For Immediate Release
Chicago, IL – July 20, 2021 – Zacks Equity Research Shares of Ford Motor Company (
F Quick Quote F - Free Report) as the Bull of the Day, Select Energy Services, Inc. ( WTTR Quick Quote WTTR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Marriott International, Inc. ( MAR Quick Quote MAR - Free Report) , Hilton Worldwide Holdings Inc. ( HLT Quick Quote HLT - Free Report) and Playa Hotels & Resorts N.V. ( PLYA Quick Quote PLYA - Free Report) .
Here is a synopsis of all four stocks:
The last time someone asked me about today's Bull of the Day, I put a sour look on my face. I think my exact response was, "I've had people ask me about that stock for nearly 20 years and nobody I know has ever made a dime off it." At the time, the stock was trading a solid 30% lower than it trades today, even with the market selling off. I am man enough to admit when I am wrong. If you can't take a loss in this game, you are in the wrong place.
As part of my penance for my blunder, I am naming
Ford my Bull of the Day. I am sure that most of you have at least been in a Ford, perhaps maybe even owned one. I have owned two, both Mustang GTs, both manual, and both awesome. Ford now includes the Lincoln brand but in the past included the now defunct Mercury.
The Zacks Rank here is top-notch. Currently, Ford is a Zacks Rank #1 (Strong Buy). The Zacks Style Scores are great as well. The Value Style Score is A, Growth B, and Momentum of D to help it round out with a VGM Composite Score of A. The company is in the Automotive – Domestic industry which ranks in the Top 15% of our Zacks Industry Rank.
Both revenue and earnings growth are very impressive when looking at both the current year and next year. Current year revenue growth is slated to come in at 9.03% with next year pushing up to 19.01%. Looking at the earnings side, that translates to 158% EPS growth for the current year, followed up by 57% growth for next year. That is not the type of growth number typically associated with a large automaker like Ford.
Part of the reason is electrification. Ford has been working on electrifying a good chunk of its fleet. It's all about the future of mobility. Like it or not, the days of the internal combustion engine are numbered. Ford has seen some success with the Mach E and has also recently unveiled a new electric F150 Lightning.
Analysts on Wall Street are taking note. Over the last sixty days, two analysts have increased their earnings estimates for the current year as well as next year. The bullish move in estimates has pushed up the Zacks Consensus Estimate for the current year from 95 cents to $1.06 while next year's number is up from $1.45 to $1.66.
Energy stocks kicked off this year with a bang. As the world economy began to reopen in the wake of COVID-19, demand on oil recovered. This helped crude prices go from the head-scratching negative event on delivery, to over $75 before a sharp downturn late last week. Even with last week's 9.56% downside move, the Energy sector is still up 18.49% on the year. But has the easy money already been made here?
Today's Bear of the Day points out a downside slide in earnings for one energy name,
Select Energy Services. Select Energy Services, Inc., an oilfield services company, provides water management and chemical solutions to the onshore oil and natural gas industry in the United States. The company operates through three segments: Water Services, Water Infrastructure, and Oilfield Chemicals.
Currently, the stock is a Zacks Rank #5 (Strong Sell), due to negative earnings estimate revisions coming from analysts all over Wall Street. Over the last sixty days, analysts have cut their earnings estimates for the current year and next year. The moves have brought the Zacks Consensus Estimate for FY2021 from a 46-cent loss to a 59-cent loss, before it rounded out at a 54-cent loss. FY2022 has moved from a 20-cent loss to a 21-cent loss then back to a 15-cent loss.
Still, a nice feather in the cap of the bulls here on this one. FY2021 EPS growth is forecast to come in at 86% while FY2022 is 73%. Both years are forecast for a loss but there is meaningful growth there. Revenue growth is there too at 9.3% this year and 17.32% next year.
The Oil and Gas – Field Services industry ranks in the Top 44% of our Zacks Industry Rank. For investors looking to find other names in this industry to research, we have a few which are in the good graces of our Zacks Industry Rank.
Additional content: 3 Stocks to Make the Most of a Rebounding Hotel Industry
The worst seems to be over for the hotel industry. Considering the pace of vaccine rollout, Americans are feeling more optimistic about the prospect of traveling again. To support this, hotel operators are focusing on a number of initiatives to meet the needs of their respective customers, while they return back to hotels.
Firstly, hoteliers are focusing on comprehensive processes for cleaning, disinfection and infectious disease prevention. To this end, they have initiated a trained hygiene and well-being leader responsible for a clean and safe environment for colleagues as well as guests.
Secondly, they have continued with the practice of evolving their respective contactless experience and leveraged technologies such as mobile and web check-in as well as mobile key. Also, players in the industry have resorted to streamlining of operations with efficient management levels, the benefits of which are likely to prevail even after the onset of the pandemic.
Improving Trends Uplifting Spirits
Despite recovery varying in regions and countries, we can see a light at the end of the tunnel. In the United States, more than 50% of adults have received at least one dose of a COVID-19 vaccine. As a result, we're seeing a significant lift in forward bookings and occupancy as well as lengthening booking windows.
Per the STR report, U.S. hotel occupancy improved week over week, while average daily rate (ADR) was the highest on record for the week from Jul 4 to Jul 10, 2021. Occupancy rates for the week came in at 67.2% compared with 65.4% in the prior week. During this duration, RevPar for U.S. hotels came in at $93.99 compared with $88.51 in the previous week.
Among the top 25 markets tracked by STR, Norfolk/Virginia Beach reported highest occupancy growth of 3% through Jul 4 to Jul 10, 2021 compared with 2019 levels. Miami reported the highest ADR growth of 44.7% (to $225.14) and RevPAR growth of 30.7% (to $152.45) compared with 2019 levels. Overall, ADR for U.S. hotels rose 5.4% (to $139.84) from 2019 levels.
Pent-up Leisure Demand: A Driving Factor
The resilience of demand is clear, as overall room nights are still heavily weighted to leisure. The fact that trips had to be put on hold in the past year (due to the pandemic) is now leading to rebound in leisure transient demand.
Meanwhile, demand in certain regions is primarily being driven by local leisure staycations, sporting events and room blocks for medical personnel related to vaccine rollouts. Moreover, higher demand is being registered in the Middle East and Africa, while recoveries across Asia Pacific, excluding China, and the Caribbean and Latin America (or CALA), have been more uneven.
While leisure transient trends are encouraging, we are fully aware that group and business demand needs to improve significantly to reach full revenue per available room (or RevPAR) recovery. Despite the dynamic environment, it is encouraging to note that the desire to travel and connect has not abated. This along with stimulus checks from the financial relief package, high household savings and business reopenings points toward continued recovery.
In summary, all these data points are enough to fuel our optimism. We expect overall leisure demand to strengthen further into the summer months, with varying trends across regions. However, the recovery trajectory is likely to remain non-linear or unevenly distributed owing to the uncertainty of the pandemic.
Investing in the Consumer Discretionary sector might sound profitable right now, it is worth noting that the Zacks
Hotels and Motels industry is currently at the top 47% (with the rank of 119) of the 251 Zacks industries, which hints at further growth.
Here, we have highlighted three stocks that are likely to witness earnings growth in 2021 buoyed by robust sales-building initiatives.
3 Hotel Stocks to Watch
Given the backdrop, here are three hotel stocks that are likely to move 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 rise in share price over the past year. You can see the complete list of today's Zacks #1 Rank stocks here. Marriott International operates, franchises and licenses hotel, residential as well as timeshare properties worldwide. Shares of this Zacks Rank #1 company have surged 52.6% in the past year compared with the industry's 39.8% rally.
The company has been benefiting from focus on expansion initiatives, digital innovation and loyalty programs. It is also witnessing improvement in occupancy and new bookings in Mainland China, as businesses are picking up. The company plans to strengthen presence outside the United States, especially in Asia, Latin America, Middle East and Africa.
The Zacks Consensus Estimate for 2021 earnings has been revised 29.6% upward in the past 90 days. The consensus mark for its 2021 earnings also indicates an improvement of 1,188.9% year over year.
Hilton Worldwide Holdings, a hospitality company, owns, leases, manages, develops and franchises hotels and resorts. Shares of this Zacks Rank #2 company have gained 53.2% in the past year. The company is benefitting from focus on unit expansion, hotel conversions, strategic partnerships and loyalty program.
With restrictions being lifted and more than 97% of its properties operating, Hilton's business is likely to pick up on improved demand post the summer period. The company is likely to benefit from gradual improvement in travel demand owing to accelerated vaccine distributions as well as ease in government restrictions.
During its fourth-quarter 2020 conference call, the company stated that it expects reopening of all systemwide rooms by second-quarter 2021. A rise in leisure demand coupled with rebound in corporate transient and group businesses are likely to benefit the company, going forward.
The Zacks Consensus Estimate for its 2021 earnings has been revised 12.3% upward in the past 90 days. The consensus mark for its 2021 earnings indicates an improvement of 1,640% year over year.
Playa Hotels & Resorts, together with its subsidiaries, owns, develops and operates resorts in prime beachfront locations in Mexico and the Caribbean. Shares of this Zacks Rank #2 company have gained 88.9% in the past year.
The fact that Mexico did not have any travel restrictions in place with respect to pre-flight COVID testing or mandatory quarantines for international tourists upon arrival is causing lesser consumer confusion compared with other destinations. Notably, this has helped sustain business confidence during the reopening phase.
Focus on direct booking channels enabled the company to ramp up occupancy faster than many third-party reliant competitors. The Zacks Consensus Estimate for its 2021 earnings has been revised 8.1% upward in the past 90 days. The consensus mark for its 2021 earnings indicates a rise of 37.7% year over year.
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