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Arrow Electronics is a Zacks Rank #1 (Strong Buy) and sports the growth divergence that I love to see. I am much more interested in growth stocks than I am value stocks so when I see a stock with a strong Growth Style Score and a weak Value Style Score I know that I am on the right path. Value investors and growth investors are looking for different things... and ARW has what I am looking for in a growth stock.
Let's take a deeper look at this stock in this Bull of the Day article.
Description
Arrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Global Components and Global Enterprise Computing Solutions. The Global Components segment markets and distributes semiconductor products and related services; passive, electro-mechanical, and interconnect products consisting primarily of capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products, as well as other products and services.
The Global Enterprise Computing Solutions segment offers computing solutions, including data-center, cloud, security, and analytics solutions, as well as access to various services, including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. The company serves original equipment manufacturers, value-added resellers, as well as manages service providers, contract manufacturers, and other commercial customers. Arrow Electronics, Inc. was founded in 1935 and is based in Centennial, Colorado.
Recent Earnings
On October 29, ARW posted an impressive beat. The company reported EPS of $2.08 when the Zacks Consensus was $1.66. The 42 cent difference translates into a 25% positive earnings surprise.
Before that, the company posted a 10% beat and a 1% beat as well as a 12% miss in the first quarter of this year.
All in all, I would say that is a pretty good earnings track record.
Estimate Movement
Following the recent beat, estimates have moved higher. I see this quarter has moved from $2.31 to $2.66 while next quarter has also increased from $1.49 to $1.77.
Those are big jumps in estimates, but the Zacks Rank keys in more on the annual numbers.
ARW is expected to post EPS of $7.26 this year and $8.69 next year. Both of those numbers have increased over the last thirty days.
Those big increases in earnings estimates have helped push this stock to a Zacks Rank #1 (Strong Buy).
Valuation
I really like the valuation here for ARW. I see a 11.8x forward earnings multiple and only 1.3x price to book multiple. Both of those metrics are very low and it makes me wonder why the value score is so low. The company did post year over year sales growth, but it was only 2% and that might have impacted the price to sales multiple of 0.24x and that is a little low for my liking.
Clipper Realty is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today. I see a lot of REITs are sitting with a Zacks Rank #5 (Strong Sell) so this is not a company specific issue. I should also note that this is a pretty small company and I don't want to pick on them as much as I want to give them a chance to shine in the spotlight. After all, in the world of REITs, a $100M market cap is probably holding them back from getting into a lot of meetings.
As a former research analyst I remember covering some of the smaller stocks and the CFO would complain that their market cap would keep them out of the office of the big mutual funds and pension funds. They always wanted to see a name with at least $1B in market cap... so this Bear of the Day is really not intended to kick this company when it's down.
So Why The Low Zacks Rank?
The Zacks Rank looks at all the earnings estimates that are submitted from any analyst that covers the stock. That could mean Goldman Sachs or Needham or whomever covers the name and also submits a model with their report.
When those analysts lower estimates, then the Rank tends to follow suit.
CLPR Estimates
When I look at the detailed estimates page for CLPR, I see the estimates are moving a little lower.
This quarter dropped from $0.16 to $0.13 and next quarter also fell by 3 cents over the last 30 days.
The Zacks Rank cares more about the movement in annual numbers, and I see some similar moves for CLPR there too.
At the same time, this stock is showing a profit and is looking at some pretty solid earnings growth for 2021. Both are excellent reasons to dig a little deeper into this name.
Valuation
I see a 13x forward earnings multiple which is a little high for REIT, but when I see 8% topline growth I also think of that as being a little high for a REIT. These should cancel each other out... but this next item is not something that is easy to forget. I see a 0.86x book multiple and for long term value investors, that number is like a dinner bell. I don't think I need to say anything more about this "Bear" of the Day!
Additional content:
2 Stocks to Watch on Pfizer’s 90% Effective COVID-19 Vaccine
All eyes have been on the development of a vaccine that can treat COVID-19, which has claimed several lives across the globe, paralyzed health systems and ravaged economic growth. But the agonizing wait seems to be over! Pfizer Inc.’s early data from late-stage human trials of the coronavirus vaccine candidate, BNT162b2, has been more than 90% effective in preventing the disease among volunteers with no prior coronavirus infection.
Pfizer, incidentally, is developing the coronavirus vaccine candidate with BioNTech SE, a German biotech firm. On Jul 27, the Phase 3 clinical study of the vaccine candidate began. As of Nov 8, out 43,538 participants, 38,955 had received the second dose.
What’s more, the companies confirmed that they haven’t found any serious safety issues till date and are now working on providing the necessary safety reports to the FDA to validate the safety standards of the vaccine candidate. The companies, no doubt, are seeking emergency authorization of the vaccine candidate as early as possible and are looking to manufacture adequate doses to immune people worldwide.
Pfizer is seeking emergency authorization of the vaccine candidate for people within the age bracket of 16 to 85. To do so, the drug manufacturer needs to provide two months of safety data of almost 44,000 participants later this month.
Pfizer Chairman and CEO, Dr. Albert Bourla, confirmed that they are “a significant step closer to providing people around the world with a much-needed breakthrough to help bring an end to this global health crisis. We look forward to sharing additional efficacy and safety data generated from thousands of participants in the coming weeks.”
Nonetheless, Pfizer along with BioNTech became the first among several companies to announce promising results from a late-stage vaccine trial. It’s also true that Pfizer’s progress in some way may assist Moderna, Inc.’s vaccine, which does apply a similar technology.
Notably, the Pfizer and BioNTech vaccine is known for using the messenger RNA (mRNA) technology that depends on synthetic genes that can be manufactured in a short span and produced at a large scale. The mRNA technology is basically designed to get the immune system in a body active without the use of pathogens. Moderna uses a similar technology and is set to report its findings from a large-scale trial by the end of this month.
Naturally, shares of these drug makers scaled north on Nov 9. Shares of Pfizer and Moderna rose 7.7% and 7.3%, respectively. In fact, Pfizer’s shares in yesterday’s trading session hit an all-time high on COVID-19 vaccine news, a tell-tale sign that once the company gets the final approval for emergence use of its vaccine candidate from the U.S. regulator, its shares will soar further.
Moderna might also taste similar success, which should help its shares rally. Thus, investors might gain from keeping an eye on the latest developments of these two stocks.
For the time being, both Pfizer and Moderna possess a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for Pfizer’s current-year earnings has moved up 1.1% over the past 60 days. In addition, the company’s expected earnings growth rate for the next five-year period is 3.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Meanwhile, the Zacks Consensus Estimate for Moderna’s next-quarter earnings has risen 37.5% over the past 60 days. In fact, the company’s expected earnings growth rate for the next quarter and current year is 42.9% and 21.3%, respectively. It’s worth concluding that there are many mRNA-based pipeline candidates in Moderna’s arsenal.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Arrow Electronics, Clipper Realty, Pfizer, BioNTech and Moderna highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 11, 2020 – Zacks Equity Research Shares of Arrow Electronics, Inc. (ARW - Free Report) as the Bull of the Day, Clipper Realty Inc. (CLPR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Pfizer Inc. (PFE - Free Report) , BioNTech SE (BNTX - Free Report) and Moderna, Inc. (MRNA - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Arrow Electronics is a Zacks Rank #1 (Strong Buy) and sports the growth divergence that I love to see. I am much more interested in growth stocks than I am value stocks so when I see a stock with a strong Growth Style Score and a weak Value Style Score I know that I am on the right path. Value investors and growth investors are looking for different things... and ARW has what I am looking for in a growth stock.
Let's take a deeper look at this stock in this Bull of the Day article.
Description
Arrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Global Components and Global Enterprise Computing Solutions. The Global Components segment markets and distributes semiconductor products and related services; passive, electro-mechanical, and interconnect products consisting primarily of capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products, as well as other products and services.
The Global Enterprise Computing Solutions segment offers computing solutions, including data-center, cloud, security, and analytics solutions, as well as access to various services, including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. The company serves original equipment manufacturers, value-added resellers, as well as manages service providers, contract manufacturers, and other commercial customers. Arrow Electronics, Inc. was founded in 1935 and is based in Centennial, Colorado.
Recent Earnings
On October 29, ARW posted an impressive beat. The company reported EPS of $2.08 when the Zacks Consensus was $1.66. The 42 cent difference translates into a 25% positive earnings surprise.
Before that, the company posted a 10% beat and a 1% beat as well as a 12% miss in the first quarter of this year.
All in all, I would say that is a pretty good earnings track record.
Estimate Movement
Following the recent beat, estimates have moved higher. I see this quarter has moved from $2.31 to $2.66 while next quarter has also increased from $1.49 to $1.77.
Those are big jumps in estimates, but the Zacks Rank keys in more on the annual numbers.
ARW is expected to post EPS of $7.26 this year and $8.69 next year. Both of those numbers have increased over the last thirty days.
Those big increases in earnings estimates have helped push this stock to a Zacks Rank #1 (Strong Buy).
Valuation
I really like the valuation here for ARW. I see a 11.8x forward earnings multiple and only 1.3x price to book multiple. Both of those metrics are very low and it makes me wonder why the value score is so low. The company did post year over year sales growth, but it was only 2% and that might have impacted the price to sales multiple of 0.24x and that is a little low for my liking.
Bear of the Day:
Clipper Realty is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today. I see a lot of REITs are sitting with a Zacks Rank #5 (Strong Sell) so this is not a company specific issue. I should also note that this is a pretty small company and I don't want to pick on them as much as I want to give them a chance to shine in the spotlight. After all, in the world of REITs, a $100M market cap is probably holding them back from getting into a lot of meetings.
As a former research analyst I remember covering some of the smaller stocks and the CFO would complain that their market cap would keep them out of the office of the big mutual funds and pension funds. They always wanted to see a name with at least $1B in market cap... so this Bear of the Day is really not intended to kick this company when it's down.
So Why The Low Zacks Rank?
The Zacks Rank looks at all the earnings estimates that are submitted from any analyst that covers the stock. That could mean Goldman Sachs or Needham or whomever covers the name and also submits a model with their report.
When those analysts lower estimates, then the Rank tends to follow suit.
CLPR Estimates
When I look at the detailed estimates page for CLPR, I see the estimates are moving a little lower.
This quarter dropped from $0.16 to $0.13 and next quarter also fell by 3 cents over the last 30 days.
The Zacks Rank cares more about the movement in annual numbers, and I see some similar moves for CLPR there too.
At the same time, this stock is showing a profit and is looking at some pretty solid earnings growth for 2021. Both are excellent reasons to dig a little deeper into this name.
Valuation
I see a 13x forward earnings multiple which is a little high for REIT, but when I see 8% topline growth I also think of that as being a little high for a REIT. These should cancel each other out... but this next item is not something that is easy to forget. I see a 0.86x book multiple and for long term value investors, that number is like a dinner bell. I don't think I need to say anything more about this "Bear" of the Day!
Additional content:
2 Stocks to Watch on Pfizer’s 90% Effective COVID-19 Vaccine
All eyes have been on the development of a vaccine that can treat COVID-19, which has claimed several lives across the globe, paralyzed health systems and ravaged economic growth. But the agonizing wait seems to be over! Pfizer Inc.’s early data from late-stage human trials of the coronavirus vaccine candidate, BNT162b2, has been more than 90% effective in preventing the disease among volunteers with no prior coronavirus infection.
Pfizer, incidentally, is developing the coronavirus vaccine candidate with BioNTech SE, a German biotech firm. On Jul 27, the Phase 3 clinical study of the vaccine candidate began. As of Nov 8, out 43,538 participants, 38,955 had received the second dose.
What’s more, the companies confirmed that they haven’t found any serious safety issues till date and are now working on providing the necessary safety reports to the FDA to validate the safety standards of the vaccine candidate. The companies, no doubt, are seeking emergency authorization of the vaccine candidate as early as possible and are looking to manufacture adequate doses to immune people worldwide.
Pfizer is seeking emergency authorization of the vaccine candidate for people within the age bracket of 16 to 85. To do so, the drug manufacturer needs to provide two months of safety data of almost 44,000 participants later this month.
Pfizer Chairman and CEO, Dr. Albert Bourla, confirmed that they are “a significant step closer to providing people around the world with a much-needed breakthrough to help bring an end to this global health crisis. We look forward to sharing additional efficacy and safety data generated from thousands of participants in the coming weeks.”
Nonetheless, Pfizer along with BioNTech became the first among several companies to announce promising results from a late-stage vaccine trial. It’s also true that Pfizer’s progress in some way may assist Moderna, Inc.’s vaccine, which does apply a similar technology.
Notably, the Pfizer and BioNTech vaccine is known for using the messenger RNA (mRNA) technology that depends on synthetic genes that can be manufactured in a short span and produced at a large scale. The mRNA technology is basically designed to get the immune system in a body active without the use of pathogens. Moderna uses a similar technology and is set to report its findings from a large-scale trial by the end of this month.
Naturally, shares of these drug makers scaled north on Nov 9. Shares of Pfizer and Moderna rose 7.7% and 7.3%, respectively. In fact, Pfizer’s shares in yesterday’s trading session hit an all-time high on COVID-19 vaccine news, a tell-tale sign that once the company gets the final approval for emergence use of its vaccine candidate from the U.S. regulator, its shares will soar further.
Moderna might also taste similar success, which should help its shares rally. Thus, investors might gain from keeping an eye on the latest developments of these two stocks.
For the time being, both Pfizer and Moderna possess a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for Pfizer’s current-year earnings has moved up 1.1% over the past 60 days. In addition, the company’s expected earnings growth rate for the next five-year period is 3.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Meanwhile, the Zacks Consensus Estimate for Moderna’s next-quarter earnings has risen 37.5% over the past 60 days. In fact, the company’s expected earnings growth rate for the next quarter and current year is 42.9% and 21.3%, respectively. It’s worth concluding that there are many mRNA-based pipeline candidates in Moderna’s arsenal.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.