For Immediate Release
Chicago, IL - May 7, 2018 - Zacks Equity Research highlights Urban Outfitters URBN as the Bull of the Day and Credit Suisse CS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Harsco Corp. HSC , KLA-Tencor KLAC , Grupo Simec SA de DV SIM .
Here is a synopsis of all five stocks:
Bull of the Day :
The retail sector has slowly found its footing in the wake of the e-commerce revolution, and just as investors were ready to declare the death of brick-and-mortar as we knew it, plenty of great stocks emerged from the special retail industry. For example, Urban Outfitters is an option that every investor should be aware of right now.
Urban Outfitters is a specialty retailer and wholesaler offering a variety of lifestyle merchandise to highly defined customer niches through Urban Retail stores in the United States, Canada, and Europe; an Urban Outfitters website; Anthropologie retail stores in the United States; and Free People, the company's wholesale division.
New store openings, increasing digital penetration, merchandising improvements, and international expansion have set Urban Outfitters up for success in the long term, and an improving earnings outlook and attractive valuation metrics make this Zacks Rank #1 (Strong Buy) a stock to consider right now.
Latest Outlook and Valuation
Analysts have become increasingly bullish on URBN recently. Within the past 60 days, the company has witnessed nine revisions to its current-quarter EPS estimates and 12 to its full-year EPS estimates, with 100% agreement to the upside. Urban Outfitters is now expected to post earnings growth of 36.5% in its current fiscal year.
This is likely a tailwind effect from the company's latest earnings report, which saw Urban report positive comps at all of its brand while notching its third consecutive positive earnings surprise. Management also noted that it had seen "positive customer reaction" to its new spring offerings and was "optimistic regarding the first half of the year."
Urban's next earnings report is still about a month away, but things are looking up for the quarter. As mentioned, positive revisions have been pouring in, and the Zacks Consensus Estimate has moved 11 cents higher in just two months. Analysts are now expecting the company to see an EPS improvement of 123.1% from the prior-year quarter.
Bear of the Day :
Amid unpredictable trading and market-wide volatility, investors should do their best to avoid stocks with questionable outlooks and stretched valuations. One such example is Credit Suisse , which currently sports a Zacks Rank #5 (Strong Sell) and a "D" grade for Value in our Style Scores system.
Credit Suisse offers investment products, private banking and financial advisory services, as well as insurance and pension solutions. The company is wrapping up a multi-year restructuring and might finally be able to see hope on the horizon, but its stock will likely remain anything but smooth in the coming weeks and months.
Latest Outlook and Valuation
Credit Suisse reported its latest quarterly earnings results on April 25, posting EPS of $0.31 and revenue of $5.94 billion. Earnings were flat on a year-over-year basis, while revenue was able to move about 7.8% higher.
Some investors thought this marginal improvement might be enough to get the stock going, but shares are actually down about 2.5% since the company's report date. The stock has now lost more than 17% since reaching a new 52-week high in January.
Part of this decline is likely due to its sluggish earnings estimate revision picture. Analysts have revised EPS downward recently, with the Zacks Consensus Estimate for Credit Suisse's full-year earnings dropping 13 cents in the past month alone.
Adding to the concern here is that CS still looks largely overvalued. The stock's P/E of 13.0 might look attractive to value investors, but it is actually a noticeable premium to the average of 11.3 displayed by our "Banks - Foreign" group right now. Meanwhile, Credit Suisse is generating just $0.91 per share in cash, with cash flow growth heading in the wrong direction.
There are a number of questions lingering around the global markets, and with many investors choosing to sit things out entirely right now, there is simply no need to buy an overvalued foreign bank in the midst of a restructuring that has struggled to generate.
Industrial "Upgrade" Cycle Arrives: Zacks May Strategy
The following is an excerpt from Zacks Chief Strategist John Blank's full May Market Strategy report . To access the full PDF, click here.
One highlight in the May 2018 Zacks Market strategy report is the sudden dominance of Industrial spending.
The Industrial Products sector is currently placed at the top 6% out of the 16 Zacks sectors. It is one of the sectors expected to record double-digit earnings growth, mainly driven by U.S. tax reform. According to our latest projections, the sector is anticipated to log an earnings growth rate of +25.8% in the first-quarter of 2018, on the back of a +12.8% rise in revenues.
Earlier this year, an Equipment Leasing and Finance Foundation report focused on the $1T equipment leasing and finance industry. It highlighted the breaking trends.
Investment in equipment and software is projected to expand +9.1% in 2018.
That 2018 investment growth projection is well above the +5.2% growth rate experienced in 2017.
It continued a strong improvement trajectory seen over the last 12 months.
While a few headwinds persist, they should be outweighed by an encouraging business investment climate.
In addition, an upbeat outlook for industrial companies - such as defense contractors, building products and machine makers - is a bet on continuing global economic revival.
Stronger growth around the globe means companies spend more on new machinery, see increased cargo demand on railroads, and profit from an increased pace of automation.
Internally, U.S. corporations must spend more to replace aging equipment and tech systems. The age of equipment in the U.S. remains at all-time highs and desperately needs to be replaced. This so-called "upgrade" cycle is creating a boom for industrial companies.
What about the money to finance the spending? It comes from the new lower 21% corporate profit tax - that stronger U.S. and global economy - and an internal change in U.S. tax rules. This change will allow companies to take a deduction for the full value of new plant and equipment upon purchase, rather than stringing it out over a number of years.
Every four years, the American Society of Civil Engineers issues a report card on the condition of the nation's infrastructure. In 2013, the country received a sad D+. The 2017 report card was no better - another D+.
Clearly, the need for a U.S. infrastructure overhaul had been there. But what exactly did that mean, who pays for it, and how much should be spent?
That Society of Civil Engineers Report Card had put up many questions and few answers.
It appears, until now.
Zacks May Sector/Industry/Company Telescope
May Zacks Industry Ranks showed a very important change. Industrials are the leader. With U.S. unemployment so, so low, the demand for machinery of all types is high and construction is booming.
Other sector leaders were the most exposed internationally: Info Tech, & Materials. That growth trend cooled a bit, though.
The Consumer Discretionary and Consumer Staples sectors fell to Unattractive. There appears to be a Late Cycle struggle to expand spending on a number of categories. The +1.1% U.S. consumer growth rate in Q1 was picked up here.
Four May sectors stood at a Market Weight: Energy, Health Care, Financials, and Utilities. Telcos lingered at the back and was Unattractive.
(1) Industrials are now Very Attractive and rising Machinery profits show how tight the labor market is. A long list of industrial groups looks HOT - it includes Machinery-Electrical, Machinery, and Industrial Products-Services, Business Services, and Construction-Building Services, and Aerospace & Defense.
Top Zacks #1 Rank (STRONG BUY) Stock: Harsco Corp.
Harsco is a services and engineered products company. The principal lines of business are: mill services that are provided to steel and non-ferrous metal producers; gas control and containment products; scaffolding services; railway maintenance of way services and equipment; and several other lines of business including, process equipment, industrial grating and bridge decking, industrial pipe fittings, slag abrasives and roofing granules.
(2) Info Tech is merely Attractive in May. The best is still the Semiconductors.
Top Zacks #1 Rank (STRONG BUY) Stock: KLA-Tencor
KLA-Tencor was formed through the merger of KLA Instruments and Tencor Instruments, two long-time leaders in the semiconductor equipment and yield management software system industry.
(3) Materials are back to just Attractive too. The best are Paper and Steel.
Top Zacks #1 Rank (STRONG BUY) Stock: Grupo Simec SA de DV
Grupo Simec, S.A, de C.V. is the leading mini-mill steel producer in Mexico and manufactures a broad range of non-flat structural steel products and is also among Mexico's lowest cost producers of extruded aluminum products.
is a Market Weight. The best is Coal and Oil & Gas Integrated.
(5) Health Care is a Market Weight. The Drugs and Medical Products industries are best.
(6) Financials are back to a Market Weight. The best is Investment Funds and Investment Banking & Brokering.
(7) Utilities are a low Market Weight.
(8) Consumer Staples falls to Unattractive. The best 2 industries are Food and Beverages, and those are just Market Weight.
(9) Consumer Discretionary falls to Unattractive. The top industry is Publishing. Far behind are Leisure Services, Non-Food Retail, and Apparel.
(10) Telcos are Unattractive.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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 Credit Suisse Group (CS): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Grupo Simec, S.A. de C.V. (SIM): Free Stock Analysis Report KLA-Tencor Corporation (KLAC): Free Stock Analysis Report Harsco Corporation (HSC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research