For Immediate Release
Chicago, IL – September 19, 2023 – Zacks Equity Research shares Owens Corning OC as the Bull of the Day and Labcorp LH as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Mondelez International MDLZ, Hershey HSY and McCormick & Company MKC.
Here is a synopsis of all five stocks:
Bull of the Day:
Owens Corning develops and produces insulation, roofing, fiberglass composites, and related materials and products. The company has three reportable segments: Composites, Insulation, and Roofing.
Analysts have taken a bullish stance on the company's earnings outlook, helping land it into the highly-coveted Zacks Rank #1 (Strong Buy). Positive revisions have hit across all timeframes.
The company resides within the Zacks Building Products – Miscellaneous industry, which is currently ranked in the top 8% of all industries thanks to favorable earnings estimate revisions.
As many know, roughly half of a stock's movement can be attributed to its group, helping to clarify the importance of targeting industries seeing improved outlooks.
Aside from the favorable earnings outlook, let's take a closer look at a few other characteristics of Owens Corning.
OC shares have been red-hot in 2023, up more than 50% and widely outperforming the S&P 500. As we can see below by the green arrows circled, shares have been boosted post-earnings following back-to-back quarterly releases.
Regarding the most recent quarterly release, OC exceeded the Zacks Consensus EPS Estimate by more than 25% and posted revenue 2% ahead of expectations. Impressively, the company has exceeded bottom line expectations by an average of 18% across its last four releases.
In addition, income-focused investors could be attracted to Owens Corning, with shares currently yielding 1.5% annually. And the company has been committed to increasingly rewarding its shareholders, boasting an 18% five-year annualized dividend growth rate.
Throughout its latest quarter, the company returned more than $160 million to shareholders via dividends and share buybacks.
OC shares aren't valuation stretched, further reflected by its Style Score of "A" for Value. Shares presently trade at a 10.1X forward earnings multiple, slightly beneath the five-year median and the respective Zacks industry average.
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Owens Corning would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
Labcorp is a leading healthcare diagnostics company providing comprehensive clinical laboratory services and end-to-end drug development support. The company provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions.
Analysts have slashed their earnings expectations for the company, pushing it down to a Zacks Rank #5 (Strong Sell).
Let's take a closer look at a few other company characteristics.
Labcorp shares have seen rollercoaster-type price action in 2023, up a modest 0.3% on a year-to-date basis and widely lagging behind the general market.
The market hasn't reacted well to the company's recent quarterly reports, facing selling pressure regularly.
Regarding the most recent quarterly release, Labcorp fell short of the Zacks Consensus EPS Estimate by 1.5% but exceeded revenue expectations modestly. Earnings declined 31% from the year-ago period, whereas sales contracted 18% year-over-year.
Further, operating income totaled $266 million, down nearly 40% from the comparable period last year due to the notable reduction in COVID-19 testing. Below is a chart illustrating the company's revenue on a quarterly basis.
The company is forecasted to witness a growth slowdown in its current year (FY23), likely a reflection of reduced COVID-19 testing. Earnings are forecasted to be down more than 30% on 19% lower revenues in FY23 before returning to growth in FY24.
Negative earnings estimate revisions from analysts and a slowdown in COVID-19 testing paint a challenging picture for the company's shares in the near term.
Labcorp is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
3 Inflation-Proof Consumer Staples Stocks Worth a Watch Now
Inflationary pressure remains stubbornly high in the United States lately, thanks to a rise in fuel prices. Therefore, investors must closely watch consumer staples stocks such as Mondelez International, Hershey and McCormick & Company as they provide a natural hedge against inflation.
Consumer Price Still Running Hot
Prices of indispensable goods and services continue to move northward. For August, the consumer price index (CPI) advanced 0.6% month over month and registered its biggest monthly increase in 14 months, per the Labor Department. The CPI climbed 3.7% last month from a year ago.
The core CPI also advanced both on a monthly and yearly basis in August. In reality, increases in consumer prices were broad-based as the current rise in oil prices across the globe perked up price pressures. Robust demand for oil amid tighter supply pushed oil prices to this year's highest level (read more: 4 Stocks to Gain as Oil Prices Hit 2023 Highs).
The cost of food, shelter, gasoline and airfares increased in August. Additionally, the cost of home furnishing, auto insurance, trucks and cars rose last month.
Wholesale Price Scale Northward
The recent report on wholesale inflation is similar to consumer prices in August. The producer price index (PPI) increased 0.7% month over month in August and notched its biggest monthly gain in 14 months. The PPI increased 1.6% in August over the past 12 months.
The so-called core PPI that generally strips out the volatile energy and food costs also edged up monthly and yearly last month. Nonetheless, wholesale prices that tend to indicate future inflation trends advanced in August, fueled by higher energy costs.
Consumer Staples Stocks Act as a Protection Against Inflation
Elevated oil prices leading to a rise in inflation decreases the purchasing power of your dollars. This leads to a drop in consumer outlays, which impacts economic growth and spurs volatility in the stock market.
However, investors shouldn't stay away from investing in stocks. Instead, they should bet on companies that are unperturbed by price pressures and their adverse effects on the stock market.
Such stocks belong to the consumer staples sector. Consumers may be compelled to cut back on discretionary spending but must purchase staple products. These products are cyclical, and their demand is constant irrespective of market upheavals.
Keep an Eye on These 3 Consumer Staples Stocks
We have, therefore, highlighted three inflation-proof consumer staples stocks that astute investors should keep a tab on. These stocks have paid dividends steadily, indicating a solid business model. Presently, these stocks have a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
Mondelez International is one of the leading global snacks company. The Zacks Consensus Estimate for its current-year earnings has increased 1.6% over the past 60 days. The company's expected earnings growth for the current year is 9.8%.
It has a dividend yield of 2.1%. In the past five-year period, MDLZ has increased its dividend six times, and its payout has advanced by 10%. MDLZ's payout ratio presently sits at 49% of earnings. Check Mondelez International's dividend history here.
Hershey is the largest chocolate manufacturer in North America. In addition, Hershey manufactures pantry items like baking ingredients, toppings, and beverages; and gum and mint refreshment products. The Zacks Consensus Estimate for its current-year earnings has increased 0.7% over the past 60 days. The company's expected earnings growth for the current year is 12.1%.
It has a dividend yield of 2.3%. In the past five-year period, HSY has increased its dividend five times, and its payout has advanced by 8.8%. HSY's payout ratio presently sits at 45% of earnings. Check Hershey's dividend history here.
McCormick & Company is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry. The Zacks Consensus Estimate for its current-year earnings has increased 1.5% over the past 90 days. The company's expected earnings growth for the current year is 5.1%.
It has a dividend yield of nearly 2%. In the past five-year period, MKC has increased its dividend five times, and its payout has advanced by almost 9%. MKC's payout ratio presently sits at 60% of earnings. Check McCormick & Company's dividend history here.
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