XPO Logistics, Rocket Companies, Home Depot, Target and Daqo New Energy highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – May 28, 2021 – Zacks Equity Research Shares of XPO Logistics Inc. XPO as the Bull of the Day, Rocket Companies, Inc. RKT asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on The Home Depot, Inc. HD, Target Corporation TGT and Daqo New Energy Corp. DQ.
Here is a synopsis of all five stocks:
Based in Greenwich, CT, XPO Logistics is a third-party logistics provider offering fast, single-source solutions for time-critical and service-sensitive shipments through its non-asset-based transportation network. XPO serves customers in the U.S., Canada, and Mexico with domestic and international freight destinations.
Q1 Earnings Recap
XPO recently reported very strong first-quarter earnings results.
Revenue jumped 24% year-over-year to $4.8 billion, which is the highest quarterly revenue total in the company’s history. Earnings per share of $1.46 came in well above the consensus estimate of $0.97 per share.
XPO generated $173 million of cash flow from operations, and $69 million of free cash flow, in Q1.
“In sum, our business has been firing on all cylinders… Our results not only reflect strong execution throughout our operations, they also underscore how our businesses are strategically well positioned to meet customers' needs and capture profitable growth opportunities in logistics, LTL and brokerage,” said CFO David Wyshner.
As for guidance, the company expects adjusted EBITDA between $1.825 billion and $1.875 billion for the fiscal year, with growth of 28% to 32% in XPO’s logistics segment and 30% to 34% in its transportation segment. Free cash flow is expected to be in the range of $650 million to $725 million.
XPO Breaks Out
In the past six months, shares of XPO have jumped 38% compared to the S&P 500’s 15.7% increase. Earnings estimates have been rising too, and XPO is a Zacks Rank #1 (Strong Buy) right now.
For fiscal 2021, 11 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 82 cents to $6.08 per share. Earnings are expected to grow over 200% compared to the prior year period. Fiscal 2022 looks strong too, and earnings should see positive year-over-year growth as well.
Looking ahead, XPO is making some big growth plans. Management is making progress toward its plan to split its two main business segments, logistics and transportation, into separate publicly traded companies, a move that will boost earnings potential and shareholder returns in the future.
Investors can also expect XPO to continue to capitalize on the e-commerce growth it was able to establish during the pandemic, as well as popular tech tools like XPO Connect, which is a digital marketplace that connects shippers and carriers to the company’s transportation network.
Wall Street is getting excited about XPO’s potential too. Barclays upgraded XPO to overweight from equal weight back in April, and other brokerage firms have recently boosted their price targets on the stock.
If you’re an investor searching for a transportation sector stock to add to your portfolio, make sure to keep XPO on your shortlist.
Based in Detroit, MI, Rocket Companies is a personal finance and consumer services holding company that went IPO last August. Its portfolio of brands includes Quicken Loans, Rocket Mortgage, Rocket Homes, Rocket Loans, Rocket Auto, Rock Central, Amrock, Core Digital Media, Rock Connections, Lendesk and Edison Financial.
Q1 Earnings Fail to Impress
Earlier this month, Rocket released first-quarter results, and the stock crashed over 16% as a result.
Revenue increased 236% year-over-year to $4.6 billion, and adjusted net income soared 170% to $1.8 billion. The top and bottom line were fueled by a 100% jump in closed loan origination volume and strong growth across the company’s title insurance, property valuation, and settlement services.
However, Rocket’s guidance was weaker than expected. Management expects closed loan volume of $82.5 billion to $87.5 billion, representing a sequential decline of about 18% at the midpoint.
The company’s lukewarm outlook coincides with the potential of higher interest rates, driven by the economic recovery and rising inflation.
In turn, many analysts cut their price targets for RKT.Analysts Daniel Perlin and Ryan Carr from RBC Capital and Jeffries both cut their forecasts from $30 per share to $26 per share.
RKT is now a Zacks Rank #5 (Strong Sell).
Two analysts have cut their full year earnings outlook over the past 60 days, with Rocket’s bottom line expected to decline over 41% year-over-year. Wall Street has lowered its earnings picture for 2022, and next year’s consensus has fallen 10 cents to $1.82 per share.
Shares have been volatile so far in 2021. In what appeared to be a Reddit-fueled short squeeze, RKT surged more than 70% on March 2, then plunged 33% the following day after analysts warned the stock had come “too far, too fast.” Year-to-date, RKT is down 13% compared to the S&P 500’s gain of 11.7%.
There’s no denying that Rocket will be a dominant player in the mortgage industry over the long-term thanks to strategic tech and operations investments, but the short-term will likely be rocky as we enter post-pandemic life.
3 Growth Stocks with Positive Revisions and Surprises
That was an outstanding earnings season with more than 85% of S&P companies beating earnings expectations and over 75% topping revenue forecasts. With most of it now behind us, it’s a good time to revisit the EPS Growth, Revisions and Positive Surprises screen.
The end of earnings season highlights the hottest stocks in the market that are enjoying upward momentum RIGHT NOW with a good chance of continuing to outperform moving forward.
Below are three names that recently passed this screen by securing a high Zacks Rank with upward earnings estimate revisions and positive surprises. Two of them are some of the biggest retailers in the world, while the third is an innovative name that operates in one of the brightest spots in the market.
It’s all over for home improvement companies, right? Now that the pandemic is on its last legs and things are finally beginning to open up, people are just going to leave their places to the termites and get “back to normal.” They’re certainly not going to take advantage of the lowest interest rates in history to buy a new home. Right?
The recent earnings report from Home Depot suggests that’s wrong… very wrong. The company’s fiscal first quarter report was one of the biggest releases in an extremely strong earnings season. In fact, analysts currently expect earnings growth of nearly 6% for next fiscal year, which is really saying something for companies that performed well during the pandemic.
HD is the world’s largest home improvement specialty retailer with more than 2,000 stores across the globe. It serves Do-It-Yourself (DIY) customers, Do-It-For-Me (DIFM) customers and Professional customers. The shutdown and historically low interest rates have benefited its DIY and Pro categories.
Shares of HD are up more than 32% over the past 12 months, including 21% this year alone. It has beaten the Zacks Consensus Estimate for four straight quarters with an average surprise of 9.9%.
The recent report included earnings per share of $3.86, which was more than 85% better than the previous year and ahead of expectations by 27%. Net sales of $37.5 billion improved nearly 33% from last year and surpassed the Zacks Consensus Estimate of $34.9 billion. Comparable sales were up 31%.
In addition to continued strong demand for home improvement projects, the company has really benefited from its ‘One Home Depot’ investment plan. The initiative focuses on expanding supply chain facilities, technology investments and enhancements to the digital experience. All of this certainly came in handy during the pandemic.
The Zacks Consensus Estimate for this year (ending January 2022) is up 10.6% in the past two months to $13.90, while next year (ending January 2023) has grown 7.1% in that time to $14.71. As mentioned above, analysts currently see year-over-year improvement at about 5.8%.
The market was being a real jerk this earnings season. It just sat there with arms folded (figuratively speaking of course) while strong report after strong report was released. A company had to get a positive reaction, which is exactly what Target did with its fiscal first quarter report. You could say that it hit a bullseye… get it?
TGT was one of the brick-and-mortar companies that really showed how to compete with a gamechanger like AMZN and other e-tailers. The company turned itself into an omni-channel entity and was perhaps the best at embracing the future by moving into digital.
These days, the company is making investments in technologies, improving its websites and modernizing its supply chain to stay up-to-date in the new world of retail. And its fiscal first-quarter report showed that it’s succeeding as it gained more than $1 billion in market share!
Earnings per share of $3.69 destroyed last year’s 59 cents and soared past the Zacks Consensus Estimate by more than 63%. TGT has now beaten our expectations for nine straight quarters with a positive surprise of 62% over the past four.
Total revenues of $24.2 billion were up more than 23% from the previous year and topped our forecast of $22.3 billion. Perhaps more importantly, comparable sales jumped 22.9%, including store comparable sales up 18% and digital comparable sales surging 50%. TGT is a big beneficiary of the economic re-opening and the stimulus checks.
And here’s how you can tell the market really liked those numbers. Shares of TGT soared 6% after the report! That was almost unheard-of this season, but goes to show how the company’s omni-channel capacities, diversified assortment and flexible format stores are really impressing analysts and investors alike.
Speaking of analysts, the Zacks Consensus Estimate for this fiscal year (ending January 2022) is up 37.7% over the past two months to $11.83. Expectations for next year (ending January 2023) have advanced 24.3% in that time to $11.88. Most of this improvement has come in the past week (since the report).
Shares of TGT are up 100% over the past 12 months, including a gain of 29.6% year to date.
Daqo New Energy Corp.
Saving the world can also be profitable for an investor's portfolio. That’s what Daqo New Energy Corp. showed in its recent first-quarter report, which saw revenue soar more than 50% year over year as a shortage in polysilicon led to higher average selling prices.
DQ manufactures and sells high-quality polysilicon to solar companies. Polysilicon is the raw material that’s used in the photovoltaic industry. Its processed into ingots, wafers, cells and modules. With seemingly every country setting carbon neutrality goals, it’s no wonder this stuff is in such high demand.
Shares of DQ have soared approximately 600% over the past 12 months, including a rise of 30.4% so far this year. It’s first-quarter report from last week reflected the potential that investors and analysts are seeing in this name.
The company reported earnings per share of $1.08, which more than doubled the previous year’s 44 cents and topped the Zacks Consensus Estimate by more than 21%. Revenues of $256.1 million jumped 52% from last year and was also ahead of our expectation at $242.8 million.
The improved sales were attributed to a higher ASP amid strong customer demand for high-purity polysilicon. The ASP was $11.90 per kg, which was up 35%. Meanwhile, polysilicon production volume was up 2% to 20,185 metric tons, while sales volume increased 12% to 21,471 MT.
For the full year, DQ expects production volume between 81K and 83K MT. It should see benefits from its new digital manufacturing system, which was put in place to stabilize production, maximize output and optimize efficiency.
The Zacks Consensus Estimate for this year is up 61.4% over the past 60 days to $8.44, while next year has climbed 62.4% in that time to $9.97. Therefore, analysts currently expect a year-over-year improvement of 18.1%, which shows that analysts see a lot of bright spots for this company moving forward.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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