizer's Animal Health business unit discovers, develops and sells products for the prevention and treatment of diseases in livestock and companion animals. It sells its products to wholesalers, distributors, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, veterinarians, livestock producers, and grocery and convenience stores. Pfizer Inc. is headquartered in New York.
KB Home (KBH) , is a builder of single-family homes with domestic operations in several western states, and international operations in France. Domestically, the company builds innovatively designed homes which cater primarily to first-time homebuyers, generally in medium-sized developments close to major metropolitan areas. Internationally, the company also builds commercial projects and high density residential properties such as condominium complexes.
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
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.
AGRIUM INC (AGU): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
KB HOME (KBH): Free Stock Analysis Report
Original post