For Immediate Release
Chicago, IL – June 14, 2022 – Zacks Equity Research shares Dell Technologies (
DELL Quick Quote DELL - Free Report) as the Bull of the Day and American Eagle Outfitters Inc. ( AEO Quick Quote AEO - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Enphase Energy ( ENPH Quick Quote ENPH - Free Report) , SunPower ( SPWR Quick Quote SPWR - Free Report) and First Solar ( FSLR Quick Quote FSLR - Free Report) .
Here is a synopsis of all five stocks:
Dell Technologies is a provider of information technology solutions. The company's operating segments include Client Solutions, Enterprise Solutions Group, and Dell Software Group. Segment Breakdown
The company's Client Solutions segment includes sales to commercial and consumer customers of desktops, thin client products, notebooks, and third-party software and peripherals of Client Solutions Hardware.
Dell's Enterprise Solutions Group includes servers, networking, storage, services, third-party software, and peripherals of ESG hardware.
The Dell Software Group segment includes systems management, security software solutions, and information management software offerings.
Shares have held up relatively well year-to-date, declining approximately 15% and outperforming the general market by a small margin.
Over the last year, the picture remains the same – DELL shares have marginally outperformed the S&P 500.
The company's share performance is inspiring – many companies have witnessed deep double-digit valuation slashes throughout 2022. Additionally, the share performance tells us that shares have provided investors with a valuable blend of defense.
Quarterly Performance & Valuation
Dell has consistently reported strong quarterly results, exceeding bottom-line estimates in eight of its last ten quarters. Over the last four quarters, the information technology solutions provider has beat on the bottom line by 8% on average, and in its latest quarterly report, DELL crushed bottom-line estimates by a sizable 33%.
The company sports an enticingly low 8.2X forward earnings multiple, nowhere near 2018 highs of 17.5X and nicely below the five-year median of 10.0X. Furthermore, the value represents a deep 53% discount relative to the S&P 500's forward P/E ratio of 17.4X.
DELL sports a Style Score of an A for Value.
Analysts have been positively revising their quarterly estimates over the last 60 days, undoubtedly a major positive and a reason the company sports the highly-coveted Zacks Rank #1 (Strong Buy). For the current fiscal year, the Consensus Estimate Trend has increased by a notable 6%, reflecting full-year earnings of $7.04 per share – a sizable 14% year-over-year increase.
Additionally, looking forward, the $7.62 EPS estimate for the next fiscal year has DELL increasing its earnings by a respectable 8.2% year-over-year.
Looking at sales, the $107 billion revenue estimate for FY23 displays a marginal 0.3% expansion in the top line, and in FY24, the $108 billion estimate reflects an additional 1.5% growth in revenue.
Dell Technologies rewards its shareholders via its 2.7% annual dividend yield with a sustainable payout ratio of 17% of earnings. The annual yield is much higher than the S&P 500's yield of 1.5%, and the company has increased its dividend once over the past five years.
Dividends are a significant boost to any portfolio, providing a stream of income that can alleviate drawdowns within a portfolio.
One of the best ways investors can find expected winners within the market is by utilizing the Zacks Rank – one of the most potent market tools out there. A portfolio consisting of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 31 years with an average annual return of 25%.
Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Dell Technologies would be an excellent bet for investors looking to add a solid stock to their portfolios, as displayed by its Zack Rank #1 (Strong Buy).
American Eagle Outfitters Inc. is a specialty retailer of casual apparel, accessories, outerwear, and footwear for men and women. It, along with its subsidiaries, engages in the designing and marketing of casual clothing. Share Performance
Year-to-date, AEO shares have pulled back significantly, declining by a jaw-dropping 52% and coming nowhere close to the S&P 500's performance.
Stretching out the time frame to over the past year, the story remains the same – AEO shares have been stuck in a deep downtrend throughout the period, losing nearly 65% of their value and underperforming the S&P 500 extensively.
This clothing retailer's poor share performance is just the first red flag.
AEO has struggled to chain together EPS beats as of late, missing bottom line estimates by a very concerning 33% in its latest quarter. Additionally, quarterly revenue results leave something to be desired – AEO has beaten top line estimates just five times out of its ten last quarters, undoubtedly a sign that the company has struggled.
Analysts have been negatively revising their earnings estimates across the board over the last 60 days, with nearly a 100% agreement revision percentage across all time frames.
For the upcoming quarter, the Consensus Estimate Trend has fallen by a double-digit 58%, reflecting EPS of $0.17 and a nasty 71% decline in earnings from the year-ago quarter.
Current fiscal year estimates also raise a red flag; the $1.32 EPS estimate displays a sizable 40% decrease in earnings year-over-year.
AEO shares have been the victim of a deep double-digit valuation slash over the last year. This, paired with negative estimate revisions and weak revenue results, undoubtedly paints a grim picture for the company within the short term.
The company is a Zacks Rank #5 (Strong Sell) and a stock that investors will be better off staying away from for now. Instead, investors should pivot to stocks that either carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) – the odds of reaping considerable gains are much higher within the companies that carry these ranks.
Additional content: Biden Invokes DPA, Halts Import Tariff: 3 Solar Stocks to Gain
U.S. solar stocks are likely to shine brightly in the days ahead, following the recent actions taken by the Biden administration in favor of the solar industry. In particular, the White House has decided to waive off any potential new tariffs on solar panels from four Southeast Asian nations for two years to boost solar installation at an affordable price.
Further, to accelerate the domestic production of clean energy technologies, including solar panel parts, Biden recently invoked the Defense Production Act ("DPA").
Such strategies bode well for the U.S. solar industry's growth trajectory. This puts the spotlight on major industry participants like
Enphase Energy, SunPower and First Solar, which are well-poised to rejuvenate amid the current reforms. How Will the U.S. Solar Industry Benefit?
The recent authorization by the U.S. President to use DPA will enable the Department of Energy to rapidly expand the American manufacturing of five critical clean energy technologies, mainly solar panel parts, building insulation, heat pumps, equipment like fuel cells and electrolyzers and power grid infrastructure.
Moreover, as the DPA declaration empowers the government to induce funds for the domestic production of solar components, it will reduce the dependence of the nation on the imports of solar components and parts. This, in turn, will further ease supply-chain susceptibility and boost the top-line growth of U.S.-based solar panel manufacturers.
Further, considering that the U.S. solar industry relies heavily on Southeast Asian countries for the supply of solar modules, by waiving off potential tariffs on solar components, Biden aims to lower the cost of components and ease the supply of solar components at present.
Of late, the U.S. solar industry has been encountering pandemic-induced supply-chain vulnerabilities and a high cost of components amid soaring inflation. Against this backdrop, actions taken by the Biden-led government would help America duly achieve its target of tripling the domestic solar manufacturing capacity by 2024.
Stocks to Gain
In light of the aforementioned factors, U.S.-based solar stocks that investors should keep in their watchlist are:
Enphase Energy: Enphase enjoys a strong position as a leading U.S. manufacturer of microinverters and has a valuable position in manufacturing fully integrated solar-plus-storage solutions.
In the first quarter of 2022, Enphase's revenues from the United States improved a solid 49% on a year-over-year basis. To further expand its market in America's solar industry, ENPH acquired SolarLeadFactory, which provides high-quality leads for solar installers in the United States, in March 2022.
SunPower: SunPower designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers.
SunPower added 16,500 customers in the first quarter of 2022, reflecting growth of 40% year over year. SPWR expects its residential customer volume to grow by more than 35% in 2022 over 2021.
First Solar: First Solar is a leading global provider of comprehensive PV solar energy solutions and specializes in designing, manufacturing and selling solar electric power modules.
In 2021, First Solar announced plans to expand its manufacturing capacity by 6.6 Gigawatt (GW) by constructing its third manufacturing facility in the United States and first manufacturing facility in India. Such capacity expansion will enable FSLR to maintain its position as the largest U.S. solar module manufacturer.
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