For Immediate Release
Chicago, IL – June 22, 2021 – Zacks Equity Research Shares of Camping World Holdings, Inc. (
CWH Quick Quote CWH - Free Report) as the Bull of the Day, Comtech Telecommunications Corp. ( CMTL Quick Quote CMTL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Chuy's Holdings, Inc. ( CHUY Quick Quote CHUY - Free Report) , Texas Roadhouse, Inc. ( TXRH Quick Quote TXRH - Free Report) and Ruth's Hospitality Group, Inc. ( RUTH Quick Quote RUTH - Free Report) .
Here is a synopsis of all five stocks:
Camping World is a Zacks Rank #1 (Strong Buy) that is a provider of services, protection plans, products and resources for recreational vehicle enthusiasts.
After doubling from the COVID lows last year, the stock has struggled as of late. Investors seem to be concerned that the momentum from last year has faded and the stock is now off over 25% from highs.
Recent earnings were solid so investors should be watching for a bounce opportunity as the stock tests support levels.
About the Company
Camping World is headquartered in Lincolnshire, Illinois and employs over 10,000 people. The company was founded in 1966 and operates a network of 170 retail locations in 38 states. The company operates in two segments, Good Sam and Plans; and RV and Outdoor Retail.
CWH is valued at $3 billion and has a Forward PE of 6. The company holds a Zacks Style Score of "A" in Momentum, Growth and Value. The stock also pays a 2.7% dividend.
Travel Has Changed
COVID-19 brought a halt to travel at the height of the pandemic. Because the U.S. had one of the highest cases counts, many countries issued quarantine rules for American travelers. This wasn't appealing for a vacation so we saw a surge in domestic travel here at home. Since all the hotels were closed, the demand for RV's and the desire to camp increased.
While America has opened up, the demand for camping is still there as we head through the summer months. In April, the RV industry Association reported March shipments at 54.3k v 30.3k a year ago, up 47.9%. We saw proof of this momentum when RV marker Thor Industries reported earnings a few weeks ago and saw a massive order backlog.
Q1 Earnings Beat
Thor isn't the only one having success, as both Winnebago and Camping World have all reported fantastic numbers last quarter. In fact, Camping World has beaten EPS expectations for five straight quarters.
Looking at the last quarter, the company reported in early May and saw a 159% EPS beat. Q1 came in at $1.40 v $0.54 expected, with revenues at $1.56B v $1.27B expected. The company also raised FY21 adj EBITDA to $770-810M and sees adjusted EBITDA at $189.3M v $36M year over year. Moreover, margins came in higher, up to 12.2% v 3.5% a year ago.
A few weeks after earnings, the company raised its quarterly dividend 8.7% to $0.25 from $0.23. This would give investors a yield of about 2.7% at the current stock price.
Over the last 60 days, estimates are rising over all time frames. For the current quarter, analysts have raised estimates from $1.54 to $2.23, a hike of 45%. For the current year, we see a 28% hike, from $4.31 to $5.54.
The Technical Take
The stock has a volatile track record, moving from $3 at the height of the pandemic to $48 just a few months ago. There has been selling as of late, with the stock falling over 25% off its highs.
We are now down to the 200-day Moving average, a support level that has seen three significant bounces since November of last year. This area could start a bounce, back to the 50-day MA at $42. However, if it fails, expect the stock to find the $30 level.
Campers are big business and the pandemic created record demand. While we might get some normalization in future earnings, this summer should continue to stay hot for the manufacturers and Camping World.
Bulls finally are getting a good price to buy as the stock falls into technical support. Additionally, the dividend allows longer-term investors to get paid while they camp out in Camping World.
Comtech Telecommunications is a Zacks Rank #5 (Strong Sell) that designs, develops, produces, and markets products, systems, and services for communications solutions in the United States and internationally.
The stock has bounced since reporting earnings and after some buyout chatter, but investors should question the move higher as estimates for the upcoming quarter and year are falling.
About the Company
Comtech is headquartered in Melville, New York and employs over 2,000 people. The company was founded in 1967 and serves satellite systems integrators, wireless and other communication service providers, satellite broadcasters, prime contractors and system suppliers, medical equipment companies, aviation industry system integrators, oil companies, and domestic and international defense and government customers, as well as end-customers.
CMTL is valued at $670 million and has a Forward PE of 26. The company holds a Zacks Style Score of "B" in Value, but "F" in Momentum.
The company reported decent earnings earlier this month, seeing EPS coming in as expected. While revenues came in higher than this time last year, the company guided FY21 lower, now seeing $580-590M v the $616M expected.
The CEO has some positive commented on the year:
"We are continuing to invest in new state-of-the-art production and engineering facilities as well as new next-generation wireless technology solutions that we believe our customers will want in the post-COVID-19 pandemic economic recovery. Looking forward, we are confident that we will have a strong finish to fiscal 2021 and achieve growth in fiscal 2022."
However, analysts are as hopeful as estimates are starting to fall.
Over the last month, the current quarters numbers have fallen from $0.49 to $0.37, or 24%. For the next year, estimates have fallen about 25% over that same time frame.
The stock was trending lower, but the bulls got relief and a 20% bounce when investor Outerbridge sent a letter to the board with their desire to seek strategic alternatives. Outerbrige believes that the company remains significantly undervalued in the public markets due to poor corporate governance, a history of capital misallocation and a lack of succession planning.
This could lead to a change of management or a sale of the company, but for now it is unclear which direction the company will take.
The stock looked poised to break the 200-day MA after earnings. However, the letter from Outerbrige saved the bulls for the time being. The stock actually popped above the 50-day MA and is trading at three-month highs because of the potential sale.
The stock likely chops in the $24-26 area until there is some clarity on the strategic alternative. If no action comes, expect the 200-day to be tested again.
Comtech is likely in for some choppy sideways action as investors and the board sort out their differences. While you wouldn't want to be short the stock, it's likely dead money in the near term.
Additional content: 3 Stocks to Make the Most of a Rebounding Restaurant Industry
Another month down and the light at the end of the tunnel looks even brighter as the restaurant industry continues to ride on the off-premise business model and improved consumer spending.
With a large number of Americans being inoculated, the idea of providing off-premise offerings, along with a connected curbside service, still holds strong. Also, the fact that restaurant operators have resorted to menu rationalization, enhanced operating procedures and IT upgrades makes it an initiative placed in the right direction.
Going by the purview, much of the optimism can be anticipated as the restaurant industry reported robust sales figures for May 2021.
Restaurant Sales Up in May
According to preliminary data from the U.S. Census Bureau, the restaurant & bars industry registered total sales of $67.3 billion (on a seasonally-adjusted basis) compared with the previous month's $64.9 billion. It was encouraging to note that the sales figure improved 3.7% sequentially and 1.7% from the February 2020 levels. Nonetheless, this was the fourth solid increase in total sales in the last five months.
Notably, resilience is being witnessed on account of enhancement in fundamentals, such as modifications in business processes, staffing, floor plans, and technology. Also, much of emphasis is being given to the off-premise business model as companies are investing heavily in digital initiatives to improve reliability and customer services. Moreover, motivations with respect to venturing out on account of the legislation-approved indoor dining and ramped-up vaccinations have been aiding the industry.
We believe the restaurant industry's recovery from the pandemic is not yet complete, as much of the upside potential continues in terms of customer traffic reaching the pre-pandemic levels. Furthermore, it is important to note that the restaurant operators are well positioned to meet customers' expectations (post-pandemic) through targeted strategic and meaningful improvements across the business.
Nonetheless, investing in the retail sector might sound profitable right now. It is worth noting that the Zacks
Retail – Restaurants industry is currently at the top 38% (with the rank of 97) of the 252 Zacks industries, which hints at further growth.
Here, we have highlighted four stocks that are likely to witness earnings growth in 2021 buoyed by robust sales-building initiatives.
3 Restaurant Stocks to Watch Out For
Given the backdrop, here are four restaurant stocks that are likely to rally higher in 2021. With the help of the Zacks
Stock Screener, we have zeroed in stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). These companies have witnessed a sharp price appreciation in the past six months. You can see the complete list of today's Zacks #1 Rank stocks here. Chuy's Holdings is a fast-growing, full-service restaurant concept offering a distinct menu of authentic, Mexican food. Shares of this Zacks Rank #1 company have surged 33.7% in the past six months compared with the industry's 7.5% gain. Notably, the company has been gaining from its focus on cost management and operating efficiencies.
In addition, its initiative toward pay at the table solutions, such as QR code payment and other tech solutions, are encouraging. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 31.9% in the past 60 days, indicating an improvement of 77.4% year over year.
Texas Roadhouse is a growing restaurant company operating predominately in the casual dining segment. Shares of this Zacks Rank #1 company have gained 12.5% in the past six months, courtesy of significant sales acceleration and profitability improvement owing to the easing of dining-room capacity restrictions.
To this end, solid performance is being registered at its Bubba's and Jaggers location. The company is optimistic on account of its expansion initiatives and the Butcher Shop business for growth for the days to come.
Meanwhile, the Zacks Consensus Estimate for the ongoing-year earnings has moved up 35.3% over the past 60 days, suggesting an increase of a whopping 666.7%, year on year.
Ruth's Hospitality, along with its subsidiaries, develops, operates and franchises fine dining restaurants under the Ruth's Chris Steak House name in the United States. Shares of this Zacks Rank #2 company have appreciated 29.5% in the past six months, courtesy of its operational adjustments.
The company remains focused on restaurant development and expansion for the upcoming period. It intends to open two to three new company-owned restaurants by the end of this year, including Short Hills, New Jersey.
Also, foundational technological investments are likely for better management of operations. Meanwhile, the Zacks Consensus Estimate for the current-year earnings has moved north by 77.6% in 60 days' time, calling for an astounding year-over-year improvement of 371.1%.
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