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Aspen, Carpenter Technology, Netflix, IBM and United Airlines highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – January 22, 2020 – Zacks Equity Research Shares of Aspen Group ASPU as the Bull of the Day, Carpenter Technology Corporation CRS asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix NFLX, IBM Corp. IBM and United Airlines UAL.

Here is a synopsis of all five stocks:

Bull of the Day:

Aspen Group is a Zacks Rank #1 (Strong Buy) with some low Zacks Style Scores, but there is something to this stock. Yesterday, it rose more than 9% as increased significantly. Let’s take a look at why investors are sending shares of ASPU up in a big way in this Bull of the Day article.

Description

Aspen Group, Inc. is an online post-secondary education company. It offers certificate programs and associate, bachelor, master, and doctoral degree programs in a range of areas, including business and organization management, education, nursing, information technology, and general studies. Aspen Group, Inc. is headquartered in Denver, Colorado.

Recent Earnings

The most recent earnings report was a very good one. The company posted a loss of 3 cents when the Zacks Consensus Estimate was calling for a loss of 7 cents. That four cent difference was good for a 57% positive earnings surprise. Investors love to see that and the also tells us that the move to profitability is not too far off.

Estimate Movement

I see the estimate are moving in the right direction for ASPU. The current quarter as moved from a loss of 7 cents 90 days ago to a loss of 5 cents. The next quarter has also seen a nice bump up in number from a loss of four cents to two cents.

The fiscal year 2020 has moved from a loss of 29 cent to a loss of 22 cents, so still some work to do there.

The real story here is the fiscal 2021 numbers. They moved from a loss of two cents to a gain of two cents over the last 60 days.

So the pathway to profitability is there, the question really becomes when does the company turn the corner? There is a good chance it happens longs before the 2021 fiscal year.

Valuation

Losses for this internet services company are shrinking and the topline has some outstanding growth. I see 49% year over year growth and that is buoyed by 16.7% sequential growth. That is great to see and will push this company to profitability in a few quarters.

Bear of the Day:

Carpenter Technology Corporation has slipped to a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  Let's take a look at why this stock fell to the lowest Zacks Rank.

Description

Philadelphia, PA-based Carpenter Technology Corporation is a producer and distributor of premium specialty alloys, including titanium alloys, powder metals, stainless steels, alloy steels, and tool steels as well as drilling tools. The company’s provides solutions for critical applications across diversified end-use markets - Aerospace and Defense (accounting for around 54% of the company’s revenues), Energy (8%), Transportation (7%), Medical (9%), Industrial and Consumer (14%) and Distribution (6%).

Recent Earnings

After posting three straight beats of the Zacks Consensus Estimate, CRS missed on its more recent report.  The company reported EPS of $0.85 when $0.89 was expected.  The four cent miss translates to a negative earnings surprise of 4.5%.

The focus now shifts to the next earnings report.

Estimate Movement

Following the miss, estimates have been falling.

The current quarter has actually seen the consensus increase by a penny over the last 60 days, but the most recently updated contribution was at $0.83 when the consensus is at $0.87.  That most recent update is the driver behind the Zacks ESP.

The next quarter has estimates dropping from $1.06 to $1.02.

The fiscal year 2020 has estimates down from $3.92 to $3.83 and the following year has seen a similar reduction in earnings estimates. Adjustments to analyst models have resulted in the consensus moving from $4.33 to $3.75.

When estimates move lower, the Zacks Rank follows suit.  Often times, we see stock prices move in lock step with earnings estimates.

Valuation

A forward PE of 12x is attractive to some investors, but the 2.2% topline growth rate might be the reason for the lower earnings multiple.  The Price to Book multiple of 1.4x is pretty low but so is the Price to Sales multiple of 0.92x.  A low book value is good, but a price to sales of less than one tells me that the market does not value incremental sales... and that isn't something that excites me or a lot of other investors.

Additional content:

Netflix, IBM and United All Beat Q4 Estimates

 

Streaming giant Netflix is the first of the FAANG stocks to report Q4 earnings so far, with headline beats on both top and bottom lines, but worse-than-expected subscriber growth numbers. Earnings of $1.30 per share was way ahead of the 51 cents in the Zacks consensus, but this is attributed to a one-time windfall associated with a tax accrual. Revenues in the quarter of $5.47 billion outpaced the estimated $5.44 billion, which itself was up 30% year over year.

Shares initially fell 3.6% on the earnings release, based on U.S. and Canada net adds of 550K, lower than expected. Further, guidance for Q1 was light -- 7 million now estimated is well off the pace of 8.5 million analysts were looking for. Average revenue per user (ARPU) also came in on the low side. That said, global net adds beat expectations to 8.76 million, and CEO Reed Hastings points out Netflix grew its subscriber numbers even as Disney+ came on the market in Q4. Shares are now up 0.4% in off-hours trading.

IBM Corp. shares are up 4% in late trading Tuesday after posting its beat on top and bottom lines: $4.71 per share on $21.78 billion marked a routine 2-cent beat on earnings, but the revenue beat connotes the first time in the past 5 quarters Big Blue has posted a positive revenue surprise. Listeners to the conference call will determine the progress of IBM's Red Hat acquisition regarding its key cloud-service business. Guidance for Q1 2020 is also up.

United Airlines posted modest beats on its earnings and sales for Q4: $2.67 per share beat by 3 cents on $10.89 billion revenues, which modestly surpassed expectations. The airline major was able to keep its Q4 cost metric down to 2.7% in the quarter, beneath the earlier projected 3.5%. However, shares are down after hours by 4.3%.
 

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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
International Business Machines Corporation (IBM) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Aspen Group Inc. (ASPU) : Free Stock Analysis Report
 
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
 
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