For Immediate Release
Chicago, IL – July 01, 2016 – Zacks Equity Research highlights Owens-Illinois (NYSE:OI) (OI) as the Bull of the Day and Korn Ferry (KFY) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AbbVie Inc (NYSE:ABBV). (ABBV) and Johnson & Johnson (NYSE:JNJ) (JNJ).
Here is a synopsis of all four stocks:
Owens-Illinois (OI) has met or beat the Zacks Consensus Estimate in each of the last seven quarters. Over that span, there were only two meets and more importantly to aggressive growth investors, the last two reports saw solid beats on the top line. The stock is a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.
The Numbers
OI beat the Zacks Consensus Estimate of $0.40 by $0.08 for a 20% positive earnings surprise. The topline was equally as impressive with the company reporting revenues of $1.588B and that was $60M more than expected for a 3.9% positive revenue surprise.
As a result of the great performance Wall Street sent shares of OI higher by more than 4% in the session following the release.
Description
Owens-Illinois makes glass containers. The Company's principal product lines are glass containers for the food and beverage industries. Owens-Illinois was founded in 1903 and is headquartered in Perrysburg, Ohio.
Earnings History
As noted above the company has a solid recent history of beating the number. With five of the last seven reports coming in ahead of the Zacks Consensus Estimate there is a clear signal here that company executives know how to manage Wall Street.
When I expand my view back another seven quarters I see another five beats, but I add on two misses. The 14 quarter history is a solid one, with 10 beats, 2 misses and 2 meets.
Estimates
Estimates have been moving higher almost all year. The 2016 Zacks Consensus Estimate was $2.15 in February, but moved higher by two and three cents in the following two months. A big move higher of a dime in May brought the number to $2.30, and it remained at that level for the month of June.
The 2017 Zacks Consensus Estimate moved from $2.41 to $2.55 over the same time period albeit with fewer actual increases.
Valuation
The valuation for OI is nothing if not enticing. The forward PE of 7.5x is less than half the industry average of 16x. Just because one metric is super low, don't expect the stock to just double to catch up to the industry average. To support that argument, look at the price to book of 6.6x when the industry average is 7x. The price to sales multiple of 0.4x is only one third of the 1.2x industry average.
To me, the valuation looks very attractive to a company that is looking at double the industry average revenue growth for this year. Analysts are looking for 9.5% revenue growth for OI this year compared to 4.3% revenue growth for the broader industry.
More growth at a discount? That is what I love to see.
Korn Ferry (KFY) posted back to back beats of the Zacks Consensus Estimate. That doesn't make a stock the Bear of the Day, so let's figure out why the stock is now a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
The Numbers
KFY beat the Zacks Consensus Estimate of $0.54 by $0.04 for a 7.4% positive earnings surprise in the most recent quarter.
This wasn't the reason the stock fell some 21% the session following the release, so read on for why it did fall. Description
Korn/Ferry offers leadership and talent consulting services. It operates in around 37 countries and is based in Los Angeles.
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 KFY, as there is one miss over the last five quarters that have been reported.
Estimates
Here is the real reason the stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day. The Zacks Consensus Estimate has fallen over the last month. The FY16 estimate stood at $2.56 in May but fell to $2.42 in June.
Next year has also saw a big move lower in estimates with the 2017 Zacks Consensus Estimate moving from $2.92 in May to $2.75 in June.
Additional content:
AbbVie, J&J’s Imbruvica Gets Breakthrough Therapy Status
AbbVie Inc. (ABBV) and Johnson & Johnson’s ( JNJ) Imbruvica got a fourth Breakthrough Therapy Designation (BTD), this time for a non-cancer indication. The FDA granted BTD to Imbruvica for the treatment of chronic graft-versus-host-disease (cGVHD) after one or more lines of systemic therapy have failed. Imbruvica was also granted Orphan Drug Designation (ODD) for the indication.
Breakthrough Therapy Designation helps fasten the development and review of drugs which are being evaluated for the treatment of serious conditions and where preliminary clinical evidence indicates that the drug may be substantially better than existing treatments on clinically significant endpoint(s).
Currently, no treatments are available specifically for cGVHD with most patients being prescribed glucocorticoids, a systemic steroid treatment. However, according to the Fred Hutchinson Cancer Research Center, research shows that serious health complications can arise from the long-term use of steroids.
Earlier BTDs for Oncology Indications
Imbruvica has previously received BTD for oncology indications including for the treatment of patients with relapsed or refractory mantle cell lymphoma (MCL), the treatment of Waldenström's macroglobulinemia (WM) and the treatment of patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL) with a deletion of the short arm of chromosome 17 (del 17p).
Pipeline in a Molecule
Imbruvica became a part of AbbVie’s portfolio following its acquisition of Pharmacyclics. Currently approved for certain types of blood cancer, Imbruvica has multi-billion dollar potential and AbbVie is exploring the potential to expand Imbruvica’s label into solid tumors and autoimmune diseases. AbbVie is positioning Imbruvica as a “pipeline in a molecule” - the treatment is in several studies including 14 phase III studies.
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OWENS-ILLINOIS (OI): Free Stock Analysis Report
KORN/FERRY INTL (KFY): Free Stock Analysis Report
ABBVIE INC (ABBV): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
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