For Immediate Release
Chicago, IL – May 21, 2021 – Zacks Equity Research Shares of Silicon Motion Technology Corporation (
SIMO Quick Quote SIMO - Free Report) as the Bull of the Day, Allakos Inc. ( ALLK Quick Quote ALLK - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bloomin' Brands, Inc. ( BLMN Quick Quote BLMN - Free Report) , Sally Beauty Holdings, Inc. ( SBH Quick Quote SBH - Free Report) and Boyd Gaming Corporation ( BYD Quick Quote BYD - Free Report) .
Here is a synopsis of all five stocks:
Silicon Motion Technology is a Zacks Rank #1 (Strong Buy) and it was downgraded the other day by a major brokerage. I am not going to mention their name but the initials for Morgan Stanley are MS. The stock tanked at the open, but then recovered throughout the day. Let's take a deeper look at this stock in this Bull of the Day article. Description
Silicon Motion Technology Corporation makes and sells NAND flash controllers for solid-state storage devices. It offers solid-state drive (SSDs) used in PCs and other devices, as well as embedded multimediacard (eMMC) and UFS mobile embedded storage used in smartphones. Silicon Motion Technology Corporation was founded in 1995 and is based in Kowloon, Hong Kong.
Downgrade vs Bull of the Day
I normally don't do this, but I have to mention that I made SIMO the Bull of the Day on January 15 of this year. On that day, the stock closed at $49.42 and yesterday (the day of the downgrade) it traded as high as $63.71.
That was a long way of saying that the stock rose more than 27% after I made it the Bull of the Day. That was just 4 months ago.
I didn't see the report from MS, but I have to mention a few things about the chip shortage and how I see that ending soon. First, I saw where one company that is a "supplier" in the chip ecosystem is expecting earnings to soar next quarter. Analysts have been increasing estimates for that company several times of late... so the read-through is: business is about to pick up.
When the shortage ends, the chip names will probably find buyers again as some investors may have reduced their exposure thinking sales would slow. The fact is demand has remained somewhat constant... but as soon as the shortage is over we should see revenues increase and if margins hold steady EPS will move up as well. Investors tend to buy stocks that see EPS moving higher, so we could expect more capital coming into the chip space.
The first thing I do when I look at stock is look to see if the company is beating the number. This tells me right away where the market's expectations have been for the company and how management has been able to communicate to the market.
A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For SIMO, I see a good history of beating the Zacks Consensus Estimate. There are four beats over the last four quarters.
The average positive earnings surprise over the last fours quarters works out to be 14.48%, which means that they are posting results that are more than what is expected.
The Zacks Rank tells us which stocks are seeing earnings estimates move higher. For SIMO, I see estimates moving higher.
Over the last 60 days I am seeing several increases.
This quarter has moved from $0.97 to $1 to $1.18.
Next quarter has been more stable, but still increasing from $1.10 to $1.32.
The full year has gone from $4.10 to $4.21 to $5.02, and I love seeing that!
Next year has increased from $4.91 to $4.93 to $5.79...once again showing that big lift.
Positive movement in earnings estimates like that are the reason that this stock is a Zacks Rank #1 (Strong Buy).
Sometimes the style scores are not all that accurate. This is one of those times and I see a C for growth but the topline is expected to see 55% growth this year and showed 37% growth in the most recent quarter.
The forward multiple is only 12.7x and for chips, that is really low. The price to book of 3.7x is very low for the chip space. The price to sales of 3.8x is also very low for the chips space as well.
Allakos is a Zacks Rank #5 (Strong Sell) and has missed earnings in each of its last two reports. Earnings history is part of the Zacks Rank, but it is not the biggest influencer. Let's take a deeper look in this Bear of the Day article. Description
Allakos Inc. is a clinical stage bio-technology company. It discovers and develops therapeutic antibodies for the treatment of allergic, inflammatory and proliferative diseases. Allakos Inc. is based in CA, United States
The first thing I do when I look at stock is look to see if the company is beating the number. This tells me right away where the market's expectations have been for the company and how management has been able to communicate to the market. A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of ALLK, I see four straight misses of the Zacks Consensus Estimate. No one wants to see a company missing the estimate all the time... but there are different rules to biotech stocks. That said, we can still look to the average surprise to see how much the analysts are off by. For ALLK, I see a -16% average surprise.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For ALLK, I see estimates moving lower across the board.
This quarter has moved from a loss of 92 cents to a loss of $1.08.
Next quarter has seen a similar decrease from -$1.01 to -$1.16.
The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is also negative for those numbers.
I see 2021 moving from -$3.93 to -$4.48 over the last 60 days.
The 2022 number has moved from - $5.63 to -$6.17 over the same time horizon.
Negative movement in earnings estimates like that are the reason that this stock is a Zacks Rank #5 (Strong Sell).
Like I said before, biotechs trade under different rules. They tend to lose money up front as they make new and useful drugs or treatments, and then if the drugs are successful, the earnings picture can change dramatically. That makes it hard to value a biotech like this. There is no PE, there really aren't any sales and therefore there are no margins. I see a 8.5x price to book and that is more than double the industry average of 3.2x.
Additional content: 3 Quality Fundamental Outperformers
The market may be bogged down by inflation concerns at the moment, but we're still in the neighborhood of all-time highs with the likelihood of a big surge as the economy continues to reopen. New records cannot be far off. Outpacing a market with so much potential energy would be fantastic, which is what the
screen is all about. Quality Fundamental Outperformers
It requires a Zacks Rank #1 (Strong Buy), which is difficult enough to obtain in its own right. But on top of that, it also demands a Momentum Style Score of "A" and a Zacks Industry Rank in the Top 50%. Not easy! But the companies able to make it through all this have an outstanding chance to eclipse the market today and keep that momentum going in the future.
Below are three names that recently passed the test.
A Bloomin' Onion® or an order of Kookaburra Wings® are best when they go right from the kitchen directly to a table. It loses a little something in the back of an Uber Eats car. So it's a good thing that we're finally getting out to restaurants now that the pandemic is on its last legs. Because nothing's worse than cold Kookaburra.
Bloomin' Brands is ready to welcome guests back into their Outback Steakhouse dining rooms, which is the company's main and most recognizable concept. However, this casual dining restaurant chain has other concepts as well, including Carrabba's Italian Grill, Bonefish Grill and Fleming's Prime Steakhouse and Wine Bar. It operates more than 1450 restaurants in 47 states and 20 countries.
As part of the retail-restaurants space, BLMN is poised to take off as things get back to normal. It's in the top 36% of the Zacks Industry Rank with shares that have jumped 160% over the past year, including a rise of nearly 43% year to date.
As with any company that survived this pandemic, BLMN focused on growing its off-premises sales digitally. As a result, U.S. digital revenue soared 147% compared to 2020. And the company has beaten the Zacks Consensus Estimate in each of the past four quarters with an average surprise of more than 85%!
In its first quarter report from last month, earnings per share of 72 cents topped the Zacks Consensus Estimate by more than 111%. Revenue of $987.47 million beat our expectation by 3.4%.
Perhaps best of all, sales momentum has continued in the first four weeks of the second quarter. The company expects this momentum to remain throughout the quarter... and the analysts seem to agree. In fact, they're expecting good things for the whole year.
The Zacks Consensus Estimate for this year has surged more than 93% over the past 60 days to $2.01, while next year is up 15% in that time to $2.38. Therefore, analysts expect a 18.4% advance year over year.
Sally Beauty Holdings
Remember, if you let yourself go and stop caring about your appearance while social distancing at home... then the pandemic wins!
However, the strong fiscal second-quarter results from Sally Beauty Holdings shows that the coronavirus never stood a chance. The company recently reported its third straight quarter with a positive surprise, which sparked significantly higher earnings revisions from analysts.
SBH is an international specialty retailer and distributor of professional beauty supplies, such as hair color and care products; styling tools; skin and nail care products; and other beauty items. It has more than 5,000 stores. The company operates under two segments: Sally Beauty Supply (59.2% of fiscal 2020 revenues) and Beauty Systems Group (49.8%).
Shares of SBH are up 101% over the past 12 months, including a rise of about 65.2% so far this year. It currently has a Transformation Plan that includes improving customer experiences; strengthening e-commerce; curtailing costs; and enhancing retail fundamentals.
The company's fiscal second-quarter report included earnings per share of 57 cents, which beat the Zacks Consensus Estimate by a robust 307%! It also improved nearly 150% from last year. Net sales of $926.3 million improved by 6.3% from last year and topped our expectation by about 12%.
Global e-commerce sales jumped 56%, which explains how SBH has been able to report such strong results when many of its stores are closed. Meanwhile, consolidated same-store sales were up 6.5% due to improving consumer confidence, stimulus payments and easing restrictions.
Looking forward, SBH believes that improvements across digital, customer engagement and the supply chain position the company for long-term growth. Analysts are feeling pretty good about the company's future as well, prompting upward earnings estimate revisions.
The Zacks Consensus Estimate for this year (ending September 2021) is up 30% over the past month to $2.21, while expectations for next year (ending September 2022) are up 19.7% to $2.31 in that time. A lot of this improvement has come since the quarterly report and now suggests year-over-year profit growth of about 4.5%.
For some people, the end of this pandemic means finally giving old friends and loved ones big, heartfelt hugs without fear of getting sick... or getting someone else sick. And for others, the end of this pandemic means fleeing the family with a huge bankroll and finding some action in the casinos.
Hey... to each their own!
If you're in the second group, then Boyd Gaming has you covered. The company is a multi-jurisdictional gaming company with 29 properties and 1.77 million square feet of casino space. It's segments include Midwest & South (71.7% of total revenues in first quarter 2021); Las Vegas Locals (25.4%); and Downtown Las Vegas (2.9%). It has nearly 37K slot machines, more than 800 table games and over 11K hotel rooms.
Shares are up 192% from a year ago and about 35% so far in 2021. It has now put together four straight quarters of positive surprises with an average beat of more than 76% over that time.
The company is already enjoying increased visitation and growing spend-per-visit across every customer segment... and we're still vaccinating people! In its first quarter, earnings per share of 93 cents eclipsed the Zacks Consensus Estimate by more than 111%. Total revenues of $753.3 million were up 10.7% from last year and beat our expectation by 13%.
The company continues making moves to expand its portfolio by strengthening current operations and growing capital investment. In addition to the grand reopening, BYD is also benefiting from expansion of online betting offerings and interactive gaming (through its partnership with FanDuel).
Analysts are feeling good about BYD's prospects as we get back to normal. The Zacks Consensus Estimate for this year is up a remarkable 61.2% over the past two months to $3.24. Next year has climbed 35.3% in that time to $3.45. That leaves profit growth of about 6.5%, but it's a good bet that will improve as gamblers return to the casinos.
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