We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tyson Foods and Ambarella have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – March 24, 2022 – Zacks Equity Research shares Tyson Foods Inc. (TSN - Free Report) as the Bull of the Day and Ambarella Inc. (AMBA - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on KB Home (KBH - Free Report) .
Tyson Foods Inc. is one of the biggest U.S. food companies, producing, distributing, and marketing chicken, beef, pork, and other prepared foods. The company's products are marketed and sold primarily by sales staff to grocery retailers, grocery wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors. Tyson's brand portfolio includes Tyson, Jimmy Dean, and Hillshire Farm, among many others.
Q1 Earnings Impress Wall Street
Total sales rose 24% year-over-year to $12.9 billion, while adjusted operating income shot up 40% to $1.4 billion. Adjusted earnings per share climbed 48% to $2.87, easily beating the Zacks Consensus Estimate of $1.90.
Overall, the company's gains were driven by price increases, and on average, prices for Tyson's beef, chicken, and pork products increased 31.7%, 19.9%, and 12.8%, respectively.
Like many other businesses, Tyson said it hiked prices to offset rising expenses. The supply chain crisis, coupled with a tight labor market, led to higher wages, shipping costs, and animal feed prices.
"We're pleased with the results of the first quarter and of the steps that we are taking to improve productivity," CEO Donnie King said in a press release. "Our performance reflects the resilience of our multi-protein portfolio even with continued volatility in the marketplace."
Despite rising expenses and other challenges, Tyson's impressive profit growth showed that the company was able to successfully navigate a difficult market environment to kick off its first quarter on a high note.
Wall Street agreed, and shares spiked over 12% following the Q1 report to close at a record high of $99.09 per share.
Can TSN Surge Higher?
Over the past six months, shares of Tyson are up about 13.6% compared to the S&P 500's 1.4% return. Earnings estimates have been rising, and TSN is a Zacks Rank #1 (Strong Buy) right now.
For fiscal 2022, five analysts revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has jumped $1.55 to $8.74 per share. Earnings are expected to grow about 5.5% compared to 2021, and sales could see growth of 9.5% to $15.6 billion for the year.
Last quarter's strong results prompted management to issue an upbeat outlook for 2022. Tyson expects to generate as much as $51 billion in revenue for the year, which is in line with Zacks' estimates. Additionally, the company is now targeting $1 billion in total cost savings by the end of fiscal 2024, including up to $400 million in savings this year.
Tyson also boasts a solid dividend, with an annual yield of 2.1% and payout ratio of only 20%. This indicates the company has lots of room to keep growing its dividend and reward shareholders.
All of these factors, plus TSN's enticing 10X 12-month forward earnings multiple, could mean the stock could continue to churn higher. If you're an investor searching for a food stock to add to your portfolio, make sure to keep TSN on your shortlist.
Headquartered in Santa Clara, CA, Ambarella Inc. develops video compression and image processing semiconductors, which enables high-definition or HD video capture, share and display. Additionally, its products are used in creating video content for wearable sports cameras, automotive aftermarket cameras, and professional and consumer Internet Protocol (IP) security cameras.
AMBA Craters After Earnings
Similar to other tech earnings stories this season, key metrics for Ambarella's fiscal fourth quarter beat expectations, but guidance for the current quarter disappointed investors.
Revenue grew 45% year-over-year to $60.2 million, while earnings came to $0.45 per share, which beat analysts' estimates of $0.42 per share. Additionally, non-GAAP gross margin was 64.8% for Q4 compared to 61.4% in the prior-year quarter.
Ambarella ended the quarter with $171 million in total cash on hand as well.
The company's Q1 outlook was a letdown though. The chip maker forecasts revenue between $88.5 million to $91.5 million, but the midpoint of that range—$90 million—is below Wall Street's estimates of $90.9 million. Ambarella also anticipates that gross margin will contract from the fourth quarter to somewhere between 63% and 64%.
"We continue to face headwinds, including geopolitical, public health, and persistent supply chain challenges," said CEO Fermi Wang in the earnings press release. "Nevertheless," he continued, "we believe we are now decisively established in front of the positive AIoT [Artificial Intelligence of Things] secular trends."
Management may be confident going forward, but investors are much more cautious, demonstrated by the stock's 30% plunge after earnings.
Bottom Line
AMBA is a Zacks Rank #5 (Strong Sell).
Eight analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has dropped $0.13 to $1.74 per share. AMBA's earnings, however, are expected to grow around 8% for fiscal 2023, with revenue increasing 16.5% for the same period to $386.8 million.
While emotionally charged post-earnings selling often sets up the opportunity for a nice rebound, that hasn't been the case yet for AMBA. Shares have plummeted over 52% year-to-date compared to the S&P 500's decline of 6.5%.
High-flying tech growth stocks like AMBA are operating in a tough trading environment right now. Shares will likely remain highly volatile, especially with the war between Russia and Ukraine and plans for multiple interest rate hikes amid record high inflation. Additionally, AMBA still isn't cheap even after its recent steep stumble; shares currently trade for 9.2X 12-month forward expected sales.
Because of the current market conditions, AMBA may continue to experience some severe ups and downs, so investors may want to wait on the sidelines for now.
Additional content:
Markets Down Wednesday on Stagflation Concerns
After seeing disparate performances on the major indexes since the bounce-back from last week began, we see a nice, even disbursement of trading today — the only problem is, they're all uniformly down: the Dow -1.29%, the Nasdaq -1.32% and the S&P 500 -1.23%. Basically a rounding error between them, but now we're down two of the three days this week.
Raising interest rates — which the Fed started last week and will continue to do throughout this year and next — while inflation continues to climb, curbing demand as consumers adjust their appetites to coordinate with their pocketbooks, runs the risk of developing into a dreaded economic circumstance: stagflation. This is where what you've got stays pat while what you want grows ever more expensive. And that creates a breeding ground for an even worse word for the economy: recession.
Because the Fed waited until full employment came within striking distance — and with it, wage price increases, especially on the lower tiers of the American workforce, which the Fed would argue is a net positive — inflation was let off the chain, and still hasn't returned to the yard. Now, faster interest rate increases are becoming increasingly higher, and we are seeing unquestioned bearishness in the bond market. The Fed is also set to start draining $9 trillion in assets off its balance sheets in the coming meetings. Tightening is not only on the way, it's here.
Long-term, let's be clear, this is the only responsible move to make. Whether or not the Fed waited too long to taper asset purchases and begin raising rates (it did), now the objective is to keep employment levels at historically high rates while working to bring inflation under control. It will likely be more than a year or two before we're back at the optimum 2% inflation, but getting headed in that direction is the key here.
As mentioned earlier today in this column, the housing market has already seen some effects of this initial interest rate hike of 25 basis points (bps): as mortgage rates rise (the 30-year fixed is already up a whopping +44% year to date), this will eventually put a cap on home prices rising. Demand is still strong, but we may see a drop-off now that the music has stopped and the open chairs all have higher-priced mortgage rates attached to them.
New Home Sales for February — in other words, prior to interest rate hikes affecting the housing market — came in notably lower than expected: 777K versus 805K analysts were looking for, compared to a downwardly revised 788K the previous month. These are seasonally adjusted, annualized units, and basically dead-center with monthly averages over the past five years. But it would appear high prices have already put a crimp in the home-buying market, although this will be easier to ascertain with forthcoming data.
LA-based homebuilder KB Home reported Q1 earnings after the closing bell Wednesday, with disappointment coming from both top- and bottom-line results: $1.47 per share missed the $1.52 expected, on $1.40 billion in sales which was short of the $1.50 billion in the Zacks consensus. Revenues grew +23% year over year, but the company reports only its second earnings miss in the past five years. Shares are down -4% in late trading, now -16% year to date.
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Tyson Foods and Ambarella have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 24, 2022 – Zacks Equity Research shares Tyson Foods Inc. (TSN - Free Report) as the Bull of the Day and Ambarella Inc. (AMBA - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on KB Home (KBH - Free Report) .
Here is a synopsis of all three stocks:
Bull of the Day:
Tyson Foods Inc. is one of the biggest U.S. food companies, producing, distributing, and marketing chicken, beef, pork, and other prepared foods. The company's products are marketed and sold primarily by sales staff to grocery retailers, grocery wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors. Tyson's brand portfolio includes Tyson, Jimmy Dean, and Hillshire Farm, among many others.
Q1 Earnings Impress Wall Street
Total sales rose 24% year-over-year to $12.9 billion, while adjusted operating income shot up 40% to $1.4 billion. Adjusted earnings per share climbed 48% to $2.87, easily beating the Zacks Consensus Estimate of $1.90.
Overall, the company's gains were driven by price increases, and on average, prices for Tyson's beef, chicken, and pork products increased 31.7%, 19.9%, and 12.8%, respectively.
Like many other businesses, Tyson said it hiked prices to offset rising expenses. The supply chain crisis, coupled with a tight labor market, led to higher wages, shipping costs, and animal feed prices.
"We're pleased with the results of the first quarter and of the steps that we are taking to improve productivity," CEO Donnie King said in a press release. "Our performance reflects the resilience of our multi-protein portfolio even with continued volatility in the marketplace."
Despite rising expenses and other challenges, Tyson's impressive profit growth showed that the company was able to successfully navigate a difficult market environment to kick off its first quarter on a high note.
Wall Street agreed, and shares spiked over 12% following the Q1 report to close at a record high of $99.09 per share.
Can TSN Surge Higher?
Over the past six months, shares of Tyson are up about 13.6% compared to the S&P 500's 1.4% return. Earnings estimates have been rising, and TSN is a Zacks Rank #1 (Strong Buy) right now.
For fiscal 2022, five analysts revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has jumped $1.55 to $8.74 per share. Earnings are expected to grow about 5.5% compared to 2021, and sales could see growth of 9.5% to $15.6 billion for the year.
Last quarter's strong results prompted management to issue an upbeat outlook for 2022. Tyson expects to generate as much as $51 billion in revenue for the year, which is in line with Zacks' estimates. Additionally, the company is now targeting $1 billion in total cost savings by the end of fiscal 2024, including up to $400 million in savings this year.
Tyson also boasts a solid dividend, with an annual yield of 2.1% and payout ratio of only 20%. This indicates the company has lots of room to keep growing its dividend and reward shareholders.
All of these factors, plus TSN's enticing 10X 12-month forward earnings multiple, could mean the stock could continue to churn higher. If you're an investor searching for a food stock to add to your portfolio, make sure to keep TSN on your shortlist.
Bear of the Day:
Headquartered in Santa Clara, CA, Ambarella Inc. develops video compression and image processing semiconductors, which enables high-definition or HD video capture, share and display. Additionally, its products are used in creating video content for wearable sports cameras, automotive aftermarket cameras, and professional and consumer Internet Protocol (IP) security cameras.
AMBA Craters After Earnings
Similar to other tech earnings stories this season, key metrics for Ambarella's fiscal fourth quarter beat expectations, but guidance for the current quarter disappointed investors.
Revenue grew 45% year-over-year to $60.2 million, while earnings came to $0.45 per share, which beat analysts' estimates of $0.42 per share. Additionally, non-GAAP gross margin was 64.8% for Q4 compared to 61.4% in the prior-year quarter.
Ambarella ended the quarter with $171 million in total cash on hand as well.
The company's Q1 outlook was a letdown though. The chip maker forecasts revenue between $88.5 million to $91.5 million, but the midpoint of that range—$90 million—is below Wall Street's estimates of $90.9 million. Ambarella also anticipates that gross margin will contract from the fourth quarter to somewhere between 63% and 64%.
"We continue to face headwinds, including geopolitical, public health, and persistent supply chain challenges," said CEO Fermi Wang in the earnings press release. "Nevertheless," he continued, "we believe we are now decisively established in front of the positive AIoT [Artificial Intelligence of Things] secular trends."
Management may be confident going forward, but investors are much more cautious, demonstrated by the stock's 30% plunge after earnings.
Bottom Line
AMBA is a Zacks Rank #5 (Strong Sell).
Eight analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has dropped $0.13 to $1.74 per share. AMBA's earnings, however, are expected to grow around 8% for fiscal 2023, with revenue increasing 16.5% for the same period to $386.8 million.
While emotionally charged post-earnings selling often sets up the opportunity for a nice rebound, that hasn't been the case yet for AMBA. Shares have plummeted over 52% year-to-date compared to the S&P 500's decline of 6.5%.
High-flying tech growth stocks like AMBA are operating in a tough trading environment right now. Shares will likely remain highly volatile, especially with the war between Russia and Ukraine and plans for multiple interest rate hikes amid record high inflation. Additionally, AMBA still isn't cheap even after its recent steep stumble; shares currently trade for 9.2X 12-month forward expected sales.
Because of the current market conditions, AMBA may continue to experience some severe ups and downs, so investors may want to wait on the sidelines for now.
Additional content:
Markets Down Wednesday on Stagflation Concerns
After seeing disparate performances on the major indexes since the bounce-back from last week began, we see a nice, even disbursement of trading today — the only problem is, they're all uniformly down: the Dow -1.29%, the Nasdaq -1.32% and the S&P 500 -1.23%. Basically a rounding error between them, but now we're down two of the three days this week.
Raising interest rates — which the Fed started last week and will continue to do throughout this year and next — while inflation continues to climb, curbing demand as consumers adjust their appetites to coordinate with their pocketbooks, runs the risk of developing into a dreaded economic circumstance: stagflation. This is where what you've got stays pat while what you want grows ever more expensive. And that creates a breeding ground for an even worse word for the economy: recession.
Because the Fed waited until full employment came within striking distance — and with it, wage price increases, especially on the lower tiers of the American workforce, which the Fed would argue is a net positive — inflation was let off the chain, and still hasn't returned to the yard. Now, faster interest rate increases are becoming increasingly higher, and we are seeing unquestioned bearishness in the bond market. The Fed is also set to start draining $9 trillion in assets off its balance sheets in the coming meetings. Tightening is not only on the way, it's here.
Long-term, let's be clear, this is the only responsible move to make. Whether or not the Fed waited too long to taper asset purchases and begin raising rates (it did), now the objective is to keep employment levels at historically high rates while working to bring inflation under control. It will likely be more than a year or two before we're back at the optimum 2% inflation, but getting headed in that direction is the key here.
As mentioned earlier today in this column, the housing market has already seen some effects of this initial interest rate hike of 25 basis points (bps): as mortgage rates rise (the 30-year fixed is already up a whopping +44% year to date), this will eventually put a cap on home prices rising. Demand is still strong, but we may see a drop-off now that the music has stopped and the open chairs all have higher-priced mortgage rates attached to them.
New Home Sales for February — in other words, prior to interest rate hikes affecting the housing market — came in notably lower than expected: 777K versus 805K analysts were looking for, compared to a downwardly revised 788K the previous month. These are seasonally adjusted, annualized units, and basically dead-center with monthly averages over the past five years. But it would appear high prices have already put a crimp in the home-buying market, although this will be easier to ascertain with forthcoming data.
LA-based homebuilder KB Home reported Q1 earnings after the closing bell Wednesday, with disappointment coming from both top- and bottom-line results: $1.47 per share missed the $1.52 expected, on $1.40 billion in sales which was short of the $1.50 billion in the Zacks consensus. Revenues grew +23% year over year, but the company reports only its second earnings miss in the past five years. Shares are down -4% in late trading, now -16% year to date.
Questions or comments about this article and/or its author? Click here>>
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
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/performance for information about the performance numbers displayed in this press release.