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Dream Finders Homes, Harmonic, Clean Energy Fuels, BP and Chevron highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – June 17, 2021 – Zacks Equity Research Shares of Dream Finders Homes, Inc. (DFH - Free Report) as the Bull of the Day, Harmonic Inc. (HLIT - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Clean Energy Fuels Corp. (CLNE - Free Report) , BP p.l.c. (BP - Free Report) and Chevron Corporation (CVX - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

Dream Finders Homes is a Zacks Rank #2 (Buy) that has a C for Value and B for Growth and is in a space that will benefit from a continued low interest rate environment.  Let's explore a little more about this stock in the Bull of the Day.

Description

Dream Finders Homes Inc. is a homebuilding company. It operates principally in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, Virginia and Maryland. Dream Finders Homes Inc. is based in Jacksonville, FL.

Earnings History

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.

There is only one report that I see on the Zacks system and it was a meet.  So the earnings history isn't really much of a history.

Estimate Revisions

So I see some good estimate increases here for DFH.

This quarter moved from 30 cents to 36 cents and is now 42 cents.

Next quarter saw an increase from 34 cents to 42 cents.

The full year has seen a nice move from $1.29 to $1.53.

Next year has increased from $1.95 to $2.06.

Good movement across the board there.

Valuation

What a great valuation for a stock that is showing some great growth.  15x forward earnings is very low for a company that posted 82% topline growth in the most recent quarter.  7x price to book is a little high, but the growth will fix that.  The analysts are calling for 70% topline growth this year and 20% next year as well.

Bear of the Day:

Harmonic is a Zacks Rank #5 (Strong Sell) and has the growth divergence that I always look for.  That means I see a strong Zacks Growth Style Score and weak Zacks Value Style Score.  Growth investors and value investors are looking for different things so I know I am on the right path when I see that.  Let's take a look at this stock in this Bear of the Day article.

Description

Harmonic Inc. enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. The company has also revolutionized cable access networking via the industry's first virtualized CCAP solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.

Whether simplifying OTT video delivery via innovative cloud and software-as-a-service (SaaS) technologies, or powering the delivery of gigabit internet cable services, Harmonic is changing the way media companies and service providers monetize live and VOD content on every screen.

Earnings History

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 HLIT, I see four straight beats of the Zacks Consensus Estimate.  This makes the case even more strange that it is a Zacks Rank #5 (Strong Sell). 

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For HLIT, I see estimates fluctuating.

This quarter has moved from $0.05 to $0.00.

Next quarter has seen a similar increase from $0.06 to $0.04.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is negative for those numbers.

I see 2021 moving from $0.24 to $0.19 over the last 60 days.

The 2022 number has moved from $0.43 to $0.42 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).

Additional content:

Is It Worth Betting on Meme Stock Clean Energy (CLNE - Free Report) ?

Clean Energy Fuels has been receiving significant attention from retail traders lately, with a lot of discussion on subreddit r/wallstreetbets. The stock has surged more than 40% over the past month, with trading volumes touching a record high of 157.1 million on Jun 9, 2021.

In addition to compressed natural gas ("CNG") and liquefied natural gas ("LNG"), Clean Energy supplies renewable natural gas ("RNG") for vehicles. Use of RNG in vehicles helps in reducing emissions significantly.

The stock has primarily been targeted by the Reddit forum as the company recently announced plans to expand renewable fuel solution for customers, and disclosed plans to carry out greater investment for the development of RNG from dairies as well as other agricultural facilities. It intends to go ahead with the RNG development plan independently as well as jointly with partners like TotalEnergies SE and BP.

The stock has been gaining momentum over the past month, with many energy behemoths showing faith in the concept of Clean Energy Fuel. As RNG has huge potential as a clean energy source, companies like Chevron Corp., TotalEnergies SE and BP Plc, among others, have already signed deals with Clean Energy to promote as well as expand the infrastructure for wider usage.

However, these developments have already been factored into the stock's price. Also, actions of retail traders have made the stock overvalued at the current price level. This is particularly obvious when one looks at the company's trailing 12-month financial performance.

Our proprietary Style Scores system has assigned a Value score of D to Clean Energy, which is a conclusive indication that the stock is overvalued. On a Price/Sales basis, the stock is currently trading at 7.82X compared with the industry average of 2.47X. Also, in terms of Price/Cash flow, Clean Energy's 32.35X compares unfavorably with the industry average of 13.58X. The premium valuation looks unjustified when the company itself expects to report negative earnings in 2021.

Clean Energy's 2021 earnings outlook remains weak. The Zacks Consensus Estimate for the bottom line for full-year 2021 has been revised 460% downward over the past 90 days to a loss of 18 cents per share. As a result, Clean Energy currently carries a Zacks Rank #4 (Sell). So, despite the hype surrounding the stock, it is better to avoid it at this moment.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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