For Immediate Release
Chicago, IL – December 09, 2016 – Zacks Equity Research highlights Bank of America (NYSE:BAC – Free Report) as the Bull of the Day and Bloomin' Brands (NASDAQ:BLMN – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Williams Partners LP (NYSE:WPZ –Free Report),Advanced Materials (NASDAQ:AMAT –Free Report) and Vale SA (NYSE:VALE – Free Report).
Here is a synopsis of all five stocks:
Bank of America (NYSE:BAC – Free Report) is on some kind of unbelievable run. The stock is up about 35% over the last month and investors are bidding it up looking for more! Let's take a look at the fundamentals of this stock and explore why it is a Zacks Rank #1 (Strong Buy) and the Bull of the Day.
Why I Like It
This is a large-cap stock is a market leader.
A good earnings history when compared to the Zacks Consensus Estimate.
Higher interest rate environment is good for the banks
The stock has seen a big "Trump Bump" now if the economy gets one too this stock will continue to move higher.
Follow Brian Bolan on twitter at @BBolan1 and on StockTwits at the same address.
The Recent Numbers
I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. BAC reported the September 2016 quarter back in mid October.
The most recent quarter was a beat on top and bottom. The company posted EPS of $0.41 when the Zacks Consensus Estimate was calling for $0.34. That translates into a positive earnings surprise of 20.6%.
Revenue came in $836M ahead of expectations for a 4% positive revenue surprise. As a result, the stock was bid up by more than 1.6% in the session following the report.
Description
Bank of America is a financial services company. Bank of America Corp (NYSE:BAC) was founded in 1874 and is based in Charlotte, North Carolina.
Earnings History
The company has a strong history of beating the Zacks Consensus Estimate. There has only been one miss in the last six reports. The rest of the reports were all beats.
Bloomin' Brands (NASDAQ:BLMN – Free Report) recently met the Zacks Consensus Estimate but is now a Zacks Rank #5 (Strong Sell) and is the Bear of the Day. Let's take a look at why this is the case.
Description
Bloomin' Brands, Inc. is a casual dining restaurant company with a portfolio of differentiated restaurant concepts. It has five concepts: Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse and Wine Bar and Roy's. The Company offers its products and services through company owned and franchised locations throughout the United States and internationally. Bloomin' Brands, Inc. is based in Tampa, Florida.
Recent Earnings
BLMN met the Zacks Consensus Estimate of $0.20 in the most recent report. Revenue came in just a shade below the Zacks Consensus Estimate at $1.005B compared to $1.009B.
The earings meet and small miss on top was encouraging news for investors who bid the stock higher by 2.25% in the session following the release.
Estimates
The Zacks Consensus Estimate has been falling over the last few months. The FY16 estimate stood at $1.40 in June and then fell to $1.34 in September. The estimate currently states at $1.31.
The decline in estimates is the main reason this is a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Additional content:
Look At That Froth!
This is an excerpt from John Blank’s latest Market Strategy report. To access the entire PDF, click here.
This 2200 S&P 500 Value Looks OK Only on an Optimistic Forward Look
Bottoms-up strategists have valued S&P 500 earnings at $118 in 2016. Tie on a 16 forward P/E to do that “fair value” math. Hence, 1904 on the S&P 500 looked to be a decent “fair value” lower bound.
Above 2,200 on the S&P 500, early DEC shows us the latest EPS “fair value” calculation has support solely on a forward look.
Consult earnings yield “fair value” math too. The risk-free 10-year U.S. Treasuries offered a 1.80% rate on Nov. 1st. This rose to 2.4% in early DEC. Historically, a stock earnings yield is +3% higher than this 10-year U.S. Treasury rate. Meaning U.S. stocks should offer a 5.4% return.
So, turn the S&P 500 P/E ratio on its head to attain a stock index’s earnings yield. Divide $118 in projected earnings for 2016 by an S&P 500 trading at 2200. That begets a 5.36% earnings yield. After a +32% rally in 2013, and +12% returns in 2014, evidence is getting sketchy on ongoing S&P 500 index undervaluation, unless you look ahead very bullishly.
The latest 12-month EPS “Look Ahead” on the S&P 500 has $131.59. Multiply by 16. You get an S&P 500 “fair value” calculation at 2105.
The Russell 2000 May Correct
The “risk on” rally took the Russell 2000 (RUT) from 1000 in Feb to near 1350 in late NOV. The RUT trades at 1352 as I write on Dec. 7th. “Risk-on” rallies usually show small cap and international stock indexes move together.
My DEC call: Hold off a bit buying the RUT, but not international… on excess optimism. A big RUT run has taken place. The way forward is not as attractive for a few weeks/months on the RUT. A RUT pullback should happen.
Rates and Currencies Tell Independent Story on Their Own
Outside the U.S., the euro is 1.08 again. A 1.08 euro/USD rate came into play late last year. The rate was 1.13 last fall. Euro parity may now happen, as earlier consensus projected. European share indexes have recovered weakly after Brexit.
Does a Fed Taper tantrum aka 2013 hit in 2017? That’s unlikely. We are clearly climbing the wall of worry outside the U.S. The U.S. is solidly at full employment.
Risks -- on China -- have changed complexion. NOTE: The renminbi keeps getting cheaper… on its own! The stealth gov’t renminbi -2% depreciation happened during Brexit. Now, the gov’t in China is worried about unchecked capital flight from China.
Another KEY: Enhanced Europe “QE.” Negative rates and fiscal stimulus are on in Japan. These two big macro players hold global rates down and keep stocks aloft.
Zacks Sector/Industry/Company Telescope: OPEC Demonstrates Power
The latest Zacks Industry Ranks show slim pickings – Energy is Very Attractive. Info Tech is Attractive. Semiconductors remain red hot. Materials and Financial sectors went to Market Weight. Look into Steel and Metals Non-Ferrous. Health Care went to Market, too. Consumer Staples and Discretionary are at the back of the line at the moment.
(1) Energy stays Very Attractive. Tops are Coal (benefits from Trump), Drillers and the E&P guys. Oil industries will get more lift from the OPEC deal. That will give EPS lift next month.
Top Zacks #2 Rank (BUY) Stock: Williams Partners LP (NYSE:WPZ – Free Report)
This $20 billion market cap stock currently offers a 9.7% annual dividend and carries a Zacks VGM score of A.
Williams Partners L.P. is a master limited partnership. The company is engaged in gathering, processing, transportation and storage of natural gas and natural gas liquids. It operates primarily in U.S. and Canada. Williams Partners L.P., formerly known as Access Midstream Partners, L.P., is headquartered in Oklahoma City.
(2) Info Tech stays Attractive. Again: Semiconductors are hot.
Top Zacks #1 Rank (STRONG BUY) Stock: Advanced Materials (NASDAQ:AMAT – Free Report)
This $34 billion market cap stock also offers a Zacks VGM score of A.
Applied Materials (NASDAQ:AMAT) develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry.
Customers for these products include semiconductor wafer manufacturers and semiconductor integrated circuit manufacturers, who either use the ICs they manufacture in their own products or sell them to other companies.
(3) Materials fall from Very Attractive to Market Weight. The boost to China manufacturing PMIs is restricted to Steel and Metals-Non Ferrous. All other industries fell into a muddle-through status.
Top Zacks #1 Rank (STRONG BUY) Stock: Vale SA (NYSE:VALE – Free Report)
This $45 billion market cap stock also offers a Zacks VGM score of A.
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 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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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BANK OF AMER CP (BAC): Free Stock Analysis Report
BLOOMIN BRANDS (BLMN): Free Stock Analysis Report
WILLIAMS PTR LP (WPZ): Free Stock Analysis Report
APPLD MATLS INC (AMAT): Free Stock Analysis Report
VALE SA (VALE): Free Stock Analysis Report
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