Procter & Gamble, Hasbro, Copart, Lululemon and KeySight Technologies highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 28, 2019 – Zacks Equity Research Shares of Procter & Gamble PG as the Bull of the Day, Hasbro HAS asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Copart CPRT, Lululemon LULU and KeySight Technologies KEYS.
Here is a synopsis of all five stocks:
Procter & Gamble is a consumer staples giant, and sells its products in grocery stores, pharmacies and drug stores, department stores, through mass merchandisers, and on e-commerce platforms. Its brand portfolio is full of well-known consumer names like Bounty, Febreze, Tide, Crest, Gillette, Olay, and Pampers, among many others.
Q1 Results Shine Bright
P&G’s latest quarterly report showed investors, and Wall Street, that it is still able to produce impressive growth numbers.
Earnings of $1.37 per share easily beat the Zacks Consensus Estimate, and revenues grew 7% year-over-year to $17.8 billion. Across its business segments, P&G saw organic sales gains in beauty, healthcare, and fabric & home care of 10%, 9%, and 8%, respectively.
The icing on the cake was its cash flow generation. P&G generated over $4 billion in operating cash flow in Q1, and $2 billion of that was paid out to shareholders via dividends.
As a result, the company boosted its fiscal 2020 outlook, and now expects organic sales growth of 3% to 5%, up from previous guidance of 3% to 4%. EPS growth is now estimated to be between 5% and 10%, up from 4% to 9%.
PG on the Up and Up
Shares of P&G are up almost 28% since January compared to the S&P 500’s return of about 11.6%. Earnings estimates have been rising too, and PG is a Zacks Rank #1 (Strong Buy) pick right now.
For the current fiscal year, nine analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up nine cents from $4.84 to $4.93; earnings could see about 9% growth compared to the prior year period. 2021 looks pretty strong too, with earnings and revenue expected to continue positive year-over-year growth.
PG currently trades around 25.3X its forward full-year earnings estimates, sitting above the broader Consumer Staples Market (19X).
Going forward, P&G’s overall organic sales, earnings, and cash flow growth will help the industry titan continue to remain on top, rewarding investors with potentially more share repurchases and increasing dividend income. The company currently boasts a 2.4% yield, making P&G a stock to seriously consider adding to a portfolio.
Hasbrois one of the world’s biggest toymakers and game manufacturers. Popular and legacy brand names include Monopoly, Play-Doh, Nerf, My Little Pony, Mr. Potato Head, and Playskool.
Tariffs Hit Q3 Earnings Hard
The ongoing trade war between the U.S. and China has deeply impacted Hasbro’s financial performance this quarter, as many retailers delayed or even cancelled toy and game orders for the upcoming holiday season due to the tariff threat.
Both the company’s top and bottom lines missed the Zacks Consensus Estimate. In particular, revenue of $1.58 billion was basically flat compared to the prior year; analysts were expecting a 9% gain.
Breaking sales down by segment, Franchise brands slumped 8% and Hasbro gaming fell 17% year-over-year. One bright spot was the company’s Partner brands, up 40% over last year; this strong growth was due to many of Disney’s (DIS) properties selling well, like Marvel, Frozen 2, Star Wars, and Descendants 3.
"The threat and enactment of tariffs reduced revenues in the third quarter and increased expenses to deliver product to retail,” said CEO Brian Goldner in the company’s earnings release.
Analysts have turned bearish on Hasbro, with four cutting estimates in the last 60 days for fiscal 2019.
While earnings are expected to see positive growth for the year, the Zacks Consensus Estimate has dropped 69 cents for that same time period from $4.76 to $4.07 per share.This sentiment has stretched into 2020. While earnings could continue positive growth, our consensus estimate has dropped 44 cents in the past two months.
HAS is now a Zacks Rank #5 (Strong Sell).
Shares of the toy retailer have gained only 5.4% since January—HAS plunged as much as 18% in the wake of its earnings report—compared to the S&P 500’s rise of about 11.6%.
Looking ahead, Goldner anticipates that additional tariffs (those scheduled to take effect on December 15) will likely continue to impact retailers’ direct import shipments from China. 85% of its toys are manufactured in China; even though Hasbro is planning on shifting some production to countries like Vietnam and India, any threat of tariffs will likely continue to weigh on shares.
3 Sales & Earnings Growth Winners
We here at Zacks are always talking about the Zacks Rank, which harnesses the power of earnings estimate revisions. But that doesn’t mean we don’t care about the top line!
The Sales & Earnings Growth Winners screen looks for companies with strong sales and a Zacks Rank of #1 (Strong Buy) or #2 (Buy), as well as a Zacks Style Score of A or B for growth. But that’s not all, because this screen also seeks out effective management via ROE and good liquidity via the current ratio.
That’s a lot of parameters. But the stocks that pass the test are strong and stable growth picks. We’ve highlighted three below:
So how much have shares of online vehicle auctions leader Copart gained so far this year?
50%? Can I hear 60%? What about 70%?
Nope. In the end, shares of this company are up 75% year to date!
That performance is all the more impressive when you consider that the Auction & Valuation Services space is in the Top 7% of the Zacks Industry Rank with an advance of nearly 60%. So it takes A LOT to outperform this area in 2019.
CPRT has accomplished this with positive surprises in 13 of the past 15 quarters. Meanwhile, the company is also strengthening its footprint in key international markets, such as the U.K. and Germany.
In the fiscal fourth quarter report (its fiscal year ends in July), the company announced earnings per share of 60 cents. The result beat the Zacks Consensus Estimate by more than 5% and improved nearly 43% from last year.
Revenue jumped 20.8% to $542.6 million, which also easily topped the Zacks Consensus Estimate of $507 million.
Since that was its fourth quarter, we can also tell you how it performed for the entire year. Fiscal 2019 earnings of $2.25 beat our consensus by 4 cents and improved from last year’s $1.73.
Meanwhile, revenue of $2 billion was inline with expectations and up from $1.8 billion in the previous year.
Over the past two months, the Zacks Consensus Estimate for this fiscal year (ending July 2020) has gained 6.4% to $2.67.
In the same time period, expectations for next fiscal year (ending July 2021) are up 6.6% to $2.90. Therefore, analysts currently expect earnings growth of 8.6% for next fiscal year.
CPRT will report again on November 19.
It’s the 21st century! We can’t be expected to go to yoga class in some raggy old shorts. What are we…barbarians?
And what if we want to grab a coffee or go shopping when we’re done downward dogging? What if we’re not even going to workout… but just want tolook like we did?
That’s where Lululemon first gained attention. They understood that people would shell out tons of money for clothes that they’re going to sweat in.
But the athleisure world has become much more than yoga. If you take a look at LULU’s website today, you’ll also see undergarments, sweaters and winter jackets.
Shares of the company have soared more than 68% so far this year, which dwarfs its industry’s gain of around 17%. It has put together 10 straight quarters of positive earnings surprises and 15 straight quarters of positive sales surprises.
And it doesn’t look to be slowing down.
In its fiscal second quarter release, LULU reported earnings per share of 96 cents, which was more than 35% better than the previous year. That marked a positive surprise of 7.9%.
Revenue of $883.4 million was 22% better than last year’s $723.5 million and over 4.6% atop the Zacks Consensus Estimate. Total comparable sales increased 15%, or 17% on a constant dollar basis.
LULU attributed the solid results to its “Power of Three” growth pillars, which are production innovation, omni-guest experience and market expansion.
The company now expects fiscal 2019 earnings between $4.63 and $4.70, compared to the earlier outlook of $4.51 to $4.58. It also raised its outlook for revenue to between $3.8 billion and $3.84 billion, instead of $3.73 billion to $3.77 billion.
As a result, the Zacks Consensus Estimate for the fiscal year ending in January 2020 is up 2.2% over the past two months. Likewise, analysts have boosted expectations for next fiscal year (ending January 2021) by 1% in that time.
Those advances may not seem like a lot, but next fiscal year’s outlook of $5.59 is nearly 18% better than this fiscal year’s $4.74.
LULU will report again on December 5.
Ever since spinning off from Agilent Technologies back in 2014, KeySight Technologies has been making it look easy.
This electronic design & test instrumentation systems company has beaten earnings estimates in 5 straight quarters and, more impressively, in 14 of the past 15 quarters. And the one quarter that didn’t positively surprise was a meet, so there are no misses in all that time.
The Electronics – Measuring Instruments industry is in the Top 4% of the of the Zacks Industry Rank with a year-to-date return of approximately 48%. But KEYS has easily outperformed its space by gaining more than 66% in 2019.
The company is launching new solutions in some of the hottest and growthiest areas, such as 5G and IoT. It also has collaborations with Qualcomm, Xilinx and AT&T, which further aids in its robust 5G portfolio.
In its fiscal third quarter report, KEYS announced earnings per share of $1.25, which trounced last year’s 89 cents and beat the Zacks Consensus Estimate by more than 22%.
Over the past four quarters, it is amassed an average positive surprise of nearly 19%.
Revenue of $1.08 billion also topped our expectations while also improving 8% from last year. This performance was driving by growth across most of its end markets as it “continued to capture a significant portion of the demand we see in the marketplace”.
Earnings estimates for this fiscal year (ending this month) are up 8.5% in three months to $4.59 per share.
Analysts have boosted next fiscal year’s outlook by 7.5% in that time to $4.90. That number also suggests year-over-year improvement of nearly 7%.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Keysight Technologies Inc. (KEYS): Free Stock Analysis Report
lululemon athletica inc. (LULU): Free Stock Analysis Report
Procter & Gamble Company (The) (PG): Free Stock Analysis Report
Hasbro, Inc. (HAS): Free Stock Analysis Report
Copart, Inc. (CPRT): Free Stock Analysis Report
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