The market has rallied dramatically off the lows. If you saw the headlines today, you’ll see not only the S&P 500 but the NASDAQ Composite are both at all-time highs. That means the broad market is rewarding investors. Eventually, there will be huge swaths of the market that come under pressure. Stocks without earnings to back up their prices will be in trouble. One way to avoid this is to look at stocks with strong Zacks Ranks. Those with weaker ranks have earnings which are moving in the wrong direction, down.
Today’s Bear of the Day is one of these stocks. I’m talking about Zacks Rank #5 (Strong Sell) AZZ (AZZ - Free Report) . AZZ Inc. provides galvanizing and metal coating solutions, welding solutions, specialty electrical equipment, and highly engineered services to the power generation, transmission, distribution, refining, and industrial markets. The company operates through two segments, Energy and Metal Coatings. The Energy segment provides specialized products and services designed to support industrial, electrical, and nuclear applications. It offers custom switchgear, electrical enclosures, medium and high voltage bus ducts, explosion proof and hazardous duty lighting, nuclear safety-related equipment, and tubular products to multi-national companies and small independent companies.
The reason for the unfavorable rank is that estimates have come down. Over the last sixty days, the Zacks Consensus Estimate for the current year has come down from $2.83 to $2.52 while next year’s number is off from $3.38 to $3.30. These negative revisions have not completely eliminated the earnings growth for this year. Now there is a 7% contraction in earnings this year. The good news for long-term investors is that next year, earnings growth is supposed to return. Next year’s number is solid too, at 30.95% EPS growth. That’s on revenue growth of 7.34%.
Investors looking for other stocks within the Manufacturing - Electronics industry have a few options to inspect further. This industry is in the Top 21% of our Zacks Industry Rank. Both Regal Beloit (RBC - Free Report) and Rexnord (RXN - Free Report) are Zacks Rank #1 (Strong Buy) stocks.
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