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Cross Country Healthcare and AeroVironment have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – December 13, 2021 – Zacks Equity Research shares Cross Country Healthcare (CCRN - Free Report) as the Bull of the Day, and AeroVironment (AVAV - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America (BAC - Free Report) , East West Bancorp, Inc. (EWBC - Free Report) and Western Alliance Bank (WAL - Free Report) .
Cross Country Healthcare is a Zacks Rank #1 (Strong Buy) that sports a D for Value and F for Growth. Normally, I want to see a strong growth style score and weak value style score as that will tell me that I am on the right path. CCRN probably should have an A for Value and an A for Growth. The company reported earnings last month so let’s take a deeper look at this stock in this Bull of the Day article.
Description
Cross Country Healthcare provides healthcare workforce solutions and staffing services. Their diverse client base includes both clinical and nonclinical settings, servicing acute care hospitals, physician practice groups, outpatient and ambulatory-care centers, nursing facilities. They are able to place clinicians on travel and per diem assignments, local short-term contracts and permanent positions. The company was founded in 1986 and its corporate headquarters are in Boca Raton, FL.
Earnings History
When I look at a stock, the first thing I do 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 communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For CCRN, 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 75%, so the beats are pretty big.
Earnings Estimates Revisions
The Zacks Rank tells us which stocks are seeing earnings estimates move higher. For CCRN, I see annual estimates moving higher.
Over the last 60 days, I see a few increases.
This quarter has increased from $0.20 to $1.09.
Next quarter has also seen a large increase from $0.14 to $0.41.
The full year 2021 has moved from $1.59 to $2.76.
Next year has seen an increase from $0.80 to $1.56.
Positive movement in earnings estimates like that is why this stock is a Zacks Rank #1 (Strong Buy).
Valuation
The forward earnings multiple for CCRN checks in at 9x, which is extremely low given topline growth last quarter came in at 93%. The price to book multiple is 4.4x, and that is just a little over where value investors would get excited as they like a book multiple of 3x or lower. The price-to-sales multiple checks in at 0.7x.
Margins have moved higher for this stock over the last three quarters and that, coupled with topline growth, is fueling higher earnings estimates. I see operating margins moving from 4.04% to 4.69% and then to 5.48% over the last three quarters.
AeroVironment is a Zacks Rank #5 (Strong Sell) despite beating the Zacks Consensus Estimate in each of the last four quarters. You don’t often see a stock that has beaten the number as consistently as AVAV fall to a Zacks Rank #5 (Strong Sell) so let’s take a look at why that is the case in this Bear of the Day article.
Description
AeroVironment, Inc makes and services drones for government agencies, businesses and consumers. It operates through two segments: Unmanned Aircraft Systems, which focuses primarily on the design, development, production, support and operation of UAS and tactical missile systems that provide situational awareness, multi-band communications, force protection and other mission effects, and Efficient Energy Systems, which focuses primarily on the design, development, production, support and operation of electric energy systems.
Earnings History
When I look at a stock, the first thing I do 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 communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of AVAV, I see four straight beats of the Zacks Consensus Estimate over the last year. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
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 AVAV I see estimates moving lower.
This quarter fell from $0.79 to $0.36.
Next quarter dropped from $1.30 to $0.37.
The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is mixed for those numbers.
The current fiscal year 2022 consensus number has been just about cut in half from $2.60 to $1.33.
The next fiscal year 2023 number has dropped from $3.09 to $1.67 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a majority of stocks in the Zacks universe are seeing positive earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
Additional content:
3 Bank Stocks to Consider for 2022
All eyes are on the Federal Reserve, as the two-day FOMC policy meeting is scheduled on Dec 14-15. There have been increasing speculations among market participants that the central bank’s monetary policy stance will likely turn a bit more hawkish.
This, along with subsiding COVID Omicron variant fears, has turned the tide in favor of banks. Today, we are choosing three bank stocks – Bank of America, East West Bancorp, Inc. and Western Alliance Bank. These banks are fundamentally strong and will benefit from robust economic growth, rising loan demand and higher interest rates.
Effective November, the Fed began tapering its $120-billion bond purchase program, with plans to end the quantitative easing in June 2022. Subsequently, the first interest rate hike since March 2020 wasn’t expected before the second half of next year.
Nonetheless, on Nov 30, in his testimony before a Senate committee, Fed Chairman Jerome Powell said, “At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner.” Powell also got rid of his long-used “inflation is transitory” remark.
Thus, this will allow the central bank to raise rates earlier. Per the CME FedWatch Tool data, at present, there is an 80.8% probability that the Fed will move ahead with a 25 basis points (bps) interest rate hike in June 2022. Further, market participants anticipate two more rate increases of 25 bps each following the June hike.
Banks thrive in the rising rate environment. Thus, banks, witnessing shrinking net interest margin and net interest income (NII) since March 2020, are expected to benefit. Improving the economy, increase in demand for loans and efforts to diversify operations will also support banks’ financial performance, going forward.
Our Picks
On the back of these favorable developments, this is the right time to buy bank stocks to generate solid returns in 2022 and beyond.
Short-listed banks have a long-term (three-five years) earnings growth rate of 5% or more, and a market cap of not less than $10 billion. Also, all three banks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
So far this year, these banks have outperformed both Zacks Finance sector’s rally of 21.1% and the S&P 500 Index gain of 26.2%.
Bank of America is one of the largest banks in the United States. With total assets worth $3.09 trillion as of Sep 30, 2021, this Charlotte, NC-based bank provides a diverse range of banking and non-banking financial services and products across North America and globally.
BAC is on track to open 500 centers in new cities and redesign existing centers with upgraded technology. These efforts, along with the success of Zelle and Erica, have enabled the company to improve digital offerings and cross-sell products. The acquisition of Axia Technologies will strengthen its healthcare payments business.
The company is also massively benefiting from the global deal-making frenzy. With deal-making and underwriting businesses likely to continue at a robust pace and the investment banking (IB) pipeline remaining strong, BAC is expected to record steady growth in IB fees.
Prudent cost management continues to support BAC’s financials. Over the last several quarters, Bank of America has incurred on an average $14 billion in expenses, despite undertaking strategic growth initiatives.
In July 2021, following the Fed’s approval, Bank of America announced a dividend hike of 17% to 21 cents per share. In October, its share repurchase plan of $25 billion was also renewed.
With a market cap of $361.4 billion, Bank of America’s efforts to improve revenues, strong balance sheet and expansion into new markets will aid financials. The stock has gained 46.8% so far this year. BAC’s long-term projected earnings growth rate of 7% promises rewards for shareholders.
Headquartered in Pasadena, CA, East West Bancorp serves as a financial bridge between the United States and China by providing various consumer and commercial banking services to the Asian-American community. EWBC operates through more than 120 locations in the United States and China.
East West Bancorp is focused on its organic growth strategy. Though the company’s NII, which is the primary source of its revenues, declined in 2020, the same witnessed a CAGR of 5.1% over the last four years (2017-2020). The momentum persisted in the first nine months of 2021 as well. Improvement in loans and deposits is expected to further support NII.
East West Bancorp has a solid balance sheet. Also, investment-grade credit ratings of BBB and a stable outlook from both S&P and Fitch Ratings render EWBC favorable access to the debt markets.
East West Bancorp’s capital deployment activities seem impressive. This January, the company hiked its quarterly dividend by 20% to 33 cents per share. EWBC also has a share repurchase plan in place. As of Sep 30, 2021, $354.1 million worth of shares were left to be repurchased under the buyback plan.
Growth in loans and deposits, along with a strong balance sheet position, is likely to keep supporting East West Bancorp’s financials. The stock, with a market cap of $11.1 billion, has jumped 54.6% in the year-to-date period. EWBC’s long-term projected earnings growth rate of 10% promises rewards for shareholders.
Western Alliance, based in Phoenix, AZ, provides a wide range of deposit, lending, treasury management, international banking and online banking products and services. As of Sep 30, 2021, WAL had $48.3 billion in total assets, $34.6 billion in net loans held for investments and $45.3 million in total deposits.
Western Alliance has been witnessing a steady improvement in revenues. Over the last five years, the top line recorded a CAGR of 15.3%, with the uptrend continuing in the first three quarters of 2021. Rising loans and deposit balance, efforts to strengthen fee income sources and an improving economy will aid revenues in the upcoming quarters.
The company has been growing through strategic acquisitions too. In April, Western Alliance closed the previously announced buyout of Aris Mortgage Holding Company, LLC for total consideration of nearly $1.22 billion. The acquisition complements the company’s national commercial businesses and expands its mortgage-related offerings. This also diversifies WAL’s revenue mix by expanding sources of non-interest income.
WAL’s capital deployment activities seem impressive. During the third quarter 2021, the company hiked its quarterly dividend by 40% to 35 cents per share. This was the first dividend hike by the company since it started paying the same from August 2019.
The stock, with a market cap of $11.2 billion, has surged 79.4% so far this year. WAL’s long-term projected earnings growth rate of 26.7% promises rewards for shareholders.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Cross Country Healthcare and AeroVironment have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – December 13, 2021 – Zacks Equity Research shares Cross Country Healthcare (CCRN - Free Report) as the Bull of the Day, and AeroVironment (AVAV - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America (BAC - Free Report) , East West Bancorp, Inc. (EWBC - Free Report) and Western Alliance Bank (WAL - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Cross Country Healthcare is a Zacks Rank #1 (Strong Buy) that sports a D for Value and F for Growth. Normally, I want to see a strong growth style score and weak value style score as that will tell me that I am on the right path. CCRN probably should have an A for Value and an A for Growth. The company reported earnings last month so let’s take a deeper look at this stock in this Bull of the Day article.
Description
Cross Country Healthcare provides healthcare workforce solutions and staffing services. Their diverse client base includes both clinical and nonclinical settings, servicing acute care hospitals, physician practice groups, outpatient and ambulatory-care centers, nursing facilities. They are able to place clinicians on travel and per diem assignments, local short-term contracts and permanent positions. The company was founded in 1986 and its corporate headquarters are in Boca Raton, FL.
Earnings History
When I look at a stock, the first thing I do 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 communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For CCRN, 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 75%, so the beats are pretty big.
Earnings Estimates Revisions
The Zacks Rank tells us which stocks are seeing earnings estimates move higher. For CCRN, I see annual estimates moving higher.
Over the last 60 days, I see a few increases.
This quarter has increased from $0.20 to $1.09.
Next quarter has also seen a large increase from $0.14 to $0.41.
The full year 2021 has moved from $1.59 to $2.76.
Next year has seen an increase from $0.80 to $1.56.
Positive movement in earnings estimates like that is why this stock is a Zacks Rank #1 (Strong Buy).
Valuation
The forward earnings multiple for CCRN checks in at 9x, which is extremely low given topline growth last quarter came in at 93%. The price to book multiple is 4.4x, and that is just a little over where value investors would get excited as they like a book multiple of 3x or lower. The price-to-sales multiple checks in at 0.7x.
Margins have moved higher for this stock over the last three quarters and that, coupled with topline growth, is fueling higher earnings estimates. I see operating margins moving from 4.04% to 4.69% and then to 5.48% over the last three quarters.
Bear of the Day:
AeroVironment is a Zacks Rank #5 (Strong Sell) despite beating the Zacks Consensus Estimate in each of the last four quarters. You don’t often see a stock that has beaten the number as consistently as AVAV fall to a Zacks Rank #5 (Strong Sell) so let’s take a look at why that is the case in this Bear of the Day article.
Description
AeroVironment, Inc makes and services drones for government agencies, businesses and consumers. It operates through two segments: Unmanned Aircraft Systems, which focuses primarily on the design, development, production, support and operation of UAS and tactical missile systems that provide situational awareness, multi-band communications, force protection and other mission effects, and Efficient Energy Systems, which focuses primarily on the design, development, production, support and operation of electric energy systems.
Earnings History
When I look at a stock, the first thing I do 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 communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of AVAV, I see four straight beats of the Zacks Consensus Estimate over the last year. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
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 AVAV I see estimates moving lower.
This quarter fell from $0.79 to $0.36.
Next quarter dropped from $1.30 to $0.37.
The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is mixed for those numbers.
The current fiscal year 2022 consensus number has been just about cut in half from $2.60 to $1.33.
The next fiscal year 2023 number has dropped from $3.09 to $1.67 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a majority of stocks in the Zacks universe are seeing positive earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
Additional content:
3 Bank Stocks to Consider for 2022
All eyes are on the Federal Reserve, as the two-day FOMC policy meeting is scheduled on Dec 14-15. There have been increasing speculations among market participants that the central bank’s monetary policy stance will likely turn a bit more hawkish.
This, along with subsiding COVID Omicron variant fears, has turned the tide in favor of banks. Today, we are choosing three bank stocks – Bank of America, East West Bancorp, Inc. and Western Alliance Bank. These banks are fundamentally strong and will benefit from robust economic growth, rising loan demand and higher interest rates.
Effective November, the Fed began tapering its $120-billion bond purchase program, with plans to end the quantitative easing in June 2022. Subsequently, the first interest rate hike since March 2020 wasn’t expected before the second half of next year.
Nonetheless, on Nov 30, in his testimony before a Senate committee, Fed Chairman Jerome Powell said, “At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner.” Powell also got rid of his long-used “inflation is transitory” remark.
Thus, this will allow the central bank to raise rates earlier. Per the CME FedWatch Tool data, at present, there is an 80.8% probability that the Fed will move ahead with a 25 basis points (bps) interest rate hike in June 2022. Further, market participants anticipate two more rate increases of 25 bps each following the June hike.
Banks thrive in the rising rate environment. Thus, banks, witnessing shrinking net interest margin and net interest income (NII) since March 2020, are expected to benefit. Improving the economy, increase in demand for loans and efforts to diversify operations will also support banks’ financial performance, going forward.
Our Picks
On the back of these favorable developments, this is the right time to buy bank stocks to generate solid returns in 2022 and beyond.
Short-listed banks have a long-term (three-five years) earnings growth rate of 5% or more, and a market cap of not less than $10 billion. Also, all three banks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
So far this year, these banks have outperformed both Zacks Finance sector’s rally of 21.1% and the S&P 500 Index gain of 26.2%.
Bank of America is one of the largest banks in the United States. With total assets worth $3.09 trillion as of Sep 30, 2021, this Charlotte, NC-based bank provides a diverse range of banking and non-banking financial services and products across North America and globally.
BAC is on track to open 500 centers in new cities and redesign existing centers with upgraded technology. These efforts, along with the success of Zelle and Erica, have enabled the company to improve digital offerings and cross-sell products. The acquisition of Axia Technologies will strengthen its healthcare payments business.
The company is also massively benefiting from the global deal-making frenzy. With deal-making and underwriting businesses likely to continue at a robust pace and the investment banking (IB) pipeline remaining strong, BAC is expected to record steady growth in IB fees.
Prudent cost management continues to support BAC’s financials. Over the last several quarters, Bank of America has incurred on an average $14 billion in expenses, despite undertaking strategic growth initiatives.
In July 2021, following the Fed’s approval, Bank of America announced a dividend hike of 17% to 21 cents per share. In October, its share repurchase plan of $25 billion was also renewed.
With a market cap of $361.4 billion, Bank of America’s efforts to improve revenues, strong balance sheet and expansion into new markets will aid financials. The stock has gained 46.8% so far this year. BAC’s long-term projected earnings growth rate of 7% promises rewards for shareholders.
Headquartered in Pasadena, CA, East West Bancorp serves as a financial bridge between the United States and China by providing various consumer and commercial banking services to the Asian-American community. EWBC operates through more than 120 locations in the United States and China.
East West Bancorp is focused on its organic growth strategy. Though the company’s NII, which is the primary source of its revenues, declined in 2020, the same witnessed a CAGR of 5.1% over the last four years (2017-2020). The momentum persisted in the first nine months of 2021 as well. Improvement in loans and deposits is expected to further support NII.
East West Bancorp has a solid balance sheet. Also, investment-grade credit ratings of BBB and a stable outlook from both S&P and Fitch Ratings render EWBC favorable access to the debt markets.
East West Bancorp’s capital deployment activities seem impressive. This January, the company hiked its quarterly dividend by 20% to 33 cents per share. EWBC also has a share repurchase plan in place. As of Sep 30, 2021, $354.1 million worth of shares were left to be repurchased under the buyback plan.
Growth in loans and deposits, along with a strong balance sheet position, is likely to keep supporting East West Bancorp’s financials. The stock, with a market cap of $11.1 billion, has jumped 54.6% in the year-to-date period. EWBC’s long-term projected earnings growth rate of 10% promises rewards for shareholders.
Western Alliance, based in Phoenix, AZ, provides a wide range of deposit, lending, treasury management, international banking and online banking products and services. As of Sep 30, 2021, WAL had $48.3 billion in total assets, $34.6 billion in net loans held for investments and $45.3 million in total deposits.
Western Alliance has been witnessing a steady improvement in revenues. Over the last five years, the top line recorded a CAGR of 15.3%, with the uptrend continuing in the first three quarters of 2021. Rising loans and deposit balance, efforts to strengthen fee income sources and an improving economy will aid revenues in the upcoming quarters.
The company has been growing through strategic acquisitions too. In April, Western Alliance closed the previously announced buyout of Aris Mortgage Holding Company, LLC for total consideration of nearly $1.22 billion. The acquisition complements the company’s national commercial businesses and expands its mortgage-related offerings. This also diversifies WAL’s revenue mix by expanding sources of non-interest income.
WAL’s capital deployment activities seem impressive. During the third quarter 2021, the company hiked its quarterly dividend by 40% to 35 cents per share. This was the first dividend hike by the company since it started paying the same from August 2019.
The stock, with a market cap of $11.2 billion, has surged 79.4% so far this year. WAL’s long-term projected earnings growth rate of 26.7% promises rewards for shareholders.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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Zacks Investment Research
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https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.