For Immediate Release
Chicago, IL – May 04, 2016 – Zacks Equity Research highlights Superior Industries ( (NYSE:SUP) ) as the Bull of the Day and TAL International Group ( (NYSE:TAL) ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Market Vectors Gold Miners ETF (NYSE:GDX) (GDX) and Direxion Daily Gold Miners Bull 3X ETF (NUGT).
Here is a synopsis of all four stocks:
The automotive market has been one of the strongest performing sectors for the past year. For the Q1 earnings season, we have seen just over 80% of the total companies within the sector report earnings, and they have posted a year over year gain of +63% (the best performing group of all 16 Zacks sectors). Then it was announced yesterday that U.S. light-vehicles sales saw renewed growth in April as low gas prices, easy financing, and improving consumer confidence has driven more new customers to car dealerships. This improvement coupled with an amazing recent earnings, has brought Superior Industries ( (NYSE:SUP) ) into focus, and is our Zacks Bull of the Day.
This Zacks Ranked #1 (Strong Buy) company designs and manufactures cast aluminum road wheels primarily for the domestic original equipment manufacturer (OEMs) market. It also designs a variety of products for the automotive aftermarket, including custom road wheels and accessories. Also, the company is the largest manufacturer of aluminum wheels for passenger cars and light-duty vehicles in North America. The company supplies many of the top car manufacturers like BMW, Ford, GM, Fiat Chrysler (NYSE:FCAU), Nissan, Subaru, and Mazda.
The company reported Q1 16 earnings last week where they posted year over year increases in EPS +250%, wheel shipments +25.3%, value-added sales +24.4%, adjusted EBITDA +110.2%, and gross profit +147%. Further, the company saw net income improve +233.7% during the quarter. Lastly, management was also able to return $16.6 million in capital to shareholders via dividends, and stock repurchases during the first quarter 2016.
According to Don Stebbins, President and CEO, “Our results in the first quarter are encouraging and a testament to the solid execution throughout the organization. The 25.3% increase in unit volume was driven by strong growth in our passenger car shipments on top of sustained increases in our light truck programs. In addition to higher unit volumes, our improved adjusted EBITDA was driven by improved cost performance, as we continued to benefit from the strategic changes to our manufacturing footprint, higher volumes in our new facility in Mexico, and greater efficiencies across our manufacturing platform.
The demand for commodities continues to decline as growth worries in China, Europe, and emerging markets continues to rise. This has put pressure on commodity producers, and suppliers of a vast array of products and materials. One such group that has been feeling the commodity pain are companies that ship and transport products and materials. This brings us to TAL International Group ( (NYSE:TAL) ), the Zacks Bear of the Day.
This Zacks Rank #5 (Strong Sell) is a lessor of intermodal containers and chassis. The Company operates in the intermodal transportation equipment industry, and has two business segments: Equipment Leasing and Equipment Trading. The Company's global operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers. It leases dry freight containers, which are used for general cargo; refrigerated containers that are used for perishable items; and special containers, which are used for heavy and oversized cargo; and chassis that are used for the transportation of containers domestically via rail and roads; and tank containers, which are used to transport bulk liquid products. It also involves in the resale of containers to container traders and users of containers for storage and one-way shipments, as well as finances port equipment, such as container cranes, reach stackers, and related equipment.
The company reported Q1 16 results last Thursday, and the company had a huge miss on the bottom line but did slightly beat expectations on the top line. The company saw year over year declines in net income -75.2%, adjusted EBITDA -15.4%, adjusted pre-tax income -61.1%, and net income per share -75.6%.
According to Brian Sondey, President and CEO, “The first quarter is typically our weakest quarter of the year since it traditionally represents the slow season for dry container leasing and disposals. This year, the typical seasonal weakness combined with difficult global economic conditions to create a very weak market environment. New container prices, market leasing rates and used container sale prices all decreased further during the first quarter, and leasing demand remained limited. The further decrease in used container selling prices had a particularly large impact since the lower sale prices led to larger losses on units sold plus resulted in mark-to-market losses on our inventory of equipment held for sale. This mark-to-market effect increased our loss on disposal by $8.0 million in the first quarter, though the impact will shrink once used container sale prices stabilize.”
Additional content:
Stocks Fall, Dollar Climbs on Fed Rate-Hike News
Atlanta Fed President Dennis Lockhart stirred up the drama today after saying that the United States could see up to two additional interest rate hikes this year. Lockhart’s comments boosted the dollar, while stocks and gold fell, as investors prepare for the Fed’s meeting next month.
"Two rate hikes are certainly possible. We have enough (Fed policy) meetings remaining but it depends entirely on how the economy evolves," Lockhart said, while also warning that a British exit from the European Union could raise economic risks.
The DOW, NASDAQ, and S&P 500 indexes all slipped over 1% in morning trading following these reports. While interest rate hikes don’t necessarily have a direct effect on stocks, they are often considered as bad news for consumer spending levels, which can cut into businesses’ bottom lines.
Gold prices also fell Tuesday morning. June futures slipped nearly 0.75%, while the mining ETF (GDX) fell over 3.2%. The popular weighted mining ETF ( NUGT) is down over 9.5% today as well.
On the other hand, interest rate hikes and related rumors tend to boost currencies over uncertain stocks and commodities that don’t bear interest. The U.S. Dollar Index edged upward Tuesday morning, gaining about $0.31.
While Lockhart’s comments suggest that the Fed has enough meeting this year to raise rates multiple times, a rate hike is not predicted to occur following the Fed’s meeting in June. According to the “FedWatch Tool” from the CME Group (NASDAQ:CME), the probability of a rate hike in June stands at just 13%.
Nevertheless, Lockhart asserted that investors should put more weight on a June hike being a “real option.”
About the Bull and Bear of the Day
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SUPERIOR INDS (SUP): Free Stock Analysis Report
TAL INTL GRP (TAL): Free Stock Analysis Report
VANECK-GOLD MNR (GDX): ETF Research Reports
DIR-D GM BL 3X (NUGT): ETF Research Reports
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