Yahoo Finance Maximus and Diodes have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – June 3, 2024 – Zacks Equity Research shares Maximus MMS as the Bull of the Day and Diodes (DIOD) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Alphabet GOOGL, NVIDIA NVDA and Nutanix NTNX.
Here is a synopsis of all five stocks:
Bull of the Day:
Government health and human services program operator Maximus made its way onto the Zacks Rank #1 (Strong Buy) list last week with its stock starting to check the boxes in terms of value, growth, and momentum.
Landing the Bull of the Day, Maximus belongs to the top-rated Zacks Government Services Industry which is currently in the upper 1 percentile of over 250 Zacks industries. Strong demand and elevated volumes in federal services programs including those tied to Medicaid redetermination have made Maximus stock very compelling with U.S. government agencies already accounting for more than 80% of the company's revenue heading into fiscal 2024.
Foreign government agencies accounted for roughly 14% of Maximus' revenue with a breadth that extends to Australia, Canada, Saudi Arabia, Singapore, and the United Kingdom.
Attractive Valuation
Considering its strong business environment, Maximus' valuation makes the company stand out with MMS trading at the optimum level of less than 2X sales with a P/S ratio of 1X compared to its industry average of 1.3X.
Even better, MMS trades at a 14.5X forward earnings multiple which is a pleasant discount to its peer's average of 22.1X and the S&P 500's 21.9X. Checking an "A" Zacks Styles Scores Grade for Value, Maximus is also attractive in terms of valuation metrics such as Price to Book Value (P/B) and Price to Cash Flow (P/CF).
Steady Growth
With an "A" Zacks Style Scores grade for Growth as well, Maximus is now expected to see its bottom line expand by 51% in FY24 to $5.79 per share versus $3.83 a share last year. Plus, FY25 EPS is projected to increase another 4%. On the top line, total sales are projected to be up 7% this year and are expected to rise another 3% in FY25 to $5.39 billion.
Most compelling and indicative of more short-term upside for Maximus stock is that FY24 and FY25 EPS estimates have continued to trend higher in the last 30 days and are nicely up in the last week.
This comes as Maximus impressively exceeded top and bottom line expectations for its fiscal second quarter in early May and raised its EPS guidance for the second time this year.
MMS is Gaining Momentum
Correlating with a strengthened outlook and the positive trend of earnings estimate revisions, Maximus lands an "A" Style Scores grade for Momentum with MMS rising +6% over the last month to roughly match the Nasdaq while topping the S&P 500's +4% and the Zacks Government Services Market's +3%.
Bottom Line
Benefiting from a strong business industry, it's hard to overlook the very favorable trading indicators for Maximus stock with MMS commanding an overall "A" VGM Zacks Style Scores Grade for the combination of Value, Growth, and Momentum.
Bear of the Day:
With a slew of promising semiconductor stocks to choose from, investors may want to avoid Diodes at the moment which lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
This comes as the supplier of high-quality discrete and analog semiconductor products says it's grappling with a slower-than-expected recovery in the consumer, communications, and computing markets.
Growth Concerns
Reporting its first quarter results in early May, Diodes' Q1 sales of $301.97 million missed estimates by -1% and dropped -35% from $467.24 million a year ago. Furthermore, Q1 earnings of $0.28 per share fell -82% from EPS of $1.59 in the comparative quarter despite slightly edging expectations.
Declining Earnings Estimates
Following mixed Q1 results, the earnings outlook for Diodes has begun to slip over the last 30 days with FY24 EPS estimates falling -20% from $2.55 per share to $1.80 a share. More concerning is that FY25 EPS projections have dipped -13% despite a rebound forecasted in Diodes bottom line next year to $4.06 a share although this is down from estimates of $4.67 per share a month ago.
In contrast, many chipmakers have seen a positive trend of earnings estimate revisions.
The CEO Just Sold Shares
What may also concern investors and dampen the optimism for a rebound in Diodes' bottom line is that CEO and Director Keh Shew Lu sold 13,216 of his DIOD shares for a total of $965,462 on May, 14. Notably, Lu controls over 900,000 shares of the company with 369,992 shares held directly and 599,143 shares held indirectly according to the Form-4 filing with the SEC.
Bottom Line
Given there are so many promising semiconductor companies to invest in, Diodes' stock may not be worth the risk at the moment considering the downward trend of earnings estimate revisons and insider selling.
Additional content:
Here's Why Alphabet (GOOGL) Is a Must-Buy Stock Right Now
Investors looking for maximum returns should consider Alphabet adding to their portfolios due to its solid fundamental strength.
Shares of the search giant have risen 23.2% year to date, outperforming the Zacks Computer & Technology sector's growth of 18.1% and the S&P 500 index's return of 11.5% during the same time frame.
This outperformance reflects the company's back-to-back quarters of impressive financial performance. Alphabet's earnings per share surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 11.3%. In its last reported quarter, the top and bottom lines beat the consensus mark and witnessed strong year-over-year growth.
We believe that GOOGL shares have further room for expansion, given the company's growing efforts to bolster its generative AI capabilities. Its leading position in the search engine space, strengthening cloud footprint, solid momentum in YouTube and Android, and growing traction in the autonomous driving space should aid Alphabet's prospects further.
The upswing in the company's estimates testifies to the aforesaid fact. The Zacks Consensus Estimate for 2024 revenues and earnings is pegged at $295.53 billion and $7.61 per share, respectively. This indicates year-over-year improvements of 15.2% in the top line and 31.2% in the bottom line. The EPS estimate has also moved 0.5% north over the past 30 days.
Let us delve deeper into the fundamental strength of Alphabet.
Growing Generative AI Capabilities: Key Catalyst
Google is well-poised to capitalize on the growing proliferation of generative AI-backed chatbots on the back of Bard, which enables users to collaborate with experimental AI with new features that include image capabilities, coding support and app integration.
The company is cashing in on the increasing demand for Large Language Models (LLMs) with its most powerful AI model called Gemini. Growing momentum in Google's Vertex AI, which enables developers to train, tune, augment and deploy applications using generative AI models, is another positive.
Google recently introduced various open-source tools to support generative AI projects and infrastructure.
The new tools include the likes of MaxDiffusion — a collection of reference implementations of various diffusion models, JetStream — a new engine to run generative AI models, MaxText — a collection of text-generating AI models targeting tensor processing units (TPUs), and NVIDIA's GPUs in the cloud.
The company's launch of an enterprise-focused AI code completion and assistance tool called Gemini Code Assist is noteworthy.
Growing generative AI capabilities position Alphabet well to capitalize on the growth prospects in the booming generative AI market, which, per a report from Fortune Business Insights, is expected to reach $667.96 billion by 2030, seeing a CAGR of 47.5% between 2023 and 2030.
Search Efforts Aid Prospects
The strong efforts of Google toward innovation in AI techniques for the advancement of its search business are noteworthy.
Growing momentum in Search Generative Experience, which leverages the generative AI technology to make search results more natural and intuitive, should benefit Google's search business in the near term.
Google's initiative to improve search results by combining LLMs' capabilities with multi-search and visual exploration features is another positive. The growing momentum of Bard bodes well for search revenues.
The company's strength in the mobile search category on the back of mobile-friendly algorithms, robust product listings and flight search capabilities is a plus. These factors will continue to boost the search traffic on the Chrome browser.
Cloud Strength Drives Growth
Alphabet has been growing rapidly in the booming cloud-computing market. Google Cloud has turned out to be the key growth driver of Alphabet, owing to strengthening cloud service offerings. The solid adoption of the Google Cloud Platform and Google Workspace has been driving growth in the Google Cloud segment.
Google's growing investments in infrastructure, security, data management, analytics and AI are major positives. Its strategic partnerships and acquisitions, and growing number of data centers are helping Google to expand its cloud footprint worldwide. The increasing number of cloud regions and availability zones globally is a major positive.
The solid adoption of generative AI-powered Workspace tools is a plus. Strength in Google's Kubernetes offerings is contributing well to driving customer momentum.
GOOGL's efforts in integrating data lakes, data warehouses, data governance and advanced machine learning into a single platform are bolstering its prospects in the data cloud market.
To Conclude
We believe that Alphabet presents a compelling investment opportunity due to its strong market position in generative AI, search engine and cloud. Strong financial health, combined with its commitment to innovation and strategic growth, positions it well for sustained success.
Alphabet currently sports a Zacks Rank #1 (Strong Buy) with a Growth Score of B, a combination that offers a good investment opportunity, per the Zacks proprietary methodology. You can see the complete list of today's Zacks #1 Rank stocks here.
Some other top-ranked stocks in the broader technology sector are NVIDIA and Nutanix , each flaunting Zacks Rank #1 at present.
NVIDIA has surged 131.9% year to date. The Zacks Consensus Estimate for NVIDIA's fiscal 2025 revenues is pegged at $116.4 billion, which indicates year-over-year growth of 91%. The consensus mark for earnings is pegged at $25.10 per share, which implies a 93.7% increase from that reported in fiscal 2024.
Nutanix has gained 18.1% year to date. The Zacks Consensus Estimate for NTNX's fiscal 2024 revenues is pegged at $2.14 billion, which indicates year-over-year growth of 14.7%. The consensus mark for earnings is pegged at $1.08 per share, which implies an 80% increase from the fiscal 2023 reported number.
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