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TrueBlue, MTS Systems, Western Digital, Huntington Ingalls And TIM Participacoes Highlighted As Zacks Bull And Bear Of The Day

Published 04/24/2017, 09:30 PM
Updated 07/09/2023, 06:31 AM

For Immediate Release

Chicago, IL – April 25, 2017 –Zacks Equity Research highlights TrueBlue Inc. (NYSE: TBI Free Report ) as the Bull of the Day, MTS Systems Corp (NASDAQ: MTSC Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Western Digital (NASDAQ: WDC Free Report ), Huntington Ingalls (NYSE: HII Free Report ) and TIM Participacoes S.A. (NYSE: TSU Free Report ).

Here is a synopsis of all five stocks:

Bull of the Day :

Governmental red tape causes delays in almost every project originated at the federal level. Back in 2015 President Obama signed into law the $305 billion Fixing America’s Surface Transportation Act (ironically dubbed the FAST Act), and the funding is just getting to the States in 2017. These projects include $205 billion for U.S. highways, and $48 billion on transit projects. The funding is set to expire in 2020, just about the time now President Trumps expected U.S. Infrastructure plan will be getting off the ground (given the current speed of congress). This brings us to our Zacks Bull of the Day, TrueBlue Inc. (NYSE: TBI Free Report ) who provides staffing solutions for a myriad of labor and construction positions.

This Zacks Ranked #2 (Buy) company is the parent company of Labor Ready, Spartan Staffing, CLP Resources, and PlaneTechs. TrueBlue's brands provide general labor, light industrial and skilled trades services to small to mid-sized businesses in the construction, warehousing, hospitality, landscaping, transportation, light manufacturing, retail, wholesale, facilities, sanitation, and aviation industries.

Recent Earnings Results

The company reported Q4 16 results where they beat the Zacks consensus earnings estimate, but came in just short of the Zacks consensus revenue estimate (there was issue that some consensus estimates included a 14th week in the quarter where some did not. By adding the 14 th week TBI would have met the consensus estimate and been in line with their initial expectations).

Management’s Take

TrueBlue’s CEO Steve Cooper stated, “ Our recent acquisitions have accelerated our growth strategy. The recruitment process outsourcing business acquired from Aon Hewitt makes PeopleScout the RPO leader in the U.S., as well as a global leader, positioning us for continued long-term success in this fast-growing, high-margin business. The SIMOS acquisition enhances our PeopleManagement business with productivity-based pricing that is highly appealing to customers ." Cooper continued, “ Along with our recent branding changes, these acquisitions position us better than ever to respond to a broad assortment of customer needs, whether it’s on-demand staffing from PeopleReady, strategic workforce management solutions from PeopleManagement, RPO from PeopleScout, or a total talent solution .”

Bear of the Day :

When management decides to merge or acquire another company they tend to see all the potential positive impacts the move will bring to the bigger company, but a perfect acquisition rarely occurs. This is the situation facing our Zacks Bear of the Day, MTS Systems Corp (NASDAQ:MTSC Free Report ) who saw a negative impact on their EPS due to their recent integration.

This Zacks Ranked #5 (Strong Sell) is a leading global supplier of test systems and industrial position sensors. The Company's testing hardware and software solutions help customers accelerate and improve their design, development, and manufacturing processes and are used for determining the mechanical behavior of materials, products, and structures. MTS' high-performance position sensors provide controls for a variety of industrial and vehicular applications.

Recent Earnings Report

On April 10th management reported FY 16, and Q1 17 earnings and revenue results where they missed the Zacks consensus earnings estimate, but beat the Zacks consensus revenue estimate. In the quarter the company saw year over year changes in Revenues +42%, on stronger than expected organic revenue growth. EPS fell by -29.5% when compared to the year earlier due to a -$0.46 negative impact from acquisition integration. The company was also negatively affected by violations of the company’s Code of Conduct by some employees. This investigation resulted in no loss of intellectual property theft, and caused management to create a new Chief Risk and Compliance Officer. Lastly, management admitted that their PCB acquisitions’ cost and restructuring expenses will have a negative impact on their FY 2017 results.

FY 2017 Guidance

During the earnings report, management gave updated guidance for FY 2017, and both EPS and revenue were below the Zacks expectations. Management guided EPS in a range between $1.67 and $2.15, well below the Zacks consensus estimate of $2.82. Moreover, management adjusted FY 2017 revenue guidance to a range between $760 million and $790 million, well below the previous estimate of $809 million.

Management’s Take

Dr. Jeffrey A. Graves, President and Chief Executive Officer of MTS Systems commented on their recent results and 2017 outlook stating, “ With regard to the business performance and the PCB acquisition that closed in July 2016, fiscal year 2016 ended on a strong note with overall double digit revenue growth that extended into the first quarter of fiscal year 2017. The integration of PCB is progressing as anticipated, and we remain excited about the products and capabilities added to the company, and the revenue and cost synergies we expect to realize from the combination. While the integration costs and restructuring expenses did have a negative impact on our fiscal year 2016 fourth quarter earnings and will negatively impact fiscal year 2017 results, we believe the Test and Sensors businesses are more complementary than ever before and will deliver greater value to our shareholders for years to come .”

Additional content:

France Puts on a JFK-Like Face

The Globe woke to important news: the populist experiment has political limits.

The youthful former Economy Minister in France, Emmanuel Macron, took 23.9% of Sunday’s 1st round vote, easily outpacing the right wing Marine Le Pen at 21.4%. This was based on 97% of votes counted. The 2nd round hits May 7th.

In this election race, Mr. Macron is openly backed by the European Union's head office. It argues France faces a choice -- between the defense of the EU and those "seeking its destruction.”

What an exceptional stance. During an ongoing campaign, the European Commission has waded into the contest. Macron has been described as a "French John F. Kennedy.” Meanwhile, Le Pen has accused Macron of being "weak" in the fight against Islamic terrorism.

In Monday’s European trading, the euro area currency and European share indexes climbed. This broad relief rally got pushed ahead by French equities. These surged even more. The benchmark French CAC40 share index lifted +4.5% my mid-morning. European bank shares recorded double-digit gains.

The euro picked up +1.4%, as the political calculus came thru cleanly.

Sunday’s French primary results also buoyed French government bonds. In recent months, such bonds have been shorted. What happened to the premium put on French sovereign bonds over German ones? It suddenly dropped below 50 basis points for the first time since late January.

In 2 weeks time, traders bet Emmanuel Macron overwhelms Marine Le Pen for the French presidency itself. That would be a fresher 2017 mandate from a leading democracy. And cleanly remove the threat an anti-Euro, anti-immigrant leader runs the Euro area’s 2nd-largest economy.

A snap poll from IPSOs, published in London’s Financial Times on Monday, showed 62% support for Mr. Macron and 38% for Ms. Le Pen. I can feel sighs of relief out here in California.

Wait, though! There are more headlines from Europe in the Global Week Ahead.

On Thursday, Mr. Mario Draghi and his peers at the European Central Bank chime in. They offer their latest assessment on the Euro-area’s monetary policy. Don’t expect the same gangbuster response from risk markets, however.

Having put such a risky poll to bed -- effectively blocking the populist movement -- the rest of the week should trade on 125 S&P 500 results, mostly upon surprises that pop up.

That sounds comparatively dull -- as a fashion. Ho hum — fundamentals!

A quarter of top U.S. firms release Q1 earnings. This is the first broad set of corporate signals traders have been given. Last week was bank-focused. Key names: Apple (NASDAQ:AAPL), Merck (NYSE:MRK), Pfizer (NYSE:PFE), Facebook (NASDAQ:FB), CBS, Time Warner, a number of oil and resource plays, Berkshire Hathaway (NYSE:BRKa), Loews (NYSE:L) and Mastercard.

Finally, the U.S. Congress returns to work after a 2-week Easter break.

Will they avert a shutdown by week’s end? I bet they do.

Top Zacks #1 Rank (STRONG BUY) Stocks—

(1) Western Digital (NASDAQ:WDC Free Report ): This $23.9 billion market cap computer storage device stock got added to our strong buy list on April 22nd. It has a long-term Zacks VGM score of A.

(2) Huntington Ingalls (NYSE:HII Free Report ): This $9.2 billion market cap naval defense builder stock has been heading up, with defense spending expectations. It has a long-term Zacks VGM score of A.

(3) TIM Participacoes S.A. (NYSE:TSU Free Report ): This is a $7.9 billion market cap stock you likely never heard about. It has a long-term Zacks VGM score of B.

TIM Participações S.A. is a holding company. It is a wireless telco subsidiary of Telecom Italia (MI:TLIT) Mobile (aka TIM). They own 67% of shares. The corporation offers mobile cellular service throughout the Brazilian territory, by means of its subsidiaries TIM Celular S.A. and TIM Nordeste S.A.

This firm is the largest GSM (Global System for Mobile communications) operator in Brazil, in terms of clients and revenues. TIM Participações ended the 2016 with $4.7 billion in U.S. revenue, from 70.9 million Brazilian customers, and has 12,841 employees.

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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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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.



TrueBlue, Inc. (TBI): Free Stock Analysis Report

MTS Systems Corporation (MTSC): Free Stock Analysis Report

Western Digital Corporation (NASDAQ:WDC): Free Stock Analysis Report

Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report

TIM Participacoes S.A. (TSU): Free Stock Analysis Report

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