For Immediate Release
Chicago, IL - December 12, 2018 - Zacks Equity Research AeroVironment AVAV as the Bull of the Day, Beacon Roofing Supply BECN asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Canopy Growth CGC and Constellation Brands STZ .
Here is a synopsis of all four stocks:
Bull of the Day :
AeroVironment is a Zacks Rank #1 (Strong Buy) and it is the Bull of the Day today. Let's take a look at the recent moves in estimates and why it has ascended to the best Zacks Rank.
AeroVironment, Inc. designs, develops, produces, operates a portfolio of products and services for government agencies, businesses and consumers. It operates through two segments: Unmanned Aircraft Systems, which focuses primarily on the design, development, production, support and operation of UAS and tactical missile systems that provide situational awareness, multi-band communications, force protection and other mission effects, and Efficient Energy Systems, which focuses primarily on the design, development, production, support and operation of electric energy systems.
The company supplies UAS, tactical missile systems and related services primarily to organizations within the United States Department of Defense. The company also supplies charging systems and services for electric vehicles, and power cycling and test systems to commercial, consumer and government customers. It serves the U.S. Department of Defense, including the U.S. Army, Marine Corps, Special Operations Command, Air Force, and Navy.
AVAV has topped the Zacks Consensus Estimate in each of the last three quarters. The most recent report came on November 29 and it was a solid beat, coming in $0.13 ahead of the Zacks Consensus Estimate. That beat translated into a positive earnings surprise of 81%, and that followed positive earnings surprises of 800%+ and 63% in the last two quarters.
Following the most recent beat, estimates have moved higher. The Zacks Consensus Estimate for 2018 has moved from $1.36 to $1.54 in the span of about 4 weeks.
Over that same time horizon, the Zacks Consensus Estimate for 2019 moved from $1.49 to $1.56.
When earnings estimates move higher, the Zacks Rank tends to follow suit.
At 46x forward earnings, AVAV is somewhat richly valued. At the same time a 3.8x price to book isn't that bad and there could still be room for growth in terms of the price to sale multiple of 5x.
Margins have been improving of late and if that continues, earnings estimates are bound to move higher.
Bear of the Day :
Beacon Roofing Supply is a Zacks Rank #5 (Strong Sell) and today is the Bear of the Day. Let's take a look a why the Zacks Rank slipped to the lowest level in this article.
Beacon Roofing Supply, Inc. is one of the largest distributors of residential and non-residential roofing materials in the United States and Canada. It also distributes other complementary exterior building products. It operate in several states and three Canadian provinces and is a leading distributor of roofing materials in key metropolitan markets in the Northeast, Mid-Atlantic, Southeast and Southwest regions of the United States and in Eastern Canada.
BECN posted a miss of the Zacks Consensus Estimate on November 19. The company posted a gain of $1.07 when the estimate was calling for $1.36. That 29 cent miss translates into a negative earnings surprise of 21%.
It was the third miss in a row for BECN, something investors do not like to see.
Since the miss, estimates have been dropping. The Zacks Consensus Estimate for the current quarter has slipped from $0.77 30 days ago to $0.57.
The Zacks Consensus Estimate for 2018 has dropped from $3.84 to $3.08 over that same time horizon.
The same can be said of the 2019 number, which has fallen from $4.55 to $3.45 over the same time period.
When estimates fall, the Zacks Rank falls with them.
Canopy Growth (CGC) Gains on Hemp Legalization, Institutional Interest
Shares of Canopy Growth were up more than 6% in late afternoon trading Tuesday, as investors expressed optimism about the Senate's hemp legalization bill and management's comments about interest from institutional investors.
Members of the U.S. Congress added a hemp legalization provision to the final version of the 2018 Farm Bill, and that law is now expected to be voted on later today. The provision received bipartisan support, with Senator Ron Wyden (D-OR) helping the Democratic push and Senate Majority Leader Mitch McConnell (R-KY) signing the final bill language with a hemp pen on Monday.
McConnell called the inclusion of a hemp legalization provision a "victory for farmers and consumers throughout our country," while Wyden declared it a "huge win for Oregon farmers and rural communities across the country."
The news also excited investors following Canadian marijuana stocks, as hemp-a species of cannabis with limited psychoactive effects but high value for production of papers, textiles, and other materials-offers a potential entrance to the U.S. market.
Other news on this front was breaking on Tuesday afternoon, too. According to the New York Post , aides said today that New York Governor Cuomo will introduce a plan for legalizing marijuana in the state.
Cuomo recently held listening sessions across New York to gather residents' thoughts on legal cannabis, and now his team will review that feedback in the hopes of releasing a comprehensive proposal in early 2019.
A study published earlier this year by Comptroller Scott Stringer projected that legal marijuana could be a $3.1 billion market in New York State, the Post reported. This could potentially generate hundreds of millions of dollars in state and city tax revenue.
Canopy Growth CEO Bruce Linton appeared on BNN Bloomberg earlier Tuesday to tout the recent institutional support witnessed by cannabis producers.
"What you're seeing is retail jumping in and out. But when they get out, I think a lot of stocks-like ours-are getting institutional support," the CEO said. "We're going to see a shift in the 2019 theme: those which are institutional investable and those whose aunts and uncles buy and sell in the morning and afternoon."
Canopy Growth has seen larger investments from Canadian pension funds and familiar institutions such as Vanguard Group, Morgan Stanley, and Macquarie Group. Beer maker Constellation Brands also owns a good chunk of Canopy Growth, upping its stake from 10% to 38% earlier this year.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AeroVironment, Inc. (AVAV): Free Stock Analysis Report Constellation Brands Inc (STZ): Free Stock Analysis Report Beacon Roofing Supply, Inc. (BECN): Free Stock Analysis Report Canopy Growth Corporation (CGC): Free Stock Analysis Report To read this article on Zacks.com click here.