Commvault Systems and PENN Entertainment have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – May 10, 2024 – Zacks Equity Research shares Commvault Systems CVLT, as the Bull of the Day and PENN Entertainment PENN, asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com, Inc. AMZN, The Goldman Sachs Group, Inc. GS and Salesforce, Inc. CRM.

Here is a synopsis of all five stocks:

Bull of the Day:

Commvault Systems, a Zacks Rank #1 (Strong Buy), provides a data protection platform that helps customers secure, defend, and recover their data. The company supports clients in a range of industries including insurance and financial services, government, health care, technology, manufacturing, and energy.

CVLT stock is benefitting from underlying momentum in the technology sector and hit an all-time high in price this month. Shares are displaying relative strength as buying pressure accumulates in this market leader.

The company is part of the Zacks Computer – Software industry group, which currently ranks in the top 30% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This group has been steadily outperforming over the past year:

Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.

It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.

Company Description

Tinton Falls, New Jersey-based Commvault Systems offers enterprise-grade data protection as a service on a cloud platform with advanced, built-in security controls. As part of its offering, the company also provides backup, replication and disaster recovery solutions.

In addition, Commvault Systems sells appliances that integrate its software with hardware for use in a range of business cases. The technology company also offers consulting, education, installation, and remote-managed services.

Commvault Systems sells its products and services directly through its sales force and indirectly through its network of distributors, value-added resellers, systems integrators, and original equipment manufacturers.

Earnings Trends and Future Estimates

The software company has established an impressive earnings history. CVLT exceeded earnings estimates in each of the last five quarters. Just last week, Commvault Systems reported fiscal fourth-quarter earnings of $0.79/share, an 8.2% beat versus the $0.73/share consensus estimate.

Revenues jumped 9.7% year-over-year to $223.3 million during the quarter. The company has delivered a trailing four-quarter average earnings surprise of 8.4%. Consistently beating earnings estimates is a recipe for success.

Analysts covering CVLT are in agreement and have been raising their earnings estimates lately. For the current fiscal year, analysts bumped up earnings estimates by 5.96% in the past 60 days. The Zacks Consensus Estimate now stands at $3.38/share, reflecting potential growth of 13.4% relative to the prior year. Revenues are projected to rise 8.4% to $910 million.

Let’s Get Technical

CVLT shares have been steadily outperforming the market this year. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.

Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week (and all-time) highs. With both strong fundamental and technical indicators, Commvault Systems is poised to continue its outperformance. The stock has rewarded investors in 2024 with a nearly 37% return.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Commvault Systems has recently witnessed positive revisions. As long as this trend remains intact (and CVLT continues to deliver earnings beats), the stock will likely continue its bullish run this year.

Bottom Line

Commvault Systems is ranked favorably by our Zacks Style Scores, with second-best ‘B’ ratings in our Growth and Momentum categories. This indicates that CVLT stock is likely to continue to move higher based on a favorable combination of earnings and sales growth as well as strong price momentum.

Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why CVLT stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture moving forward.

Bear of the Day:

PENN Entertainment, a Zacks Rank #5 (Strong Sell), provides integrated entertainment, sports content, and casino gaming experiences. It operates online sports betting and an online casino under brands such as Hollywood Casino, ESPN BET, and theScore Bet Sportsbook.

The company’s portfolio also includes PENN Play, a customer loyalty program that offers a set of rewards and experiences. Formerly known as Penn National Gaming, PENN Entertainment was founded in 1972 and is based in Wyomissing, Pennsylvania.

PENN faces cut-throat competition in the gaming industry. Its challenges are likely to hinder the company’s ability to finance operations, secure capital, pursue acquisitions, and adapt to market dynamics. Also of concern is the fact that most of its properties are located by waterbodies, making the company vulnerable to floods and other natural disasters. Weather-related downturns can affect revenues and profitability.

The Zacks Rundown

PENN Entertainment has been severely underperforming the market over the past year. The downtrend has continued in 2024 as PENN stock hits a series of 52-week lows. The company represents a compelling short opportunity even as the major indices hover near all-time highs.

PENN is part of the Zacks Gaming industry group, which currently ranks in the bottom 38% out of approximately 250 industries. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to underperform the market over the next 3 to 6 months. This industry has widely underperformed the market so far in 2024.

Candidates in the bottom half of industry groups can often represent potential short candidates. While individual stocks have the ability to outperform even when included in weak industries, their industry association serves as a headwind for any potential rallies. PENN Entertainment continues to fight an uphill battle and the stock is confirming this notion, lagging the general market by a wide margin.

Recent Earnings and Deteriorating Forecasts

The online sports betting and casino provider missed the earnings mark in two of the past three quarters. Just last week, PENN posted a first-quarter loss of -$0.79/share, a -33.9% miss versus the -$0.59/share consensus estimate. The company also missed revenue projections for the second consecutive quarter. Consistently falling short of estimates is a recipe for underperformance.

Analysts covering PENN decreased their earnings estimates recently. Looking at the current quarter, estimates have been slashed by -2,400% in the past 60 days. The Q2 Zacks Consensus Estimate sits at -$0.23/share, reflecting a -147.9% drop from the year-ago period.

Technical Outlook

PENN shares have been steadily falling since late last year and have now established a well-defined downtrend. Shares have declined nearly 38% this year alone.

The stock has also experienced the dreaded death cross, whereby its 50-day moving average crosses below its 200-day moving average. PENN Entertainment would have to make an outsized move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. Shares remain in negative territory this year while the general market has eclipsed its former highs.

Final Thoughts

A deteriorating fundamental and technical backdrop show that this stock is not set to return to its former glory anytime soon. The fact that PENN is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns.

A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend. Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of PENN until the situation shows major signs of improvement.

Additional content:

Dow 40K on the Way: 3 Blue Chips to Buy Now

After witnessing a noteworthy December, the Dow continued its advances this year. The 30-stock blue-chip index closed higher in the last six trading sessions, its longest winning streak since the period ending on Dec 19, when the index notched an astounding nine-day winning streak. The Dow is currently trading above the 39,000 threshold, with market participants eagerly waiting for the index to surpass the 40,000-point mark.

However, the blue-chip index time and again found it problematic to cross a multi-zero barrier. Eclipsing the 40,000 barrier remained an uphill task due to the pandemic, elevated interest rates and relentless volatility among high-flying tech stocks. But fortunately, things are looking up at the moment. A “Goldilocks” economic circumstance is expected to take the heat off price pressures and compel the Federal Reserve to ease its monetary policy this year.

The U.S. economy added 175,000 new jobs in April, the smallest increase in hiring since September, and way less than analysts’ prediction of 240,000 new job additions. At the same time, the jobless rate ticked up to 3.9% from 3.8% and is now tantalizingly close to the 4% mark. In contrast, the uptick in wages over the past 12 months slowed to 3.9% in April from 4.1% in the prior month, the lowest level in three years.

With fewer jobs and a decline in pay, consumers’ tendency to spend will decline and eventually curb inflationary pressure. This, in turn, will compel the Fed to cut interest rates. Fed Chair Jerome Powell, by the way, has ruled out any interest rate hike in its upcoming policy meetings. Needless to say, interest rate cuts boost consumer outlays, and curtail borrowing costs, leading to economic growth and helping the stock market scale northward. Hence, the odds of the Dow blowing past the 40,000 mark seem just a matter of time.

Amid such optimism, it’s judicious for astute investors to invest in fundamentally solid blue-chip stocks such as Amazon.com, Inc., The Goldman Sachs Group, Inc. and Salesforce, Inc. that are well-poised to take advantage of the Dow’s uptrend. Being blue-chip stocks, they have sturdy balance sheets, steady cash inflows and large market capitalization. They currently have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Amazon is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe.

The Zacks Consensus Estimate for its current-year earnings has moved up 11.8% over the past 60 days. AMZN’s expected earnings growth rate for the current year is 56.6%. Its projected earnings growth rate for the next five-year period is 29.6%.

Goldman Sachs is a leading global financial holding company.

The Zacks Consensus Estimate for its current-year earnings has moved up 9.8% over the past 60 days. GS’ expected earnings growth rate for the current year is 57.8%. Its projected earnings growth rate for the next five-year period is 8.8%.

Salesforce is the leading provider of on-demand Customer Relationship Management (CRM) software.

The Zacks Consensus Estimate for its current-year earnings has moved up 0.3% over the past 60 days. CRM’s expected earnings growth rate for the current year is 18.1%. Its projected earnings growth rate for the next five-year period is 17.4%.

Shares of Amazon, Goldman Sachs and Salesforce have gained 23.7%, 15.9%, and 6%, respectively, year to date.

Image Source: Zacks Investment Research

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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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CommVault Systems, Inc. (CVLT) : Free Stock Analysis Report

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