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Sinclair and EPAM Systems have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – June 9, 2023 – Zacks Equity Research shares Sinclair Inc SBGI as the Bull of the Day and EPAM Systems EPAM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Murphy USA Inc. MUSA, Weatherford International plc WFRD and Transportadora de Gas del Sur SA TGS.

Here is a synopsis of all five stocks:

Bull of the Day:

Sinclair Inc is a Zacks Rank #1 (Buy) and it sports an A for Value and an A for Growth. Normally I select stocks that have strong revenue growth potential, but this one has a wonderful valuation and good growth potential.  Let’s explore more about this company in this Bull of The Day article.

Description

Sinclair, Inc., a media company, focuses on providing content on local television stations and digital platforms. The company distributes its content through broadcast platforms and third-party platforms that consist of programming provided by third-party networks and syndicators, local news, other original programming, and college sports. It also owns digital media products that are complementary to its portfolio of television station related digital properties, as well as interests in, owns, manages, and/or operates technical and software services companies, intellectual property for the advancement of broadcast technology, and other media and non-media related businesses and assets, including interests in real estate, venture capital, private equity, and direct investments. Sinclair, Inc. was founded in 1986 and is headquartered in Hunt Valley, Maryland.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

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For Sinclair, I see four consecutive beats Zacks Consensus Estimate.  That is not that great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).

I see a good earnings history with the company beating the number in each of the three quarters that had a Zacks Consensus Estimate.  The last two quarters were massive beats.

Two quarters ago the company reported EPS of 90 cents when 28 was expected.  That 62 cent beat translates to a 221% positive surprise.

Last quarter saw EPS of $2.71 when a loss of 59 cents was expected.  The $3.30 difference works out to be a 559% positive earnings surprise.

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher.

Over the last 60 days, earning estimates have increased for SBGI.

I see a big shift in estimates over the last 30 days.  The estimate for this quarter improved from a loss of 63 cents to a loss of 58 cents.

Next quarter when from a loss of 14 cents to a loss of 10 cents.

The full year numbers are certainly more important… and they are dramatically different.

This year has moved from a loss of 16 cents 60 days ago to a gain of $1.43 30 days ago and is now at a gain of $2.71.  That is a big time move higher.

Next year the dramatic move continues, with the estimates going from $3.56 to $4.23 and are now at $5.08.

EPS is basically expected to grow by 87% next year.  That is huge.

Valuation

The huge growth in earnings and the stock moving lower have caused the valuation metrics to look very good.  I see a forward PE of 5.7x which is super low compared to the 18.4x industry average.  The price to sales comes in at 0.3x, again a very low compared to the 1.7x industry average.

The price to book on the Zacks website is 1.3x and is well below the 2.1x industry average.  This where it gets interesting.  The company noted in the most recent earnings report that they calculate their portfolio to have $1.3B in value and that equates to $19 a share.

Margins have moved dramatically higher over the last three quarters.  I see them going from -0.56% to 2.8% and most recently at 8%.

Higher margins, combined with 15% topline growth projected for next year is driving the 87% growth in earnings.

Bear of the Day:

EPAM Systems is a Zacks Rank #5 (Strong Sell) has seen earnings estimates slide lower recently.  Despite a recent beat at the start of the May, the stock has drifted back lower. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.

Description

EPAM Systems, Inc. provides digital platform engineering and software development services worldwide. The company offers engineering services, including requirements analysis and platform selection, customization, cross-platform migration, implementation, and integration. The company serves the financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, and other industries EPAM Systems, Inc. was founded in 1993 and is headquartered in Newtown, Pennsylvania.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of EPAM, I see four straight beats of the Zacks Consensus Estimate.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For EPAM I see annual estimates moving lower of late.

The current fiscal year consensus number moved lower from $11.29 to $10.31 over the last 60 days.

The next year has moved from $13.95 to $11.61 over the last 60 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

Additional content:

Bet on 3 Low-Beta Energy Stocks to Combat Volatility

Oil prices have witnessed wild swings since the onset of the coronavirus pandemic, reflecting that notorious volatility is an integral part of the energy sector. Hence, creating a portfolio of low-beta energy stocks is of utmost importance since the securities will deliver healthy returns and shield against choppy market conditions.

In this regard, stocks like Murphy USA Inc., Weatherford International plc and Transportadora de Gas del Sur SA are worth betting on.

Extremely Volatile Energy Market

We should never forget how oil prices have behaved since the initial coronavirus outbreak. The early pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity’s price plunged to a negative $36.98 per barrel on Apr 20, 2020.

However, with the rapid developments of vaccines by scientists, which, in turn, led to the gradual reopening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration. Oil is currently trading higher than the $70-per-barrel mark.

Low-Beta Energy Stocks to the Rescue

While the energy market is highly volatile, it will be better to consider stocks belonging to the sector that are less volatile than the market. For analyzing a stock’s risk profile, it is better to employ a statistical measure called beta — one of the popular indicators. Beta measures the volatility or risk of a particular asset compared to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.

If a stock has a beta of 1, then the price of the stock will move with the market. Therefore, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.

For example, if the market offers a return of 20%, a stock with a beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.

While employing our proprietary stock screener, we have zeroed down on three low-beta energy stocks that investors should bet on. All the companies sport a Zacks Rank #1 (Strong Buy) and have a beta lower than 1, which is our prime criterion for screening stocks. You can see the complete list of today's Zacks #1 Rank stocks here.

Murphy USA is a well-known retailer of gasoline and convenience merchandise. Robust customer traffic has been driving its strong merchandise performance. Over the past 30 days, MUSA has witnessed upward earnings estimate revisions for 2023.

Weatherford is a key energy player and is engaged in offering exclusive drilling technologies that will maximize clients’ reservoir exposure. Weatherford is also involved in well construction and completion activities in an efficient manner.

Transportadora’s midstream asset portfolio has the most extensive natural gas pipeline network in Latin America. It generates stable fee-based revenues since its pipeline assets transport more than 60% of the gas consumed in Argentina.

Transportadora has witnessed upward estimate revisions for its 2023 bottom line in the past 30 days. The upward revisions are backed by the company’s stable business model and a strong focus on creating differential value for shareholders. Also, TGS has lower debt exposure than the composite stocks belonging to the industry.

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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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Sinclair, Inc. (SBGI) : Free Stock Analysis Report

Murphy USA Inc. (MUSA) : Free Stock Analysis Report

EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report

Transportadora De Gas Sa Ord B (TGS) : Free Stock Analysis Report

Weatherford International PLC (WFRD) : Free Stock Analysis Report

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