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Macy's and Five Below have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL –June 10, 2024 – Zacks Equity Research shares Macy’s M, as the Bull of the Day and Five Below FIVE, as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Siemens Aktiengesellschaft SIEGY, ASML Holding N.V. ASML and Novo Nordisk A/S NVO.

Here is a synopsis of all five stocks:

Bull of the Day:

Ticking up at all-time highs on the S&P 500, the market can make you feel invincible. It’s like no matter what you pick, you’re going to make money because everything is going up. However, it’s not the great market times you should be focused on. Eventually, the market is going to get picky. And when it does, you want to make sure that you are invested in stocks that have the strongest earnings trends. Certain stocks continue to show promising potential due to strong earnings trends and favorable analyst estimates. Today’s Bull of the Day stands out as a beacon of resilience and opportunity in the retail sector, earning a Zacks Rank #1 (Strong Buy).

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Today’s Bull of the Day is Macy’s. Macy's has been a staple in the retail industry, adapting to market changes and evolving consumer preferences. The company’s strategic initiatives, including its digital transformation and focus on omnichannel retailing, have positioned it well for sustained growth. Macy's is capitalizing on the resurgence in consumer spending and a renewed interest in physical retail locations, complemented by its strong online presence.

The primary reason for Macy's bullish outlook is the significant upward revisions in earnings estimates. Over the last 60 days, analysts have raised their earnings estimates for the current year and next year, reflecting increased confidence in Macy's operational strategy and market positioning. The Zacks Consensus Estimate for the current year has risen from $2.58 to $2.79 per while next year’s estimate has also seen a significant boost, climbing from $2.56 to $2.80 per share

Macy's has been proactive in enhancing its business model, focusing on key areas such as supply chain optimization, merchandise planning, and customer engagement. The company’s Polaris strategy aims to streamline operations, expand its private label portfolio, and enhance the overall shopping experience. These initiatives are paying off, as evidenced by the increasing sales and profitability metrics.

Moreover, Macy's has been effective in managing inventory and reducing excess stock, leading to improved gross margins. The company’s efforts to bolster its e-commerce capabilities have also borne fruit, with online sales showing significant growth. The digital platform now accounts for over 30% of total sales, underscoring the success of Macy's omnichannel approach.

Bear of the Day:

Not all retail stocks are created equal. While some have come out of the gate swinging for the fences and crushing earnings this quarter, others are teetering on the brink. The downside risk is palpable for a number of names. One way to shelter yourself from this downside risk is to avoid stocks that have seen their earnings locked in downtrends. Avoiding these can be the key to making it through the next market downturn which is inevitable.

Today’s Bear of the Day is a stock that is not in the good graces of our Zacks Rank and is therefore also in a bad, negative earnings trend. It’s Zacks Rank #5 (Strong Sell) Five Below. Five Below has built its brand on offering trendy and affordable products to a younger demographic. However, the company's reliance on discretionary spending places it at a disadvantage in the current economic climate, where inflationary pressures and reduced consumer confidence are curtailing non-essential purchases. With consumers tightening their belts, Five Below's sales are likely to suffer, particularly in its core market segments of teens and young adults.

The company is also grappling with supply chain issues, which have led to increased costs and delays in inventory restocking. These operational challenges are exacerbating the company’s financial woes, as higher costs eat into margins and disrupt the timely availability of popular products. In addition, the rapid expansion of Five Below’s store footprint is stretching its resources thin, further complicating efforts to maintain efficient operations across its growing network of locations.

The reason for the unfavorable Zacks Rank is that five analysts have cut their earnings expectations for the current year and next year over the last week. These negative revisions have dropped our Zacks Consensus Estimate for the current year from $6.48 to $5.68 while next year’s number is off from $7.70 to $6.81. That’s still strong earnings growth for next year but the numbers are moving in the right direction.

Five Below is in the Retail – Miscellaneous industry which ranks in the Bottom 42% of our Zacks Industry Rank. There are few stocks in this industry which are in the good graces of our Zacks Rank.

Additional content:

ECB Rate Cut Propels European Markets: 3 Must-Watch Stocks

Despite sticky price pressures in the eurozone, the European Central Bank (ECB) delivered a widely expected interest rate cut in its June meeting, helping drive regional equities to record highs. Headline inflation in the eurozone increased to 2.6% in May from April’s reading of 2.4%. Concurrently, ECB staff expect inflation to remain at 2.5% for 2024, up from an earlier projection of 2.3%.

However, the ECB shrugged off sticky inflation and began its interest rate-trimming cycle ahead of the Federal Reserve as price pressure continued to cool down faster in the eurozone than in the United States. The ECB trimmed the key interest rate to 3.75% from 4%, where it had been since September 2023. Market pundits did price in the 25-basis point rate cut and forecast two more rate cuts this year.

Interest rate cuts bode well for the economy vis-à-vis the stock market, particularly in the absence of a broad recession. Rate cuts boost consumer outlays and decrease borrowing costs. Such easing of monetary policy helps the equity market to scale upward. The market rally gets stronger when the rate cuts are accompanied by robust economic growth.

Talking about economic growth, the eurozone has already exited a recession, primarily driven by its main economies. The annual rate of GDP expanded by 0.3% in the first quarter in the eurozone and registered the strongest growth in one and a half years. Pick-up in global trade and a strong labor market mitigated geopolitical risks even though the energy sector continues to feel the heat of Russia’s invasion of Ukraine. Lest we forget, economic growth in the prior six quarters was almost stagnant.

Nonetheless, the rate cut has provided a much-needed economic boost to the eurozone and pushed the pan-European Stoxx 600 index to close at a record high on Jun 6. Rate-sensitive sectors led the gains, with the banking, healthcare, and technology sectors scaling northward by more than 1%.

Thus, it’s prudent for astute investors to keep an eye on European stocks such as Siemens Aktiengesellschaft, ASML Holding N.V. and Novo Nordisk A/S that are well-poised to make the most of the broader market rally. These stocks have a Zacks Rank #2 (Buy) and 3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Siemens is the world's largest supplier of products, systems, solutions, and services for industrial automation and building technology. Siemens has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.2% over the past 60 days. SIEGY’s expected earnings growth rate for the current year is 9.1%.

ASML is a world leader in the manufacture of advanced technology systems for the semiconductor industry. ASML has a Zacks Rank #3. The Zacks Consensus Estimate for its next-year earnings has moved up 2.7% over the past 60 days. ASML’s expected earnings growth rate for the next five-year period is 20%.

Novo Nordisk is the leader in the worldwide diabetes market. The company has a full portfolio of glucagon-like peptide 1 (GLP-1) receptor agonists, modern insulins and human insulins. Novo Nordisk has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has moved up 3% over the past 60 days. NVO’s expected earnings growth rate for the current year is 26.7%.

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Novo Nordisk A/S (NVO) : Free Stock Analysis Report

Macy's, Inc. (M) : Free Stock Analysis Report

ASML Holding N.V. (ASML) : Free Stock Analysis Report

Five Below, Inc. (FIVE) : Free Stock Analysis Report

Siemens AG (SIEGY) : Free Stock Analysis Report

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