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ExxonMobil and Hasbro have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – October 21, 2022 – Zacks Equity Research shares ExxonMobil (XOM - Free Report) as the Bull of the Day and Hasbro, Inc. (HAS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tesla (TSLA - Free Report) and Ford (F - Free Report) .
ExxonMobil is one of the leaders in the hottest sector of 2022: energy. This Zacks Rank #1 (Strong Buy) is busting out to new 5-year highs when almost everyone else is breaking down.
ExxonMobil is one of the largest energy companies in the world. It explores, produces, refines and owns service stations around the world. But it's also one of the largest chemical companies as well.
In the 2000s, ExxonMobil was one of the largest companies in the world. Will it regain its crown during this commodities cycle?
Earnings Coming on Oct 28, 2022
On Oct 28, ExxonMobil will report third quarter earnings. It has beat 3 out of the last 4 quarters but has had a nice streak during the pandemic.
Analysts remain bullish with oil and natural gas prices remaining elevated. The Zacks Consensus Estimate is looking for $3.60 in the quarter with 4 estimates revised higher in the last 30 days but just 2 lowered during that time.
Big Earnings Growth in 2022
With other companies cutting guidance or seeing declining earnings, ExxonMobil is sitting pretty in 2022.
Earnings are expected to rise 146.7% year-over-year to $13.27 from just $5.38 last year. Analysts have gotten more bullish over the last 90 days, with earnings jumping to $13.27 from $11.95 in that time.
Analysts are conservative about next year, however, currently seeing earnings softening by 18.6% to $10.81. However, it's still too early to have any insights into commodity prices in 2023, which are the main driver of earnings.
Dividend All-Star
ExxonMobil has long been a favorite of income investors as it has paid a dividend for decades. ExxonMobil says on its website that payments to shareholders have grown at an average annual rate of 6% over the last 39 years.
That's a nice added bonus for shareholders as the stock has been challenged during some of that time period.
Despite shares being up 69.9% this year and breaking out to a new 5-year high, over that 5-years, shares are up just 25%. For comparison purposes, the S&P 500 was up 43% during that same time period.
ExxonMobil's dividend is currently yielding 3.4%.
Shares are Dirt Cheap
Even with shares at new 5-year highs, earnings are soaring so the shares are still cheap.
It trades with a forward P/E of 7.8. The S&P 500 is trading at 17x.
ExxonMobil also has a PEG Ratio of just 0.3. A PEG under 1.0 usually indicates a company has both value and growth, which is a powerful combination.
For investors looking to get into oil stocks, ExxonMobil is one of the leaders and one to keep on your short list.
Hasbro, Inc. is seeing a slowdown as consumers feel inflationary pressures. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline 11% this year.
Hasbro is a global branded entertainment leader through gaming, consumer products and entertainment. Some of its brands include Magic: The Gathering, Dungeons & Dragons, Hasbro Gaming, Nerf, Transformers, Play-doh and Peppa Pig.
A Miss in the Third Quarter of 2022
On Oct 18, 2022, Hasbro reported its third quarter earnings and missed on the Zacks Consensus by $0.11. Earnings were $1.42 versus the Zacks Consensus of $1.53.
Revenue fell 15%, or 12% on a constant currency basis, to $1.68 billion. The results were impacted by the acceleration of Consumer Products shipments by its retailers into the second quarter due to anticipated supply chain challenges, as well as Magic: The Gathering set releases and entertainment content scheduled for release in the fourth quarter versus the third quarter like last year.
All three of its segments saw declines. Consumer Products, it's largest segment, fell 10% to $1.16 billion from $1.28 billion a year ago.
Wizards and Digital Gaming fell 16% to $303.5 million from $360.2 million in 2021. Entertainment dropped 35% to $211.6 million from $327.1 million a year ago.
Hasbro also saw "increasing price sensitivity for the average consumer" in the quarter.
As a result, Hasbro guided to flat fourth quarter year-over-year revenue, with strength coming from its Wizards and Digital Gaming segment.
The company also has a 3-year cost cutting program which is aimed to drive $250 to $300 million per year in savings.
Full Year 2022 and 2023 Earnings Estimates Cut
Given the earnings miss and the company's guidance, it's not surprising that analysts have been lowering earnings estimates.
For 2022, 6 estimates were cut in the last 30 days, including 1 in the last week, which has pushed the Zacks Consensus Estimate down to $4.65 from $5.09. That's an earnings decline of 11% because the company made $5.23 last year.
Analysts are also bearish on 2023, with 6 estimates cut in the last 30 days and 2 cut in the last week. The 2023 Zacks Consensus Estimate has come down to $5.38 from $5.68 during that time. However, that's still earnings growth of 15.7% from 2022.
Committed to Its Dividend
Hasbro pays a juicy dividend, currently yielding 4.3%.
If you're worried that it may not be "safe" from cuts, in its press release, Hasbro said it was "committed" to its "industry-leading" dividend.
The next quarterly dividend of $0.70 will be paid on Nov 15, 2022, to shareholders of record as of Nov 1, 2022.
Shares are Cheap
Hasbro shares are down 37% year-to-date and have entered into value territory.
It trades with a forward P/E of 13.9 and has a P/S ratio of just 1.5.
But if the US enters into a recession in 2023, will these shares get even cheaper?
Investors interested in entertainment and gaming might want to wait on the sidelines for those earnings to turn back around before diving in.
Additional content:
Should You Sell the Tesla Sales Miss?
Tesla is the leading EV maker by far and the world is doubling down on EV adoption with government subsidies, policy changes and infrastructure buildup. This should be the perfect backdrop for solid growth into the foreseeable future, which is what CEO Elon Musk has talked about on the earnings call.
The competition is not sitting idle either because as Musk himself says, “We are still a very small percentage of the total vehicles on the road” and “We're about a long way to go to even reach 1% of the global fleet.” The scope for expansion is huge and there is obviously room to accommodate more than one player. Therefore, share erosion at Tesla is only to be expected even as its volumes grow.
According to elektrek which quotes registration data from Experian, Tesla currently accounts for 68% of registered electric vehicles in the U.S., one of the largest EV markets. That’s great, but it’s down from 79% at the end of 2020 and close to 70% at the end of 2021, as more players enter the market. But as the site points out, Tesla conceded a little over 1% of its revenue in the first half of this year to rivals, which grew their U.S. deliveries 58%. All four Tesla models were in the top 5, with only Ford’s Mustang Mach-E pushing into the third position. Being the first mover, Tesla has had the time to create its own fan base, which is just as well because the established players now taking share already have theirs.
As this analysis by Troy Teslike shows, Tesla’s international deliveries are gradually catching up with demand, as seen from the declining backlog, although some regions continue to see extended wait times. Musk explained on the call that the main problem is outbound logistics because production is typically backend-loaded (“roughly two-thirds of our Q3 deliveries occurred in September and one-third in the final two weeks”). There simply aren’t enough ships from Shanghai to Europe or local trucking in parts of the U.S. and Europe to deal with this sudden burst in demand. This problem will take time to iron out, so the fourth quarter won’t be immune to it.
The delivery issue stems from more demand not less and so, should be viewed as a problem that is good to have. Especially since management is on it. The goal is to spread out builds to ease pressure at the end of the period and we may expect some improvement next year.
It is hard to view the above situation negatively. And it’s worth noting that Tesla also has an energy business that is expected to grow faster than its vehicles business, which Musk thinks will grow at 30% a year for the foreseeable future. And any recession that may happen next year will not have them taking down vehicle production. There is just so much demand out there.
Therefore, I would be the last person asking you to sell Tesla shares. If you’re concerned about valuation, you could sit on it, because valuation has fluctuated wildly, as the company gradually proved its business (and production) model. Although expensive at 47.71X P/E, it is the lowest level the shares have traded this year.
Tesla does have problems related to raw material procurement as well as the logistics problems discussed above. The strong U.S. dollar also doesn’t help a company that generates a significant percentage of sales overseas and does a significant amount of production within the country.
The recession could create the perfect opportunity to load up, as the shares could get beaten down further (they are down 37% year to date). Or the persistent rate hikes could do it. The Zacks #3 (Hold) rank on Tesla shares appears to support this strategy.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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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ExxonMobil and Hasbro have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 21, 2022 – Zacks Equity Research shares ExxonMobil (XOM - Free Report) as the Bull of the Day and Hasbro, Inc. (HAS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tesla (TSLA - Free Report) and Ford (F - Free Report) .
Here is a synopsis of all four stocks.
Bull of the Day:
ExxonMobil is one of the leaders in the hottest sector of 2022: energy. This Zacks Rank #1 (Strong Buy) is busting out to new 5-year highs when almost everyone else is breaking down.
ExxonMobil is one of the largest energy companies in the world. It explores, produces, refines and owns service stations around the world. But it's also one of the largest chemical companies as well.
In the 2000s, ExxonMobil was one of the largest companies in the world. Will it regain its crown during this commodities cycle?
Earnings Coming on Oct 28, 2022
On Oct 28, ExxonMobil will report third quarter earnings. It has beat 3 out of the last 4 quarters but has had a nice streak during the pandemic.
Analysts remain bullish with oil and natural gas prices remaining elevated. The Zacks Consensus Estimate is looking for $3.60 in the quarter with 4 estimates revised higher in the last 30 days but just 2 lowered during that time.
Big Earnings Growth in 2022
With other companies cutting guidance or seeing declining earnings, ExxonMobil is sitting pretty in 2022.
Earnings are expected to rise 146.7% year-over-year to $13.27 from just $5.38 last year. Analysts have gotten more bullish over the last 90 days, with earnings jumping to $13.27 from $11.95 in that time.
Analysts are conservative about next year, however, currently seeing earnings softening by 18.6% to $10.81. However, it's still too early to have any insights into commodity prices in 2023, which are the main driver of earnings.
Dividend All-Star
ExxonMobil has long been a favorite of income investors as it has paid a dividend for decades. ExxonMobil says on its website that payments to shareholders have grown at an average annual rate of 6% over the last 39 years.
That's a nice added bonus for shareholders as the stock has been challenged during some of that time period.
Despite shares being up 69.9% this year and breaking out to a new 5-year high, over that 5-years, shares are up just 25%. For comparison purposes, the S&P 500 was up 43% during that same time period.
ExxonMobil's dividend is currently yielding 3.4%.
Shares are Dirt Cheap
Even with shares at new 5-year highs, earnings are soaring so the shares are still cheap.
It trades with a forward P/E of 7.8. The S&P 500 is trading at 17x.
ExxonMobil also has a PEG Ratio of just 0.3. A PEG under 1.0 usually indicates a company has both value and growth, which is a powerful combination.
For investors looking to get into oil stocks, ExxonMobil is one of the leaders and one to keep on your short list.
Bear of the Day:
Hasbro, Inc. is seeing a slowdown as consumers feel inflationary pressures. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline 11% this year.
Hasbro is a global branded entertainment leader through gaming, consumer products and entertainment. Some of its brands include Magic: The Gathering, Dungeons & Dragons, Hasbro Gaming, Nerf, Transformers, Play-doh and Peppa Pig.
A Miss in the Third Quarter of 2022
On Oct 18, 2022, Hasbro reported its third quarter earnings and missed on the Zacks Consensus by $0.11. Earnings were $1.42 versus the Zacks Consensus of $1.53.
Revenue fell 15%, or 12% on a constant currency basis, to $1.68 billion. The results were impacted by the acceleration of Consumer Products shipments by its retailers into the second quarter due to anticipated supply chain challenges, as well as Magic: The Gathering set releases and entertainment content scheduled for release in the fourth quarter versus the third quarter like last year.
All three of its segments saw declines. Consumer Products, it's largest segment, fell 10% to $1.16 billion from $1.28 billion a year ago.
Wizards and Digital Gaming fell 16% to $303.5 million from $360.2 million in 2021. Entertainment dropped 35% to $211.6 million from $327.1 million a year ago.
Hasbro also saw "increasing price sensitivity for the average consumer" in the quarter.
As a result, Hasbro guided to flat fourth quarter year-over-year revenue, with strength coming from its Wizards and Digital Gaming segment.
The company also has a 3-year cost cutting program which is aimed to drive $250 to $300 million per year in savings.
Full Year 2022 and 2023 Earnings Estimates Cut
Given the earnings miss and the company's guidance, it's not surprising that analysts have been lowering earnings estimates.
For 2022, 6 estimates were cut in the last 30 days, including 1 in the last week, which has pushed the Zacks Consensus Estimate down to $4.65 from $5.09. That's an earnings decline of 11% because the company made $5.23 last year.
Analysts are also bearish on 2023, with 6 estimates cut in the last 30 days and 2 cut in the last week. The 2023 Zacks Consensus Estimate has come down to $5.38 from $5.68 during that time. However, that's still earnings growth of 15.7% from 2022.
Committed to Its Dividend
Hasbro pays a juicy dividend, currently yielding 4.3%.
If you're worried that it may not be "safe" from cuts, in its press release, Hasbro said it was "committed" to its "industry-leading" dividend.
The next quarterly dividend of $0.70 will be paid on Nov 15, 2022, to shareholders of record as of Nov 1, 2022.
Shares are Cheap
Hasbro shares are down 37% year-to-date and have entered into value territory.
It trades with a forward P/E of 13.9 and has a P/S ratio of just 1.5.
But if the US enters into a recession in 2023, will these shares get even cheaper?
Investors interested in entertainment and gaming might want to wait on the sidelines for those earnings to turn back around before diving in.
Additional content:
Should You Sell the Tesla Sales Miss?
Tesla is the leading EV maker by far and the world is doubling down on EV adoption with government subsidies, policy changes and infrastructure buildup. This should be the perfect backdrop for solid growth into the foreseeable future, which is what CEO Elon Musk has talked about on the earnings call.
The competition is not sitting idle either because as Musk himself says, “We are still a very small percentage of the total vehicles on the road” and “We're about a long way to go to even reach 1% of the global fleet.” The scope for expansion is huge and there is obviously room to accommodate more than one player. Therefore, share erosion at Tesla is only to be expected even as its volumes grow.
According to elektrek which quotes registration data from Experian, Tesla currently accounts for 68% of registered electric vehicles in the U.S., one of the largest EV markets. That’s great, but it’s down from 79% at the end of 2020 and close to 70% at the end of 2021, as more players enter the market. But as the site points out, Tesla conceded a little over 1% of its revenue in the first half of this year to rivals, which grew their U.S. deliveries 58%. All four Tesla models were in the top 5, with only Ford’s Mustang Mach-E pushing into the third position. Being the first mover, Tesla has had the time to create its own fan base, which is just as well because the established players now taking share already have theirs.
As this analysis by Troy Teslike shows, Tesla’s international deliveries are gradually catching up with demand, as seen from the declining backlog, although some regions continue to see extended wait times. Musk explained on the call that the main problem is outbound logistics because production is typically backend-loaded (“roughly two-thirds of our Q3 deliveries occurred in September and one-third in the final two weeks”). There simply aren’t enough ships from Shanghai to Europe or local trucking in parts of the U.S. and Europe to deal with this sudden burst in demand. This problem will take time to iron out, so the fourth quarter won’t be immune to it.
The delivery issue stems from more demand not less and so, should be viewed as a problem that is good to have. Especially since management is on it. The goal is to spread out builds to ease pressure at the end of the period and we may expect some improvement next year.
It is hard to view the above situation negatively. And it’s worth noting that Tesla also has an energy business that is expected to grow faster than its vehicles business, which Musk thinks will grow at 30% a year for the foreseeable future. And any recession that may happen next year will not have them taking down vehicle production. There is just so much demand out there.
Therefore, I would be the last person asking you to sell Tesla shares. If you’re concerned about valuation, you could sit on it, because valuation has fluctuated wildly, as the company gradually proved its business (and production) model. Although expensive at 47.71X P/E, it is the lowest level the shares have traded this year.
Tesla does have problems related to raw material procurement as well as the logistics problems discussed above. The strong U.S. dollar also doesn’t help a company that generates a significant percentage of sales overseas and does a significant amount of production within the country.
The recession could create the perfect opportunity to load up, as the shares could get beaten down further (they are down 37% year to date). Or the persistent rate hikes could do it. The Zacks #3 (Hold) rank on Tesla shares appears to support this strategy.
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.