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Pulte Group, First Data and Nestle highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – April 01, 2016– Zacks Equity Research highlights Pulte Group (PHM) as the Bull of the Day and First Data Corp (FDC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nestle (NSRGY).

Here is a synopsis of all three stocks:

Bull of the Day :

Pulte Group (PHM) beat the Zacks Consensus Estimate about two months ago and since that time we have seen a great post earnings drift higher. The stock is a Zacks Rank #2 (Buy) and today it is the Bull of the Day.

The Numbers

PHM beat the Zacks Consensus Estimate of $0.50 by $0.07 for a 14% positive earnings surprise. Revenues came in a little above expectations at $2.06 billion for a 9.3% positive revenue surprise.

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Post Earnings Drift

Following the beat, the stock jumped 4.2% in the session immediately the release. That wasn't exactly an out sized move might make investors believe that the shipped has sailed. Big beats in tech stocks can cause investors to chase stocks that are moving higher, something we call "FOMO", or Fear Of Missing Out.

The truth is, the rally in this stock was just getting started. Since the beat the stock has continued to gain ground, tacking on another 13%.

This is the definition of a post earnings drift higher.

Description

Pulte Group is in the home building business. The company is involved in the acquisition and development of land primarily for residential purposes and the construction of housing on land. Pulte Group was founded in 1950 and is headquartered in Atlanta, Georgia.

Earnings History

The recent earnings history for PHM is a mixed bag with three beats and four misses in the last seven reports.

The recent beat of 14% is the biggest beat, with the two preceding beasts coming in at 4.8% and 2.8% respectively.

Estimates

The FY16 Zacks Consensus Estimate has recently inched higher. The number stood at $1.53 in January of this year, but then kicked higher to $1.54 following the beat at the end of the month. Since that time the Zacks Consensus Estimate has remained at $1.54.

The FY2017 Zacks Consensus Estimate moved from $1.84 in December of last year to $1.87, which is where it stands today.

Valuation

Normally I look for growth stocks, I want that big burst in revenue to drive earnings and propel the stock higher. There are a lot of tech stocks that have potential for such a move, but even I can recognize when a value stock looks too good to pass up on.

PHM has a forward PE of 12x, and that is right in line with the industry average. The price to book multiple of 1.4x is just below the 1.6x industry average, and the price to sales multiple is also in line with the industry average.

After reading that, you might start to wonder where the value is, and as I see it, its in the growth. Analysts are calling for topline growth of 19% for PHM in 2016, while the industry average is looking at 15%.

2017 Looks even better with 13% topline growth for PHM versus only 9% for the industry average. The analysts are also calling for EPS growth of 22% in 2017 for PHM compared to 18% for the industry average.

To me, the better growth numbers deserve a premium multiple, but the stock just isn't getting one. That is what makes this stock a value in my eyes.

Bear of the Day:

First Data Corp (FDC) isn't exactly a new stock, but a recent IPO means that the slate was pretty much wiped clean. That said, the company missed the Zacks Consensus Estimate and the stock has slipped to a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.

The Numbers

FDC missed the Zacks Consensus Estimate of $0.17 by $0.24 for a 141% negative earnings surprise. Revenues came well ahead of expectations at $2.9B for an 56% positive revenue surprise.

Description

First Data Corp provides payment processing to merchants and financial institutions.

Earnings History

There is only one report for this stock, so there isn't really enough data here to make a proper investment decision. A wise investor will generally wait for at least four quarters of information even though this company has been around for many years.

Estimates

Here is the real reason the stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day. The Zacks Consensus Estimate has fallen in each of the last two months. The FY16 estimate stood at $1.12 in January but fell to $1.03 in February and is now down to $1.02 in March.

Next year is seeing an even larger move to the downside, with numbers sliding from $1.43 to $1.39 down to $1.32 over the same time period as mentioned above. That is the reason this stock is a Zacks Rank #5 (Strong Sell).

Additional content:

Why Is Nestle a Zacks Rank #5 (Strong Sell) Now?

Nestle (NSRGY) is the largest food company in the world, with holdings in coffee, water, and ophthalmology brands as well. Among its more than 8,500 products are Alpo dog food, Baby Ruth and Butterfinger candy bars, Carnation evaporated and condensed milk, Coffee-Mate coffee creamer, Kix breakfast cereals, Nestle Quik chocolate drink mix, Stouffer's frozen dinners, and Toll House morsels.

Nestle was just added to the Zacks Rank #5 (Strong Sell) list today.

Right now, Nestle has a “D” grade for VGM, which takes a weighted average of the company’s grades in the Value, Growth, and Momentum categories of our Style Scores system. The stock has lost over 2.5% on the year, while its industry peers have gained about 7.5% on average.

Additionally, in the past 60 days, we have seen a total of four negative estimate revisions for the company’s annual earnings. Driving this downturn is a series of public relations nightmares, including food safety concerns in India surrounding Nestle’s popular Maggi noodles and a slave labor suit stemming from its cocoa bean sources.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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PULTE GROUP ONC (PHM): Free Stock Analysis Report
 
FIRST DATA CORP (FDC): Free Stock Analysis Report
 
NESTLE S A REG (NSRGY): Free Stock Analysis Report
 
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