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Cincinnati Financial, Bunge, SolarCity, First Solar and ReneSola highlighted as Zacks Bull and Bear of the Day

Chicago, IL - November 20, 2015- Zacks Equity Research highlights Cincinnati Financial ( CINF ) as the Bull of the Day and Bunge Limited ( BG ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on SolarCity Corp ( SCTY ), First Solar ( FSLR ) and ReneSola Ltd. ( SOL ).

Here is a synopsis of all five stocks:

Bull of the Day :

This S&P 500 dividend aristocrat-with a juicy dividend yield of more than 3%--has been increasing its dividend for the last 54 years in a row-a record matched by only eight US public companies.

Further, this Zacks Rank # 1 (Strong Buy) stock has been benefitting from an above industry average premium growth, expansion in underwriting margins and excellent performance of its diversified investment portfolio.

About the Company

Headquartered in Fairfield, OH, Cincinnati Financial ( CINF ) is one of top 25 property and casualty insurers in the US. Formed in 1968 the company operates through the Cincinnati Insurance Company, which itself has four insurance subsidiaries, and through two financial services subsidiaries.

The company, which was started by independent insurance agents, has an agent-centered business model. They market a broad range of property casualty insurance products in 39 states.

The company enjoys excellent ratings from the top rating agencies--A.M. Best, S&P and Fitch rating of 'A+' and Moody's rating of 'A1'.

Impressive Third Quarter Results

The company reported third-quarter 2015 results on October 27. Operating income of $1.04 per share was way ahead of the Zacks Consensus Estimate of $0.69. Strong results were driven by property casualty underwriting profits and increase in investment income, partly offset by higher catastrophe losses.

Total operating revenue came in at $1.28 billion, up 4.9% year over year. Combined ratio increased 320 bps.

Rising Estimates

After strong results, analysts have revised the earnings estimates upwards. Zacks Consensus Estimates for the current and the next year are now $3.35 per share and $2.60 per share respectively, up significantly from $2.90 and $2.40, 30 days ago.

The company has beaten the Zacks Consensus Estimates in three out of last four quarters, with an average positive surprise of 42%. In fact looking at the longer-term picture, the company has missed only in 3 out of last 20 quarters.

Bear of the Day :

Bunge Limited ( BG ) is a leading agribusiness and food company with integrated operations in about 40 countries. It is a global leader in oilseed processing, and grain & oilseed marketing. The company has four business segments 1) Agribusiness, 2) Sugar & Bioenergy 3) Food & Ingredients and 4) Fertilizers.

The company IPO'd in 2001 and has expanded though many significant acquisitions since then.

Disappointing Third Quarter Results

Adjusted EBIT for the quarter was $367 million, up from $316 million in the prior-year quarter, driven mainly by Agribusiness segment's performance. However, agribusiness' strength could not offset the weakness seen in other segments. Revenue for the quarter was $10.8 billion, down from $13.7 billion, a year ago.

Adjusted earnings were $1.24 per share, about 21% short of the Zacks Consensus Estimate of $1.57 per share. The company has missed in three out of last four quarters, with an average quarterly surprise of negative 24%

Falling Estimates

After poor results, analysts have revised their estimates for the company sharply downwards. Zacks Consensus Estimates for the current and the next fiscal year are now $5.15 per share and $6.23 per share respectively, down from $5.74 per share and $6.75 per share, 7 days ago.

The Bottom Line

As the company generates most of its revenues from its Agribusiness segment, it remains vulnerable to weak agricultural commodity prices, decline in global demand and foreign exchange volatility. Zacks Industry Rank for Agricultural Products Industry is currently 248 out of 265 (bottom 6%) . There is no Zacks Rank # 1 (Strong Buy) or # 2 (Buy) stock in this industry. It is safer for investors to avoid this industry for the time being.

Additional content:

SolarCity Climbs on $100M Investment from Silver Lake

Shares of SolarCity Corp ( SCTY ) gained 6.73% on Nov 18 after the company received a $100 million investment from the private equity firm Silver Lake Kraftwerk.

Investors heaved a sign of relief as Silver Lake's energy and resource innovation fund, Silver Lake Kraftwerk, announced a strategic investment of $113 million in aggregate principal amount of SolarCity's zero coupon convertible senior notes. The fund will invest $100 million of its own capital, SolarCity's Chairman Elon Musk will add $10 million and the company's CEO Lyndon Rive will put in $3 million.

So far this year, SolarCity shares have plunged more than 48% and are down 56.5% from its 52-week high of $63.79 on May 15 as investors are largely unimpressed by the company's recent performances.

SolarCity, the largest U.S. rooftop solar installer, posted a wider loss in the third quarter of 2015. It reported an adjusted loss of $2.10 per share, much wider than the Zacks Consensus Estimate of a loss of $1.99 and also the year-ago loss of 75 cents per share. The wider loss can be attributed to the company's rising expenses.

In marked contrast to the appalling loss, SolarCity posted total revenues of $113.9 million in the quarter, beating the Zacks Consensus Estimate of $107 million by 6.4%. On a year-over-year basis, reported revenues soared 95.1% on the back of increased operating leases and solar energy systems incentives as well as higher solar energy systems and components sales.

SolarCity is rapidly expanding its business and winning customers before it loses a key federal tax credit in 2017. The 30% tax credit for solar systems on residential and commercial properties is expected to drop to 10% in 2017.

The money being invested in its business is currently weighing on its bottom line. One cannot ignore the fact that the company has failed to earn profits for 12 consecutive quarters while its operating expenses have risen significantly.

The latest investment comes at a time when SolarCity is making a big shift in its business strategy. Since its initial public offering in Dec 2012, SolarCity has focused on rapid installations to drive growth. But this came at the cost of profit as expenses rose with installations. On the third-quarter earnings call, the company however revealed that it would slow down installations, forecasting about 40% installation growth for 2016 compared with the 2015 projection of as much as 79%.

Silver Lake Kraftwerk's Managing Director, Josh Raffaelli, believes that SolarCity is a "highly attractive" long-term investment. He added, "We think the Company's unparalleled access to solar-specific tax equity, asset-backed security and debt clearly differentiates it from providers that are funding projects constantly via equity markets."

Moreover, Raffaelli is optimistic on SolarCity's strategy of focusing on cost reduction in the near term and believes cash flow breakeven is absolutely the right policy to take for now. He also noted that distributed solar generation is an "enormous opportunity" and that "there is no other company better positioned to take advantage of it."

Zacks Rank

SolarCity currently carries a Zacks Rank #4 (Sell). Some better-ranked solar stocks include First Solar ( FSLR ) and ReneSola Ltd. ( SOL ), with a Zacks Rank #2 (Buy).

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CINCINNATI FINL (CINF): Free Stock Analysis Report

BUNGE LTD (BG): Free Stock Analysis Report

SOLARCITY CORP (SCTY): Free Stock Analysis Report

FIRST SOLAR INC (FSLR): Free Stock Analysis Report

RENESOLA LT-ADR (SOL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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