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Lindsay and Terminix have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 30, 2022 – Zacks Equity Research shares Lindsay Corporation (LNN - Free Report) as the Bull of the Day and Terminix asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil (XOM - Free Report) , Marathon Petroleum (MPC - Free Report) and Chevron (CVX - Free Report) .
Lindsay Corporation, a Zacks Rank #1 (Strong Buy), is well-positioned to continue benefiting from higher agricultural commodity prices and improving farm income. The stock has recently broken out to 52-week highs while the general market remains in a deep correction. Only stocks that are in extremely powerful uptrends are able to weather bear markets so gracefully. The company's longevity and continued stock price ascent speak to management's ability to adapt to the ever-changing market landscape.
LNN is part of the Zacks Manufacturing – Farm Equipment industry, which is currently ranked in the top 37% of all Zacks Ranked Industries. This group has widely outperformed the market this year with a nearly 10% return year-to-date. It's no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market.
Quantitative research studies have shown that roughly half of a stock's price movement can be attributed to its industry group. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Lindsay Corp. provides water management and road infrastructure services and products globally. Its Irrigation segment manufactures and markets irrigations systems, chemical injection systems, soil moisture sensors, remote monitoring applications, and global positioning system (GPS) guidance. Lindsay is benefitting from increased selling prices and higher unit sales volumes in most international irrigation markets.
The company's Infrastructure segment provides moveable barrier systems that help in highway reconstruction, paving and resurfacing, road widening, and tunnel and bridge repairs. This segment is also benefiting from higher sales of road safety products and project revenues.
LNN serves departments of transportation, municipal transportation road agencies, roadway contractors, distributors, and dealers. Lindsay Corp. was founded in 1954 and is based in Omaha, NE.
Earnings Trends and Future Estimates
LNN has exceeded earnings estimates in each of the past four quarters, sporting a 25.57% average beat over this time frame. The company most recently announced fiscal Q3 earnings back in June of $2.28/share, a 45.22% beat over the $1.57 consensus estimate. Earnings in 2022 are expected to grow 44.07% year-over-year to $5.95/share, with sales increasing 34.68% to $764.5 million. The growth trends are expected to continue into 2023.
Analysts are in agreement in terms of earnings revisions and have raised estimates across the board. For the current quarter, estimates have been raised 110.26% in the past 60 days. The fiscal Q4 Zacks Consensus EPS Estimate now stands at $1.64/share, reflecting potential growth of 74.5% relative to the same quarter in the prior year.
Charting the Course
LNN shares have advanced nearly 8% on the year, all while the major indices continue to hover in a deep correction. The stock hit a 52-week high just a few days ago. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Lindsay Corp. has recently witnessed positive revisions. As long as this trend remains intact (and LNN continues to deliver earnings beats), the stock will likely continue its bullish run this year. With both strong fundamentals and technicals, LNN is poised to continue its dominance.
Bottom Line
Backed by a leading industry group and robust history of earnings beats, it's not difficult to see why this company is a compelling investment. Solid institutional buying should continue to provide a tailwind for the stock price.
A strong technical trend along with recent positive earnings estimate revisions should also serve to create a 'floor' regarding any sudden or unexpected downside moves. If you haven't already done so, make sure to put LNN on your shortlist.
Terminix provides residential and commercial termite and pest management services. The company offers termite remediation and prevention treatments including periodic pest management services, insulation services, crawlspace encapsulation, and disinfection. These offerings protect clients against termite damage, rodents, insects and other pests, as well as bed bugs.
Terminix markets its services to homeowners and businesses through digital marketing, TV and radio advertising, print advertising, marketing partnerships, door-to-door sales programs, telemarketing, and social media channels. TMX was founded in 1929 and is headquartered in Memphis, TN.
The Zacks Rundown
Formerly known as ServiceMaster Global Holdings, TMX is a Zacks Rank #5 (Strong Sell) stock. The company is a component of the Zacks Industrial Services industry, which currently ranks in the bottom 32% out of approximately 250 industries. This group has underperformed the S&P 500 with a nearly 20% decline year-to-date. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to continue to underperform the market over the next 3 to 6 months.
Candidates in the bottom tiers of industries can often be solid potential short candidates. While individual stocks have the ability to outperform even when included in a poor-performing industry group, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much tougher.
The stock topped out all the way back in January of 2021, well before the major indices. When a stock fails to gain ground along with the general market, it's telling us "I'm very weak." TMX represents a compelling short opportunity as the market continues its volatile pattern this year.
Recent Earnings and Deteriorating Forecasts
Earnings misses have been a sore spot for TMX during the past year. The pest control provider has fallen short of estimates in two of the past four quarters. TMX most recently reported Q2 EPS earlier this month of $0.02/share, missing the $0.44 consensus estimate by -95.45%.
TMX has posted an average earnings miss of -22.65% over the past four quarters. This is the type of negative trend that the bears like to see. When you're consistently missing earnings estimates by a wide margin, you're going to be fighting an uphill battle when it comes to the stock price.
Analysts covering the company are in agreement and have been revising earnings estimates downward as of late. For the current quarter, estimates have been slashed -10.87% over the past 60 days. The Q3 Zacks Consensus EPS Estimate now stands at $0.41/share, translating to zero growth relative to the same quarter last year – not exactly what the bulls are looking for.
Technical Outlook
TMX stock has been steadily falling since last year and has now established a well-defined downtrend. TMX has also formed an ominous head-and-shoulders pattern, highlighted by the purple parabolas. This pattern tends to precede large moves to the downside.
Even with the recent price declines, Terminix is still relatively overvalued, irrespective of the valuation metric used.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock is not set to print new highs anytime soon. The recent earnings misses in addition to deteriorating estimates are both huge red flags and need to be respected. These will likely serve as a ceiling to any potential rallies, nurturing the stock's downtrend.
TMX's characteristics have resulted in a worst-possible Zacks Momentum Style Score of 'F', indicating further downside is likely. The fact that TMX is included in a bottom-performing industry group simply adds to the growing list of concerns. Investors will want to steer clear of an overvalued TMX until the situation shows major signs of improvement, or possibly include it as part of a hedge or short strategy.
Additional content:
A Hawkish Fed Can't Burst Oil's Bubble
The Fed's resolute stand on battling inflation had the markets swooning Friday. But there was one bright spot.
The Fed intends to raise interest rates and keep them high until the inflation rate comes back down to the targeted sub-2% level. And it intends to do whatever it takes to get there. "Reducing inflation is likely to require a sustained period of below-trend growth," Powell said. It could also lead to a recession.
"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation," he said in no uncertain terms. "But a failure to restore price stability would mean far greater pain."
As may be expected, the markets didn't take the news well with the S&P, Dow and Nasdaq all dropping into the red.
Oil prices were the big surprise, despite the fact that higher interest rates and a slowing economy affects oil demand and consumption. A closer look at the WTI price chart shows an initial hiccup that was subsequently overcome for a day's range of $92.00 to $92.88.
Investors quickly weighed the impact of weaker growth in the U.S. against Saudi Arabia considering production cuts (also supported by several other OPEC members) earlier in the week and China's growth engine possibly recovering. Since Saudi Arabia is willing to maintain pricing at the cost of production cuts in the event that Iran's nuclear deal with the U.S. is done, it stands to reason that pricing will be maintained at these historical highs.
Even if the US economy hits pause. In any case, production hasn't been easy of late with militants continuing to disrupt activity in Libya, as well as certain issues in Kazakhstan.
As a result, the Energy sector, which has outperformed all others this year, continues on that path. Three oil stocks that have seen notable increase in their earnings estimates over the last 30 days are:
Exxon Mobil: The Zacks Rank #1 (Strong Buy) stock with Value, Growth and Momentum Scores of B, A and B, respectively, is seeing a lot of love from analysts. Its 2022 estimate is up 70 cents (5.8%) while the 2023 estimate is up 24 cents (2.4%).
Marathon Petroleum: The Zacks Rank #2 (Buy) stock has Value, Growth and Momentum Scores of A, A and C, respectively. Its 2022 estimate is up $1.72 (9.1%) and 2023 estimate up 51 cents (4.3%).
Chevron: Zacks Rank #3 ranked Chevron scores a B for Value but A for both Growth and Momentum. Its 2022 estimate is up 28 cents (1.6%) while the 2023 estimate is up 82 cents (5.0%).
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.
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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Lindsay and Terminix have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 30, 2022 – Zacks Equity Research shares Lindsay Corporation (LNN - Free Report) as the Bull of the Day and Terminix asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil (XOM - Free Report) , Marathon Petroleum (MPC - Free Report) and Chevron (CVX - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Lindsay Corporation, a Zacks Rank #1 (Strong Buy), is well-positioned to continue benefiting from higher agricultural commodity prices and improving farm income. The stock has recently broken out to 52-week highs while the general market remains in a deep correction. Only stocks that are in extremely powerful uptrends are able to weather bear markets so gracefully. The company's longevity and continued stock price ascent speak to management's ability to adapt to the ever-changing market landscape.
LNN is part of the Zacks Manufacturing – Farm Equipment industry, which is currently ranked in the top 37% of all Zacks Ranked Industries. This group has widely outperformed the market this year with a nearly 10% return year-to-date. It's no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market.
Quantitative research studies have shown that roughly half of a stock's price movement can be attributed to its industry group. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Lindsay Corp. provides water management and road infrastructure services and products globally. Its Irrigation segment manufactures and markets irrigations systems, chemical injection systems, soil moisture sensors, remote monitoring applications, and global positioning system (GPS) guidance. Lindsay is benefitting from increased selling prices and higher unit sales volumes in most international irrigation markets.
The company's Infrastructure segment provides moveable barrier systems that help in highway reconstruction, paving and resurfacing, road widening, and tunnel and bridge repairs. This segment is also benefiting from higher sales of road safety products and project revenues.
LNN serves departments of transportation, municipal transportation road agencies, roadway contractors, distributors, and dealers. Lindsay Corp. was founded in 1954 and is based in Omaha, NE.
Earnings Trends and Future Estimates
LNN has exceeded earnings estimates in each of the past four quarters, sporting a 25.57% average beat over this time frame. The company most recently announced fiscal Q3 earnings back in June of $2.28/share, a 45.22% beat over the $1.57 consensus estimate. Earnings in 2022 are expected to grow 44.07% year-over-year to $5.95/share, with sales increasing 34.68% to $764.5 million. The growth trends are expected to continue into 2023.
Analysts are in agreement in terms of earnings revisions and have raised estimates across the board. For the current quarter, estimates have been raised 110.26% in the past 60 days. The fiscal Q4 Zacks Consensus EPS Estimate now stands at $1.64/share, reflecting potential growth of 74.5% relative to the same quarter in the prior year.
Charting the Course
LNN shares have advanced nearly 8% on the year, all while the major indices continue to hover in a deep correction. The stock hit a 52-week high just a few days ago. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Lindsay Corp. has recently witnessed positive revisions. As long as this trend remains intact (and LNN continues to deliver earnings beats), the stock will likely continue its bullish run this year. With both strong fundamentals and technicals, LNN is poised to continue its dominance.
Bottom Line
Backed by a leading industry group and robust history of earnings beats, it's not difficult to see why this company is a compelling investment. Solid institutional buying should continue to provide a tailwind for the stock price.
A strong technical trend along with recent positive earnings estimate revisions should also serve to create a 'floor' regarding any sudden or unexpected downside moves. If you haven't already done so, make sure to put LNN on your shortlist.
Bear of the Day:
Terminix provides residential and commercial termite and pest management services. The company offers termite remediation and prevention treatments including periodic pest management services, insulation services, crawlspace encapsulation, and disinfection. These offerings protect clients against termite damage, rodents, insects and other pests, as well as bed bugs.
Terminix markets its services to homeowners and businesses through digital marketing, TV and radio advertising, print advertising, marketing partnerships, door-to-door sales programs, telemarketing, and social media channels. TMX was founded in 1929 and is headquartered in Memphis, TN.
The Zacks Rundown
Formerly known as ServiceMaster Global Holdings, TMX is a Zacks Rank #5 (Strong Sell) stock. The company is a component of the Zacks Industrial Services industry, which currently ranks in the bottom 32% out of approximately 250 industries. This group has underperformed the S&P 500 with a nearly 20% decline year-to-date. Because this industry is ranked in the bottom half of all Zacks Ranked Industries, we expect it to continue to underperform the market over the next 3 to 6 months.
Candidates in the bottom tiers of industries can often be solid potential short candidates. While individual stocks have the ability to outperform even when included in a poor-performing industry group, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much tougher.
The stock topped out all the way back in January of 2021, well before the major indices. When a stock fails to gain ground along with the general market, it's telling us "I'm very weak." TMX represents a compelling short opportunity as the market continues its volatile pattern this year.
Recent Earnings and Deteriorating Forecasts
Earnings misses have been a sore spot for TMX during the past year. The pest control provider has fallen short of estimates in two of the past four quarters. TMX most recently reported Q2 EPS earlier this month of $0.02/share, missing the $0.44 consensus estimate by -95.45%.
TMX has posted an average earnings miss of -22.65% over the past four quarters. This is the type of negative trend that the bears like to see. When you're consistently missing earnings estimates by a wide margin, you're going to be fighting an uphill battle when it comes to the stock price.
Analysts covering the company are in agreement and have been revising earnings estimates downward as of late. For the current quarter, estimates have been slashed -10.87% over the past 60 days. The Q3 Zacks Consensus EPS Estimate now stands at $0.41/share, translating to zero growth relative to the same quarter last year – not exactly what the bulls are looking for.
Technical Outlook
TMX stock has been steadily falling since last year and has now established a well-defined downtrend. TMX has also formed an ominous head-and-shoulders pattern, highlighted by the purple parabolas. This pattern tends to precede large moves to the downside.
Even with the recent price declines, Terminix is still relatively overvalued, irrespective of the valuation metric used.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock is not set to print new highs anytime soon. The recent earnings misses in addition to deteriorating estimates are both huge red flags and need to be respected. These will likely serve as a ceiling to any potential rallies, nurturing the stock's downtrend.
TMX's characteristics have resulted in a worst-possible Zacks Momentum Style Score of 'F', indicating further downside is likely. The fact that TMX is included in a bottom-performing industry group simply adds to the growing list of concerns. Investors will want to steer clear of an overvalued TMX until the situation shows major signs of improvement, or possibly include it as part of a hedge or short strategy.
Additional content:
A Hawkish Fed Can't Burst Oil's Bubble
The Fed's resolute stand on battling inflation had the markets swooning Friday. But there was one bright spot.
The Fed intends to raise interest rates and keep them high until the inflation rate comes back down to the targeted sub-2% level. And it intends to do whatever it takes to get there. "Reducing inflation is likely to require a sustained period of below-trend growth," Powell said. It could also lead to a recession.
"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation," he said in no uncertain terms. "But a failure to restore price stability would mean far greater pain."
As may be expected, the markets didn't take the news well with the S&P, Dow and Nasdaq all dropping into the red.
Oil prices were the big surprise, despite the fact that higher interest rates and a slowing economy affects oil demand and consumption. A closer look at the WTI price chart shows an initial hiccup that was subsequently overcome for a day's range of $92.00 to $92.88.
Investors quickly weighed the impact of weaker growth in the U.S. against Saudi Arabia considering production cuts (also supported by several other OPEC members) earlier in the week and China's growth engine possibly recovering. Since Saudi Arabia is willing to maintain pricing at the cost of production cuts in the event that Iran's nuclear deal with the U.S. is done, it stands to reason that pricing will be maintained at these historical highs.
Even if the US economy hits pause. In any case, production hasn't been easy of late with militants continuing to disrupt activity in Libya, as well as certain issues in Kazakhstan.
As a result, the Energy sector, which has outperformed all others this year, continues on that path. Three oil stocks that have seen notable increase in their earnings estimates over the last 30 days are:
Exxon Mobil: The Zacks Rank #1 (Strong Buy) stock with Value, Growth and Momentum Scores of B, A and B, respectively, is seeing a lot of love from analysts. Its 2022 estimate is up 70 cents (5.8%) while the 2023 estimate is up 24 cents (2.4%).
Marathon Petroleum: The Zacks Rank #2 (Buy) stock has Value, Growth and Momentum Scores of A, A and C, respectively. Its 2022 estimate is up $1.72 (9.1%) and 2023 estimate up 51 cents (4.3%).
Chevron: Zacks Rank #3 ranked Chevron scores a B for Value but A for both Growth and Momentum. Its 2022 estimate is up 28 cents (1.6%) while the 2023 estimate is up 82 cents (5.0%).
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 >>
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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.