Yahoo Finance Tactile Systems Technology and ESCO Technologies have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 24, 2024 – Zacks Equity Research shares Tactile Systems Technology TCMD as the Bull of the Day and ESCO Technologies ESE as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Royal Caribbean Group RCL, Fox Corp. FOXA and DraftKings Inc. DKNG.
Here is a synopsis of all five stocks:
Bull of the Day:
Tactile Systems Technology is a Zacks Rank #1 (Strong Buy) that has an A for Value and an A for Growth. This medical instruments company develops devices for the treatment of chronic diseases at home. Let's explore more about this company in this Bull of The Day article.
Description
Tactile Systems Technology, Inc. is a medical technology company which develops medical devices for the treatment of chronic diseases at home. The company's product pipeline consists of Flexitouch System(R), the Entre System and the ACTitouch System (R). Tactile Systems Technology, Inc. is headquartered in Minneapolis, Minnesota.
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.
For Tactile Systems Technology, I see four straight beats of the Zacks Consensus Estimate over the last year. The average positive earnings surprise over the last year works out to be a positive 769%.
The average is skewed by the September 2023 quarter in which the company reported a gain of 85 cents when the estimate was calling for just 3 cents. That 2,733% beat dwarfs the other positive surprises of 192%, 171% and 88%.
Earnings Estimates Revisions
Earnings estimates revisions is what the Zacks Rank is all about.
The consensus estimate for the current quarter has held still at a loss of $0.11.
Next quarter has seen the consensus move from $0.09 to $0.10.
The full fiscal year 2024 estimate has moved from $0.42 to $0.56
Next year has moved from $0.80 to $0.88.
Valuation
The forward PE multiple for TCMD is 25.5x which is just around the industry average. The price to book stands at 1.8x, which means the value oriented will be interested in this stock as they tend to place more emphasis on that metric. The price to sales multiple comes in at 1.25x. Over the last two quarters, operating margins have increased from 9.7% to 10.7%.
Bear of the Day:
ESCO Technologies is a Zacks Rank #5 (Strong Sell) as earnings estimates have tracked lower after a recent earnings beat. The company is best known for its software that enables the vision of what energy information can accomplish for a utility. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
ESCO Technologies, Inc. is a producer of engineered products and systems, which engages in the provision of utility, industrial, aerospace, and commercial applications. It operates through the following segments: Aerospace and Defense, Utility Solutions Group, and RF Test and Measurement.
The Aerospace and Defense segment designs and manufactures filtration products, including hydraulic filter elements and fluid control devices used in commercial and defense aerospace applications, filter mechanisms used in micro-propulsion devices for satellites, and custom designed filters for manned aircraft and submarines.
The Utility Solutions Group segment provides diagnostic testing solutions that enable electric power grid operators to assess the integrity of high-voltage power delivery equipment. The RF Test and Measurement segment focuses on providing customers with the ability to identify, measure and control magnetic, electromagnetic, and acoustic energy. The company was founded in October 1990 and is headquartered in St. Louis, MO.
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 ESCO Technologies, I see three beats and one miss of the Wall Street Estimate. The most recent quarter was a miss with the company posting $0.62 when $0.65 was expected. 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 ESE I see annual estimates moving lower of late.
The current year (2024) consensus number moved lower from $4.66 to $4.20 over the last 60 days.
The next year has held still at $4.79 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:
How to Play Royal Caribbean (RCL) Ahead of Q1 Earnings
Royal Caribbean Group is scheduled to report first-quarter 2024 resultson Apr 25, before the opening bell.
The Zacks Consensus Estimate for earnings is pegged at $1.30 per share. In the prior-year quarter, RCL reported an adjusted loss per share of 23 cents. The consensus mark for revenues is pegged at $3.64 billion, suggesting 26.3% jump from a year ago.
The company is likely to have been aided by strong cruising demand from new and loyal guests, robust booking trends and new ship addition. Our model predicts passenger ticket revenues, and onboard and other revenues to improve 15.8% and 23.2% from the year-ago levels to $2,195.6 million and $1,218.1 million, respectively. We expect occupancy to be 105%.
The cruise industry giant's performance outlook appears promising, but investors must weigh potential risks against anticipated rewards before making investment decisions.
Solid Booking Trends and New Ship Additions Drive Optimism
RCL's results are likely to be aided by solid booking volumes concerning all key itineraries. Rise in consumer spending onboard and pre-cruise purchases are expected to bode well. With a load factor of 105% in the previous quarter, indicating full capacity operations, it is poised to capitalize on active consumer engagement and outperform the broader travel industry.
Early booking patterns and heightened onboard spending reflect active consumer engagement, positioning Royal Caribbean favorably to outperform the broader travel industry and attract new clients. With projected 40% earnings growth, 2024 is anticipated to be a record-breaking year, in line with the company's strategic objectives.
On the other hand, Royal Caribbean continues to benefit from new ship addition. Management focuses on new innovative ships and onboard experiences to differentiate its offering as well as deliver superior yields and margins. In 2023, RCL unveiled three new ships that align with its strategy and are poised to generate higher yields 2024 onward.
In 2024, management anticipates capacity to increase by 8.5% from the year-ago levels with the introduction of Utopia of the Seas and Silver Ray. The new vessels enhance vacation experiences, attract fresh customers to RCL's brands, and contribute to yield improvements and overall profitability.
High Costs Pose Challenges
Despite the optimistic outlook, Royal Caribbean faces challenges associated with high expenses primarily due to a rise in food, fuel and onboard expenses. It also expects fuel costs to increase and continue through 2025. Our model predicts total cruise operating expenses to increase 4.2% from the year-earlier levels in first-quarter 2024.
Investment Considerations: Balancing Risk and Reward
While Royal Caribbean's performance outlook appears promising, investors should exercise caution given the stock's recent surge in value. Over the past year, the company's shares have skyrocketed by 111.5%, outperforming the industry's growth of 11.2%.
As RCL has significantly outperformed the industry in the past year, its valuation looks a bit stretched compared with its own range as well as the industry average. The stock is currently trading at 2.07X forward 12-month sales, which compares with 1.29X for the Zacks sub-industry and 1.61X for the Zacks sector.
As investors await Royal Caribbean's first-quarter earnings report, its solid booking trends, new ship additions and anticipated financial performance paint a positive picture. However, concerns over high costs and stretched valuation warrant caution for potential investors. While Royal Caribbean's long-term prospects remain promising as the travel industry continues to recover, it may be prudent to wait for a more attractive entry point.
What the Zacks Model Unveils
Per our proven model, stocks with a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) are likely to beat on earnings. At present, Royal Caribbean has an Earnings ESP of +5.30% and a Zacks Rank of 3. Hence, it is presumed that Royal Caribbean is likely to beat estimates this earnings season.
In the last reported quarter, RCL delivered an earnings surprise of 10.6%.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Other Stocks Poised to Beat on Earnings
Here are some other stocks from the Zacks Consumer Discretionary sector that investors may consider, as our model shows that these, too, have the right combination of elements to post an earnings beat.
Fox Corp. has an Earnings ESP of +15.53% and a Zacks Rank of 3 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
FOXA is expected to register a 23.4% increase in earnings for the to-be-reported quarter. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 71.1%.
DraftKings Inc. currently has an Earnings ESP of +36.22% and a Zacks Rank of 3.
DKNG's earnings for the to-be-reported quarter are expected to increase 67.8%. It reported better-than-expected earnings in two of the trailing four quarters and missed on the other two occasions, with a negative surprise of 57.1%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
ESCO Technologies Inc. (ESE) : Free Stock Analysis Report
Fox Corporation (FOXA) : Free Stock Analysis Report
Tactile Systems Technology, Inc. (TCMD) : Free Stock Analysis Report
DraftKings Inc. (DKNG) : Free Stock Analysis Report
