PRA Group and Daktronics have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 26, 2024 – Zacks Equity Research shares PRA Group PRAA as the Bull of the Day and Daktronics DAKT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Williams Companies WMB, Chevron CVX and Kinder Morgan KMI.
Here is a synopsis of all five stocks:
Bull of the Day:
The market is cheering the start of the rate cut cycle. It felt like it was never going to come and that inflation was going to beat us to death. The numbers have reeled in, thankfully, allowing for the Fed to shift its stance to accommodative policy. That's good news for the stock market and great news for investors looking for strong earnings track records. One way to dig up these track records is by leaning on the strength of the Zacks Rank.
Stocks in the good grades of our Zacks Rank have the strongest earnings trends. That includes today's Bull of the Day, PRA Group. PRA Group is a financial and business services company, engages in the purchase, collection, and management of portfolios of nonperforming loans worldwide. It is involved in the purchase of accounts that are primarily the unpaid obligations of individuals owed to credit originators, which include banks and other types of consumer, retail, and auto finance companies.
The reason for the favorable rank is several analysts have come out and upped the ante on their earnings estimates. Over the last sixty days, three analysts have pushed up their estimates for the current year and next year. The impact to the Zacks Consensus Estimate has been a big one. Current year consensus is up from 70 cents to $1.33 while next year's number is up from $1.72 to $2.01. That's on revenue growth of 33% this year and 6% next year.
A quick peek at the Price, Consensus and EPS Surprise Chart on Zacks.com shows some very bullish divergence between earnings estimates and the stock's price. Estimates bottomed out at the end of last year. The stock did pop up initially after a huge earnings report at the end of the year. That didn't translate to a rally this year though, and even though the stock has continued to deliver earnings beats, the share price has suffered. That distance between the price and earnings shows me the opportunity.
This is a stock that was trading around $50 at the start of 2022. It's now less than half that amount. If earnings can continue to move in a positive direction, it's only a matter of time before the share price keeps up.
Bear of the Day:
While the market sighed a collective breath of relief after the Fed cut 50-bps, this week has been anything but bullish for the broad market. I'm looking at 5 consecutive red daily candles on the Russell 2000. Long-term investors out there should not despair. Rather, there are going to be a ton of stocks which were overvalued which are going to come on back down to Earth.
Rather than blindly buying all the dips out there thought, you should focus your attention on stocks with strong earnings trends, and try to avoid those with earnings moving to the downside. Unless, of course, you have the patience of a saint and a good reason to believe a turnaround is eminent.
One stock that's seen earnings estimates move in the wrong direction is today's Bear of the Day, Daktronics. Daktronics designs, manufactures, and sells electronic scoreboards, programmable display systems and large screen video displays for sporting, commercial, and transportation applications in the United States and internationally.
Current year estimate revisions are the reason why this stock is currently a Zacks Rank #5 (Strong Sell).Following its last report, analysts have come out and cut expectations for the current quarter, next quarter and current year. The estimate revisions have dropped our Zacks Consensus Estimates for the current year from $1.13 to 90 cents. That means current year earnings are set to contract 29.69%.
The good news for long-term investors is that nest year's numbers are forecast to pick back up. Next year's Zacks Consensus Estimate is up from 92 cents to $1.17. That is growth of 30.56% for the current year.
The Electronics – Miscellaneous Products industry ranks in the Bottom 35% of our Zacks Industry Rank.
Additional content:
3 High-Yield Large Caps to Watch in the Volatile Energy Market
The Oil/Energy market has been roiled by concerns over a slowdown in global economic activity, particularly the decline in fuel demand in China. Both the U.S. and the global benchmark prices recently fell to their lowest levels in more than two years.
Sustained volatility, combined with potential OPEC+ production increases, threatens to strain energy companies' revenues and margins in the coming quarters, creating a challenging outlook for the operators.
Given the current state of affairs in the energy sector, it seems a wise investment strategy to search for stocks that provide a solid level of defense and often come with dividend payouts. A group of stocks that fulfill these criteria are the large caps — defined as companies with a market capitalization of $10 billion or more.
The Williams Companies, Chevron and Kinder Morgan stand out as compelling choices for investors seeking large-cap energy exposure.
Why Large Caps?
These companies possess strong financial positions and established reputations and enjoy extensive analyst coverage. Moreover, their consistent dividend payments make them popular among income-oriented investors. Investors seeking reliability and a solid track record will find these large-cap companies appealing.
While large-cap companies may offer less growth potential compared to their smaller counterparts, they compensate with a lower level of price volatility. This characteristic makes them an excellent choice for investors who prefer a steadier investment approach, free from drastic commodity price swings.
Our Choices
Williams Companies: Founded in 1908, Oklahoma-based The Williams Companies is a premier energy infrastructure provider in North America. The company's core operations include finding, producing, gathering, processing, and transporting natural gas and natural gas liquids.
The Tulsa, OK-based WMB beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 11.3%. Williams has a market capitalization of roughly $56.3 billion.
A major incentive for holding the WMB stock is dividend. With a quarterly payout of 47.50 cents, shares currently yielding 4.1% annually, well above the Zacks Oil/Energy sector average of 3.8%. Reflecting a shareholder-friendly nature, the Zacks Rank #3 (Hold) company has hiked its payout by more than 4% over the last five years.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Chevron: Based in San Ramon, CA, Chevron is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy — from oil production to refining and marketing.
Chevron beat the Zacks Consensus Estimate for earnings in two of the last three quarters. The #3 Ranked company has a market capitalization of roughly $269.8 billion.
With a quarterly payout of $1.63 per share, the CVX stock has a 4.4% dividend yield, above the generous sector average and significantly over the S&P 500's 1.2% average.
Kinder Morgan: Houston, TX-based Kinder Morgan is a leading midstream energy infrastructure provider in North America. The company operates pipelines across 83,000 miles to transport natural gas, crude oil, condensate, refined petroleum products, CO2 and other products.
Kinder Morgan – carrying a Zacks Rank of 3 - is valued at some $49.2 billion. The energy infrastructure provider's 2024 earnings per share indicate 11.2% year-over-year growth.
KMI pays out a quarterly dividend of 28.75 cents, which gives it a 5.2% yield at the current stock price.
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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Chevron Corporation (CVX) : Free Stock Analysis Report
PRA Group, Inc. (PRAA) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
Daktronics, Inc. (DAKT) : Free Stock Analysis Report