For Immediate Release
Chicago, IL – June 7, 2016– Zacks Equity Research highlights Dycom Industries, Inc. (DY) as the Bull of the Day and Movado Group, Inc. ( MOV) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Church & Dwight (CHD),BASF (BASFY) and Autoliv ( ALV).
Here is a synopsis of all three stocks:
Dycom Industries, Inc. (DY) is cashing in on the strength in US construction. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits both this fiscal year and next.
Dycom provides specialty contracting services in the United States and Canada, including program management, engineering, construction, maintenance and installation for various utilities, including telecommunications, gas and electricity providers.
Big Beat in Fiscal Third Quarter
On May 24, Dycom reported better than expected fiscal third quarter results beating the Zacks Consensus Estimate by 33 cents. Earnings were $1.08 versus the consensus of just $0.75. That's a 44% beat.
Contract revenue jumped to $664.6 million from $492.4 million in the year ago period. Excluding contract revenues from acquired businesses that were not owned during the entire period, organic revenue still rose 28.7%.
Dycom is benefiting from the start of a telecom upgrade cycle which, the analysts believe, still has room to run.
Estimates Rise for F2016 and F2017
With the big beat in the third quarter, it's not surprising that analysts raised their estimates for fiscal 2016.
6 estimates were revised since the earnings report, pushing fiscal 2016 Zacks Consensus Estimate up to $4.32 from $3.88. That is more than the 33 cent beat in the third quarter which indicates that the analysts believe the fourth quarter will be stronger than previously thought as well.
That's earnings growth of $79.3% from fiscal 2015.
Looking ahead to fiscal 2017, 6 analysts also raised those estimates. The Zacks Consensus jumped to $5.12 from $4.53.
That's further earnings growth of 18.6%.
Movado Group, Inc. (MOV) continues to struggle as watch sales decline worldwide. This Zacks Rank #5 (Strong Sell) recently cut full year guidance.
Movado Group makes watches in its Switzerland manufacturing facilities under the brands Movado, Ebel, Concord, ESQ Movado, Coach, Tommy Hilfiger, Hugo Boss, Juicy Couture, Lacoste and Ferrari (NYSE:RACE). It also operates about 38 Movado retail stores globally.
Movado focuses on the upscale watch market with the Movado brand but sells its licensed watches in department stores and also to independent distributors.
A Beat in Q1 But Sales Fell
On May 26, Movado reported its first quarter results and beat the Zacks Consensus by 3 cents. Earnings were $0.19 compared to the Consensus of $0.16.
It was the company's fourth earnings beat in a row.
Net sales, however, fell 5% on a constant dollar basis year over year to $114.1 million from $120.5 million in the year ago quarter.
It is the tale of various markets. While sales were up double digit in the United Kingdom, they suffered in Asia, especially in Hong Kong and China.
The lower priced fashion watch segment, which is mostly in the department stores, was also weak in the quarter. As a result, customers were reducing inventories.
Cut Full Year Guidance
There are many who believe traditional watches are dead. Movado hasn't ignored the trend towards wearables like the Apple (NASDAQ:AAPL) Watch.
It has seen early success with its new Movado Edge collection of wearables.
There are analysts who believe that Movado's edge in the wearables category will be in producing a fashion forward wearable watch. Most of those on the market aren't exactly fashion forward.
But, for now, 2017 is still expected to be tough. Movado's wearable market isn't big enough to boost its traditional watch segment.
It cut its full year earnings guidance by $0.30 a share to a range of $1.55 to $1.70.
The analysts were more optimistic just 90 days ago. The Zacks Consensus stood at $2.26 per share. It has since been cut to $1.61.
That is an earnings decline of 22% from last year.
Additional content:
June Market Strategy: U.S. Expansion Carries On
The title of this Zacks Market Strategy piece openly hints at my bull thesis: The U.S. expansion carries on. Following that expansion tune -- the S&P 500.
June Strategy Update
We were trading around 2100 on the S&P 500 in early June. The S&P 500 breaks thru its high at 2135. Weak Q1-16 U.S earnings can only be ignored via a summer 2016 look ahead to 2017. Earnings and revenue growth are not expected to return until 2H 2016.
Yes, the U.S. remains in expansion. Recent monthly labor market evidence was NOT conclusive, however.
The U.S. created just +38K new jobs in May. The number of new jobs was the smallest the economy created since the fall of 2010. Consensus had pegged an increase of +155K nonfarm jobs.
Given the screwy May jobs report, three caveats ask for inclusion:
- Jobs figures were likely suppressed by a strike of about 35,000 Verizon workers. That began in late April and stretched through May.
- A bout of “unusually cool” and “very wet” weather hit certain U.S. regions. This may have also hit job growth estimates.
- Consensus had expected a “weak reading” on employment at retailers, following a mild decline in April. This was payback for gains that averaged more than +50K a month in the first quarter of 2016.
- In a twist going the other way, the U.S. unemployment fell to 4.7% rate in May after having ticked back up to 5.0% in March 2016. That’s frictional unemployment.
Zacks June Sector/Industry/Company Telescope
The U.S. consumer did show up strongly in late May macro data. It clearly helped analysts to upgrade earnings estimates for consumer sectors. In sum, Consumer Staples and Consumer Discretionary are back to the top of the S&P 500 sector pack.
Materials – another Very Attractive sector – were led by industries that supply consumers.
Interestingly, deep defensives got upgraded to Market Weight. Financials are at the back of the heap. That shows the super low interest rate environment keeps a bid on dividend paying defensives and off rate earning banks.
(1) Consumer Staples upgraded to Very Attractive. The Food and Soaps & Cosmetics Industries lead the way. Tobacco, Food/Drug Retail, and Misc. Staples all look good too.
Zacks #2 Rank (BUY) Company: Church & Dwight (CHD)
Church & Dwight Co, Inc. is the world's leading producer of sodium bicarbonate (baking soda), a versatile chemical. They sell their products, primarily under the ARM & HAMMER trademark, to consumers through supermarkets, drug stores and mass merchandisers and to industrial customers/distributors.
(2) Materials keep on at Very Attractive. The best is Chemicals and Metals-non-Ferrous, Paper, and Containers & Glass. Those are tied to consumption.
Zacks #1 Rank (STRONG BUY) Company: BASF (BASFY)
BASF is the world's leading chemical company. Its portfolio ranges from chemicals, plastics, performance products and agricultural products to oil and gas.
(3) Consumer Discretionary upgraded to Attractive. Industry leaders are the big cyclicals of Home Furnishing-Appliances and Autos/Tires/Trucks. Publishing and Other Consumer Discretionary also look good.
Zacks #1 Ranked (STRONG BUY) Company: Autoliv (ALV)
Autoliv Inc. is a worldwide leader in automotive safety, a pioneer in both seatbelts and airbags, and a technology leader with the widest product offering for automotive safety. All the leading automobile manufacturers in the world are customers.
(4) Health Care falls back to Attractive. Medical Care is best. Drugs and Medical Services are Market Weight.
(5) Industrials fell one notch to Attractive. Metal Fabricators, Business Services, Railroads, and Electrical Machinery lead the way here.
(6) Telcos are a Market Weight.
(7) Utilities are a Market Weight.
(8) Energy falls back to a Market Weight. Oil & Gas Integrated looks best. Drillers remain in the tank, along with Oil-Misc.
(9) Info Tech fell to a Market Weight. The best is Electronics. The worst is Computer-Office equipment.
(10) Financials are still Unattractive. The best is Real Estate and Banks-Major and Banks & Thrifts. The worst is Investment Funds.
This is an excerpt from John Blank’s June Market Strategy. To access the full PDF, click here.
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DYCOM INDS (DY): Free Stock Analysis Report
MOVADO GRP INC (MOV): Free Stock Analysis Report
CHURCH & DWIGHT (CHD): Free Stock Analysis Report
BASF SE (DE:BASFN) (BASFY): Free Stock Analysis Report
AUTOLIV INC (ALV): Free Stock Analysis Report
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