For Immediate Release
Chicago, IL – November 12, 2021 – Zacks Equity Research Shares of Donnelley Financial Solutions, Inc. (
DFIN Quick Quote DFIN - Free Report) as the Bull of the Day, Beyond Meat, Inc. ( BYND Quick Quote BYND - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Crocs, Inc. ( CROX Quick Quote CROX - Free Report) , Tri Pointe Homes, Inc. ( TPH Quick Quote TPH - Free Report) and Tractor Supply Company ( TSCO Quick Quote TSCO - Free Report) . Here is a synopsis of all five stocks:
When I am on the hunt for the “next big thing” I always start the same way. I look for stocks with consistent earnings growth over several quarters. Even better, if there was a downwards earnings trend that reversed and now is heading higher. It shows there has been a huge change to either the market or the individual company. It can lead to some serous gains if I can catch it before the rest of the market does.
One way to find these ideas is by using the Zacks Rank. Stocks in the good graces of the Zacks Rank have seen recent earnings estimate revisions coming from analysts. These positive revisions tell me the analysts know something I don’t, and perhaps the rest of the market does not know either.
Today’s Bull of the Day is a stock I found several months ago and is a success story. It’s
Donnelley Financial Solutions. Donnelley Financial Solutions is a leader in risk and compliance solutions, providing insightful technology, industry expertise and data insights to clients across the globe.
Donnelley Financial Solutions is a Zacks Rank #1 (Strong Buy). The reason for the favorable Zacks Rank is the positive earnings estimate revisions coming from analysts. Over the last thirty days, analysts have increased their estimates for the current quarter, current year and next year. The bullish sentiment has pushed up our Zacks Consensus Estimates for each of those time periods. Current quarter estimates are up from 79 cents to $1.26, current year is up from $4.07 to $5.12, while next year is up from $4.43 to $5.68. That current year number for Donnelley Financial Solutions represent year-over-year EPS growth of 147%. That is on revenue growth of just 10%.
A recent string of earnings beats for Donnelley Financial Solutions is forcing analysts to move their numbers higher. Last quarter’s $1.36 EPS number was 67% better than the 81-cent estimate. Over the last four quarters, Donnelley Financial Solutions has beat earnings by an average of 47 cents.
For several months, today’s Bear of the Day was one of the hottest stocks on Wall Street. Everybody was talking about how it was going to revolutionize the industry. In the future, that may still be true. However, right now, earnings are moving in the wrong direction. One way to figure that out is by looking at our Zacks Rank. The Zacks Rank helps find stocks with the strongest earnings trends. Stocks which are not in the good graces of the Zacks Rank have earnings which are moving in the opposite direction, to the downside.
Today’s Bear of the Day is a stock with earnings currently moving in the wrong direction. I’m talking about
Beyond Meat. Beyond Meat, Inc., a food company, manufactures, markets, and sells plant-based meat products in the United States and internationally. It operates under the Beyond Meat, Beyond Burger, Beyond Beef, Beyond Sausage, Beyond Breakfast Sausage, Beyond Chicken, Beyond Fried Chicken, Beyond Meatball, the Caped Steer Logo, Go Beyond, Eat What You Love, The Cookout Classic, The Future of Protein, and The Future of Protein Beyond Meat and design trademarks. The company sells its products through grocery, mass merchandiser, club, convenience store, natural retailer channels, restaurants, foodservice outlets, and schools, as well as through an e-commerce site.
Currently, Beyond Meat is a Zacks Rank #5 (Strong Sell). The reason for the unfavorable rank is the series of negative earnings estimate revisions coming from analysts. Over the last thirty day, four analysts have cut their earnings estimates for the current year while five have done so for next year. The bearish moves have dropped the Zacks Consensus Estimates for Beyond Meat’s current year from a $1.17-per-share loss to a $1.52 loss. Next year’s number is off from a 54-cent loss to 99-cents.
Beyond Meat has a history of disappointing earnings reports. Over the last year, Beyond Meat has missed earnings by an average of 21-cents. Last quarter’s 87-cent loss was 46 cents worse-than-expected.
That being said, Beyond Meat still has very strong growth in both EPS and revenues. Next year, earnings are expected to grow 34.9%. Revenue growth is more impressive though, with current year growth at 23.13% and next year at 44.87% growth.
The Food – Meat Products industry is in the Top 12% of our Zacks Industry Rank. Several other names in the industry are in the good graces of our Zacks Rank.
Additional content: 3 Growth Stocks with a Zacks Rank #1 (Strong Buy)
What an amazing start to November! A ‘goldilocks’ jobs report, a taper announcement and passage of a $1.2 Trillion infrastructure package. And amid all this, investors enjoyed a solid earnings season that reassured nervous investors at a time of soaring inflation and severe global supply chain issues.
Oh, and the major indices started the month with a solid week of new highs. There may never be a better time to take a look at the
screen. Zacks #1 Rank Growth Stocks
In addition to a Strong Buy ranking, this strategy also looks for stocks with a minimum 20% historical growth EPS rate and a 20% or more projected growth rate. We’re looking for big growth in the past and the present that will lead to big growth in the future.
Below are three names that recently passed the test for this screen:
Crocs fell victim to the globe’s severe supply chain issues just like most other retailers, but this popular footwear brand proved to be as durable and flexible as its iconic clogs and sandals. Despite the challenges, CROX continues to beat earnings estimates and also raised its revenue growth forecast for fiscal 2021.
If you don’t own a pair of Crocs yourself, then you certainly know someone who does. It's one of the leading footwear brands in the world and is famous for its clog material dubbed Croslite. The wide variety of footwear products include sandals, wedges, flips and more that cater to people of all ages. As part of the textile – apparel space, CROX is in the top 20% of the Zacks Industry Rank. Shares are up more than 180% so far this year.
The third quarter saw earnings per share of $2.47, which beat the Zacks Consensus Estimate by 30%. In addition to being the sixth straight positive surprise, the result also marks the 14th outperformance in the past 15 quarters. (You can probably guess why it had a rare miss in April of 2020.)
Revenue of $625.9 million was a record, and also increased 73% year over year while topping the Zacks Consensus Estimate by 1.7%. Business was strong in all regions.
Its Vietnamese factory felt the pinch from severe global supply chain issues, which led to closures and disruptions in the global supply chain. However, CROX confronted the problem and made moves to weather this storm, including shifting production to other areas, improving its factory throughput, leveraging air freight and strategically allocating units. These actions appear to be successful, as evidenced by the short and long-term goals.
In fact, the company has been so agile in unprecedented circumstances that it now sees revenue growth between 62% and 65% this year, compared to an earlier forecast of 60% to 65%. Furthermore, adjusted operating margin is now expected around 28%, instead of the prior outlook of 25% and fiscal 2020’s 18.9%.
Analysts are impressed with CROX and its successful efforts to combat current challenges. The Zacks Consensus Estimate for this year is up 11.9% over the past 60 days to $7.59, while next year climbed nearly 20% in that time to $9.38. Most impressively though, analysts currently expect year-over-year improvement of 23.6%.
Tri Pointe Homes
No growth screen would be complete without knocking on the door of the homebuilders. This space enjoyed an enviable combination of surging demand (due to historically-low rates and millennial interest) along with a glut in supply (due to that pandemic). The building products – home builders space is still in the top 30% of the Zacks Industry Rank.
And one of the few companies from that space with Zacks Rank #1 (Strong Buy) status is Tri Pointe, which builds premium homes and communities in 10 states. Shares are up 45% so far in 2021 with ten straight quarters of positive earnings surprises. Strong revenue growth and margin expansion led to a solid third-quarter report late last month.
Earnings per share of $1.17 topped the Zacks Consensus Estimate by more than 31% and brought the four-quarter average surprise to nearly 32%. Home sales revenue of over $1 billion improved 25% from last year and also beat our expectations. Even with the supply chain issues, TPH managed to increase deliveries by an impressive 25%.
Even with the pandemic losing its grip and people getting ready to resume normal lives, the future looks pretty good for TPH. The company still enjoys a robust backlog, healthy demand outlook and a strong balance sheet. These demand drivers should continue even as we leave Covid behind, as millennials have discovered the benefits of owning a home.
As a result, deliveries for the full year are expected between 6,000 and 6300 with an average sales price of $635K to $640K.
Analysts have boosted their forecasts for this year... and for next. The Zacks Consensus Estimate for 2021 is now $3.91, which is up 8% in 30 days. The 2022 estimate is now up to $4.29, marking a rise of 8.6% since the report and suggesting year-over-year improvement of nearly 10%.
Tractor Supply Company
It seems fitting that Tractor Supply would be in a growth screen like this one. Not only does the company sell products to farmers and ranchers, but the raised forecast for 2021 also shows plenty of growth in the future.
TSCO is the largest retail farm and ranch store in the country, operating more than 1900 Tractor Supply stores across 49 states (as of Sep 25, 2021). The company focuses on recreational farmers and ranchers, as well as tradespeople and small businesses. It offers a wide array of merchandise such as livestock, pet and animal products, maintenance products for agricultural and rural use, hardware and tools, lawn and garden power equipment, truck and towing products, and work apparel.
Shares are up approximately 60% so far this year after seven straight quarters of positive surprises. The company decided to raise its outlook for the full year despite “unprecedented pressures across our supply chain”. The “Life Out Here” strategy, detailed in late October 2020, appears to be bearing fruit. This plan to drive sustainable growth focuses on the five pillars of customers, digitization, execution, team members and total shareholder return.
TSCO reported third-quarter earnings per share of $1.95, which beat the Zacks Consensus Estimate by more than 18%. The four-quarter average beat is now up to 22.8%. Net sales of $3.02 billion jumped 15.8% from last year and eclipsed our expectation by over 5%. Comparable store sales grew by 13.1%, marking six straight quarters of double-digits for this metric.
The company says business has “never been stronger” and that growth continues to be “robust”. This optimism was underscored when expectations for 2021 were raised. TSCO now expects net sales of $12.6 billion, instead of $12.1 billion to $12.3 billion. Furthermore, earnings per share are now seen between $8.40 and $8.50, rather than $7.70 to $8.
Analysts responded by boosting their own expectations. The Zacks Consensus Estimate for this year is now $8.51, which is up 8% over the past 60 days. The forecast for next year is $8.55, marking a 6% gain in that time and a slight improvement over the previous year with plenty of time to rise further.
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