For Immediate Release
Chicago, IL – August 26, 2016 – Zacks Equity Research highlights Central Garden and Pet (CENT) as the Bull of the Day and Janus Capital (JNS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Copa Holdings (CPA), Skywest Inc. ( SKYW) and ANA Holdings Inc. (ALNPY).
Here is a synopsis of all five stocks:
Central Garden and Pet (CENT) has beaten the Zacks Consensus Estimate for earnings and revenue in each of the last five quarters. The most recent report was a yet another example of a solid beat. Let's take a look at the quarter, the earnings history, estimate revisions and of course the valuation. I think you will like what you see from this Zacks Rank #1 (Strong Buy) stock seeing as it is the Bull of the Day.
The Numbers
CENT beat the Zacks Consensus Estimate of $0.43 when it reported $0.48 in the first week of August. This $0.05 beat was good for a 11.6% positive earnings surprise.
The topline was also impressive with the company delivering $515M in sales when the Zacks Consensus Estimate was looking for $491M. That $24M beat was good for an 4.8% positive revenue surprise.
Description
Central Garden & Pet makes products for the lawn & garden and pet supplies markets. In Lawn & Garden: Grass seed including the brands Pennington and The Rebels; wild bird feed and the brands Pennington and Kaytee; weed and insect control and the brands AMDRO, Sevin, Ironite and Over 'N Out and decorative outdoor patio products and the brands Norcal, New England Pottery and Matthews Four Seasons. The Company also provide a host of other regional and application-specific garden brands and supplies. It also provide a host of other application-specific Pet brands and supplies.
Earnings History
The last time CENT missed the Zacks Consensus Estimate was in 2014. Since then, there has been a string of 8 consecutive positive earnings surprises. This is a very enviable track record and demonstrates management's ability to guide Wall Street to a beatable number and then still outperforming expectations.
The topline also has a very strong history, but not quite as impressive as we have seen on the bottom line. The company missed on top back in the March 2015 quarter, when it posted sales that were $2M below expectations.
Janus Capital (JNS) recently missed the Zacks Consensus Estimate by $0.01 for a 4.5% negative earnings surprise. The market didn't seem too worried about the miss as the stock advanced 1.5% in the session following the earnings release. JNS is a Zacks Rank #5 (Strong Sell) and is the Bear of the Day.
The Numbers
JNS missed the Zacks Consensus Estimate of $0.22 by $0.01 for a 4.5% negative earnings surprise in the most recent quarter. This was the second consecutive quarter the company missed the Zacks Consensus Estimate.
The company also missed on the topline, and this was the third quarter in a row that sales came in below expectations.
Description
Janus Capital Group is an asset manager offering individual investors and institutional clients complementary asset management disciplines through the firm's global distribution network. Janus Capital Group consists of Janus Capital Management LLC, Berger Financial Group LLC, Enhanced Investment Technologies LLC and Bay Isle Financial LLC.
Earnings History
Usually when a stock is the Bear of the Day, the earnings history is filled with misses. This is not the case for JNS, as there are three beats in the last seven reports. The flipside of that is that there are four misses in that same time period.
Estimates
The Zacks Consensus Estimate has been falling over the last few months. The FY16 estimate stood at $0.93 in March and dropped a penny each month since then. The current estimate is now at $0.88
Next year has also seen a consistent move lower in estimates with the 2017 Zacks Consensus Estimate moving from $1.10 in April to the current level of $1.03.
Additional content:
3 Airline Stocks to Buy Despite Headwinds
The second-quarter 2016 earnings season has ended for airline companies. Although quite a few companies in the space including key players like Delta, American and United delivered better-than-expected earnings, the fact remains that the sector is plagued with multiple headwinds.
Headwinds Overshadow Earnings Beats
The sector is amid severe stress at the moment and it is evident from the fact that despite the earnings outperformance, stock prices of the companies have remained passive. For example, Delta, in spite of the bottom-line outperformance, continues to carry a Zacks Rank #5 (Strong Sell) and has seen its stock price go down by over 11% since its earnings release on Jul 14.
The headwinds vary greatly, from the surge in terror attacks, uncertainty following the Brexit vote in June, unit revenue issues, technical glitches to name a few. The unfortunate escalation in the frequency of terror attacks has affected airline stocks massively due to the associated security fears resulting in a decrease of air travel demand. Additionally declining ticket prices too have the potential to hurt revenues of carriers.
Moreover, the Brexit vote and the subsequent uncertainty put airline stocks at risk, particularly those with considerable exposure to the U.K. due to fears related to slackening demand for business travel. The aftermath of the Brexit vote are well exhibited by the projection of Lufthansa, another Zacks Rank #5 airline stock, that travel demand to Europe has been waning following multiple terror attacks and the uncertainty following the Brexit vote. The German carrier also stated that advance bookings, especially on long-haul Europe-bound routes, have been impacted.
Apart from the abovementioned issues, unit revenue related problems continue to hurt stocks in the space with very little signs of any respite. Furthermore, computer glitches have also proved to be a nuisance disrupting operations and causing undue harassments to passengers.
The headwinds are well displayed by the fact that the NYSE ARCA Airline index has declined over the past six months. The Zacks Industry rank of 244 (among 260+ groups) carried by the Transportation-Airline segment is further evidence of the tough times being endured by the stocks in the space. In view of this gloomy backdrop, it is no surprise that the bottom-line outperformances for carriers have failed to find favor among the investors.
Some Tailwinds Remain
Despite the challenges enveloping the space, we highlight some positives for investors interested in the sector. Cheap oil has been a huge benefactor for airline stocks for quite some time. Cheap oil has aided the bottom-line of carriers significantly in the form of huge savings. This has strengthened carriers’ balance sheets leading to increased investments aimed at improving flying experience of passengers apart from hiking dividend payouts/buybacks along with profit sharing payments.
Although oil prices have been weak for quite some time (since mid-2014) and consequently have been priced in, this major tailwind continues to be the main factor behind the considerable year-over-year earnings growth for carriers. Currently, oil prices are hovering around the $45 a barrel mark, a long way off the $100+ a barrel witnessed two years ago. With oil prices not anticipated to touch the highs of mid-2014 anytime soon, this factor will continue to aid carriers’ bottom-lines going forward.
The bullish forecast by the International Air Transport Association for the airlines industry for the full-year 2016 is also driven by the assumption of weak oil prices. Moreover, Airlines for America expects that U.S. carriers will make hay in the upcoming Labor Day holiday period (Aug 31 – Sep 6) with travel demand projected to increase 4% on the back of low air fares.
We are also positive on the U.S. Department of Transportation's decision to allow major US- based carriers to operate flights to Cuban cities. Once operational, the top line of the concerned carriers will be benefitted immensely due to new route additions as Cuba is a favorite tourist spot.
How to Pick Winners?
The above commentary clearly reflects that despite headwinds all is not lost for airline stocks and there exists few hidden gems in the space which investors can unearth. The stocks have the potential to generate handsome returns.
However, given the vastness of the airline space and with most stocks struggling, it is by no means an easy task to identify the few bright spots. We have utilized our Zacks Stock Screener to pinpoint such stocks. The Zacks Rank, which justifies a company’s strong fundamentals, can come in really handy.
Our Choices
Latin American carrier Copa Holdings ( CPA), which performed impressively in the second quarter, reporting better-than-expected earnings as well as revenues is our first choice. The carrier carries a Zacks Rank #2 (Buy). The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 18.47, lower than the industry average of 19.90. The Zacks Consensus Estimate for 2016 has improved 17.4% to $4.45 per share over the last 30 days.
Skywest Inc. (SKYW) , headquartered at St. George, UT, operates as one of the major regional airlines in the U.S. SkyWest reported impressive numbers for the second-quarter 2016, comfortably beating both the earnings and revenue estimates. The carrier holds a Zacks Rank #2. The forward P/E ratio for the current financial year is 10.54. The 2016 Zacks Consensus Estimate has improved 4.7% to $2.65 per share over the last 30 days.
ANA Holdings Inc. (ALNPY) based in Tokyo offers air passenger and air courier services. The carrier carries a Zacks Rank #2 making it a good investment choice. The forward P/E ratio for the current financial year is 11.76, much lower than the industry average. Earnings for the company are expected to grow over 20% this year.
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CENTRAL GARDEN (CENT): Free Stock Analysis Report
JANUS CAP GRP (JNS): Free Stock Analysis Report
COPA HLDGS SA-A (CPA): Free Stock Analysis Report
SKYWEST INC (SKYW): Free Stock Analysis Report
ANA HOLDINGS (ALNPY): Free Stock Analysis Report
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