Yahoo Finance BRC and American Woodmark have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – June 27, 2024 – Zacks Equity Research shares BRC Inc BRCC as the Bull of the Day and American Woodmark AMWD as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Rivian Automotive, Inc. RIVN, Volkswagen AG VWAGY and Blue Bird Corp. BLBD.
Here is a synopsis of all five stocks.
Bull of the Day:
BRC Inc is a Zacks Rank #1 (Strong Buy) that has a F for Value and an A for Growth. This company makes and ships coffee and associated merchandise. There are a handful of stores in Arkansas but the majority of sales are made online. Let’s explore more about this company in this Bull of The Day article.
Description
Black Rifle Coffee Company engages in the business of sourcing, processing, manufacturing, packaging, distributing, marketing, and selling coffee and other food and beverage products. It utilizes a three-pronged approach to craft a brand that resonates with its customer base and enhances brand loyalty: Inform, Inspire, and Entertain. The company was founded by Evan Hafer and Mat Best in 2014 and is headquartered in Salt Lake City, UT.
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.
I see a good earnings history with 3 beats and 1 miss over the last year. There was a monster beat at the end of 2023 where the company posted 19 cents in EPS when a loss of a penny was expected. That beat skews the average in a big way but was followed up by another profitable quarter.
Earnings Estimates Revisions
Earnings estimates revisions is what the Zacks Rank is all about.
Estimates are moving higher for BRC.
This quarter has moved from a loss of 2 cents to a loss of 1 cent.
Next quarter actually slipped from a gain of a penny to breakeven.
The full year 2024 has moved from a loss of 2 cents to a gain of 3 cents.
Next year has moved from $0.07 to $0.12.
Growth
This year the company is looking at 13% topline growth this year to $447M. Next year that number increases by another 10% to just shy of $500M.
The most recent quarter saw topline growth of 17%.
Valuation
The flip to profitability means a low level of earnings right now, but that also means the forward PE is especially bloated at 236x. That changes dramatically when we push that multiple out to 2025. The price to book is a little high right here at 27x and price to sales is 3.4x.
Margins are the story here as gross margins moved from 33% in 1Q23 to 43% in the most recent quarter. That is a huge swing.
We have seen operating margins go from -4% to 0.7% to 2%.
Margin expansion along with sales increases will drive this stock higher.
Bear of the Day:
American Woodmark is a Zacks Rank #5 (Strong Sell) as earnings estimates have tracked lower after a recent earnings miss. The company is the third largest manufacturer of kitchen and bath cabinets. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
American Woodmark Corp. engages in the manufacture and distribution of kitchen cabinets and vanities for the remodeling and new home construction markets. The company was founded by William F. Brandt, Jr., Richard Al Graber, Jeffrey S. Holcomb and Donald P. Mathias in 1980 and is headquartered in Winchester, VA.
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 American Woodmark, I see three straight beats of the Zacks Consensus Estimate followed up by a miss. The most recent quarter was a miss with the company posting $1.75 when $1.70 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 ARW I see annual estimates moving lower of late.
The current fiscal year consensus number moved lower from $9.20 to $8.31 over the last 60 days.
The next year has moved from $10.23 to $9.16 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:
Rivian (RIVN) & Volkswagen to Form Joint Venture
Rivian Automotive, Inc. and Volkswagen AG have announced a plan to create an equally owned and controlled joint venture (JV) focused on developing next-generation electrical architecture and advanced software technology.
This partnership aims to accelerate software development for both companies by leveraging their complementary strengths, reducing per-vehicle costs through increased scale and driving global innovation. Rivian’s existing zonal hardware design and integrated technology platform will be the foundation for the JV’s future software-defined vehicle (SDV) development, applicable to both companies' vehicles. RIVN intends to contribute its electrical architecture expertise and license existing intellectual property to the joint venture.
The companies plan to launch vehicles using the technology developed by JV in the latter half of this decade. In the short term, the JV will allow Volkswagen to use Rivian’s existing electrical architecture and software platform, helping VWAGY expedite its SDV plan and transition to a pure zonal architecture. Both companies will continue to operate their vehicle businesses independently.
This deal is significant for Rivian, which faces financial challenges as it ramps up production of its electric trucks and sport utility vehicles. While EV startups struggle with demand slowdowns due to high interest rates, traditional automakers face difficulties in building battery-powered vehicles and advanced software.
Per RJ Scaringe, founder and CEO of Rivian, this partnership is expected to expand RIVN's market reach and secure the necessary capital for growth. It aligns with Rivian’s mission to transition away from fossil fuels through innovative products and services.
Volkswagen plans to invest $5 billion in Rivian, starting with an initial $1 billion through an unsecured convertible note, which will convert into RIVN’s common stock upon regulatory approval by Dec 1, 2024. An additional $4 billion investment will follow as part of the transaction. This funding will support Rivian in developing its upcoming R2 SUVs, which are set to release in 2026.
Extensive work has been done to ensure compatibility between Rivian’s electrical architecture and Volkswagen’s vehicles. The formation of the JV is expected to be completed by the fourth quarter of 2024, subject to definitive agreements and regulatory approvals. Lazard and BDT & MSD Partners are serving as financial advisors to Rivian.
Half of the convertible note's outstanding amount will be converted based on a specific volume-weighted average price (VWAP) before the announcement, with the other half based on the VWAP before the conversion date.
Additional investments of up to $2 billion in Rivian’s common stock will occur in two $1 billion tranches in 2025 and 2026, with pricing based on the VWAP of Rivian’s stock before each purchase. The $2 billion JV investment will be split between an initial payment and a loan available in 2026.
Zacks Rank & Key Picks
RIVN currently carries a Zacks Rank #3 (Hold).
One better-ranked stock in the auto space is Blue Bird Corp., sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.29% and 155.14%, respectively. The EPS estimates for 2024 and 2025 have improved 63 cents and 69 cents, respectively, in the past 60 days.
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American Woodmark Corporation (AMWD) : Free Stock Analysis Report
Blue Bird Corporation (BLBD) : Free Stock Analysis Report
Volkswagen AG Unsponsored ADR (VWAGY) : Free Stock Analysis Report
Rivian Automotive, Inc. (RIVN) : Free Stock Analysis Report
BRC Inc. (BRCC) : Free Stock Analysis Report
