For Immediate Release
Chicago, IL – June 30, 2020 – Zacks Equity Research Shares of Schnitzer Steel SCHN as the Bull of the Day, Carnival CCL asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Boeing BA, Facebook FB and Micron MU.
Here is a synopsis of all five stocks:
Bull of the Day:
The market’s knee-jerk reaction to COVID was to sell off everything. It didn’t matter what your business was, when investors pulled money from the market, stock prices were hit…hard. Once the market bottomed, there was a noticeable flight towards tech stocks. Recently, a new phenomenon has been occurring. There’s been money flowing into more traditional industrial industries. One such beneficiary of these new found fund flows is today’s Bull of the Day.
Today’s Bull of the Day is Zacks Rank #1 (Strong Buy) Schnitzer Steel. Schnitzer Steel Industries, collects, processes and recycles metals by operating one of the largest metals recycling businesses in the United States. They also manufacture finished steel products at their technologically advanced steel mini-mill.
The reason behind the favorable Zacks Rank is simple. Analysts all over Wall Street have been increasing their earnings estimates. Analysts were very bearish on the stock as recently as 30 days ago, but have dramatically changed their tune over the last week. The current year Zacks Consensus estimate reached as low as an 18-cent loss. Since then, the consensus number has shot up to a 5-cent profit. Next year’s Zacks Consensus Estimate has taken a similar path. After bottoming out at 22-cents sixty days ago, next year’s Zacks Consensus Estimate has now risen to a profit of 57 cents.
While the EPS number looks a lot better next year, the revenue growth is not as appealing. Current year sales estimates call for a contraction of 27.69%. Next year the forecast calls for a return to growth. That may seem great for a company which just experienced a serious contraction but it’s only slated to come in at a paltry 1.87%. That is something to keep in mind for the more cautious investor.
Earnings estimates have rounded off over the last several months. That’s a welcome reversal of a negative trend which began in mid-2018. Back then, shares were trading north of $35. The stock is now trading at half of that price. Should this earnings rebound continue, the upside potential could far outweigh the risks of the current year slowdown in sales.
Bear of the Day:
You don’t need me to point out the tough times that the cruise industry has had recently. COVID-related shutdowns have put the industry on ice. Ships are stuck in port with nowhere to go. Some folks on the fence about cruising have now sworn them off for good. It could take years for the industry to bounce back, and there is a risk that it never gets back to pre-COVID levels.
Today’s Bear of the Day is cruise operator Carnival. Carnival Corporation operates as a cruise and vacation company. As a single economic entity, Carnival Corporation & Carnival plc forms the largest cruise operator in the world. Carnival is the world’s leading leisure travel firm and carries nearly half of the global cruise guests. The company has operations in North America, Australia, Europe and Asia.
Analysts’ estimates of the downside action in earnings have been nothing short of devastating. You can see the dramatic shift in our Zacks Consensus Estimates. Over the course of the last ninety days, current year consensus has dropped from a $2.14 profit per share to a loss of $6.17. Recently, continued closings and more negativity from analysts has cut next year’s profit out of the equation as well. Ninety days ago, next year’s estimate was a profit of $3.44. Thirty days ago, that sunk to just 32 cents. Now, the Zacks Consensus Estimate for next year is down to a $1.97 loss.
That current year loss is a result of a painful dip in sales. This year, sales are forecast to come in 67.6% lower than last year. Next year, analysts are expecting a rebound. Sales for next year are forecast to come in at $14.04 billion, a 108.09% increase from this year.
While Carnival is a cruise ship operator, we have it in our broad Leisure and Recreation Services Industry. This industry ranks in the Bottom 23% of our Zacks Industry Rank.
Markets Start a New Week in the Green
Markets closed the first day of a new trading week — and second-to-last trading day of the month — up strongly, filling in most of the crater formed during regular trading hours Friday. The small-cap Russell 2000 finished 3% in the green to lead all major domestic indexes, with the Dow up 2.32% (579 points), the S&P 500 +1.47% and the Nasdaq +1.2%. No big news event has shaken the markets’ foundation, but today illustrates the bulls are still alive and well.
Boeing led the charge in the Dow 30 today, up 14.4% on news that the FAA will be using test pilots to work over the much-beleaguered 737 MAX jet, which has been grounded since March 2019. The pilots will be putting the plane’s flight control systems through various emergency scenarios; the thinking here seems to be the 737 MAX might see its way to carrying passengers on the early side of forecasts should everything check out. Thus far, difficulties on the model have cost the aerospace giant $18.7 billion so far.
Facebook finished up 2% to boost the Nasdaq today, despite more companies joining the advertising ban on the social media major until it more completely addresses issues with posts containing hate speech in a new era of social consciousness. The top 100 companies that advertised on Facebook last year accounted for more than $4 billion in revenues for the company. Apparently, however, traders believe companies won’t stay away from Facebook advertising very long, as it has become a staple revenue-generator for a long list of firms.
After today’s close, memory chipmaker Micron reported fiscal Q3 2020 earnings results, with solid beats on both top and bottom lines: 82 cents per share was well ahead of the 75 cents in the Zacks consensus, as sales in the quarter of $5.44 billion easily surpassed the $5.32 billion expected. Further, next-quarter guidance pushed the needle of expectations even further: $1.05 per share (+/- 10 cents) is way out in front of the 75 cents analysts had been looking for, with Q4 revenue guidance between $5.75-6.256 billion, taking out the Zacks consensus estimate of $5.43 billion.
Micron last missed earnings estimates back in fiscal Q2 2019; the trailing 4-quarter average before today’s beat was an average surprise of more than 17%. The Boise, Idaho-based tech firm had been trading around $56 per share prior to the market crash as a result of the coronavirus lockdown, and the Zacks Rank #2 (Buy)-rated company is up 5.5% following the earnings release to near $52 per share.
Free Book: Finding #1 Stocks
In this 300-page hardcover, Zacks' Executive VP Kevin Matras reveals almost every stock-picking secret he’s learned from the system that since 1988 has more than doubled the average yearly gain of the S&P 500.
Learn more now >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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/performancefor information about the performance numbers displayed in this press release.
Click to get this free report Micron Technology, Inc. (MU) : Free Stock Analysis Report The Boeing Company (BA) : Free Stock Analysis Report Carnival Corporation (CCL) : Free Stock Analysis Report Facebook, Inc. (FB) : Free Stock Analysis Report Schnitzer Steel Industries, Inc. (SCHN) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research