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Enjoy These Moments, Because The Outlook For After Thanksgiving Is Not Promising At All

Enjoy These Moments, Because The Outlook For After Thanksgiving Is Not Promising At All Authored by Michael Snyder via The Economic Collapse blog, I know that things aren’t great right now, but please try to enjoy the next few days, because it appears that economic conditions could quickly get a whole lot worse after Thanksgiving.  I understand that may be difficult for many of you to hear, because we are already dealing with so much.  The worst inflation crisis in decades has been eviscerating our standard of living, major layoffs are being announced all over the nation, the housing market has started to crash, and the fallout from the collapse of FTX threatens to push over more financial dominoes in the weeks ahead.  Unfortunately, now we potentially have another major problem to add to the list.  One of the largest rail unions just voted down a tentative agreement, and so now a national railroad strike in December is a very real possibility… The likelihood of a strike that would paralyze the nation’s rail traffic grew on Monday when the largest of the 12 rail unions, which represents mostly conductors, rejected management’s latest offering that included 24% raises and $5,000 in bonuses. With four of the 12 unions that represent half of the 115,000 rail workers holding out for a better deal, it might fall to Congress to impose one to protect the U.S. economy. Now that SMART-TD has become the fourth union to reject the tentative labor deal that was on the table, preparations for a crippling nationwide railroad strike that would begin early next month will rapidly move forward. Such a strike would cripple thousands of supply chains from coast to coast, and even CNN has been forced to admit that an extended strike “could cause shortages and higher prices for goods including fuel and food”… If a strike goes on for an extended period, it could cause shortages and higher prices for goods including fuel and food. If the four unions that rejected the deals are unable to reach new deals before strike deadlines, Congress could order the railroad workers to remain on the job or return to work. The good news is that this labor dispute will eventually be resolved one way or another. But even without a national railroad strike, most experts were already forecasting a dismal month of December. According to the Wall Street Journal, consumers and businesses are both “bracing for a humbug holiday season”… Households, retailers and charities nationwide, feeling the pinch of inflation, are bracing for a humbug holiday season. U.S. consumers and businesses have trimmed spending plans for gifts, charitable contributions and holiday events, data show. The penny-pinching threatens to spoil the year-end for many, especially firms and nonprofits that tally their largest share of sales and donations in November and December. The Federal Reserve has been waging a war against inflation for months, but prices just keep going up. In fact, it is being reported that an average Thanksgiving dinner will cost about 20 percent more this year than it did last year… American families will have an unwelcome guest at the dinner table this Thanksgiving: inflation. A Thanksgiving meal for 10 will cost $64.05, a 20 percent increase from last year’s average of $53.31, the American Farm Bureau reports. The centerpiece on most Thanksgiving tables – the turkey – is a big driver of the increase. According to the Farm Bureau,the average price per pound is up 21 percent from last year. Meanwhile, job losses will completely spoil this holiday season for thousands upon thousands of Americans. Sadly, many of the jobs that are being lost are good paying jobs.  For example, Cisco just announced that they will be firing over 4,000 well paid workers… San Jose-based tech giant Cisco plans to lay off over 4,000 employees, according to a report in the Silicon Valley Business Journal and later corroborated by the San Francisco Chronicle. In a transcript of Cisco’s Q1 2023 Earnings Call published by Motley Fool, Cisco Chief Financial Officer Scott Herren characterized the move as a “rebalancing.” Chairman and Chief Executive Officer Chuck Robbins said the company was “rightsizing certain businesses.” At one point, the average employee at Cisco was making $109,000 a year. Those that are losing their jobs won’t be able to replace those incomes easily. On top of everything else, U.S. consumers are now seeing their home values start to fall as the housing market crashes. As I discussed earlier this week, home sales were 28.4 percent lower in October 2022 than they were in October 2021. That is a nightmare figure, and those that work in the real estate business are starting to feel the pain. In fact, Zero Hedge is reporting that a whopping 37 percent of U.S. real estate agents could not pay office rent in October… Higher borrowing costs triggered a sharp drop in mortgage applications and home sales in the back half of the year. Deal flow is drying up for many real estate agents, resulting in financial duress that may worsen into early 2023. In October, a shocking 37% of real estate agents struggled to pay office rent — a 10% increase from the prior month, according to Yahoo, citing a new report via Redfin. The figure could worsen as the housing market rapidly cools via the Fed-induced demand side crunch. That is more than a third of all real estate agents! Sadly, this is just the beginning. Our economic momentum is taking us downhill quite quickly now, and it isn’t going to take very much to turn this downturn into an avalanche. At this point, things are already so bad that best-selling author James Rickards is warning that “this thing is going to completely crash” and that “we are in for a worse crisis than 2008″… Rickards points out, “Why does Warren Buffett and Brookshire Hathaway have $130 billion in cash?  Buffett is one of the greatest investors of all time.  Why isn’t he out there buying stocks?  Again, why does he have $130 billion in cash?  It’s because Buffett sees what I see.  Yes, this thing is going to completely crash.  It’s a really good idea to have cash because you can go shopping in the wreckage and pick up some bargains.  My point is, we don’t have to guess.  Look at the Treasury yield curve.  Look at the euro/dollar futures yield curve.  Look at other metrics, and guess what it looks like?  It looks like 2007.  Everything I am describing, but not quite as extreme by the way, was true in 2007. . . . These euro/dollar futures were behaving then exactly as they are now.  Except now, the inversion is even worse, which means we are in for a worse crisis than 2008.  It’s coming.  Everything I said has nothing to do with FTX.  Throw FTX on top, and as I said, you are throwing gasoline on a fire.” If Rickards is correct, what will our nation look like a year from now? You might want to start thinking about that, because the times we are moving into will be unlike anything we have ever seen before. But most Americans don’t want to hear this. Most Americans just want to blindly believe that our leaders in Washington have everything under control and that they will be able to fix things. There is certainly nothing wrong with hoping for the best, but meanwhile you might also want to start preparing for the worst, because things are starting to get really crazy out there. *  *  * It is finally here! Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon. Tyler Durden Thu, 11/24/2022 - 08:40.....»»

Category: smallbizSource: nytNov 24th, 2022

Facebook Craters 20% To 6-Year-Low After Dismal Earnings, Massive CapEx Guidance, Revenue Warning

Facebook Craters 20% To 6-Year-Low After Dismal Earnings, Massive CapEx Guidance, Revenue Warning Heading into today's earning from Facebook, which still has the bizarro ticker META (Ok, Zuck, we got the joke, time to change the name and the ticker), the option-implied move was for a staggering 12% swing in the stock price as nobody had any idea what to expect: yes, the recent results from SNAP and GOOGL were ugly, but sentiment was so beaten down that it was unlikely Facebook could really surprise to the downside (and, boy, was sentiment wrong in retrospect). Well, moments ago the company reported earnings, and it appears that the options market was correct, because after first surging almost 10% higher, the stock has since tumbled a whopping 12% all in the span of a few seconds as traders digest what the world's largest social network reported for Q3, which is the following: EPS $1.64, missing the estimate of $1.89, down 49% from a year ago. Revenue $27.71BN, beating the consensus estimate of $27.41BN, but down 4% from a year ago. Advertising rev. $27.24 billion, beating estimates of $26.86 billion Family of Apps revenue $27.43 billion, beating estimates of $27.07 billion Reality Labs revenue $285 million, missing estimates of $406.3 million Other revenue $192 million, in line with the est. $193.9 million Despite the revenue beat, this was the second straight quarter of revenue declines from the year earlier (after the first decline ever last quarter). As for Net Income, forgetaboutit... ... As Bloomgerg notes, this is a company that got so used to growing with no end in sight, that they now have to adjust to a period of intense prioritization. Needless to say,  a mixed picture at best, especially since the number of total ad impressions rose by a higher than expected +17% (est. +11.8%) and yet the average price per ad tumbled -18%, much worse than the estimate -15.3%. In fact, ad revenue was so ugly, it dropped in every user geography. Looking at the number of users, we get more mixed results: Facebook daily active users 1.98 billion, beating the est. 1.86 billion Facebook monthly active users 2.96 billion, missing the est. 2.97 billion Some more headlines from the quarter: Meta Sees Reality Labs Op Losses in 2023 Significantly Higher Meta Making Changes Across Board to Operate More Efficiently Meta Has Increased Scrutiny on All Areas of Operating Expenses Meta Holding Some Teams Flat in Headcount, Shrinking Others Meta: Beyond 2023 to Pace Reality Labs Investments Meta: Boost in AI Capacity Driving Capex Growth in 2023 But it was the company's guidance that prompted the after hours reversal from high to low, as the company now sees: Revenue of $30 billion to $32.5 billion, on the weak side of the estimate $32.2 billion And while FB trimmed its expense forecast for full year 2022 to $85 billion-$87 billion, from $85 billion-$88 billion (est. 85.11BN), it was the company 2023 full year forecast that was ugly, as a result of far more spending than previously expected: Sees total expenses $96 billion to $101 billion, estimate $93.2 billion Sees capital expenditure $34 billion to $39 billion, estimate $28.99 billion Another problem: the metaverse may be the next sliced bread, but it costs a lot of money to convince the world, and even more cash burn, to wit: “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.” Reality Labs' revenues are tumbling and losses are soaring... Finally, what assured that META stock would crater is the warning from CEO Mark Zuckerberg, who admitted that "we face near-term challenges on revenue." While he tried to walk it back by promising that "the fundamentals are there for a return to stronger revenue growth" and that he is "approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company" all investors saw was "revenue challenges" and hammered the stock accordingly. It gets worse: the company said that FX would be a ~7% headwind to Y/Y total revenue growth in 4Q. Amazingly, despite the ugly results, Meta said it sees headcount end 2023 about in-Line With 3Q 2022. Don't worry, after Zuck sees the crash in the stock he will change his mind.  Not even extended outlook commentary from the CFO did anything to stop the bleeding: “To provide some context on the approach we are taking towards setting our 2023 budget, we are making significant changes across the board to operate more efficiently. We are holding some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities. As a result, we expect headcount at the end of 2023 will be approximately in-line with third quarter 2022 levels." Bottom line: what little good news there is, is that Facebook is still growing on both a DAU... ... and MAU basis. To some, such as Bloomberg Intel's Singh, this was enough: “If you look at the numbers, it’s a beat. Look at the impressions growth -- that’s pretty impressive. That goes to show that people are spending time on Facebook properties because that is how you are driving those impressions.” As Zuckerberg has told his employees, once you have the attention, you can make money off of that. And that’s what’s going to fund this metaverse transition. The bad news is that so far the transition is going from bad to worse, with the company plowing ever more dollars into its new strategic vision, and has nothing to show for it. Putting the above together, here are the five main lessons from Bloomberg: Meta is in a revenue slump for the long haul. The company sees $30 billion to $32.5 billion for the holiday quarter, missing the midpoint of consensus. Expenses for 2023 are higher than expected, at $96 billion to $101 billion, as Zuckerberg pursues that metaverse vision. Reality Labs and other metaverse initiatives are going to keep losing money. Operating loss is $3.67 billion. Earnings also missed estimates, at $1.64 per share compared to the $1.89 per share estimate. Zuckerberg says “prioritization and efficiency” are the focus for 2023. Some teams will be downsized, only priority teams get to grow headcount. Or rather it has a crashing stock price to show: remember what we said that META options were pricing in a 13% swing after earnings? Well, they got just that- first to the upside, and then down... ... with the stock plunging 70% from its recent highs, and tumbling to a fresh 2016 low of $114... ... and still dropping, now down more than 19% on the day, and 14.5% after hours, the second biggest one-day drop in Facebook history. And while it's clear why anyone who bought the stock in the past year is beating themselves on the head, nobody is as bad an investor here as Facebook itself: over the past 12 months, META has repurchased $42BN of stock at an average price of roughly $300. It is now trading at $112. The company's full earnings presentation is below. Tyler Durden Wed, 10/26/2022 - 18:30.....»»

Category: blogSource: zerohedgeOct 26th, 2022

Facebook Craters 20% To 6 Year After Dismal Earnings, Massive CapEx Guidance, Revenue Warning

Facebook Craters 20% To 6 Year After Dismal Earnings, Massive CapEx Guidance, Revenue Warning Heading into today's earning from Facebook, which still has the bizarro ticker META (Ok, Zuck, we got the joke, time to change the name and the ticker), the option-implied move was for a staggering 12% swing in the stock price as nobody had any idea what to expect: yes, the recent results from SNAP and GOOGL were ugly, but sentiment was so beaten down that it was unlikely Facebook could really surprise to the downside (and, boy, was sentiment wrong in retrospect). Well, moments ago the company reported earnings, and it appears that the options market was correct, because after first surging almost 10% higher, the stock has since tumbled a whopping 12% all in the span of a few seconds as traders digest what the world's largest social network reported for Q3, which is the following: EPS $1.64, missing the estimate of $1.89, down 49% from a year ago. Revenue $27.71BN, beating the consensus estimate of $27.41BN, but down 4% from a year ago. Advertising rev. $27.24 billion, beating estimates of $26.86 billion Family of Apps revenue $27.43 billion, beating estimates of $27.07 billion Reality Labs revenue $285 million, missing estimates of $406.3 million Other revenue $192 million, in line with the est. $193.9 million Despite the revenue beat, this was the second straight quarter of revenue declines from the year earlier (after the first decline ever last quarter). As for Net Income, forgetaboutit... ... As Bloomgerg notes, this is a company that got so used to growing with no end in sight, that they now have to adjust to a period of intense prioritization. Needless to say,  a mixed picture at best, especially since the number of total ad impressions rose by a higher than expected +17% (est. +11.8%) and yet the average price per ad tumbled -18%, much worse than the estimate -15.3%. In fact, ad revenue was so ugly, it dropped in every user geography. Looking at the number of users, we get more mixed results: Facebook daily active users 1.98 billion, beating the est. 1.86 billion Facebook monthly active users 2.96 billion, missing the est. 2.97 billion Some more headlines from the quarter: Meta Sees Reality Labs Op Losses in 2023 Significantly Higher Meta Making Changes Across Board to Operate More Efficiently Meta Has Increased Scrutiny on All Areas of Operating Expenses Meta Holding Some Teams Flat in Headcount, Shrinking Others Meta: Beyond 2023 to Pace Reality Labs Investments Meta: Boost in AI Capacity Driving Capex Growth in 2023 But it was the company's guidance that prompted the after hours reversal from high to low, as the company now sees: Revenue of $30 billion to $32.5 billion, on the weak side of the estimate $32.2 billion And while FB trimmed its expense forecast for full year 2022 to $85 billion-$87 billion, from $85 billion-$88 billion (est. 85.11BN), it was the company 2023 full year forecast that was ugly, as a result of far more spending than previously expected: Sees total expenses $96 billion to $101 billion, estimate $93.2 billion Sees capital expenditure $34 billion to $39 billion, estimate $28.99 billion Another problem: the metaverse may be the next sliced bread,  but it costs a lot of money to convince the world, and even more cash burn, to wit: “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.” Finally, what assured that META stock would crater is the warning from CEO Mark Zuckerberg, who admitted that "we face near-term challenges on revenue." While he tried to walk it back by promising that "the fundamentals are there for a return to stronger revenue growth" and that he is "approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company" all investors saw was "revenue challenges" and hammered the stock accordingly. It gets worse: the company said that FX would be a ~7% headwind to Y/Y total revenue growth in 4Q. Amazingly, despite the ugly results, Meta said it sees headcount end 2023 about in-Line With 3Q 2022. Don't worry, after Zuck sees the crash in the stock he will change his mind. Bottom line: what little good news there is, is that Facebook is still growing on both a DAU... ... and MAU basis. To some, such as Bloomberg Intel's Singh, this was enough: “If you look at the numbers, it’s a beat. Look at the impressions growth -- that’s pretty impressive. That goes to show that people are spending time on Facebook properties because that is how you are driving those impressions.” As Zuckerberg has told his employees, once you have the attention, you can make money off of that. And that’s what’s going to fund this metaverse transition. Not even extended outlook commentary from the CFO did anything to stop the bleeding: “To provide some context on the approach we are taking towards setting our 2023 budget, we are making significant changes across the board to operate more efficiently. We are holding some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities. As a result, we expect headcount at the end of 2023 will be approximately in-line with third quarter 2022 levels." The bad news is that so far the transition is going from bad to worse, with the company plowing ever more dollars into its new strategic vision, and has nothing to show for it. Or rather it has a crashing stock price to show: remember what we said that META options were pricing in a 13% swing after earnings? Well, they got just that- first to the upside, and then down... ... with the stock plunging 70% from its recent highs, and tumbling to a fresh 2016 low of $114... ... and still dropping, now down more than 19% on the day, and 14.5% after hours, the second biggest one-day drop in Facebook history. And while it's clear why anyone who bought the stock in the past year is beating themselves on the head, nobody is as bad an investor here as Facebook itself: over the past 12 months, META has repurchased $42BN of stock at an average price of roughly $300. It is now trading at $112. The company's full earnings presentation is below. Tyler Durden Wed, 10/26/2022 - 16:32.....»»

Category: blogSource: zerohedgeOct 26th, 2022

Ken Griffin: Stocks “Looking Pretty Good On A Relative Basis”

Following is the unofficial transcript of a CNBC interview with Citadel Founder & CEO Ken Griffin and CNBC’s “Fast Money Halftime Report” and “Closing Bell: Overtime” Host Scott Wapner live during the CNBC Delivering Alpha conference today, Wednesday, September 28th. Interview With Ken Griffin From The Delivering Alpha Conference SCOTT WAPNER: Welcome. Great to have […] Following is the unofficial transcript of a CNBC interview with Citadel Founder & CEO Ken Griffin and CNBC’s “Fast Money Halftime Report” and “Closing Bell: Overtime” Host Scott Wapner live during the CNBC Delivering Alpha conference today, Wednesday, September 28th. Interview With Ken Griffin From The Delivering Alpha Conference SCOTT WAPNER: Welcome. Great to have you here. KEN GRIFFIN: It’s great to be here. SCOTT WAPNER: I can’t think of a better time to speak with you, either. These are such unsettled times, uncertain. I have a lot to get to and I’d like to start by sort of getting your view of kind of where we are from a market standpoint. What do you see? .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   KEN GRIFFIN: So you opened with the right choice of words. It's a very uncertain time. We are grappling with the threat of nuclear war in the Ukraine, we're grappling with unprecedented Central Bank interventions, we're grappling with record high inflation in the United States in our lifetimes. We're in a very uncertain time for investors. Fortunately, the U.S. equity market, although down quite a bit for the year, is showing a level of resiliency. And the U.S. economy, most importantly, is still strong for people who are going to work every day. In fact, I think we're looking at real wage growth in Q4 this year. We're probably looking at peak inflation having just occurred or just about to occur. So the forward trajectory on a number of key fronts looks somewhat better domestically, again, assuming nothing goes totally off the rails abroad. SCOTT WAPNER: I'm kind of surprised to hear you answer the question that way. I was expecting maybe more gloom and doom. You don't really sound that way, like Stan Druckenmiller did, who was on the stage earlier today who was talking about, at minimum, a hard landing sometime in 2023, if not worse. KEN GRIFFIN: Well, everybody likes to forecast recessions, and there will be one, it's just a question of when and, frankly, how hard. And is it possible that end of '23 we have a hard landing? Absolutely. The Fed is grappling with a level of inflation we haven't seen in a long time. They have a very limited toolkit. They can raise interest rates. That has very adverse consequences for home builders, adverse consequences for auto manufacturers. It will slow down new office construction, for example. But it's a pretty awkward tool to actually cool the economy in a services-led economy. Your decision and my decision to go to a restaurant tonight isn't really impacted by overnight interest rates. Now, we'll get some knock-down effects from wealth deterioration, right? Stock market is lower. People are a bit anxious to spend some of their savings because their savings have come down. But with employment numbers as good as they are, with wages going up nominally, quite a bit, in real terms, back in an upward trajectory, I think the consumer is going to spend money. SCOTT WAPNER: You talk about a resilient stock market, that's the word you used. Do you think that can continue, or is that going to end? KEN GRIFFIN: If we look at multiples, they are high by historical standards, and they are still high by historical standards even given the onslaught of bad news that we've seen, right? Like you said, it's been a year of some really tough headlines. There's a war in Europe, there is record inflation. The market is -- of course, it's down, I don't want to sugarcoat that, but it's not down as much as you probably would have thought if you looked at the news headlines. I think that, again, reflects people have job security, they feel safe in their jobs. Because they're safe in their jobs, they're willing to put money at risk in the stock market. I think if people started to hear their neighbors losing their jobs, we'd see a rotation out of equities and into fixed income. But right now, the American consumer is feeling pretty good about where things stand on an absolute basis. Again, as a country, we all like to find a list of things to complain about, inflation high on the list. But in an 8% inflation environment, do you want your money in 2% short-term bills? Do you want your money in a bank account yielding next to nothing? Stock market was looking pretty good on a relative basis. SCOTT WAPNER: You speak to the competition that now exists, that didn't exist for the better part of at least a decade, if not longer. I know you've heard the debate whether stocks are better than bonds at the current time. Some suggest it's not even close right now, that bonds are the better bet. KEN GRIFFIN: I've got to tell you, with the 10-year at 4% this morning, that was pretty compelling. If you walk through the story we went through, inflation peaking here, heading to a -- you know, let's call it 3- or 2-headline number sometime early to mid next year, core will be higher. That's the challenge the Fed's going to have to deal with, is bringing core down. But you've got a 4% nominal yield. You could be looking at a pretty good real rate of return with bonds at 4%. SCOTT WAPNER: This whole conversation obviously hinges on what the Fed continues to do, and what the impact is of what they're already done. That debate has percolated maybe over the pot of late, with some suggesting that the Fed has gone way too far. I don't know if you've heard some of the debate on our own network about that. Where do you come down on that? Has the Fed oversteered, as some suggest? KEN GRIFFIN: You know, I think that you have one of the most difficult jobs you could ever imagine, right? You're trying to figure out what would be the trajectory of inflation against a backdrop of a labor market that we've never seen before. We don't know the impact of productivity from people working from home, for example. We just don't know. We also don't know what the next move out of Washington is going to be. There's been a lot of regulatory increase out of Washington which, of course, is tough on the economy. There's been a tremendous amount of spending that we, as a country, just shouldn't be incurring that, again, is pro-cyclical, pro-inflation. So the Fed's had a really difficult job to try to use a very blunt tool, interest rates, to address an overheating economy where Washington keeps making moves on the chess board that turned the oven hotter. So it's a tough job. The Fed came out pretty aggressively and then lost some credibility this summer as the financial conditions started to relax. And the most recent moves by the Fed are about reasserting credibility. They want to be very clear-cut, we're going to put inflation back in the box, we're going to take care of this issue. But they lost some credibility this summer when the market started to think the Fed was going to come off of a steep trajectory. SCOTT WAPNER: To pivot. KEN GRIFFIN: To pivot, right? And that was exactly what the Fed didn't need. Now, let's look at counterpoints. The Bank of England right now is facing many of the same challenges, right? The U.K. is going to offer a massive subsidy to homeowners to deal with the cost of energy. That's the price that Europe is paying for, frankly, really poorly thought-out energy policies borne to a significant degree by U.K. consumers who, to their credit, that country's built much more infrastructure and has much more infrastructure to grapple with the crisis created by the dynamics in Ukraine and Russia. But the Bank of England's got to deal with policies that are, again, huge subsidies to homeowners for energy bills, $100 billion-plus, in all likelihood, and then a tax cut against an economy already struggling with inflation. And there, where you see the credibility being brought into question the last couple of days, you've seen just a dramatic fall in the value of the pound, you've seen a dramatic increase in U.K. rates. You can understand why central banks are so focused on maintaining confidence when you see it go awry. SCOTT WAPNER: You run a global firm, obviously, with exposure all over the world. The fallout from what -- since you went there, the U.K -- the BOE has done, I mean, monetary and fiscal policymakers there, are you worried about contagion as a result of what they've done or what kind of exposure might you have given your big macro-presence in Europe? KEN GRIFFIN: So am I worried about contagion? No. But I'm worried about what the loss of confidence in the U.K. represents. It represents the first time we've seen a major developed market, in a very long time, lose confidence from investors. And it represents the challenges that a country faces when policymakers have created a poor foundation. The U.K, because it had high inflation, cannot resort to tax cuts in the same ready fashion to spur growth as we could have in the United States during the Trump administration, for example. When you have your fiscal house in order, when you have inflation under control, you have far more degrees of freedom from both a fiscal and monetary perspective to deal with moments of adversity. The U.K. has lost some of those degrees of freedom, and you see that in the market's reaction to policies that would have been acceptable under a different regime. I worry about that from the context of being an American, where our deficit continues to explode in size, where our government continues to expand in size, and we're losing some of our competitive advantage on a global stage because of the weight of our government and our policy decisions. SCOTT WAPNER: When you see the dramatic moves that have taken place in the currency in the U.K, in bonds, I mean, given your job, do you think about the exposure that you have at that given moment and what the ramifications are? How are you thinking about that question? KEN GRIFFIN: I mean, of course we're always thinking about every exposure we have around the world. We trade a substantial portfolio of foreign exchange positions of fixed-income assets around the world, in addition to equities, and part of our job as a management team is to understand the risks and rewards inherent in those assets, in those positions. The U.K. has been a bit of a minefield the last couple weeks, because today, for example, Central Bank stepped in and bought 10-year gilts in the U.K. to try to create stability in the market, in a country that has enormous amount of debt to be issued. So how do you interpret that? How do you think about these forms of market intervention by central banks? Bank of Japan, just a week ago, intervened in the FX market in a very profound way. And so when you're trading a large macro portfolio, part of your job is to understand how governments will intervene. But watching governments intervene is always a frightening place to be. SCOTT WAPNER: Sometimes the -- I guess you think about the "how," you never can predict the "when," and that is maybe the most unknown variable there is that brings you back to our conversation about our Federal Reserve. Do you think that they have done enough to this point in time that they should stop and wait? It speaks to the "when" and the "how much" of another rate cut -- a rate hike, and if and when that happens. Have they done enough? Should they let it go through the system like some suggest they should? KEN GRIFFIN: So, from my vantage point, absolutely not. We should continue on the path that we're on to ensure that we re-anchor inflation expectations. There's a psychological component to inflation that we need to make sure that our country doesn't start to assume that we should expect 5 or 6 or 7% inflation, because once you expect it broadly enough, it becomes reality, it becomes the table stakes in wage negotiations, for example. So it's important that we don't let inflation expectations become unanchored. But I will tell you, I think the Fed has another challenge, which is if Stan Druckenmiller is right -- let's just stipulate he is -- and we go into a deep recession late next year, then we're going to have had millions of Americans unemployed back to back twice in a three-and-change-year period. And from the perspective of our nation, the loss of human capital that that implies is devastating. To be unemployed twice in such a short period of time, the diminution of job skills, career experience, derailment to future aspirations, a belief that the American dream is not achievable, those cultural and tangible impacts are really devastating. So, for choice, if I am the Fed, I want to try to bring inflation expectations down, but I don't want to create a hard landing because of the cost in human capital. SCOTT WAPNER: You think that they can actually control that? KEN GRIFFIN: No. I think that's the really difficult dance they're trying to do right now. But, you know, you're dealing with very lagged effects. You raise rates today, it impacts very small sectors of the economy very sharply. The follow-on knock-on effects will take 6-12 months to play out. It's a really difficult job they have. SCOTT WAPNER: Stan, you know, aside from suggesting that there was going to be a hard landing at some point next year, suggested you could have something much worse than that. Do you think we could? KEN GRIFFIN: I mean, it's possible. It's always -- here is the problem with economics. I spent three years of my life pulling my hair out at Harvard studying economics. There is no answer. There's just distributions. There's just what may happen. And, of course, there's some distribution that says we're going to go into a significant recession or depression. I can give you that story. I can give you that really bearish story. I'm not sure it serves much purpose. One should always think about that in terms of their portfolio allocation. Can I endure the losses in my portfolio that would go with a severe recession or depression? I should be aware of that possibility. But you want to think about managing your portfolio over your life and over your ability to sustain your risk positions over the journey of your life. In other words, you don't want to own so many equities that when the inevitable recession happens, you're forced to sell at the bottom. That's a much more important concept for investors to understand and to focus on than trying to prognosticate as to when the next recession is going to happen, if that makes any sense. SCOTT WAPNER: Is the 60/40 portfolio dead? KEN GRIFFIN: No. Actually, the 60/40 portfolio looks much better today than at any point in recent times. SCOTT WAPNER: Why so? KEN GRIFFIN: We've got 10-year bonds at 4%, right? When 10-year bonds are at 75 basis points, or 1%, there's no real upside to the bond in a moment of a recession that's often characterized with inflation. But now with the 10-year bond at 4%, if you go into a downturn and inflation heads back towards a 1 handle, all of a sudden those bonds are worth a fair amount more than they are today. That's a win in your portfolio; that's in the green, when your equity portfolio is likely to be in the red. SCOTT WAPNER: Just to be clear, we're talking about 60/40 stocks/bonds, right? The 60/40 portfolio being the best there; we're not saying 60 bonds/40 stocks? KEN GRIFFIN: No. We're saying -- just to case it back, look at the traditional 60/40 advice that investment advisors have given people for the last 40 years of our lives, okay? What I'm saying is, right here, right now, that's a much more compelling value proposition than it was back when the 10-year bond had a 1% yield. SCOTT WAPNER: But you're not -- are you positioning for an eventual hard landing or not? KEN GRIFFIN: So, you know, we're very focused on the possibility of a recession. That's part of risk management. But our central case, unemployment claims at effectively all-time lows, labor force participation rates for prime in life, close to all-time highs. The labor market is healthy. You're going to have real wage growth in Q4. The consumer, lower gasoline prices, lower energy prices, is putting that savings right into consumption. They're putting it into airline tickets, hotels, electronics. They're spending the money that they're saving that they were spending on gasoline just six months ago on other forms of consumption. So that creates a really powerful tailwind to the overall economy. Remember, this, in America, is a consumer consumption-led economy. For better, for worse, that's what drives the American economy. What's the consumer doing? And right here, right now, for the consumer, things look better than they did six months ago. In the future, if you have a bit of a crystal ball, it looks even better over the next 3-6 months. SCOTT WAPNER: Interesting. So we talk a little bit about your positioning. I mentioned at the beginning you have had an ability to navigate these unsettled and uncertain markets better than most. Tyler alluded to that as well. Citadel is having a great year. What's been the key to that? What's been the positioning for you that has led you to do better than most? KEN GRIFFIN: So what you have to keep in mind is, is when you're running a large alternative asset management firm, and particularly one with a very sharp trading stance -- so we're very actively trading dollar/yen and pound/dollar and the 10-year bond and -- SCOTT WAPNER: And commodities. KEN GRIFFIN: -- and commodities, the fluidity with how you change that portfolio is very fast. You can come in to work one day, find that you're long on a bunch of 10-year bonds; two weeks later, you're short a bunch of 10-year bonds. So the tactics of how we're positioning our capital from a trading perspective means that the portfolio really reflects a summation of making a significant number of very on-point short-term calls over the course of the last nine months. Now, I will tell you, one of our key competitive advantages is my entire team is back at work. And the communication collaboration that goes with an in-office workforce is a really powerful competitive advantage when a lot of our competitors are still working remotely. So I think we're in a better position to assimilate quickly macroeconomic news, company earning reports, and move our feet in response to that information and capture value for the people that entrust us with their capital. SCOTT WAPNER: You mentioned your presence in commodities is large, you're one of the largest commodities traders in the world. What is your outlook for that space, specifically energy, which is still, I think, the best-performing sector of this year? KEN GRIFFIN: Energy has been just an unbelievable upward trajectory for most of 2022. And this reflects the fact that Europe -- Europe was willing to trust Russia as its fundamental provider of energy. In fact, when it came to Nord Stream, the whole point that President Trump had about "no" to Nord Stream was trying to reduce European dependency upon the Russians for energy. And guess what? The President was right. In fact, this winter in Germany, the question will be what part of the manufacturing base may need to shut down to secure enough natural gas to heat people's homes. I mean, this is really hard for Americans to relate to, this idea that GM and Ford and Toyota would shut down their manufacturing lines here in America so we would have enough natural gas to keep people's homes warm during the winter. That's how precarious things are in Europe. And the price of natural gas in Europe is several times, several times higher than the price in the United States. So Europe, unlike the United States, because of this enormous energy tax, both inflationary -- and, bluntly, you're writing a check to the Russians -- well, you were until recently; they stopped sending gas to the Europeans. That is putting their economy in a much weaker position on a relative basis than ours. Europe is probably already in a recession because of the high cost and scarcity of energy, and that's a really sad commentary on a substantial portion of the world's consumer or population base. SCOTT WAPNER: You mentioned President Trump -- former President Trump. I want to pivot, if I may, to politics for a minute, because the reports are that you are a big supporter of Governor DeSantis in your new home base of Florida. You were ear-to-ear smile before we came in here, telling me how much you love being down in Miami. Are reports of your backing of DeSantis true? KEN GRIFFIN: Well, I've been a supporter of DeSantis for years. There's nothing newsworthy, and I'm a big supporter of DeSantis. And living in Florida, you see the impact of his policies. It is a state that is prospering. Children in school are being educated and not indoctrinated, which is really great to see as a father of three children. The focus from the Mayor of Miami on managing crime, I mean, we just didn't have that in Chicago. And Chicago, one of our great northern cities right now, frankly, engulfed in almost anarchy. Crime is just out of control in the streets. My friends in New York complain about crime. Nothing compared to Chicago. So, if you look at the quality of life that people have in Florida right now, good schools, safe streets, incredibly prosperous business community, incredible influx of people from across the country moving to Florida, they're like intra-American immigrants. These are people that want to build businesses, they want to create careers. They're moving to states like Florida, where it's just easier to do. And it's really fun to be in an environment where people are forward and they embrace the future. They're hopeful about tomorrow. In contrast, in Chicago, dinner with friends would open for the first 20 minutes with crime and how bad crime is, and this person was murdered here, and what are they going to do about it. That's just not the conversation in Miami. The conversation in Miami is about building a future. SCOTT WAPNER: What did you think of the Governor's policy on migrants? KEN GRIFFIN: I don't agree with what he did. SCOTT WAPNER: Did you tell him that? KEN GRIFFIN: I'm certain that my team's communicated that to him. The point that he's trying to make, I agree with, but the immigrants -- the illegal immigrants are coming over the border in Texas. Texas is bearing the brunt of this. And Governor Abbott, in Texas, I think is justified in what he's been doing because, frankly, the rest of the United States has left him with the bill, while cities like Chicago declared themselves to be sanctuary cities. So he's making a very powerful point to the rest of the country as the state that's bearing the cost of open borders. I think DeSantis reiterated that point but, frankly, I think the Governor of Texas had made it. I don't think Governor DeSantis had to get in the middle of this. SCOTT WAPNER: What about his fight with Disney? KEN GRIFFIN: That's a complicated fight with Disney. First of all, I think Disney put themselves in a position to be punched back. I think the Governor of Florida is completely appropriate in punching back in words. I always get anxious when government does things that look retaliatory. So when the State of Florida revoked Disney's special tax status, that to me could be interpreted as retaliation. And I think it's incredibly important that the U.S. government, at the state level and federal level, stays above anything that looks like politically-based retaliation at all times. SCOTT WAPNER: And you thought that was? KEN GRIFFIN: Look, you could interpret it as such. So whether or not it was, it doesn't matter. The timing was such that one could conclude or believe it was retaliation. SCOTT WAPNER: To the reports that you would consider a cabinet position should he win in '24, perhaps as Treasury Secretary, is that true? KEN GRIFFIN: Well, the question was posed to me, if there was a moment where -- Let me just rephrase this. If we had an economic crisis and I was asked to be Secretary of Treasury, of course I would offer my services. I would be honored to be asked under those circumstances. But right here, right now, I love running Citadel. I'm not interested in being Secretary of Treasury. If we ever had a crisis, of course I'm interested in serving my nation. SCOTT WAPNER: But it would take a crisis to get you to seriously think about it? KEN GRIFFIN: It probably would. SCOTT WAPNER: Interesting. Lastly, before we go, I guess it was 18 months ago or so when you and Citadel were thrust into the whole issue of payment for order flow with Robinhood, which you, I believe, came on with my colleague, Andrew Ross Sorkin, to sort of defend the practice and Citadel's role in it. There was news last week that seemed to suggest that that policy was not going to be outlawed by the SEC. You said at the time that if it was, you would adapt. I think that was the word you used, was "adapt." Are you surprised? Did you think it might be outlawed? KEN GRIFFIN: So, you know, is there a chance, was there a significant chance the SEC was going to end up somewhere banning payment for order flow? Of course. And, frankly, I don't think we've done enough to help consumers understand the nature of payment for order flow. If you're a client of any of the major E-brokerage firms, whether it's a Fidelity, a Schwab, Ameritrade, a Robinhood, an E-Trade, you route your order flow to firms like Citadel Securities, or V2 or Jane Street. And we share our trading acumen at the time of execution of that order. We can very precisely price equities, manage the risk of doing so, and we can share our trading acumen in the form of price improvement and payment for order flow. And this has driven this spectacularly high-execution quality that retail investors have enjoyed and, at the same time, payment for order flow has allowed the major E-brokerage firms to offer zero dollar commissions. We can end payment for order flow, perhaps that trading acumen is shared by more price improvement in that world, but it probably also results in higher commissions. And I think that's just a policy decision that Gensler and the E-brokerage community need to make. SCOTT WAPNER: How will we look back on this whole period, do you think? We've had some runway now away from the meme stock mania, but if you consider that and NFTs and SPACs and some of the other -- you know, what some would call froth or frothy activity in the market, how will you look back at this period of the last couple of years with the sort of keen market sense that you have? KEN GRIFFIN: Wait. Some would call froth? SCOTT WAPNER: Okay. I was trying to be -- KEN GRIFFIN: No. I mean, we went through a period of time where there was massive fiscal stimulus to the American household, much of that early in the pandemic, completely justified. I mean, I was in the White House in March of 2020, and we were talking about the fact that literally millions of Americans were about to lose their jobs. I was pounding the table pretty hard that we had to put checks in the hands of American households, because otherwise people were going to go without food. You and I both know the numbers in the average savings account in our country. People have not saved enough money for a rainy day. And I give great credit to the administration for moving aggressively to get those early stimulus checks out to make sure that nobody in this country went hungry at the start of that pandemic. But we just kept sending checks under one program after another program, last administration, this administration. That deluge of money handed to households, which we borrowed from our great-grandchildren, the surge in the federal deficit has just been -- it's been equivalent to winning World War II. It's been incomprehensible. That surge of borrowing and money delivered to households cycled back into speculative assets in many cases, into NFTs, into crypto, into meme stocks. Now that we're past that moment in time and people are starting to spend those savings down to travel, go out to eat, enjoy other items in life that they want to have, we're seeing that speculative bubble really recede. And this is healthy for the economy. Money misallocated in speculative assets doesn't create jobs in the long run, doesn't help to create the long-term prosperity that makes America the country that it is. SCOTT WAPNER: And you see the direct cause and effect? KEN GRIFFIN: Oh, absolutely. I mean, billions of dollars going into companies that are effectively going to go broke, tens of billions, is money that doesn't go to how do we treat Alzheimer's or how do we treat Parkinson's or how do we educate our children. Our capital markets, when they're awash in speculation, miss the point of why they exist. They exist to allocate capital to the best and highest use. And America's capital markets historically are an incredible engine of job creation, innovation, and improvement in our quality of life. I mean, the stories of the great tech companies, they're almost all U.S. stories, whether it's Apple or Intel or Microsoft. And these are companies that were funded with the American capital markets to create that incredible change in our lives that you and I have enjoyed growing up over the course of the last few decades. SCOTT WAPNER: You included crypto in the areas of "froth" that you just said. Does that mean you're a nonbeliever in crypto? KEN GRIFFIN: Oh, this is -- you know, all the 20-year-olds that work for me now want to kill me, thank you very much, because there's a bit of an intergenerational fight here. I see my younger colleagues much more crypto-centric than my older colleagues, and for good reasons, including, ironically, sort of a Libertarian view of the world. You know, as our government gets bigger and bigger, a certain number of people sort of feel like, you know what, I want the privacy and I want to be -- I want to pull away from government. SCOTT WAPNER: Decentralization. KEN GRIFFIN: Decentralization, right? So what's interesting is we see people pulling away from big government when they look at assets like cryptocurrency, which is a real irony given how people view government can solve so many other problems. SCOTT WAPNER: I enjoyed our conversation. Thank you so much for being so generous with your time. That's Ken Griffin. KEN GRIFFIN: Great to be here......»»

Category: blogSource: valuewalkSep 29th, 2022

5 Retail-Miscellaneous Stocks to Safeguard Against Industry Woes

While challenges prevail in the Retail - Miscellaneous industry, players such as Ulta Beauty (ULTA), Tractor Supply (TSCO), DICK'S Sporting (DKS), Arhaus (ARHS) and MarineMax (HZO) look well poised, courtesy of their business operating model and prospects. Product cost inflation, tight labor market and supply-chain issues are some of the headwinds that players in the Zacks Retail – Miscellaneous industry have been encountering lately. These along with geopolitical turbulence, thanks to the conflict between Russia and Ukraine, have dampened consumers’ spirits.That said, industry participants have been focusing on superior product strategy, advancement of omni-channel capabilities and prudent capital investments to strike the right chord with consumers. Ulta Beauty, Inc. ULTA, Tractor Supply Company TSCO, DICK'S Sporting Goods, Inc. DKS, Arhaus, Inc. ARHS and MarineMax, Inc. (HZO) look well poised, courtesy of their business operating model and opportunities ahead.About the IndustryThe Zacks Retail – Miscellaneous industry covers retailers of sporting goods, office supplies, and specialty products as well as sellers of a wide range of domestic merchandise. It also includes retailers of beauty products providing cosmetics, fragrances, skincare and haircare products, and salon styling tools. Some of the industry participants operate rural lifestyle retail stores, and arts and crafts specialty outlets, and sell their products to farmers, ranchers, and others as well as tradesmen and small businesses. The industry also comprises recreational boat and yacht retailers as well as specialty value retailers offering a broad range of trend-right, high-quality merchandise targeted at tween and teen customers. The players' profitability depends on a prudent pricing model, a well-organized supply chain, and an effective merchandising strategy.4 Key Industry TrendsPressure on Margins to Linger: Companies in the industry are vying for a bigger share on attributes such as price, products and speed to market. They have been accelerating investments to strengthen the digital ecosystem and boost shipping and delivery capabilities. While these endeavors drive sales, they entail high costs. Apart from these, any deleverage in SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might build pressure on margins. Of late, the industry participants have been dealing with high labor costs amid the tight labor market, increased freight costs, and supply-chain issues. Nonetheless, companies have been focused on undertaking initiatives to mitigate cost-related challenges. These include streamlining operational structures, optimizing supply networks as well as adopting effective pricing policies.Soft Consumer Activity May Hit Revenues: Elevating prices and geopolitical concerns continue to pose a threat to consumer spending activity. Undoubtedly, the industry’s prospects are correlated with the purchasing power of consumers. But higher gasoline and food prices have been discomforting the family budgets. The consumer price index rose to 8.5% in July 2022 on a year-over-year basis. The Fed’s aggressive rate hikes to tame inflation and cool off an overheated economy are making things tough for consumers by squeezing disposable income.Focus on Boosting Portfolio & Market Reach: Most companies in the space are working on providing a wide assortment of products, enhancing the online experience and adopting a favorable pricing strategy to boost sales. Initiatives such as building omni-channel operations, coming up with reward programs, and developing innovative products and services are worth mentioning. There has been an increase in demand for office supplies, personal care items, domestic merchandise products and fitness-related products. Companies are looking to fuel sales via targeted marketing.Digitization Key to Growth: With the change in consumer shopping patterns and behavior, industry participants have been playing dual in-store and online roles. In this respect, the industry players have been directing resources toward digital platforms, accelerating fleet optimization and augmenting the supply chain. In fact, companies’ initiatives to expand delivery options — curbside pickup or ship-to-home orders — and contactless payment solutions have been a boon. Additionally, retailers are investing in renovation, improved checkouts and mobile point-of-sale capabilities to keep stores relevant. Keeping in mind consumers’ product preferences and inclination toward online shopping, retailers are replenishing shelves with in-demand merchandise and ramping up investments in digitization.Zacks Industry Rank Indicates Bleak ProspectsThe Zacks Retail – Miscellaneous industry is housed within the broader Zacks Retail – Wholesale sector. The industry currently carries a Zacks Industry Rank #165, which places it in the bottom 35% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates drab near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. Since the beginning of May 2022, the industry’s earnings estimate has declined 12.3%.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Vs. Broader MarketThe Zacks Retail – Miscellaneous industry has underperformed the broader Retail – Wholesale sector and the Zacks S&P 500 composite over the past year.The industry has fallen 24.4% over this period compared with the S&P 500’s decline of 14.3% and the broader sector’s decline of 26.1% in the said time frame.One-Year Price PerformanceIndustry's Current ValuationOn the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing retail stocks, the industry is currently trading at 13.64X compared with the S&P 500’s 16.92X and the sector’s 22.12X.Over the last five years, the industry has traded as high as 24.96X, as low as 11.28X and at the median of 16.25X, as the chart below shows.Price-to-Earnings Ratio (Past 5 Years)5 Retail - Miscellaneous StocksUlta Beauty: The company has been strengthening its omni-channel business and exploring the potential of both physical and digital facets. It has been implementing various tools to enhance guests' experience, like offering a virtual try-on tool and in-store education, and reimagining fixtures, among others. Ulta Beauty focuses on offering customers a curated and exclusive range of beauty products through innovation.This beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 32.8%, on average. Ulta Beauty has an estimated long-term earnings growth rate of 11.9%. The Zacks Consensus Estimate for its current-fiscal EPS has risen 6.4% in the past 30 days. Shares of this Zacks Rank #1 (Strong Buy) company have risen 13.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here. Price and Consensus: ULTADICK'S Sporting Goods: Favorable customer demand, a solid product portfolio and strength in the online platform have been contributing to DICK'S Sporting Goods’ upbeat performance. The company remains optimistic about the demand trends in athletic apparel, footwear, team sports and golf.The Zacks Consensus Estimate for DICK'S Sporting’s current-fiscal EPS has moved up 5.2% in the past 30 days. This Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 21.4%, on average, and an estimated long-term earnings growth rate of 5%. Shares of this sporting goods retailer have declined approximately 21.3% in the past year.Price and Consensus: DKSArhaus: Strong consumer demand, new collections, brand awareness and ramp-up of new showrooms have been driving Arhaus’ top-line performance. The company plans to have 165 total traditional showrooms over the period from the current count of 80 showrooms, with plans to add five to seven new traditional showrooms per year. Arhaus estimates fiscal 2022 net revenues in the band of $1,173 million to $1,193 million and foresees comparable growth in the bracket of 43% to 48%.The Zacks Consensus Estimate for Arhaus’ current-fiscal EPS has moved up 17.7% in the past 30 days. This Zacks Rank #2 company has a trailing four-quarter earnings surprise of 92%, on average, and an estimated long-term earnings growth rate of 14.3%. Shares of this lifestyle brand and premium retailer have fallen 30.3% in the past year.Price and Consensus: ARHSTractor Supply Company: This largest rural lifestyle retailer in the United States has been benefiting from its robust business strategies, "Life Out Here" and everyday low pricing, as well as favorable consumer demand for product categories. In addition, Tractor Supply's Neighbor's Club loyalty program remains sturdy. Its omni-channel initiatives, including curbside pickup and same-day delivery, have been aiding digital sales. We note that strength in everyday merchandise, including consumable, usable and edible products, has been fueling sales.Tractor Supply has a trailing four-quarter earnings surprise of 10.2%, on average. The company has an estimated long-term earnings growth rate of 10.2%. The Zacks Consensus Estimate for its current-fiscal EPS has risen 0.6% in the past 60 days. Shares of this Zacks Rank #3 (Hold) company have declined 5.7% in the past year.Price and Consensus: TSCOMarineMax: Significant geographic reach, product diversification and stellar demand bode well for this world’s largest recreational boat and yacht retailer. MarineMax has been benefiting as consumers embrace and enjoy the boating lifestyle. The company’s digitization endeavors have been helping it better engage with customers. The company’s investments in high-margin businesses such as finance, insurance, brokerage, marina and service operations bode well. Impressively, its strategic acquisitions have been playing a major role in driving the top line.This Zacks Rank #3 company has a trailing four-quarter earnings surprise of 27.6%, on average. The Zacks Consensus Estimate for its current-fiscal EPS has risen 0.6% in the past 60 days. Shares of MarineMax have declined 26.7% in the past year.Price and Consensus: HZO Want to Know the #1 Semiconductor Stock for 2022? Few people know how promising the semiconductor market is. Over the last couple of years, disruptions to the supply chain have caused shortages in several industries. The absence of one single semiconductor can stop all operations in certain industries. This year, companies that create and produce this essential material will have incredible pricing power. For a limited time, Zacks is revealing the top semiconductor stock for 2022. You'll find it in our new Special Report, One Semiconductor Stock Stands to Gain the Most. Today, it's yours free with no obligation.>>Give me access to my free special report.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 Ulta Beauty Inc. (ULTA): Free Stock Analysis Report Tractor Supply Company (TSCO): Free Stock Analysis Report DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis Report MarineMax, Inc. (HZO): Free Stock Analysis Report Arhaus, Inc. (ARHS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 7th, 2022

3 Top REITs to Buy From a Prospering Retail REIT Industry

Zacks REIT and Equity Trust - Retail industry stocks KIM, NNN and STOR are in focus amid pent-up consumer demand with waning of the pandemic impact and favorable job-and-wage growth environment, supporting consumer confidence. The Zacks REIT and Equity Trust - Retail industry constituents are poised to benefit from the favorable job-and-wage growth environment, which supports consumer confidence, and extra savings accumulated during the pandemic. Also, there is pent-up consumer demand as consumers look for an exclusive in-store shopping experience following the pandemic downtime.Focus on e-commerce resistant sectors, efforts to support omni-channel retailing, adaptive reuse capabilities and opportunities emanating from consolidations have poised Kimco Realty Corporation KIM, National Retail Properties, Inc. NNN and STORE Capital Corporation STOR well for growth. However, inflationary pressure and economic slowdown might cast a pall on recovery. Also, higher e-commerce adoption might continue to affect retail landlords’ cash flows.Industry DescriptionThe Zacks REIT and Equity Trust - Retail industry represents a group of REITs engaged in owning, developing, managing and renting space in a variety of retail real estates. Among these are regional malls, outlet centers, grocery-anchored shopping centers and power centers, including big-box retailers. Also, net lease REITs enjoy the ownership of freestanding properties, wherein both rent and the majority of operating expenses for the properties are borne by tenants. The overall health of the economy, job market and consumer spending are the main drivers of retail REITs. The location of properties and trade area demographics play key roles in determining the demand for spaces. Although dwindling footfall, store closures and retailer bankruptcies have been bothering this asset category, it is on its path to a rebound amid an improving economy and solid consumer spending.What's Shaping the Future of the REIT and Equity Trust - Retail Industry?Consumer Confidence, Pent-up Consumer Demand to Fuel Recovery: Consumers seem optimistic and their confidence gets a boost from a favorable job-and-wage growth environment. They are likely to continue enjoying their spending power with rising income backed by wage compensation and extra savings accumulated during the pandemic. Also, there are signs of peaking inflation as prices in July remained unchanged from June. Further, this industry is poised to benefit from the pent-up consumer demand as consumers look for exclusive in-store shopping experience following the pandemic downtime. Amid these, retailers’ focus has now shifted from the closing of stores to the revival of their growth plans, resulting in more demand for physical store spaces and paving the way for the retail REITs to experience gain in leasing activity, pricing power and flourish. Retailers are also focusing on investments in their stores because apart from serving as showrooms, physical stores offer a convenient location for pick-up or exchange of goods, helping retailers counter the increasing costs associated with last-mile delivery. Furthermore, amid limited availability and with the rapid formation of new businesses in the retail sector, lease signings, rent and occupancies in retail real estates are likely to get a boost.Omni-Channel Strategy, Structural Changes Remain Key Focus: Omni-channel is the focal point for retailers. Physical stores will be a vital sales channel over the long run because though there is convenience in online shopping, it cannot replace the benefits and satisfaction of visiting a brick-and-mortar store. This is quite evident from the recent foot traffic at retail destinations. Moreover, digitally-native brands are likely to keep boosting their physical presence in the days to come as part of the omni-channel strategy as the opening of stores helps them improve their connection with customers and drive expansion. In fact, for retailers, the focus now is not only on boosting their online presence but also on maintaining brick-and-mortar stores in the best locations, which in turn is raising hopes for retail REITs that focus on such locations. Also, with the waning impact of the pandemic, entertainment and dining concepts are seeing a revival, boosting retail REIT’s growth scopes.Repurposing and Conversions Pick Up Pace: Adaptive reuse as well as the conversion of malls into distribution hubs has accelerated as these distribution centers, being situated close to consumers of retailers, facilitate faster delivery of products and aid retailers in improving services, lower costs and make optimum asset utilization. Also, retail REITs are now focusing on adaptive reuse, which includes multifamily, hotel, office and medical components, resulting in the construction of mixed-use real estate destinations. Moreover, the open-air format and pick-up concepts have been helping the landlords to lure tenants. As the structural changes involve a huge outlay, the ones with solid balance-sheet strength are well poised to opt for such moves.Inflationary Pressure, Economic Slowdown Cast a Pall on Recovery: Higher material and operating costs remain a concern for the retailers and this, in turn, might cast a pall on their landlords’ cash flows. Moreover, a slowdown in the economy and the depletion of savings might temper consumers’ willingness to spend to some extent. Also, with office usage affected and international tourism yet to regain lost ground, certain submarkets remain choppy.Higher E-commerce Adoption to Remain a Concern: Consumers’ habits have transformed at a rapid pace over the past years and traffic at retail real estates has suffered, with e-commerce capturing market share from brick-and-mortar stores. Social distancing measures further aggravated this as even the reluctant ones, who once favored in-store purchases, started preferring online purchases to avoid physical contact. Though the preference for brick-and-mortar stores has again picked up pace now, the concern with higher e-commerce adoption is still there as more consumers have been learning about the convenience of online purchases.Zacks Industry Rank Indicates Bright ProspectsThe Zacks REIT and Equity Trust - Retail industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #57, which places it in the top 23% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the positive funds from operations (FFO) per share outlook for the constituent companies in aggregate. Looking at the aggregate FFO per share estimate revisions, it appears that analysts are gaining confidence in this group’s growth potential. Over the past year, the industry’s FFO per share estimate for 2022 moved 3.7% north.Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Underperfoms Sector & S&P 500The REIT and Equity Trust - Retail Industry has underperformed the broader Zacks Finance sector as well as the S&P 500 composite over the past year.The industry has declined 22.1% during this period compared with the S&P 500’s fall of 14% and the broader Finance sector’s decline of 12.4%.One-Year Price PerformanceIndustry's Current ValuationOn the basis of forward 12-month price-to-FFO (funds from operations), which is a commonly used multiple for valuing Retail REITs, we see that the industry is currently trading at 13.84X compared with the S&P 500’s forward 12-month price-to-earnings (P/E) of 17.07X. The industry is trading above the Finance sector’s forward 12-month P/E of 13.55X. This is shown in the chart below.Forward 12 Month Price-to-FFO (P/FFO) RatioOver the last five years, the industry has traded as high as 18.49X, as low as 10.20X, with a median of 15.39X.3 Retail REIT Stocks Worth Betting OnKimco Realty Corporation: Jericho, NY-based Kimco Realty is a leading publicly traded owner and operator of open-air, grocery-anchored shopping centers and mixed-use assets in the United States.The company’s acquisition of the grocery-anchored shopping center owner — Weingarten Realty Investors — in 2021 has been beneficial as the combined company is poised well to benefit from the increased scale, density in the key Sun Belt markets and a broader redevelopment pipeline.Kimco is expected to benefit from its presence in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets, which offer several growth levers. Also, the conveniently located grocery-anchored properties and focus on last mile assets augur well. Kimco’s strong balance-sheet position helps it to sail through any mayhem and bank on growth opportunities.Currently, Kimco carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for this year’s FFO per share has been revised marginally upward to $1.56 over the past month, indicating a year-on-year improvement of 13%. The stock has appreciated 7.7% so far in the quarter.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. National Retail Properties: This Orlando, FL -based retail REIT focuses on investing in high-grade retail properties usually subject to long-term, net leases. It is poised to gain from the selective acquisition of more than $150 million in new properties in the second quarter.With a portfolio of 3,305 properties in 48 states with a gross leasable area of approximately 33.8 million square feet and a weighted average remaining lease term of 10.6 years as of Jun 30, 2022, National Retail Properties is well poised to benefit from the industry’s rebound.Currently, NNN carries a Zacks Rank #2 and has a long-term growth rate of 4%. Moreover, for 2022, the stock has seen the Zacks Consensus Estimate for FFO per share being revised marginally upward to $3.18 over the past month. This also suggests an increase of 3.9% year over year. The stock has also gained 4.4% quarter to date.STORE Capital Corporation: This Scottsdale, AZ-based STORE Capital is engaged in the acquisition, investment and management of Single Tenant Operational Real Estate. This REIT has emerged as one of the fastest-growing net-lease REITs. Its customers consist of regional and national companies with a strong track record of growth. STORE Capital has a diverse investment portfolio. Also, geographically, its investments are spread across 49 states.This diversification is likely to continue to aid STOR to enjoy steady rental revenues. The company is also active on the investment front and capital recycling. It is poised to benefit from an increase in the real estate investment portfolio size.Its direct origination model results in a healthy and active investment pipeline, and the company’s focus on service, manufacturing and service-oriented retail industries, which are essential, helps secure steady cash flows.STORE Capital holds a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised marginally upward over the past week to $2.26. The FFO per share figure for 2022 also indicates a projected increase of 20.2%, year on year. The stock has appreciated 3% so far in the quarter. Note: Funds from operations (FFO) is a widely used metric to gauge the performance of REITs rather than net income as it indicates cash flow from their operations. FFO is obtained after adding depreciation and amortization to earnings and subtracting the gains on sales. Want to Know the #1 Semiconductor Stock for 2022? Few people know how promising the semiconductor market is. Over the last couple of years, disruptions to the supply chain have caused shortages in several industries. The absence of one single semiconductor can stop all operations in certain industries. This year, companies that create and produce this essential material will have incredible pricing power. For a limited time, Zacks is revealing the top semiconductor stock for 2022. You'll find it in our new Special Report, One Semiconductor Stock Stands to Gain the Most. Today, it's yours free with no obligation.>>Give me access to my free special report.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 Kimco Realty Corporation (KIM): Free Stock Analysis Report National Retail Properties (NNN): Free Stock Analysis Report STORE Capital Corporation (STOR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 2nd, 2022

Volatile Markets And Growing Tension In Europe Pushes Startup Investors To Look For Nearby Alternatives

As economic challenges persist around the world, venture capital (VC) investors in Europe are slowly but surely starting to look for new territories that can offer them sustainable financial investment opportunities. Even with most of Europe already home to a well-established startup ecosystem, with more and more European entrepreneurs to fast-track efforts and development in […] As economic challenges persist around the world, venture capital (VC) investors in Europe are slowly but surely starting to look for new territories that can offer them sustainable financial investment opportunities. Even with most of Europe already home to a well-established startup ecosystem, with more and more European entrepreneurs to fast-track efforts and development in industries such as sustainability, fintech, software, technology, and tourism – the continent has seen its VC funding already down by 38% this year alone. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Earlier in July, Crunchbase data revealed that European startups were unable to sidestep the brunt of declining VC deals, with total funding across all stages reaching $23.7 billion in Q2 2022, down from its peak of $38 billion during the same period in 2021. The sudden turnaround of positive growth and VC-backed investment deals is not surprising, considering the ongoing political tension between Russia and Ukraine, and the continent experiencing slower than usual economic activity. The invasion of Ukraine has also meant that the European Union has imposed major sanctions on the Russian government, with major western corporations completely seizing operations and trade with the country. The decline in funding, which has now become a common sight across several global startup ecosystems, signals warning signs for smaller and early-stage startups as economic conditions only deteriorate even more. Late-stage funding has also come down significantly, with year-over-year (YoY) investments falling 23%, and quarter-over-quarter (QoQ) nosediving 26%. With the bearish outlook, and investors pulling back on major investment deals, startups in niche industries could find it increasingly difficult in the coming months to survive if the current trend continues. In some sudden change of perspective, investors have grown increasingly interested in Icelandic-based tech startups that focus on more than conventional tech research and development. This is a complete change from what the country experienced throughout most of 2021, as being one of the only Nordic nations, among Denmark, Finland, Norway, and Sweden to see a decrease in startup funding capital raised.  Though the landscape is looking to improve over time, especially as some now suggest that Iceland could soon be considered the Silicon Valley of Europe. Before that can even happen, there’s still a lot of investment and interest that needs to come from mainland Europe and the rest of the world. Why Are Investors Choosing Icelandic Startups? Investors usually make their judgments based on several factors, and while these can change across different startup ecosystems, small, yet growing interest in Icelandic startups has looked to become more promising in the tight economic conditions. For the better half of the country’s startups, which are focussed on fintech, Web 3.0 commerce, and gaming, investors are now seeking out newer and more advanced businesses that could potentially lead Europe towards a more digital landscape. This would mean that those startups currently working within these fields can develop the tools and resources needed to advance the industry and could soon influence the broader global playing field. On the other hand, blockchain-driven technologies have also played a major role in the rapid expansion of the country’s startup ecosystem. This filters down further to a small community of anti-money laundering (AML) and anti-fraud startups utilizing the abilities of Artificial Intelligence to improve financial security in the country. Slow And Steady Economic Recovery A third industry, which has for decades been vital to the country’s economy and growth is leisure and tourism. The major disruptions caused by the pandemic saw the country welcoming less than 500,000 foreign visitors in 2020, and around 700,000 in 2021 according to Statistics Iceland. The severe lack of leisure and tourism caused the country’s overall economy to contract by 7.1% in 2020. Reports found that during the height of the COVID pandemic, mostly between 2019 and 2020, Iceland’s GDP nosedived from $24 billion to $19 billion, as the country experienced a 10-month halt in tourism. Overall, the Icelandic tourism sector employs more than 30,000 citizens, and has been a vital driver of financial and economic support for the country throughout the years. The crucial matter here is that the country, while having limited access to natural resources and continental Europe, tourism remains a vital part, representing 39% of the country’s export revenue. Now, with the country’s economy fully reopened, and has lifted most of its travel restrictions, domestic growth has seen significant improvement throughout most of 2022. At the beginning of June this year, Landsbankinn, an Icelandic financial institution confirmed that the country’s economy is back on track, as the island experienced an 8.6% growth in Gross Domestic Product (GDP) compared to the first six months of 2021. The pleasing news, which brought an influx of both tourists to enjoy whale watching in Iceland and volcanic eruptions, and venture capitalists has pleased economic experts to predict the country’s economy to continue growing at a predicted forecast of 5.1% this year. This estimate made by domestic economists is higher than the 4.2% predicted by the OECD. While the country has deemed it safe and acceptable to welcome back foreign visitors, macroeconomic factors and political tension could potentially impact the rebuilding of the tourism sector. Tensions between Russia and Ukraine have also played a role in the recovery process of the country’s overall tourism industry and domestic economy. Like most of Europe, Iceland relies on Russia for 30% of its oil used to produce motor fuel. Since the start of the year, fuel prices - which were already high to start with - rose to a record-shattering $9.37 per gallon, the second highest in the world after Hong Kong. In the U.S. fuel prices have been falling for seven straight weeks, coming down below $4.00 per gallon in almost every state, except California and Hawaii. Soaring fuel prices have also now made it more expensive to travel to the country, as airlines look to pass higher costs onto travelers during the peak travel season. Economic experts have also been concerned over Europe’s choppy road to recovery, as the European Central Bank has been working to sidestep the possibility of a looming recession, all against the backdrop of the recent pandemic and the changing economic cycle. Even as the country looks to hike its prime interest rates in the next several months, the overall rebound has been slow and steady despite major macroeconomic headwinds. Iceland’s Growing Startup Ecosystem Though we see several reasons for the growing startup ecosystem in Iceland, compared to other nations, including the United Kingdom, United States, India, and China - Iceland still lacks significant financial support from private investors. Perhaps many may see this as disproportionate, but there’s continued interest that’s coming from a handful of investors from different corners of the world, most stemming from Europe. When we look at what Iceland has to offer, compared to other more advanced startup ecosystems, it’s clear that the most basic needs and requirements of investors are being fulfilled by the different startups found on the island. Icelandic startups offer progressive innovation, not just in particular markets, but a shared or rather divided interest across several important industries. Along with the need to attract investors, both for expansion and economic purposes, the startup landscape is positioned in such a way that it will, and could secure lucrative investment deals as it encompasses traditional concepts. Looking Forward There’s not to say that the current economic climate won’t deteriorate Iceland’s growing startup ecosystem, the country has solidified itself as a leading cause of influence among venture capital investors. As European nations, along with those in the European Union feel the pressure coming from political and economic tension, Iceland’s autonomy from the continent and governance means that it’s able to remain resilient in the face of uncertainty while advancing its startup landscape and economy. Though the potential is there, it’s not to say that the country will at any time catch up with larger and more advanced rivals such as France, Germany, or the UK. Iceland can become a key player but it would take a lot of advancement and progressive innovation before the country will be able to dominate on the world stage. While there is interest coming from investors both in Europe and around the world,  Icelandic tech startups don't necessarily offer investors recession-proof opportunities and are often restrictive in their near-term innovations. As the rest of continental Europe becomes overrun by political asininity,  the coming years will be crucial to the further growth and establishment of the Icelandic tech startup ecosystem. If the country and its innovative entrepreneurs prove to be a viable and lucrative investment opportunity, there is perhaps a chance that in the coming years Iceland will be considered a key influence for  European and global digitization......»»

Category: blogSource: valuewalkAug 31st, 2022

"If The Fed Marches On, They"re Creating Another Lehman Situation", Larry McDonald Warns Powell Is "Pumping A False Narrative"

"If The Fed Marches On, They're Creating Another Lehman Situation", Larry McDonald Warns Powell Is "Pumping A False Narrative" Authored by Christoph Gisiger via themarket.ch, After a crucial week for global financial markets with all the big tech giants reporting quarterly earnings and The Fed hiking its key interest rate further from 1.75 to 2.5%, the world's investors are asking - what comes next? Larry McDonald thinks Fed Chairman Jerome Powell will soon be forced into another pivot because the financial system is under severe stress. «Our 21 Lehman systemic risk indicators globally are the highest since the financial crisis, a lot of these risk metrics blew through Covid levels,» says the macro strategist and former senior trader at Lehman Brothers. The editor of the «Bear Traps Report», a research service which is based on a network with over 700 financial advisors and family offices in more than 23 different countries, sees particular risks in emerging markets credit and the European banking sector. In this in-depth interview, which has been edited and condensed for clarity, he shares his outlook on the stock market in the second half of the year, explains what risks to watch out for, and tells where opportunities for prudent investments. «With a raging greenback, you add lighter fluid on to the credit risk fire in emerging markets»: Larry McDonald. Mr. McDonald, stocks have seen an impressive rally over the past few weeks. How do you assess the overall market situation? Many of our institutional clients are nervous because the Nasdaq 100 is now unchanged after close to two years, and has been under the 100-day moving average since January 13th. We haven’t seen this pattern for quite some time. It’s the longest such stretch since the Lehman crisis in 2008/09. And how do you interpret this pattern? The issue of demographics has been out there for years, but it hasn’t really mattered because the Fed always had the market’s back. But now, the risk of inflation hanging around at an elevated rate for several years is rising every day. In this regard, it’s important to be aware that the baby boomers in the US have about $56 trillion of wealth, ten times what the millennials have. Today, the average age of a baby boomer is 67, and the oldest ones are 80. So if you’re a baby boomer and just lived through the Global Financial Crisis and then Covid and you’re seeing the Fed dealing with this elevated inflation, the probability that you’re selling the rallies in the stock market is extremely high. That means the baby boomers use such rallies to cash out? Exactly. There is a lot of money in big names like Apple, and the supply of Apple stock at a price level of about $150 is very large. The stock is having a very difficult time getting through all this supply. Same thing with Tesla. And keep in mind: Apple and Tesla are around 9% of the S&P 500. There is a huge amount of overhead supply in these dominant tech stocks, and that’s going to put tremendous pressure on the big index. What does this imply for investors? Over the last five years, basically all you had to do was to buy the index. But now, we’re in a new area where the outperformance of certain sectors is going to be spectacular. In 1980, the energy and materials sectors together were close to 28% of the S&P 500. Today, it’s less than 7%. There is always one favorite sector. As you know, in 2007, at the peak of the credit boom, financials were 24% of the S&P 500. They were the Bob Marley sector. It was «One Love», everybody was in financial stocks. Obviously, in 2000 it was tech. But this time, so much wealth has gone into tech stocks that they had to redefine the communications and consumer discretionary sectors to include tech stocks: Amazon and Tesla are about 45% of the consumer discretionary sector. In the communications sector, Google and Facebook make up close to 50%. And finally, Apple, Microsoft and Nvidia make up about 52% of the information technology sector. At the end of the day, they have shoehorned tech into nearly every corner of the S&P 500’s valuation. These three sectors represent close to 50% of the S&P 500´s market cap. What will happen next? Here’s the sizzler: We’ve come through a period where inflation has hung out at high levels for about twelve months. If inflation goes away quickly, it’s not such a big deal in terms of the loss of purchasing power. But the problem is that financial instability is going to force the Fed out of its proposed policy path. There is so much risk showing up in things like credit default swaps on European banks or emerging market bonds. Our 21 Lehman systemic risk indicators globally are the highest since the financial crisis, a lot of these risk metrics blew through Covid levels which is really bad. That means the Fed is not going to be able to complete the job on inflation which gets you to inflation sticking around at something like 3 to 6%. And that means you need a whole new portfolio. Does that mean this counter trend is just a classic bear market rally? I don’t want to sound too bearish here, maybe there will be one more leg down. But then we could very well see a big rally toward the end of the year because it’s highly likely that the credit risk is going to force the Fed out of its path. If they march on, they’re creating another Lehman situation. That’s the big story at the end of the year. But if inflation stays at an elevated level, that’s going to be a big problem for next year. It forces the Fed to come back and fight inflation again, and the supply overhang is going to kill the big indexes because of the baby boomers cashing out. Hence, my outlook for the next couple of years is around 3000 for the S&P 500 before it’s all set and done. At the current level, this would mean a further setback of around 25%. If inflation stays at a range of 3 to 6% for a long time, the loss of purchasing power will be significant. There has already been enormous wealth destruction. The Nasdaq has lost around $8 trillion in market cap, and the Barclays Aggregate Bond Index has lost about $10 or $11 trillion, and that’s just counting investment grade sovereigns and corporates. Adding leveraged loans, high yield debt, private equity, unicorns, cryptos and real estate, you’re talking about a $30 trillion wealth wipeout. Put differently, the 50% of upper income households in the United States have taken a huge loss, and the other 50% have been hit by inflation. It’s a double whammy, and it’s going to force investors out of tech stocks. In our last interview, we talked about the rotation from growth into value, but it’s really commodities, emerging markets and hard assets. These kinds of assets are still dramatically underowned. In recent weeks, however, commodities have also suffered a sharp correction, especially energy stocks. Does this open up opportunities to increase positions? Yes, at this level the energy names are a gift. Number one, they are underweighted in the S&P 500. Number two, what’s happening right now is what I call the «hot money flush» - and that’s one of the greatest opportunities in investing. We were talking about the bull case for energy stocks in the fall of 2020 when the amount of pessimism was off the charts. Since then, a new bull market started and a whole bunch of tourists were coming in. Next, you typically have some type of event that shocks those tourists and flushes them out. So this violent correction in commodity prices is such an event? If you go back fifty or sixty years, we’ve never seen that kind of move in copper, interest rates and oil as we’ve seen in the last forty days without a deep recession. These are the great indicators when it comes to the economy, and they’re down 25 to 35%. That’s extremely deflationary short-term which has scared all these tourists out. However, the beautiful thing is that we’re only in the second or third inning of a big materials, energy, hard asset bull market. So this is a gift, because as I said earlier: If inflation sticks around at something like 3% to 6% over the next few years, all the pension funds and real money accounts are going to be forced to re-allocate their portfolios to hard assets. Precious metals and mining stocks have also suffered a severe downturn. How do you assess the prospects here? The risk reward of the miners here is terrific. You have 10 to 15% down risk, and I think potentially 100% up. Right now, the Fed is pumping a false narrative and pushing up the front end of the yield curve. At 2,9% six months treasuries are yielding as much as, or more than ten-year treasuries, and that’s taking away a lot of money from gold. What makes you confident about the sector? Every time when the Fed is selling a false narrative, gold does poorly. In 2015 and 2016, they were promising eight rate hikes for those two years, but then they were only hiking twice. Gold and the miners did very poorly there for some time. But they do extremely well when the Fed overpromises and underdelivers. That’s exactly what’s happening now. Since March, the Fed has raised the fed funds rate from 0% to 1.75% at a near-record pace. This Wednesday, another 0.75 percentage point move is in the cards. What will this rate hike cycle look like after that? The Fed is promising 15 rate hikes in total, and $1 trillion of quantitative tightening. They will have to cut that in half because the systemic risk indicators are so dangerous. They must be seeing the same thing I’m seeing, but they can’t admit it yet. They have to publicly show that they are fighting inflation. Meanwhile, we’re actually in a recession, or at the brink of one. After the next Fed hike, the 10-year/3-month Treasury yield curve is going to be inverted. The Fed will start to cut rates next year and the real yield on bonds is going to get extremely negative, and that’s when the miners will do very well. Which names do you think have the most potential? I like names like Hecla Mining, one of the largest silver producers. At $3.80 the stock is a screaming buy. Your downside is $3.50, and the upside is massive. Fundamentally, there’s immense demand for silver for electric vehicles and solar panels over the next decade. Hecla’s market cap is around $2 billion, and they have an extremely unlevered balance sheet with only $500 million of debt. The Street’s estimate for next year’s EBITDA is $300. Right now, silver is at $18.50, in the last cycle it peaked at $50 in 2011. It’s pretty likely that silver will see $40 to $50 in this commodity super cycle. That means Hecla is probably going to earn up to $750 million in EBITDA sometime in the next four years. On that basis, the stock is trading at less than 3x potential forward EBITDA. That’s extremely cheap. Yet, at the moment, it seems that virtually no one wants anything to do with gold and silver stocks. It’s always the case at this point of the cycle. Pan American Silver, another large silver miner, traded at $6 when the Fed started the hiking cycle in 2015. Once they ended hiking, the stock was up more than 200%. That’s why you want to buy silver and gold miners now, because the important thing about this hiking cycle is the global systemic risk. The Fed has been exporting inflation all around the world into countries that can least afford it. What do you mean by that? The strong dollar a global wrecking ball. There are $70 trillion of GDP outside of the United States, but only $23 trillion in the US. The Fed pretends to care about inequality and all the related issues. I’m sure they do in some respect, but they are exporting inflation to places like Chile, Columbia, Panama, Sri Lanka and the other countries where we see protests in the streets. Societies are being destroyed, families crushed because they’re trying to buy essential commodities like oil, gas, food, coffee, corn which are traded in US dollars. When the Fed is promising all these rate hikes, they make the dollar stronger and commodities more expensive. It’s a colossal tax on emerging market countries. If you’re in an emerging market country, you’re getting annihilated. Your standard of living is being destroyed because the Fed is trying to fight inflation in the United States. It’s heartbreaking. How dangerous could this situation become? With a raging greenback, you add lighter fluid on to the credit risk fire in emerging markets. Emerging- and frontier market countries currently owe the IMF over $100bn. The strong dollar is vaporizing this capital as we speak. Based on our conversations with clients, we believe that at least five finance ministers globally have called the Fed in the last two weeks. There is so much credit risk in emerging markets, it’s like 1998 levels. In many countries, the credit spreads are through Covid levels, with places like El Salvador, Ghana, Egypt, Tunisia and Pakistan appearing particularly vulnerable. If the Fed is trying to complete their agenda, they’re risking the greatest emerging market credit crisis in thirty years. The situation is also tense in Europe. In the market for credit default swaps, prices for hedging against the default of European banks have skyrocketed in recent weeks, particularly in the case of Credit Suisse. The problem is the much bigger loan book of European banks as a percentage of their market cap. Now, the strong dollar is creating tremendous amounts of stress in the European financial sector, and they’re dealing with the Russian crisis as well. This creates a massive tightening of financial conditions. Hence, the credit default swaps on European banks are near or through Covid levels, and a bank like Credit Suisse is just another victim here. Why are investors particularly nervous in the case of Credit Suisse? They were already wounded going into this crisis because they were burned by the Archegos and Greensill scandals and never really recapitalized enough. We hear that Credit Suisse is going to be forced into a merger with UBS which is reminiscent of the onset of the Global Financial Crisis when they forced Bear Stearns into a merger with JPMorgan. Every crisis has its hallmark moments, and the probability of the regulators forcing a merger between UBS and Credit Suisse is high. So again: The Fed’s promise of 16 rate hikes including 1 trillion of quantitative tightening is insanity. The problem is that the academics on the Fed’s Board have never been in a risk seat in their lives. They are nice people, and they’re very highly educated. They’re smart, but they just never sat on Goldman Sachs’ trading desk. They never traded bonds, leveraged loans or emerging market debt, but they’re sitting on $9 trillion of assets. This is pure madness. We have already talked about commodities. Where else do you spot opportunities in this explosive environment? The big thing is that the credit risk is going to veto the Fed’s policy path. Hence, you’re going to get a weaker dollar and elevated inflation sticking around. In this environment, a commodity producing country like Brazil is going to do extremely well. I’m excited about Brazilian equities. There is some election risk, but net-net, it’s a commodity producing country with much cheaper stocks, and you have the dollar at a secular high. Any other investment ideas worth considering? The supply chain woes prompt a renewed push to bring manufacturing back from overseas. It’s a big deal, and everybody knows about TSMC and the China-Taiwan risk in the semiconductor sector. Ramping up reshoring is very inflationary, but a lot of companies can’t roll the dice on globalization. They have to have a backup plan, and Intel is going to be one of the main beneficiaries. If there is an escalation in Asia around China and Taiwan, Nvidia and all the other chip design companies that don’t have a manufacturing base and use TSMC as a foundry are in deep trouble. In the tech sector, speculative stocks have plummeted. Are there any names that look attractive now? As a long-term tech play, we like Joby Aviation. It’s an aerospace company, developing an electric vertical takeoff and landing aircraft. Over the next decade, your package deliveries are going to Joby, especially in the countryside, across the farming community or other wide spaces. Joby is going to dominate this business because their first mover advantage on the technology is spectacular. I also like the ownership. Baupost Group, Seth Klarman’s Hedge Fund, is one of the original investors and still owns close to 2 million shares. Toyota and Intel together own 20% of the company. Obviously, the risk is that you’re dealing with a company like Tesla ten years ago. They have no revenues, but the technology leadership and the management team look highly promising. The market cap is about $3 billion, and that could very well be a $30 billion in ten years. In our last conversation at the end of December, you also identified upside potential in cannabis stocks. Does that still apply? So far, that was our worst pick of the year. But it’s no question that the GOP and the Democrats are going to come together on the SAFE Banking Act. Even if the Republicans take the House and Senate, they have moved dramatically more to the center on this subject. As I said, it’s not about getting high, but getting well. Everybody looks at these cannabis companies as if they are just marijuana gummy producers. I get that, that’s the near-term cash flow. But the number of drugs that will come out of the Cannabis molecule is going to be tremendous. What would this mean from an investment perspective? Over the next twenty years, you have spectacular growth potential. And if we get some kind of legalization on the federal level, that means these companies can have a banking charter and ETFs can own their stocks. If just one third of one percent of BlackRock’s passive assets go into the cannabis sector, we’re talking about these stocks being up 200 or 300%. It’s still a good story, but it’s taking longer to play out. We’re in a bear market, and in a bear market you want to have a part of your portfolio in things like Joby Aviation, Cannabis stocks and other speculative names that have been destroyed. Tyler Durden Fri, 07/29/2022 - 09:30.....»»

Category: worldSource: nytJul 29th, 2022

Choice Equities Fund 2Q22 Commentary: Crocs And SiteOne

Choice Equities Fund commentary for the second quarter ended June 30, 2022. Dear Investor: I hope this letter finds you well. Choice Equities Fund generated losses of -17.4% on a net basis in the second quarter, taking year-to-date performance to -34.6%. This compares to the Russell 2000’s -17.2% loss for the quarter and -23.5% loss […] Choice Equities Fund commentary for the second quarter ended June 30, 2022. Dear Investor: I hope this letter finds you well. Choice Equities Fund generated losses of -17.4% on a net basis in the second quarter, taking year-to-date performance to -34.6%. This compares to the Russell 2000’s -17.2% loss for the quarter and -23.5% loss year-to-date and the S&P 500’s loss of -16.1% for the quarter and -20.0% loss year-to-date. Since inception in 2017, the fund has generated annualized gains of +15.7% versus +5.6% and +12.0% for the Russell 2000 and S&P 500, respectively. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more Executive Summary In this letter, we discuss the major macroeconomic events of the quarter and their influence on market performance. We also take a closer look at how the stocks within the market performed in the first half of the year. I highlight two new positions in Crocs, Inc. (CROX) and SiteOne Landscape Supply, Inc. (SITE). Finally, I conclude with a few thoughts on the current outlook and provide a few big picture charts that inform our optimistic view of the coming years. Quarterly Commentary 2022 has been a tough year so far for owners of almost all assets. Equities, bonds and basically everything other than energy-related equities and commodities have produced meaningful losses at the halfway point. Headlines remain bleak. According to the University of Michigan study, consumer sentiment recently hit all-time lows. Declining optimism and increasing interest rates have led to reduced trading multiples across the market. Though earnings thus far have remained resilient, the decline in market multiples has the S&P 500 off to its worst start to a year since 1970, with its decline past the -20% threshold sending the index into bear market territory. Likewise, the Russell 2000 experienced its worst start to a year ever, with trailing four year returns again going negative, much like we saw in the spring of 2020. At times of such market duress, I find it useful to look at how the stocks in the market have behaved rather than just the market-cap weighted indices which contain them. I believe this can a) help us better contextualize how we got here, and also b) inform us of the opportunity set going forward. To that end, the table below, which breaks out the performance of the stocks of several important indices into quintiles by average price performance, highlights just how far-reaching the first half’s selloff has been. Though it is perhaps unsurprising that a subsegment of small caps were among the worst performers, declining nearly -65% since the year began, it is a bit eye-opening to see the components of the Nasdaq producing similar performance. This is even more remarkable when considering mega-caps like Netflix, Inc. (NFLX) and Meta, Inc. (META) landed in the fifth quintile, together accounting for nearly ~$700B of market cap that has evaporated. Portfolio Commentary Against this backdrop, our holdings have not been immune with our portfolio experiencing market-like performance in the recent quarter. All of our equity holdings declined in price, while light hedging activity added about 2% to our return. As always, during the quarter, I attempted to balance the sometimes competing aims of protecting capital with increasing future prospective returns. This is not always an easy balance to achieve, as our portfolio orientation which is primarily constructed around owning equities means that from time to time we will incur mark-to-market losses. Our performance thus far this year reflects this fact. Even so, despite the disappointing performance thus far, or to some degree because of it, I believe our portfolio of companies are trading at unusually high discounts to fair value. I also believe our holdings are well-positioned competitively, well-managed and offer attractive growth prospects. I provide updates on existing holdings below and highlight two new holdings, both from the “fifth quintile.” CROX Crocs, Inc. (NASDAQ:CROX) trades at 5x this year’s earnings and 6x EBITDA. Like many of its peers in the consumer space, the valuation implies the market regards the company as a one-time pandemic beneficiary, and business prospects offer little growth beyond this year. While it would be ill-advised to suggest the company did not benefit from the pandemic’s effects on consumer spending of goods, I think this view is incomplete and neglects to incorporate the tremendous success the management team has achieved since they arrived five years ago. Most recall Croc’s original success as having come from pretty much out of the blue, as the funny-looking but comfortable clogs sent the stock on a meteoric rise shortly after its IPO in 2006. Many also conflate the stock chart with a fad driven boom and bust cycle, even though a closer look at clog volumes actually shows fairly consistent growth over the last twenty years. Even so, the company was not without its problems, primarily from management missteps as an overburdened cost structure created profit headwinds. Accordingly, when Andrew Rees became CEO in 2017, he had his work cut out for him. Initially, he focused his efforts on taking costs out and making the operation more efficient. He shrunk the store count by more than a third and began optimizing their go to market strategy by emphasizing sales through the direct-to-consumer digital channel and through wholesaler channel partners. This enabled the company to devote greater resources to product innovation and marketing, a smart reallocation of corporate resources that offered great payoffs for the branded consumer products company. These efforts have paid off handsomely. Deft and efficient marketing spend with influencers on social media via platforms like Instagram put Croc’s back in the limelight. Clever products like jibbitz, the fun and offbeat charms which can be appendaged to the clogs, grew a second consumables-like revenue stream. Growth and profitability for the core Croc’s brand followed. Today, management is focused on perpetuating the success of the Croc’s clogs, with new product adaptions partly aided by a consistent new diet of jibbitzs. But they are also keen on duplicating their successful playbook in new markets, both geographically in markets like Europe and Asia where they have a lot of room for growth, and importantly, across new products like sandals, and most recently, lightweight loafers. The company’s December purchase of HeyDude was initially panned by investors. Management took on debt to finance the acquisition (though at 3x ebitda it looks quite manageable) and paid a full multiple for a nascent company – born in Italy but selling shoes in America – that most investors had never heard of. Despite the initial share price reaction, the HeyDude acquisition looks quite promising, particularly when considering the company catapulted to half a billion dollars in sales and a low 30s EBITDA margin in just over a decade’s time. Now Croc’s proven management team is intent on building on this strong start by bringing greater resources like increased marketing budgets and broader distribution to the promising brand. Proven industry veteran Rick Blackshaw has been appointed to lead the company’s efforts. Accordingly, the recent acquisition broadens Croc’s product line and adds another promising avenue of growth, positioning the company well to achieve its recent goals which imply multiyear sales and earnings CAGRs north of 20%. Insiders seem to agree the future is bright with several executives and board members making open market purchases all year long. SITE In some ways, quite a lot has changed since our first purchases of SiteOne Landscape Supply Inc (NYSE:SITE) some six years ago. Yet in others, particularly regarding the company’s competitive positioning, very little has. It was this durability in the company’s competitive position that was core to our original investment thesis at the time. Today, after years of growth through acquisitions, the company continues to enjoy a near monopoly-like position in the specialized distribution vertical of lawncare and maintenance supplies, with our latest checks suggesting the company is now 5x the size of its closest peer. Equally promisingly, the industry continues to remain quite fragmented with small independent players. The stock is off nearly 60% from recent highs. The share price decline suggests a meaningfully impaired growth trajectory. Yet, even assuming a 25% haircut to this year’s likely EBITDA, shares still trade at the company’s cheapest valuation on offer since coming public in 2015. The long horizon market growth and consolidation opportunity remains, only now the company stands to benefit from having the best balance sheet it has had at any point since being public. We are delighted to be able to repurchase this business at attractive prices. FARM Farmer Bros Co (NASDAQ:FARM) remains unloved and overlooked. I recently had the opportunity to visit with the company and some other shareholders while touring the new plant in Dallas, TX. Reviewing the visit on my flight home, I had two primary takeaways. First, this company’s operating environment has been exceptionally difficult since this management team took over in late 2019. A great number of the company’s customers were closed due to the pandemic, while coffee-focused day parts like breakfast and locations like hotels have been slower to return to normal purchasing patterns than others. Though the external environment has not cooperated, execution on items within the company’s control have been more promising, as management has positioned the company to prosper when normalcy returns. Second, the company’s market cap of $.....»»

Category: blogSource: valuewalkJul 23rd, 2022

3 Outsourcing Stocks to Strengthen Your Portfolio Now

As the industry seeks to benefit from the COVID-driven reliance on technology and the accelerated uptake of cloud infrastructure, investing in outsourcing stocks like ADP, PAYX, G can be a prudent move. The outsourcing industry stands to benefit from the increased adoption of cloud computing and other emerging technologies. These factors drive competitive advantage, increase innovation, improve speed-to-market and boost performance within the industry. Further, the wider application of artificial intelligence should lower complications and simplify operations. Industry players are in the process of modernizing their traditional legacy-oriented business processes to keep themselves flexible in any kind of operating environment.The rising demand for expertise in improving efficiency and reducing costs has been aiding the industry over the past several years. The industry has witnessed growth in revenues, income and cash flow over the past few years, enabling most players to pursue acquisitions and other investments as well as pay out stable dividends.Automatic Data Processing, Inc.ADP, Paychex, Inc. PAYX and Genpact Limited G are some of the stocks that are likely to gain from the above-mentioned favorable industry trends. However, escalating data security issues, thanks to excessive dependency on technology, are concerns for the industry.Notably, the Zacks Outsourcing industry has gained 5.1% over the past year against the 52.5% decline of the broader Zacks Business Services sector and 3.6% decline of the Zacks S&P 500 composite.Image Source: Zacks Investment ResearchThe buoyancy in the industry is further confirmed by its Zacks Industry Rank #50, which places it in the top 20% of more than 250 Zacks industries.3 Outsourcing Stocks to Buy NowGiven this encouraging backdrop, it would be a good idea to zero in on outsourcing stocks that have strong growth potential for 2022. Here we present three promising Zacks Rank #2 (Buy) outsourcing stocks, which have a solid expected earnings growth rate for the current year, witnessed upward estimate revisions in the past 90 days and have a strong trailing four-quarter average earnings surprise history. Additionally, these stocks have a solid long-term (three to five years) expected earnings growth rate. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Automatic Data Processing: This New Jersey-based provider of cloud-based human capital management solutions, continues to enjoy a dominant position in the human capital management market through strategic buyouts like Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company. It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. Further, it continues to innovate, improve operations and invest in its ongoing transformation efforts.Further, ADP raised its fiscal 2022 outlook. The company now expects revenues to register 9-10% growth compared with the expected prior growth rate of 8-9%. Adjusted EPS is now expected to register 15-17% growth compared with the prior expected growth rate of 12-14%. The company now expects Employer Services revenues to grow at a rate of about 7% compared with the prior expected growth rate of about 6% and PEO Services revenues at a rate of 14-15% compared with the prior growth rate of 13% to 15%.The Zacks Consensus Estimate for ADP’s 2022 EPS has moved up 2.2% in the past 90 days. Its expected earnings growth rate for the year is 15.8%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 12%. Automatic Data Processing has a trailing four-quarter earnings surprise of 6.2%, on average.ADP stock has gained 7.3% over the past year. It has a market capitalization of $87.22 billion.Automatic Data Processing, Inc. Price, Consensus and EPS Surprise Automatic Data Processing, Inc. price-consensus-eps-surprise-chart | Automatic Data Processing, Inc. QuotePaychex: This New York-based provider of integrated human capital management solutions recently declared a dividend hike of 20%, thereby raising its quarterly cash dividend from 66 cents per share to 79 cents. The dividend will be paid out on May 26 to shareholders of record as of May 12, 2022.The raised fiscal 2022 guidance is another notable tailwind.  Total revenues are now expected to register 12-13% growth compared with the prior expectation of 10-11%. Adjusted earnings per share are now expected to register 22.5-23% growth compared with the prior expectation of 18-20%. The adjusted operating margin is expected to be almost 40% compared with the prior expectation of 39-40%. The adjusted EBITDA margin is now expected to be nearly 44-45% compared with the prior expectation of 44%.Paychex looks strong on the back of solid top-line growth and a dominant position in the outsourcing market. Strength across Management Solutions and Professional Employer Organization and Insurance Solutions revenues are likely to aid the company’s top-line performance. Buyouts expand the company's customer base and generate cost and revenue synergies.The Zacks Consensus Estimate for Paychex’s 2022 EPS has moved up 3% in the past 90 days. The company’s expected earnings growth rate for the current year is 23.4%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 7.5%. Paychex has a trailing four-quarter earnings surprise of 10.8%, on average.Paychex stock has gained 19.9% over the past year. It has a market capitalization of $43.21 billion.Paychex, Inc. Price, Consensus and EPS Surprise Paychex, Inc. price-consensus-eps-surprise-chart | Paychex, Inc. QuoteGenpact: This Bermuda-based provider of business process outsourcing and information technology services has raised its 2022 guidance.Total revenues are now anticipated between $4.325 billion and $4.4 billion compared with the prior guidance of $4.3-$4.4 billion. Global Client revenue growth is now expected in the range of 9-11%, or 11%-13% on a constant currency basis, compared with the prior guidance of 8%-11%, or 9%-12% on a constant currency basis. Adjusted EPS is now anticipated between $2.60 and $2.76 compared with the prior guidance of $2.53-$2.71.The company continues to enjoy a competitive position in the BPO services market based on domain expertise in business analytics, digital and consulting. Buyouts boost customer base and drive top-line growth. Artificial Intelligence offers ample growth opportunities. Genpact is benefitting from its strong clientele across the world. Consistency in dividend payments and share repurchases boost investor confidence and positively impact earnings per share.The Zacks Consensus Estimate for Genpact’s 2022 EPS has moved up 0.8% in the past 90 days. The company’s expected earnings growth rate for the current year is 8.9%. Additionally, it has a long-term (three to five years) expected earnings growth rate of 12.3%. Genpact has a trailing four-quarter earnings surprise of 13.3%, on average.Genpact has a market capitalization of $7.97 billion.Genpact Limited Price, Consensus and EPS Surprise Genpact Limited price-consensus-eps-surprise-chart | Genpact Limited Quote Investor Alert: Legal Marijuana Looking for big gains? Now is the time to get in on a young industry primed to skyrocket from $13.5 billion in 2021 to an expected $70.6 billion by 2028. After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could kick start an even greater bonanza for investors. Zacks Investment Research has recently closed pot stocks that have shot up as high as +147.0%. You’re invited to immediately check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers FREE >>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 Paychex, Inc. (PAYX): Free Stock Analysis Report Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report Genpact Limited (G): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 16th, 2022

Leaders in sustainability share their perspectives on the future of workplace wellness as normalcy returns

Members of the Financing a Sustainable Future's advisory council share how perspectives and policies around employees have changed during the pandemic, and increased focus on social justice. Kazi Awal/InsiderKazi Awal/Insider Companies were forced to change their relationship with employees during the pandemic, leading to policy changes and new investment in the workplace.  Following are five perspectives from leaders of the series' Advisory Council, representing Deloitte, Ford, Impact Investment Exchange, Bank of America, and Infosys. We asked them to share with us how their organziations and sectors have created lasting change.  Key themes include: developing talent from new places, supporting women in the workplace, and investing in community partnerships.  This article is part of the "Financing a Sustainable Future" series exploring how companies take steps toward funding and setting their own sustainable goals.  "Companies need to measure the impact they are creating internally on their workforce, and outside through its operations."Durreen Shahnaz, Founder and CEO, Impact Investment Exchange and Impact Investment Exchange FoundationImpact Investment Exchange; Edited by Kazi Awal/InsiderAs the world comes together in the wake of the COVID-19 pandemic to build back better, governments and businesses both are facing a drastically new environment — one where sustainability is ultimately limited if they cannot secure the health and well-being of all the people including the workers and the vulnerable populations.While there is a broad consensus on the need to urgently intervene to provide relief for women and underserved communities, governments and businesses have the opportunity to go one step beyond, to build the kind of resilience across every group of the population that will outlast any pandemic.People are looking for that. They are demanding that. They want their voices to be heard and actions to match those demands.Businesses need to now not only survive the pandemic but recover and have a lifeline to pivot their businesses so they're able to adapt and thrive in the new norm.Leveraging our insights garnered from working with thousands of small growing businesses across the Asia Pacific, we at IIX see that the key for businesses to adapt to the new norm is to create a deep positive impact both inside and outside the company.Companies need to measure the impact they are creating internally on their workforce, and outside through its operations.  The act of measuring their impact has to go beyond  'check boxes', and the top-down ESG approach.They also need to embrace impact toolkits that measure the impact of their business across the wide spectrum of stakeholders from the bottom up. They need to listen to all the stakeholders if the positive impact they are creating is deep enough and also acknowledge the negative impacts.For us at IIX, the bottom-up up approach of measuring impact has been the norm for the past 13 years. We have developed tailored toolkits and technology platforms across the growth stages of an enterprise that help them rebuild, pivot and strengthen their business operations for a new business and economic environment. One such tool is IIX Values which is effectively measuring the companies' impact and verifying it through technology directly by the stakeholder input.Such a tool is acting as a great 'de-risking' mechanism for the companies and making them exceedingly more attractive for investors to invest in."Organizations need strong leaders that prioritize diversity, equity, and inclusion in their policies and culture and provide tangible support for the women in their workforces."Jennifer Steinmann, Global Climate and Sustainability Marketplace Leader, DeloitteDeloitte; Edited by Kazi Awal/InWhile the pandemic is likely to remain with us in some form going forward, the past two years have led to a profound shift in the way that we think about work and the future of work.  I believe business leaders can seize this opportunity to lead the way to drive systemic change, by challenging outdated beliefs and behaviors, and building an equitable future for their employees.Diversity, equity, and inclusion need to be prioritized at every level of the organization and they are imperative elements of a successful business strategy and resilience.Narrowing in on gender equity, our 2021 Women @ Work: A global outlook report found that the pandemic had disproportionate effects on working women, since they have taken on more responsibilities both at home and at work while not receiving adequate support from their employers.The report found that women are more stressed and pessimistic about their careers than before the pandemic — as many as 51% are less optimistic about their career prospects than they were before COVID. We also see that the pandemic has negatively impacted women's well-being and relationships with their employers, and that longstanding non-inclusive workplace cultures also continue to be a roadblock to their career progression.That being said, there are specific steps that organizations can take to strengthen their relationship with their female workforce and not lose top talent. First, the report found that leaders that get it right work to create and maintain an inclusive everyday culture, where non-inclusive behaviors are not tolerated, and where women feel able to raise concerns without fear of reprisal.Second, they exemplify and enable work-life balance and normalize flexible work. Third, they demonstrate visible leadership to the issue, which includes setting targets for gender representation at the senior level. Fourth, they provide avenues for career growth by offering better learning and development opportunities and stretch projects.And finally, they enable success both at work and life outside of work by providing the necessary support, such as mental health resources or even short-term sabbaticals to allow employees to pursue other interests.Organizations need strong leaders that prioritize diversity, equity, and inclusion in their policies and culture and provide tangible support for the women in their workforces. Doing so will not only advance gender equity in their workplace, but will also fortify the organization against inevitable future disruptions."For companies to continue to thrive following the pandemic and the social catalysts of 2020, leadership needs to embrace and champion diverse representation, backgrounds, and ideas."Karen Fang, Managing Director, Global Head of Sustainable Finance, Bank of AmericaBank of America; Edited by Kazi Awal/InsiderAs part of being a great place to work, Bank of America continues to invest in our teammates and, over the past two years of the pandemic, we focused on prioritizing their health and safety. This included expanding benefits and resources to promote health and wellness; offering programs to support them during life's important moments; and creating additional opportunities to help them grow and develop in their careers.To remain a great place work, we continuously evolve our approach to recruiting, bolstering, and retaining amazing, diverse talent. We provide employees access to a range of programs and resources focused on driving their success in the workplace.Furthermore, we increased our U.S. minimum hourly wage to $21 in 2021 and are increasing it to $25 by 2025; we provided approximately 97% of our global employee base with a "Sharing Success Award" this year ― representing $3.3 billion in additional compensation delivered since 2017; and for the tenth consecutive year, we did not increase medical premiums for teammates earning less than $50,000 per year.We also believe companies need to build strong and diverse talent pipelines. One way to do that is through our campus recruiting programs, where we attract future leaders and develop promising young talent who serve our clients and local communities every day.  Their diverse thought-leadership is valued and is what helps push our company forward.Beyond our hiring efforts, we strive to advance racial equality and economic opportunity in the communities where we live and work. We make long-term investments through community partnerships and grants that support education and job skill programming through our $1.25 billion five-year commitment to advance racial equality and economic opportunity.However, for companies to continue to thrive following the pandemic and the social catalysts of 2020, leadership needs to embrace and champion diverse representation, backgrounds, and ideas. At Bank of America, this starts at the top with our CEO, board of directors, and management committees all playing a crucial role establishing an inclusive culture. They set expectations that every teammate is accountable for ethical and professional conduct and are extremely committed to making Bank of America a great place to work.As a leading global financial institution, we want every Bank of America employee to bring their whole selves to work and feel celebrated, not minimized. We work hard to offer an inclusive workplace, career growth and development, and rewarding and comprehensive benefits that will help our employees thrive at every stage of their careers and their lives. Having this inclusive culture and investing in our communities is the core of who we are as a company and how we drive responsible growth."We will see more systemic changes that will pivot us all to potential, instead of degrees or even skills."Ravi Kumar, President, InfosysInfosys; Edited by Kazi Awal/InsiderWhen we look at overall job-market data trends – open jobs exceeding the number of job seekers, escalating attrition rates across companies, or the continued lack of participation in the workforce — it's clear that we're missing something.This goes beyond a discussion about post-pandemic return to work although the pandemic has created an inflection point in the work-workforce-workplace dynamics. First, we will see more systemic changes that will pivot us all to potential, instead of degrees or even skills. Organizations will create the talent pools they need to drive business — by hiring extremely diverse talent and assuring them upward mobility — because they will have developed the ability to educate and train people from across backgrounds and levels of formal education. Second, companies will focus not just on traditional business outcomes but on delivering concrete results that matter to its employees on a personal level. The ability to create an ecosystem of trust in meaningful ways will become a powerful differentiator, a business necessity even, when it comes to attracting and retaining great people.And third, beyond compensation, policy, and perks the conversation will shift to purpose.With workers demanding that their employer define a 'north star' — that energizes them because it speaks to why and how their company is different from any other, why their role exists, and how they can step up, create value, and make a difference. "As the post-COVID-19 business environment continues to evolve, it is more important than ever that companies...help focus on equity and access to opportunity for employees across our industry and beyond."Bob Holycross, Vice President, Sustainability, Environment, and Safety Engineering, Ford Motor CompanyFord; Edited by Kazi Awal/InsiderAs the post-COVID-19 business environment continues to evolve, it is more important than ever that companies like Ford help focus on equity and access to opportunity for employees across our industry and beyond. To do this, companies have to provide additional resources to support their team through unprecedented change.At Ford, we now offer a US sabbatical program with partial pay and full benefits. Ford has also enhanced its family assistance programs, including increasing US salaried paid parental leave, flexible work hours, and backup childcare.These practices are helping Ford retain talent, and helping our team members balance their personal and professional lives. These changes are a part of the company's broad commitment to sustainability, which I believe supports good business and our Purpose to help build a better world.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderApr 8th, 2022

Whole Earth Brands Reports Fourth Quarter and Full Year 2021 Results and Provides 2022 Guidance

CHICAGO, March 14, 2022 (GLOBE NEWSWIRE) -- Whole Earth Brands, Inc. (the "Company" or "we" or "our") (NASDAQ:FREE), a global food company enabling healthier lifestyles through premium plant-based sweeteners, flavor enhancers and other foods, today announced its financial results for its fourth quarter and full year ended December 31, 2021. The Company also provided initial 2022 guidance. Full Year Highlights Reported consolidated revenue growth of 79%, including strategic acquisitions Branded CPG proforma organic constant currency revenue growth of approximately 12% on a two-year stacked basis versus 2019 and approximately 1% compared to 2020 Flavors & Ingredients revenue growth of approximately 7% compared to 2020 Operating income of $22.8 million and adjusted EBITDA of $82.2 million, an increase of approximately 51% Fourth Quarter Highlights Reported consolidated revenue growth of 75%, including strategic acquisitions Branded CPG proforma organic constant currency revenue growth of approximately 9% on a two-year stacked basis versus 2019 and a decrease of approximately 4% compared to 2020 Flavors & Ingredients revenue growth of approximately 21% compared to 2020 Operating income of $6.4 million and adjusted EBITDA of $20.6 million, an increase of approximately 47% Irwin D. Simon, Executive Chairman, stated, "In the 18 months since our business combination, we have significantly grown revenue and adjusted EBITDA, and transformed the business through two successful acquisitions, all while managing through a complex environment. Looking ahead to 2022, we are well positioned with our diversified and resilient global platform that has a market presence in approximately 100 countries and is focused on driving profitable growth, establishing formal environmental, social and governance practices, and creating value for shareholders." Albert Manzone, Chief Executive Officer, commented, "We made great strides this year to expand our reach and drive distribution gains by leveraging our broad product assortment and innovations across all geographies to service a global base of diverse customers utilizing all sales channels. To complement our commercial efforts, we continue to execute, and have accelerated, our North American Supply Chain Reinvention leveraging the increased scale from the Swerve and Wholesome acquisitions to ensure that we remain well positioned to meet future demand despite a challenging supply chain environment." Mr. Manzone continued, "The power of our portfolio of brands, geographies, channels and segments allowed us to deliver revenue and adjusted EBITDA within our guidance, despite headwinds from product supply and rising supply chain costs. Heading into 2022, we expect our recent pricing actions and productivity improvements will offset current inflationary pressures. We remain laser focused on executing our strategies to deliver on our short and long-term objectives." FOURTH QUARTER 2021 RESULTS The Company's reported consolidated financials reflect the completed acquisitions of Swerve on November 10, 2020 and Wholesome on February 5, 2021 from those respective dates. Proforma comparisons include the impact of these acquisitions for both the current and prior year periods. Consolidated product revenues were $132.7 million, an increase of 75.3% on a reported basis, as compared to the prior year fourth quarter. On a proforma basis, organic constant currency product revenues were flat with the prior year fourth quarter. Reported gross profit was $38.7 million, compared to $25.2 million in the prior year fourth quarter. The increase was largely driven by contributions from the Swerve and Wholesome acquisitions and a $5.9 million favorable change in non-cash purchase accounting adjustments related to inventory revaluations, partially offset by $6.2 million of costs associated with our supply chain reinvention project. Gross profit margin was 29.2% in the fourth quarter of 2021, compared to 33.3% in the prior year period. Adjusted gross profit margin was 34.0%, down from 42.0% in the prior year due primarily to the inclusion of Wholesome in 2021, which has lower margins, and other product mix. Consolidated operating income was $6.4 million compared to an operating loss of $6.9 million in the prior year fourth quarter and consolidated net loss was $0.4 million in the fourth quarter of 2021 compared to a net loss of $5.1 million in the prior year period. Consolidated Adjusted EBITDA of $20.6 million increased 47.5% driven by contributions from the Swerve and Wholesome acquisitions and revenue growth, partially offset by higher bonus expense compared to 2020. SEGMENT RESULTS Branded CPG SegmentBranded CPG segment product revenues increased $52.3 million, or 98.1%, to $105.6 million for the fourth quarter of 2021, compared to $53.3 million for the same period in the prior year, driven primarily by the addition of Swerve and Wholesome. On a proforma basis, organic constant currency product revenue decreased 4.3% compared to the prior year fourth quarter primarily due to temporary supply constraints that were partially offset by solid volume growth at Wholesome. On a two-year stacked basis, when comparing fourth quarter 2021 to fourth quarter 2019, Branded CPG segment proforma organic constant currency revenue increased 9.1% driven by volume growth. Operating income was $4.4 million in the fourth quarter of 2021 compared to operating income of $6.2 million for the same period in the prior year. The decrease was driven by temporary supply constraints, higher bonus expense, and costs associated with our supply chain reinvention project, partially offset by contributions from the acquired Swerve and Wholesome businesses, and lower purchase accounting adjustments. Flavors & Ingredients SegmentFlavors & Ingredients segment product revenues increased 21.2% to $27.1 million for the fourth quarter of 2021, compared to $22.4 million for the same period in the prior year primarily due to strong volume growth across all product categories including licorice extracts, pure derivatives and the Magnasweet product lines driven by innovation and commercial expansion. Operating income was $7.6 million in the fourth quarter of 2021, compared to an operating loss of $2.0 million in the prior year period primarily due to a $5.9 million favorable change in purchase accounting adjustments related to inventory revaluations, revenue growth and lower operating costs. CorporateCorporate expenses for the fourth quarter of 2021 were $5.7 million, compared to $11.1 million of expenses in the prior year period. The decrease is primarily due to lower M&A transaction fees and non-recurring public company readiness expenses. FULL YEAR 2021 RESULTS The Company's consolidated financial results reflect both predecessor and successor periods indicative of the June 25, 2020 business combination date. The full year results discussed below compare the results for the year ended December 31, 2021 to the combined year ended December 31, 2020, which includes the successor period from June 26, 2020 through December 31, 2020 and the predecessor period from January 1, 2020 through June 25, 2020. Additionally, the Company's consolidated reported financial results reflect the completed acquisitions of Swerve on November 10, 2020 and Wholesome on February 5, 2021 from those respective dates onwards. Proforma comparisons include the impact of both acquisitions for both the current and prior full years. Consolidated product revenues were $494.0 million, an increase of 79.3% compared to the full year 2020. On a proforma basis, organic constant currency product revenue increased 2.0%, compared to the prior year. Branded CPG segment product revenues were $389.2 million, an increase of 119.1%, reflecting the acquisitions of Wholesome and Swerve. On a proforma basis, organic constant currency product revenues increased 0.7% compared to the prior year and grew 11.9% on a two-year stacked basis as compared to the full year 2019 driven by portfolio innovation and distribution gains. Flavors & Ingredients segment product revenues were $104.8 million, an increase of 7.1% as compared to the prior year, driven by product innovation and commercial expansion. Reported gross profit was $158.8 million, an increase of $62.5 million from $96.3 million in the prior year, and gross profit margin was 32.1% in the full year ended December 31, 2021 as compared to 34.9% in the prior year. Adjusted gross profit margin was 34.5%, down from 42.0% in the prior year driven primarily by the inclusion of Wholesome. Consolidated operating income was $22.8 million compared to an operating loss of $44.3 million in the prior year and consolidated net income was $0.1 million for the year ended December 31, 2021 compared to a net loss of $42.6 million in the prior year. Consolidated Adjusted EBITDA increased 50.7% to $82.2 million driven by contributions from the acquired Swerve and Wholesome businesses and revenue growth, partially offset by higher bonus expense. BALANCE SHEET As of December 31, 2021, the Company had cash and cash equivalents of $28.3 million and $383.5 million of long-term debt, net of unamortized debt issuance costs. OUTLOOK The Company is providing its initial outlook for full year 2022, which includes the full year impact of its recent acquisition of Wholesome. The outlook includes expectations for growth on a proforma organic basis. The Company defines proforma organic growth to be as if the Company owned Wholesome for the full year 2021. The Company's 2022 outlook is as follows: Net Product Revenues: $530 million to $545 million (representing reported growth of 7% to 10%, and proforma organic growth of 3% to 6%) Adjusted EBITDA: $84 million to $87 million Capital Expenditures: Approximately $10 million Outlook is provided in the context of greater than usual volatility as a result of current geo-political events and the on-going COVID-19 pandemic. CONFERENCE CALL DETAILS The Company will host a conference call and webcast to review its fourth quarter and full year results today, March 14, 2022 at 8:30 am ET. The conference call can be accessed live over the phone by dialing (877) 705-6003 or for international callers by dialing (201) 493-6725. A replay of the call will be available until March 28, 2022 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13726948. The live audio webcast of the conference call will be accessible in the News & Events section on the Company's Investor Relations website at investor.wholeearthbrands.com. An archived replay of the webcast will also be available shortly after the live event has concluded. About Whole Earth Brands Whole Earth Brands is a global food company enabling healthier lifestyles and providing access to premium plant-based sweeteners, flavor enhancers and other foods through our diverse portfolio of trusted brands and delicious products, including Whole Earth Sweetener®, Wholesome®, Swerve®, Pure Via®, Equal® and Canderel®. With food playing a central role in people's health and wellness, Whole Earth Brands' innovative product pipeline addresses the growing consumer demand for more dietary options, baking ingredients and taste profiles. Our world-class global distribution network is the largest provider of plant-based sweeteners in more than 100 countries with a vision to expand our portfolio to responsibly meet local preferences. We are committed to helping people enjoy life's everyday moments and the celebrations that bring us together. For more information on how we "Open a World of Goodness®," please visit www.WholeEarthBrands.com. Forward-Looking Statements This press release contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning Whole Earth Brands, Inc. and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of management, as well as assumptions made by, and information currently available to, management. Forward-looking statements may be accompanied by words such as "achieve," "aim," "anticipate," "believe," "can," "continue," "could," "drive," "estimate," "expect," "forecast," "future," "guidance," "grow," "improve," "increase," "intend," "may," "outlook," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would," or similar words, phrases or expressions. Examples of forward-looking statements include, but are not limited to, the statements made by Messrs. Simon and Manzone, and our 2022 guidance. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the Company's ability to achieve the anticipated benefits of the integration of Wholesome and Swerve in a timely manner or at all; the ongoing conflict in Ukraine and related economic disruptions and new governmental regulations on our business, including but not limited to the potential impact on our sales, operations and supply chain; adverse changes in the global or regional general business, political and economic conditions, including the impact of continuing uncertainty and instability in certain countries, that could affect our global markets and the potential adverse economic impact and related uncertainty caused by these items; the extent of the impact of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, the impact on our employees, and the extent of the impact of the COVID-19 pandemic on overall demand for the Company's products; local, regional, national, and international economic conditions that have deteriorated as a result of the COVID-19 pandemic, including the risks of a global recession or a recession in one or more of the Company's key markets, and the impact they may have on the Company and its customers and management's assessment of that impact; extensive and evolving government regulations that impact the way the Company operates; and the impact of the COVID-19 pandemic on the Company's suppliers, including disruptions and inefficiencies in the supply chain. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company's control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These statements are subject to the risks and uncertainties indicated from time to time in the documents the Company files (or furnishes) with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance upon any forward-looking statements, which are based only on information currently available to the Company and speak only as of the date made. The Company undertakes no commitment to publicly update or revise the forward-looking statements, whether written or oral that may be made from time to time, whether as a result of new information, future events or otherwise, except as required by law. Contacts:Investor Relations Contact:Whole Earth Brands312-840-5001investor@wholeearthbrands.com ICRJeff Sonnek646-277-1263jeff.sonnek@icrinc.com Media Relations Contact:KWT Global Larry Larsen312-497-0655llarsen@kwtglobal.com Whole Earth Brands, Inc. Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited) The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). However, management believes that also presenting certain non-GAAP financial measures provides additional information to facilitate the comparison of the Company's historical operating results and trends in its underlying operating results, and provides additional transparency on how the Company evaluates its business. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. The Company also believes that presenting these measures allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends. The Company considers quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of its ongoing financial and business performance and trends. The adjustments generally fall within the following categories: constant currency adjustments, intangible asset non-cash impairments, purchase accounting charges, transaction related costs, long-term incentive expense, non-cash pension expenses, severance and related expenses associated with a restructuring, public company readiness, M&A transaction expenses and other one-time items affecting comparability of operating results. See below for a description of adjustments to the Company's U.S. GAAP financial measures included herein. Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, the Company's non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies. DEFINITIONS OF THE COMPANY'S NON-GAAP FINANCIAL MEASURES The Company's non-GAAP financial measures and corresponding metrics reflect how the Company evaluates its operating results currently and provide improved comparability of operating results. As new events or circumstances arise, these definitions could change. When these definitions change, the Company provides the updated definitions and presents the related non-GAAP historical results on a comparable basis. When items no longer impact the Company's current or future presentation of non-GAAP operating results, the Company removes these items from its non-GAAP definitions. The following is a list of non-GAAP financial measures which the Company has discussed or expects to discuss in the future: Constant Currency Presentation: We evaluate our product revenue results on both a reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our product revenue results, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company's performance. We calculate constant currency percentages by converting our current period local currency product revenue results using the prior period exchange rates and comparing these adjusted amounts to our current period reported product revenues. Adjusted EBITDA: We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, as well as certain other items that arise outside of the ordinary course of our continuing operations specifically described below: Asset impairment charges: We exclude the impact of charges related to the impairment of goodwill and other long-lived intangible assets. Impairment charges during the calendar year 2020 were incurred only during the predecessor period. We believe that the exclusion of these impairments, which are non-cash, allows for more meaningful comparisons of operating results to peer companies. We believe that this increases period-to-period comparability and is useful to evaluate the performance of the total company. Purchase accounting adjustments: We exclude the impact of purchase accounting adjustments, including the revaluation of inventory at the time of the business combination. These adjustments are non-cash and we believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Transaction-related expenses: We exclude transaction-related expenses including transaction bonuses that were paid for by the seller of the businesses acquired by the Company on June 25, 2020. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Long-term incentive plan: We exclude the impact of costs relating to the long-term incentive plan. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Non-cash pension expenses: We exclude non-cash pension expenses/credits related to closed, defined pension programs of the Company. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Severance and related expenses: We exclude employee severance and associated expenses related to roles that have been eliminated or reduced in scope as a productivity measure taken by the Company. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Public company readiness: We exclude non-recurring organization and consulting costs incurred to establish required public company capabilities. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Brand Introduction expenses: To measure operating performance, we exclude the Company's sampling program costs with Starbucks. We believe the exclusion of such amounts allows management and the users of the financial statements to better understand our financial results. Restructuring: To measure operating performance, we exclude restructuring costs. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. M&A transaction expenses: We exclude expenses directly related to the acquisition of businesses after the business combination on June 25, 2020. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Supply chain reinvention: To measure operating performance, we exclude certain one-time and other costs associated with reorganizing our North America Branded CPG operations and facilities in connection with our supply chain reinvention program, which will drive long-term productivity and cost savings. These costs for 2021 include incremental expenses such as hiring, training and other temporary costs primarily related to taking control over production that was previously outsourced to a contract manufacturer. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance. Other items: To measure operating performance, we exclude certain expenses and include certain gains that we believe are operational in nature. We believe the exclusion or inclusion of such amounts allows management and the users of the financial statements to better understand our financial results. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Adjusted EBITDA margin is Adjusted EBITDA for a particular period expressed as a percentage of product revenues for that period. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. In addition to Adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. Adjusted EBITDA should not be considered as an alternative to net income or loss, operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. The Company cannot reconcile its expected Adjusted EBITDA to Net Income under "Outlook" without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time. These items include, but are not limited to, share-based compensation expense, impairment of assets, acquisition-related charges and COVID-19 related expenses. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. Adjusted Gross Profit Margin: We define Adjusted Gross Profit Margin as Gross Profit excluding all cash and non-cash adjustments, impacting Cost of Goods Sold, included in the Adjusted EBITDA reconciliation, as a percentage of Product Revenues, net. Such adjustments include: depreciation, purchase accounting adjustments, long term incentives and other items adjusted by management to better understand our financial results. The Company cannot reconcile its expected Adjusted Gross Profit Margin to Gross Profit Margin under "Outlook" without unreasonable effort because certain items that impact Gross Profit Margin and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time. These items include, but are not limited to, share-based compensation expense, impairment of assets, acquisition-related charges and COVID-19 related expenses. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. Whole Earth Brands, Inc.Consolidated Balance Sheets(In thousands of dollars, except for share and per share data)   December 31, 2021   December 31, 2020 Assets       Current Assets       Cash and cash equivalents $ 28,296     $ 16,898   Accounts receivable (net of allowances of $1,285 and $955, respectively)   69,590       56,423   Inventories   212,930       111,699   Prepaid expenses and other current assets   7,585       5,045   Total current assets   318,401       190,065           Property, Plant and Equipment, net   58,503       47,285           Other Assets       Operating lease right-of-use assets   26,444       12,193   Goodwill   242,661       153,537   Other intangible assets, net   266,939       184,527   Deferred tax assets, net   1,993       2,671   Other assets   7,638       6,260   Total Assets $ 922,579     $ 596,538           Liabilities and Stockholders' Equity       Current Liabilities       Accounts payable $ 55,182     $ 25,200   Accrued expenses and other current liabilities   30,733       29,029   Contingent consideration payable   54,113       —   Current portion of operating lease liabilities   7,950       3,623   Current portion of long-term debt   3,750       7,000   Total current liabilities   151,728       64,852   Non-Current Liabilities       Long-term debt   383,484       172,662   Warrant liabilities   2,053       —   Deferred tax liabilities, net   35,090       23,297   Operating lease liabilities, less current portion   22,575       11,324   Other liabilities   13,778       15,557   Total Liabilities   608,708       287,692   Commitments and Contingencies   —       —   Stockholders' Equity       Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding   —       —   Common stock, $0.0001 par value; 220,000,000 shares authorized; 38,871,646 and 38,426,669 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively   4       4   Additional paid-in capital   330,616       325,679   Accumulated deficit   (26,436 )     (25,442 ) Accumulated other comprehensive income   9,687       8,605   Total stockholders' equity   313,871       308,846   Total Liabilities and Stockholders' Equity $ 922,579     $ 596,538   Whole Earth Brands, Inc.Consolidated and Combined Statements of Operations(In thousands of dollars, except for per share data)   (Successor)     (Predecessor)   Three Months EndedDecember 31, 2021   Three Months EndedDecember 31, 2020   Year EndedDecember 31, 2021   From June 26, 2020to December 31, 2020     From January 1, 2020to June 25, 2020 Product revenues, net $ 132,714     $ 75,688     $ 493,973     $ 147,168       $ 128,328   Cost of goods sold   93,994       50,520       335,218       101,585         77,627   Gross profit   38,720       25,168       158,755       45,583         50,701                         Selling, general and administrative expenses   27,568       27,789       113,141       44,616         43,355   Amortization of intangible assets   4,763       3,180       18,295       6,021         4,927   Asset impairment charges   —       —       —       —         40,600   Restructuring and other expenses   —       1,052       4,503       1,052         —                         Operating income (loss)   6,389       (6,853 )     22,816       (6,106 )       (38,181 )                       Change in fair value of warrant liabilities   454       —       29       —         —   Interest expense, net   (6,562 )     (2,210 )     (24,589 )     (4,371 )       (238 ) Loss on extinguishment and debt transaction costs   —       —       (5,513 )     —         —   Other income (expense), net   476       (346 )     196       (578 )       801   Income (loss) before income taxes   757       (9,409 )     (7,061 )     (11,055 )       (37,618 ) Provision (benefit) for income taxes   1,150       (4,312 )     (7,144 )     (2,618 )       (3,482 ) Net (loss) income $ (393 )   $ (5,097 )   $ 83     $ (8,437 )     $ (34,136 )                       Net (loss) earnings per share:                     Basic $ (0.01 )   $ (0.13 )   $ 0.00     $ (0.22 )       Diluted $ (0.01 )   $ (0.13 )   $ 0.00     $ (0.22 )       Whole Earth Brands, Inc.Consolidated and Combined Statements of Cash Flows(In thousands of dollars)   (Successor)     (Predecessor)   Year EndedDecember 31, 2021   From June 26, 2020to December 31, 2020     From January 1, 2020to June 25, 2020   Year EndedDecember 31, 2019 Operating activities                 Net income (loss) $ 83     $ (8,437 )     $ (34,136 )   $ 30,812   Adjustments to reconcile net income (loss) to net cash provided by operating activities:                 Stock-based compensation   8,715       1,262         —       —   Depreciation   4,727       1,652         1,334       3,031   Amortization of intangible assets   18,295       6,021         4,927       10,724   Deferred income taxes   (12,300 )     (2,842 )       (5,578 )     (10,500 ) Asset impairment charges   —       —         40,600       —   Amortization of inventory fair value adjustments   (3,396 )     12,613         —       —   Non-cash loss on extinguishment of debt   4,435       —         —       —   Change in fair value of warrant liabilities   (29 )     —         —       —   Changes in current assets and liabilities:                 Accounts receivable   964       (4,554 )       7,726       1,311   Inventories   (22,957 )     (5,305 )       3,576       2,004   Prepaid expenses and other current assets   (1,030 )     (2,066 )       3,330       (3,097 ) Accounts payable, accrued liabilities and income taxes   12,050       (7,939 )       507       (3,057 ) Other, net   (75 )     150         (2,378 )     437   Net cash provided by (used in) operating activities   9,482       (9,445 )       19,908       31,665                     Investing activities                 Capital expenditures   (12,198 )     (4,489 )       (3,532 )     (4,037 ) Acquisitions, net of cash acquired   (190,231 )     (456,508 )       —       —   Proceeds from sale of fixed assets   4,516       —         —       —   Transfer from trust account   —       178,875         —       —   Net cash used in investing activities   (197,913 )     (282,122 )       (3,532 )     (4,037 )                   Financing activities                 Proceeds from revolving credit facility   25,000       47,855         3,500       1,500   Repayments of revolving credit facility   (47,855 )     —         (8,500 )     —   Long-term borrowings   375,000       140,000         —       —   Repayments of long-term borrowings   (139,314 )     (3,500 )       —       —   Debt issuance costs   (11,589 )     (7,139 )       —       —   Proceeds from sale of common stock and warrants   1       75,000         —       —   Tax withholdings related to net share settlements of stock-based awards   (1,913 )     —         —       —   Funding to Parent, net   —       —         (11,924 )     (25,442 ) Net cash provided by (used in) financing activities   199,330       252,216         (16,924 )     (23,942 ) Whole Earth Brands, Inc.Consolidated and Combined Statements of Cash Flows (Continued)(In thousands of dollars)   (Successor)     (Predecessor)   Year EndedDecember 31, 2021   From June 26, 2020to December 31, 2020     From January 1, 2020to June 25, 2020   Year EndedDecember 31, 2019                   Effect of exchange rate changes on cash and cash equivalents   499     714         215       (496 ) Net change in cash and cash equivalents   11,398     (38,637 )       (333 )     3,190   Cash and cash equivalents, beginning of period   16,898     55,535         10,395       7,205   Cash and cash equivalents, end of period $ 28,296   $ 16,898       $ 10,062     $ 10,395                     Supplemental disclosure of cash flow information                 Interest paid $ 21,203   $ 3,328       $ 798     $ —   Taxes paid, net of refunds $ 4,523   $ 3,091       $ 2,244     $ 4,571   Supplemental disclosure of non-cash investing                 Non-cash capital expenditures $ 3,796   $ —       $ —     $ —   Whole Earth Brands, Inc.Adjusted EBITDA Reconciliation(In thousands of dollars) (Unaudited)   (Successor)     (Predecessor)     Three Months EndedDecember 31, 2021   Three Months EndedDecember 31, 2020   Twelve Months EndedDecember 31, 2021   From June 26, 2020to December 31, 2020     From January 1, 2020to June 25, 2020   Product revenues, net $ 132,714     $ 75,688     $ 493,973     $ 147,168       $ 128,328     Net income (loss) $ (393 )   $ (5,097 )   $ 83     $ (8,437 )     $ (34,136 )   (Benefit) provision for income taxes   1,150       (4,312 )     (7,144 ).....»»

Category: earningsSource: benzingaMar 14th, 2022

4 REITs Your Black Friday Shopping Cart Must Have

As consumers are expected to splurge this holiday season amid rising wages and considerable savings, don't forget to add some REIT stocks that house retailers or support e-retailing. Americans celebrated nature’s bounty on Thanksgiving Day. Now, Black Friday will kick off the annual holiday shopping season, giving retailers a chance to enjoy abundant sales.  And why not? With rising income backed by wage compensation and hefty savings accumulated during the pandemic, consumers are ready to splurge.According to the National Retail Federation (“NRF”) Chief Economist Jack Kleinhenz, “The unusual and beneficial position we find ourselves in is that households have increased spending vigorously throughout most of 2021 and remain with plenty of holiday purchasing power.”In fact, the projections from NRF paint an encouraging picture, with holiday retail sales — excluding restaurants, automobile dealers and gasoline stations — anticipated to climb 8.5-10.5% from the prior year to a total of $843.4-$859 billion, suggesting the highest holiday retail sales on record. Online and other non-store sales are estimated to jump 11-15% to a total of $218.3-$226.2 billion, up from the $196.7 billion reported during the same period last year.Even though e-commerce is expected to remain a significant contributor, people are expected to opt for a more traditional holiday shopping experience this year and shift back to in-store shopping. In anticipation, the hiring for positions in bricks-and-mortar stores and warehouse and distribution centers have gained momentum.This optimism would translate into greater benefits for the real estate sector – particularly the REITs. Higher retail sales — whether online or at physical stores — bring huge profits for these REITs. Increased footfall at malls and shopping center would create further demand for space. Online sales too need real space for storage and efficient distribution.In addition, retailers are utilizing the last-mile stores as indispensable fulfillment and distribution centers to serve the dense population close by and outperforming pure e-commerce players on delivery times and cost efficiency. Also, curbside pick-up, combined with click-and-collect options, are likely to continue gaining attention in the present environment and even in the post-Covid era. And REITs making efforts along these lines are likely to add competitive advantage in current times.Stock PicksTo capitalize on this trend, we have handpicked four stocks for your Black Friday cart. Aside from having solid fundamentals, these better-ranked REITs have high chances of market outperformance over the next 1-3 months. These stocks are witnessing positive estimate revisions too, reflecting analysts’ upbeat view.We suggest investing in Simon Property Group SPG, which is a behemoth in the retail REIT industry and enjoys a portfolio of premium retail assets in the United States and abroad. The adoption of an omni-channel strategy and successful tie-ups with premium retailers have been aiding Simon Property Group. It is also tapping growth opportunities by assisting digital brands to enhance their brick-and-mortar presence, as well as capitalizing on buying recognized retail brands in bankruptcy.Additionally, Simon Property is exploring the mixed-use development option, which has gained immense popularity in recent years among those who prefer to live, work and play in the same area. Moreover, with a solid balance-sheet strength and available capital resources, SPG looks poised to ride this growth curve and bank on opportunities emanating from market dislocations.In the third quarter, Simon Property recorded increased leasing volumes, occupancy gains, shopper traffic and retail sales. Also, management raised the 2021 funds from operations (FFO) per share guidance to the $11.55-$11.65 range, up from the $10.70-$10.80 band projected earlier, suggesting an increase of 85 cents at the mid-point. Simon Property announced a 10% sequential hike in its fourth-quarter 2021 dividend. The company will now pay out $1.65 per share compared with the $1.50 paid out earlier. The increased dividend will be paid out on Dec 31 to its shareholders of record as of Dec 10, 2021.Simon Property Group currently carries a Zacks Rank #2 (Buy). Over the past month, the Zacks Consensus Estimate for 2021 FFO per share witnessed upward revision of 3.8% to $11.28, reflecting analysts’ bullish outlook.Another retail landlord is Federal Realty Investment Trust FRT, a North Bethesda, MD-based retail REIT boasting of a portfolio of premium retail assets — mainly situated in the major coastal markets from Washington, D.C. to Boston, San Francisco and Los Angeles — along with a diverse tenant base, both national and local.Federal Realty has strategically selected first-ring suburbs of nine major metropolitan markets. Due to the strong demographics and the infill nature of its properties, the company has been able to maintain a high occupancy level over the years. Moreover, its focus on open-air format and “The Pick-Up” concept has poised it well to lure tenants even amid the current health crisis. Furthermore, with the resumption of the economy, widespread vaccination and solid consumer spending, the retail REIT is poised to benefit from its superior assets in premium locations and experience improving leasing environment.Currently, FRT carries a Zacks Rank #2 and has a long-term growth rate of 8.4%. Moreover, for 2021, the stock has seen the Zacks Consensus Estimate for FFO per share being revised 4.9% upward to $ 5.36 over the past month. This also suggests an increase of 18.6% year over year.Our next pick is an industrial REIT stock — Rexford Industrial Realty, Inc. REXR — which is focused on the acquisition, ownership and operation of industrial properties situated in Southern California in-fill markets. Recently, Rexford announced shelling out $125.9 million to acquire five industrial properties in the prime in-fill Southern California submarkets.With these buyouts, Rexford’s 2021 acquisition activity has reached $1.4 billion. Also, more than $300 million of acquisitions are under contract or have accepted offer. Southern California is considered a highly valued industrial property market with supply constraints in the United States.Presently, Rexford carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised 2.5% upward over the last 30 days. This also indicates a projected increase of 23.5% year over year.The cart will be incomplete without another industrial REIT. A promising one on the shelf is Bellevue, WA-based Terreno Realty Corporation TRNO, which targets functional buildings at in-fill locations, which enjoy high-population densities and are located near high-volume distribution points.Terreno Realty recently shelled out $7.7 million to purchase an industrial property in Los Angeles, CA, as part of its acquisition-driven growth strategy. Backed by expansion efforts, TRNO is well poised to enhance its portfolio in the six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC — which display solid demographic trends and witness healthy demand for industrial real estate.Terreno Realty currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for the ongoing year’s FFO per share has been revised marginally upward to $1.72 over the last 30 days. This calls for an increase of 19.4% year over year.Here’s how the above stocks have performed in the past three months.Image Source: Zacks Investment ResearchNote: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. 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. See 3 crypto-related stocks now >>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 Simon Property Group, Inc. (SPG): Free Stock Analysis Report Federal Realty Investment Trust (FRT): Free Stock Analysis Report Terreno Realty Corporation (TRNO): Free Stock Analysis Report Rexford Industrial Realty, Inc. (REXR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 26th, 2021

Surging Earnings Estimates Signal Upside for Super Micro (SMCI) Stock

Super Micro (SMCI) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions. Super Micro Computer (SMCI) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.The upward trend in estimate revisions for this server technology company reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.Consensus earnings estimates for the next quarter and full year have moved considerably higher for Super Micro, as there has been strong agreement among the covering analysts in raising estimates.The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:12 Month EPSCurrent-Quarter Estimate RevisionsFor the current quarter, the company is expected to earn $2.76 per share, which is a change of +213.64% from the year-ago reported number.The Zacks Consensus Estimate for Super Micro has increased 45.89% over the last 30 days, as two estimates have gone higher compared to no negative revisions.Current-Year Estimate RevisionsFor the full year, the earnings estimate of $9.58 per share represents a change of +69.56% from the year-ago number.The revisions trend for the current year also appears quite promising for Super Micro, with two estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 21.48%.Favorable Zacks RankThanks to promising estimate revisions, Super Micro currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.Bottom LineSuper Micro shares have added 36.5% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Super Micro Computer, Inc. (SMCI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

Here"s Why Marathon Petroleum (MPC) is a Strong Value Stock

Wondering how to pick strong, market-beating stocks for your investment portfolio? Look no further than the Zacks Style Scores. It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.It also includes access to the Zacks Style Scores.What are the Zacks Style Scores?The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.The Style Scores are broken down into four categories:Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankThe Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.That's where the Style Scores come in.To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: Marathon Petroleum (MPC)Findlay, OH-based Marathon Petroleum Corporation is a leading independent refiner, transporter and marketer of petroleum products. The company, in its current form, came into existence following the 2011 spin-off of Houston, TX-based Marathon Oil Corporation’s refining/sales business into a separate, independent and publicly-traded entity.  In October 2018, Marathon Oil completed the acquisition of its rival Andeavor in a $23.3 billion deal, thereby becoming the nationwide largest refining company by market capitalization. The deal also made the company the largest U.S. refiner and the fifth largest in the world by capacity.MPC is a #1 (Strong Buy) on the Zacks Rank, with a VGM Score of A.It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 4.89; value investors should take notice.Five analysts revised their earnings estimate higher in the last 60 days for fiscal 2022, while the Zacks Consensus Estimate has increased $3.94 to $25.70 per share. MPC also boasts an average earnings surprise of 60.1%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, MPC should be on investors' short list. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Marathon Petroleum Corporation (MPC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

Why Is Community Health Systems (CYH) Up 16.9% Since Last Earnings Report?

Community Health Systems (CYH) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. It has been about a month since the last earnings report for Community Health Systems (CYH). Shares have added about 16.9% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Community Health Systems due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Community Health Miss Q3 Earnings EstimatesCommunity Health reported third-quarter 2022 adjusted net loss of 52 cents per share, which missed the Zacks Consensus Estimate of earnings of 5 cents. The quarterly figure compares unfavorably with the year-ago quarter’s profit of 69 cents.Net operating revenues amounted to $3,025 million, which declined 2.9% year over year in the third quarter. The top line also missed the consensus mark by 1.2%.The weak third-quarter results were caused by lower admissions, patient days, occupancy rate and higher operating costs. Hurricane Ian in Florida also negatively impacted its results. However, investors were likely impressed by the company’s cost-containment efforts in the face of inflation, which brought down its cost of supplies. Further, the company stuck to its previous guidance, despite taking a hit from Hurricane Ian in the third quarter, showing resilience.Quarterly Operational UpdateThe number of hospitals at the third-quarter end was 81 million. Patient days declined 13.6% year over year in the third quarter. Average length of stay declined 9.8% year over year, while the occupancy rate decreased 680 basis points to 46.7%.Admissions slipped 3.7% year over year, but adjusted admissions rose 3.8% year over year in the quarter under review. On a same-store basis, admissions dipped 2.2% year over year, but adjusted admissions improved 5.2% from the prior-year quarter’s reported figure.Community Health had 13,309 licensed beds as of Sep 30, 2022, which increased from 13,229 a year ago.Income from operations declined 40% year over year to $204 million. Adjusted EBITDA decreased 17% year over year to $400 million in the third quarter.Total operating costs and expenses were $2,821 million, which escalated from $2,775 million a year ago. Salaries and benefits and other operating expenses increased in the third quarter while the cost of supplies declined. Meanwhile, CYH’s interest expense, net, increased marginally to $217 million from $216 million a year ago.Financial Update (as of Sep 30, 2022)Community Health exited the third quarter with cash and cash equivalents of $300 million, down from the 2021-end figure of $507 million. Total assets at the third-quarter end were $14,914 million, down from $15,217 million at 2021-end.Long-term debt amounted to $11,943 million, which declined from the $12,109 million level at 2021-end. Current maturities of long-term debt were at $21 million.Net cash provided by operating activities was at $137 million in the third quarter of 2022, up from $121 million in the year-ago period.2022 Outlook in DetailsCYH reaffirmed its previous 2022 annual earnings guidance of a net loss per share of $2.55-$1.65.Adjusted EBITDA was projected within the $1,300-$1,400 million range. The outlook suggests a decline from $1,969 million in 2021. Net operating revenues were expected in the range of $12,200-$12,500 million compared with the year-ago level of $12,368 million. For the medium-term (4 years), net revenue growth was expected in the mid-single digit.Net cash provided by operating activities was anticipated to lie between $500 million and $600 million for 2022. Last year, CYH reported net cash used in operations of $131 million. Capex was expected within $450-$500 million.The company now expects labor inflation for 2023 to be within the 3-4% range.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in estimates revision.The consensus estimate has shifted 6.25% due to these changes.VGM ScoresAt this time, Community Health Systems has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Community Health Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerCommunity Health Systems belongs to the Zacks Medical - Hospital industry. Another stock from the same industry, HCA Healthcare (HCA), has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.HCA reported revenues of $14.97 billion in the last reported quarter, representing a year-over-year change of -2%. EPS of $3.93 for the same period compares with $4.57 a year ago.HCA is expected to post earnings of $4.76 per share for the current quarter, representing a year-over-year change of +7.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.HCA has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Community Health Systems, Inc. (CYH): Free Stock Analysis Report HCA Healthcare, Inc. (HCA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

Why Allison Transmission (ALSN) is a Top Value Stock for the Long-Term

Whether you're a value, growth, or momentum investor, finding strong stocks becomes easier with the Zacks Style Scores, a top feature of the Zacks Premium research service. For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.It also includes access to the Zacks Style Scores.What are the Zacks Style Scores?The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.The Style Scores are broken down into four categories:Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankThe Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.That's where the Style Scores come in.You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: Allison Transmission (ALSN)Headquartered in Indianapolis, IN, Allison Transmission Holdings, Inc. is a manufacturer of fully-automatic transmissions for medium and heavy-duty commercial and heavy-tactical U.S. defense vehicles. In fact, the company is the largest producer of fully-automatic transmissions, holding the leading position in several niche markets. The firm also offers electric hybrid and fully electric propulsion systems. ALSN is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 8.55; value investors should take notice.Six analysts revised their earnings estimate higher in the last 60 days for fiscal 2022, while the Zacks Consensus Estimate has increased $0.21 to $5.21 per share. ALSN also boasts an average earnings surprise of 10.3%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, ALSN should be on investors' short list. Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in?  If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.>>Send me my free report on the top 5 EV stocksWant 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 Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

TotalEnergies SE Sponsored ADR (TTE) is a Top-Ranked Value Stock: Should You Buy?

The Zacks Style Scores offers investors a way to easily find top-rated stocks based on their investing style. Here's why you should take advantage. For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.Zacks Premium includes access to the Zacks Style Scores as well.What are the Zacks Style Scores?The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.The Style Scores are broken down into four categories:Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankA proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.That's where the Style Scores come in.To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: TotalEnergies SE Sponsored ADR (TTE)France-based TotalEnergies SE is among the top five publicly traded global integrated oil and gas companies based on production volumes, proved reserves and market capitalization. The company has operations in more than 130 countries across five continents. The company was founded in 1924. The company has changed its name from TOTAL SE to TotalEnergies SE, which better reflects its transition toward a broad energy company. The new trading symbol of the company is TTE.TTE is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 4.18; value investors should take notice.Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2022. The Zacks Consensus Estimate has increased $0.22 to $14.41 per share. TTE boasts an average earnings surprise of 10.9%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, TTE should be on investors' short list. Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in?  If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.>>Send me my free report on the top 5 EV stocksWant 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 TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

Southwest Airlines (LUV) is a Top-Ranked Value Stock: Should You Buy?

The Zacks Style Scores offers investors a way to easily find top-rated stocks based on their investing style. Here's why you should take advantage. For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.Zacks Premium includes access to the Zacks Style Scores as well.What are the Zacks Style Scores?The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.The Style Scores are broken down into four categories:Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankA proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.That's where the Style Scores come in.To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: Southwest Airlines (LUV)Based in Dallas, TX, Southwest Airlines is a passenger airline that provides scheduled air transportation in the United States and 'ten near-international' markets. The company, incorporated in Texas in 1967, commenced operations on Jun 18, 1971, with three Boeing 737 jets serving the cities of Dallas, Houston and San Antonio.LUV is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 16.89; value investors should take notice.Nine analysts revised their earnings estimate upwards in the last 60 days for fiscal 2022. The Zacks Consensus Estimate has increased $0.18 to $2.29 per share. LUV boasts an average earnings surprise of 54.7%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, LUV should be on investors' short list. Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in?  If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.>>Send me my free report on the top 5 EV stocksWant 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 Southwest Airlines Co. (LUV): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

Astrazeneca (AZN) is a Top-Ranked Value Stock: Should You Buy?

Wondering how to pick strong, market-beating stocks for your investment portfolio? Look no further than the Zacks Style Scores. For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.It also includes access to the Zacks Style Scores.What are the Zacks Style Scores?Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.The Style Scores are broken down into four categories:Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.How Style Scores Work with the Zacks RankA proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.That's where the Style Scores come in.You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: Astrazeneca (AZN)AstraZeneca plc, headquartered in London, UK, is one of the largest biopharmaceutical companies in the world. AstraZeneca was formed on Apr 6, 1999, through the merger of Sweden’s Astra AB and UK’s Zeneca Group plc. AstraZeneca’s business can be broken down into separate lines based on therapeutic classes. These include cardiovascular, respiratory, immunology, oncology, rare diseases and other.AZN is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 19.75; value investors should take notice.For fiscal 2022, three analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.04 to $3.35 per share. AZN boasts an average earnings surprise of 9.7%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, AZN should be on investors' short list. Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in?  If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.>>Send me my free report on the top 5 EV stocksWant 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 AstraZeneca PLC (AZN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022

H&R Block (HRB) is a Top-Ranked Value Stock: Should You Buy?

Wondering how to pick strong, market-beating stocks for your investment portfolio? Look no further than the Zacks Style Scores. It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.It also includes access to the Zacks Style Scores.What are the Zacks Style Scores?Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.The Style Scores are broken down into four categories:Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.How Style Scores Work with the Zacks RankA proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.That's where the Style Scores come in.To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.Stock to Watch: H&R Block (HRB)H&R Block Inc. is a leading provider of tax preparation services. The company provides assisted income tax return preparation, do-it-yourself (DIY) tax solutions and other products and services associated with income tax return preparation in the United States, Canada and Australia.HRB is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 11.22; value investors should take notice.One analysts revised their earnings estimate upwards in the last 60 days for fiscal 2023. The Zacks Consensus Estimate has increased $0.02 to $3.80 per share. HRB boasts an average earnings surprise of 13.9%.With a solid Zacks Rank and top-tier Value and VGM Style Scores, HRB should be on investors' short list. Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in?  If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.>>Send me my free report on the top 5 EV stocksWant 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 H&R Block, Inc. (HRB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2022