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United Rentals and Huntington Ingalls Industries have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – January 23, 2023 – Zacks Equity Research shares United Rentals (URI - Free Report) as the Bull of the Day and Huntington Ingalls Industries (HII - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on HF Sinclair (DINO - Free Report) , ExxonMobil (XOM - Free Report) and Diamondback Energy (FANG - Free Report) .
Coming out of the pandemic, there were many newly found shortages. These shortages led to higher prices for consumers across the globe. It also made for some incredible years for several companies. Many were able to charge prices that they will never see again, with unbelievable margins as well. Moving forward, it has become tough to recognize which companies will be able to keep their margins high and keep the profits rolling in.
One way to figure it out is by leaning on the Zacks Rank. Stocks in the good graces of our Zacks Rank have the strongest earnings trends, which are most likely to continue on in the future. One such stock is today's Bull of the Day, United Rentals.
United Rentals, Inc. is the largest equipment rental company in the world. It provides rental equipment for a diverse range of industries and uses, including construction, manufacturing, transportation, oil and gas, government, and disaster response. The company has an extensive inventory of equipment, including earthmoving equipment, aerial work platforms, power and HVAC equipment, pumps, tools, and more. United Rentals operates through a network of over 1,300 rental locations in North America and 11 other countries.
Over the last sixty days, five analysts have increased their earnings estimates for next year. That bullish behavior is the recent why the stock is currently a Zacks Rank #1 (Strong Buy). These revisions have also pushed up our Zacks Consensus Estimate for next year from $35.25 to $37.58. That now represents earnings growth of 15.5% for next year. Current year growth is even stronger, at 47.46%.
The stock has had one of the strongest Price, Consensus and EPS Surprise Charts over the last few years. Earnings bottomed out into the depths of the COVID shutdown. Since then, earnings have consistently grown year-over-year. Not only have earnings been on the rise year-over-year, but estimates have ticked up nearly each and every month.
The market has been trying to recover after last year's down year. There has been a nice bounce to start the year, with some major technical indicators showing strength in the move. However, that doesn't mean that you should just go out there and load the boat on the first stock you see. That could lead to you adding stocks which have seen their earnings fall into a downtrend.
One way to uncover these stocks is by leaning on the Zacks Rank. Stocks which are Zacks Rank #5 (Strong Sell) stocks have seen analysts cut earnings estimates. When analysts are predicting dismal futures like this, it may be a stock to avoid in the near-term.
Today's Bear of the Day is one of these. It's Huntington Ingalls Industries. Huntington Ingalls Industries is the largest military shipbuilding company in the United States and one of the largest in the world. The company designs and builds ships for the U.S. Navy and Coast Guard, as well as for international customers. HII's portfolio includes aircraft carriers, amphibious warfare ships, surface combatants, and submarines, as well as a wide range of support and auxiliary ships. The company also provides a range of engineering and technical services, including ship design and systems integration, as well as maintenance and modernization services.
Over the last sixty days, analysts cut their earnings estimates for both the current year and next year. The bearish sentiments have dropped our Zacks Consensus Estimates for the current year from $15.32 to $14.69 while next year's number is off from $17.98 to $14.92.
Additional content:
3 Safe Dividend Stocks Worth Considering in the Energy Space
The Energy sector is infamous for being notoriously volatile, with sudden positive surprises and crashes. While wild price moves have always been integral to investment in oil and natural gas, the quantum of uncertainty has increased manifold in recent years, especially post-COVID.
In an erratic energy market setting, investing in high-quality dividend stocks like HF Sinclair, ExxonMobil and Diamondback Energy might fetch you promising returns.
Use Dividend to Shield from Unpredictable Energy Prices
From the depths of minus $38 a barrel during the height of the pandemic in April 2020 to a 14-year high surge of above $130 per barrel in March last year and finally around $80 now, crude has been on a roller-coaster ride over the past few years. It's not any different for natural gas. The fuel slumped to a 25-year low in June 2020 but hit $10 per MMBtu in 2022 for the first time since 2008 before falling to the current $3 level. Diverse factors ranging from demand/supply fundamentals to economic events to geopolitical/weather shocks influence commodity price realizations.
As evident from the energy market story, stocks can take a sudden turn for the good (or bad), making stock picking a risky game. Every good stock also has its bad day, which adds to the risk. With uncertainty ruling the markets, it is not surprising that dividend investing has emerged as one of the most popular investing themes.
Dividend stocks are always investors' preferred choices as they provide steady income and cushion against market risks. These stocks are generally less volatile in nature and hence, are dependable when it comes to long-term investment planning. They not only offer higher income but also protect against equity market risks.
Dividend stocks are safe bets to create wealth, as the payouts generally act as a hedge against economic uncertainty and simultaneously provide downside protection by offering sizable yields on a regular basis. Finally, dividend growth can also help investors to offset some of the value destruction of the high inflationary environment prevailing at the moment.
How to Pick the Best Dividend Stocks?
Although the benefits of dividend investing cannot be stressed enough, one should keep in mind that not every company can keep up with its dividend-paying momentum. Hence, a cautious strategy needs to be followed to select the best dividend stocks with the potential for steady returns.
To guide investors to the right picks, we recommend stocks with a payout ratio of less than 60 and a dividend yield of at least 2%. Moreover, these companies have hiked their dividends over the past five years.
Calculated by dividing dividend per share by earnings per share, the payout ratio indicates how comfortably a firm can pay the dividend from its earnings. It is one of the key metrics that dividend growth investors consider when looking for potential investments. A payout ratio below 60 looks quite sustainable and leaves enough scope for future dividend hikes.
With our objective to build a dividend income portfolio, we look for companies that at least have better yields than the S&P 500. A representative of the broader market, the index currently yields 1.59%. While our yield criterion isn't very high, it's at a level where the company can weather all kinds of commodity price environments and provide a reliable income stream to investors.
Finally, we only consider stocks that have a consistent dividend, i.e., paying and increasing offerings over the past five years. It also acts as an indicator of what to expect from the company in the next few years on the payout front.
Our Choices
We have used the above criteria to narrow down three dividend-paying energy stocks.
HF Sinclair Corp.: A producer and marketer of gasoline, diesel fuel and other specialty products, HF Sinclair pays out a quarterly dividend of 40 cents ($1.60 annualized) per share that gives it a 3% yield at the current stock price. The Zacks Rank #3 (Hold) company's payout ratio is 14, with a five-year dividend growth rate of 4.78%. (Check HF Sinclair's dividend history here)
DINO is valued at some $10.7 billion. The Zacks Consensus Estimate for HF Sinclair's 2022 earnings has been revised 5.5% upward over the past 90 days. The downstream operator has a trailing four-quarter earnings surprise of roughly 695.8%, on average. DINO shares have gained 61.5% in a year.
ExxonMobil: ExxonMobil is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy — from oil production to refining and marketing. XOM's dividend of 91 cents per share ($3.64 annualized) represents a 3.29% yield. The Zacks #3 Ranked ExxonMobil's payout ratio is 28, with a five-year dividend growth rate of 2.17%. (Check ExxonMobil's dividend history here)
ExxonMobil is valued at some $455.5 billion. The Zacks Consensus Estimate for XOM's 2022 earnings has been revised 5.4% upward over the past 90 days. ExxonMobil, headquartered in Irving, TX, has a trailing four-quarter earnings surprise of roughly 5.1%, on average. XOM shares have gained 54.2% in a year.
Diamondback Energy: Diamondback Energy is an independent oil and gas exploration & production company with its primary focus on the Permian Basin. FANG's dividend of $2.26 per share comprises 75 cents ($3 annualized) in regular payout, plus a variable cash component of $1.51 apiece. The regular component represents a 2.08% yield. The #3 Ranked Diamondback's payout ratio is 13, with a five-year dividend growth rate of 55.31%. (Check Diamondback Energy's dividend history here)
Diamondback is valued at some $25.4 billion. For 2022, FANG has a projected earnings growth rate of 115.1%. Diamondback, headquartered in Midland, TX, has a trailing four-quarter earnings surprise of roughly 5.7%, on average. FANG shares have gained 24.1% in a year.
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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United Rentals and Huntington Ingalls Industries have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – January 23, 2023 – Zacks Equity Research shares United Rentals (URI - Free Report) as the Bull of the Day and Huntington Ingalls Industries (HII - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on HF Sinclair (DINO - Free Report) , ExxonMobil (XOM - Free Report) and Diamondback Energy (FANG - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Coming out of the pandemic, there were many newly found shortages. These shortages led to higher prices for consumers across the globe. It also made for some incredible years for several companies. Many were able to charge prices that they will never see again, with unbelievable margins as well. Moving forward, it has become tough to recognize which companies will be able to keep their margins high and keep the profits rolling in.
One way to figure it out is by leaning on the Zacks Rank. Stocks in the good graces of our Zacks Rank have the strongest earnings trends, which are most likely to continue on in the future. One such stock is today's Bull of the Day, United Rentals.
United Rentals, Inc. is the largest equipment rental company in the world. It provides rental equipment for a diverse range of industries and uses, including construction, manufacturing, transportation, oil and gas, government, and disaster response. The company has an extensive inventory of equipment, including earthmoving equipment, aerial work platforms, power and HVAC equipment, pumps, tools, and more. United Rentals operates through a network of over 1,300 rental locations in North America and 11 other countries.
Over the last sixty days, five analysts have increased their earnings estimates for next year. That bullish behavior is the recent why the stock is currently a Zacks Rank #1 (Strong Buy). These revisions have also pushed up our Zacks Consensus Estimate for next year from $35.25 to $37.58. That now represents earnings growth of 15.5% for next year. Current year growth is even stronger, at 47.46%.
The stock has had one of the strongest Price, Consensus and EPS Surprise Charts over the last few years. Earnings bottomed out into the depths of the COVID shutdown. Since then, earnings have consistently grown year-over-year. Not only have earnings been on the rise year-over-year, but estimates have ticked up nearly each and every month.
Bear of the Day:
The market has been trying to recover after last year's down year. There has been a nice bounce to start the year, with some major technical indicators showing strength in the move. However, that doesn't mean that you should just go out there and load the boat on the first stock you see. That could lead to you adding stocks which have seen their earnings fall into a downtrend.
One way to uncover these stocks is by leaning on the Zacks Rank. Stocks which are Zacks Rank #5 (Strong Sell) stocks have seen analysts cut earnings estimates. When analysts are predicting dismal futures like this, it may be a stock to avoid in the near-term.
Today's Bear of the Day is one of these. It's Huntington Ingalls Industries. Huntington Ingalls Industries is the largest military shipbuilding company in the United States and one of the largest in the world. The company designs and builds ships for the U.S. Navy and Coast Guard, as well as for international customers. HII's portfolio includes aircraft carriers, amphibious warfare ships, surface combatants, and submarines, as well as a wide range of support and auxiliary ships. The company also provides a range of engineering and technical services, including ship design and systems integration, as well as maintenance and modernization services.
Over the last sixty days, analysts cut their earnings estimates for both the current year and next year. The bearish sentiments have dropped our Zacks Consensus Estimates for the current year from $15.32 to $14.69 while next year's number is off from $17.98 to $14.92.
Additional content:
3 Safe Dividend Stocks Worth Considering in the Energy Space
The Energy sector is infamous for being notoriously volatile, with sudden positive surprises and crashes. While wild price moves have always been integral to investment in oil and natural gas, the quantum of uncertainty has increased manifold in recent years, especially post-COVID.
In an erratic energy market setting, investing in high-quality dividend stocks like HF Sinclair, ExxonMobil and Diamondback Energy might fetch you promising returns.
Use Dividend to Shield from Unpredictable Energy Prices
From the depths of minus $38 a barrel during the height of the pandemic in April 2020 to a 14-year high surge of above $130 per barrel in March last year and finally around $80 now, crude has been on a roller-coaster ride over the past few years. It's not any different for natural gas. The fuel slumped to a 25-year low in June 2020 but hit $10 per MMBtu in 2022 for the first time since 2008 before falling to the current $3 level. Diverse factors ranging from demand/supply fundamentals to economic events to geopolitical/weather shocks influence commodity price realizations.
As evident from the energy market story, stocks can take a sudden turn for the good (or bad), making stock picking a risky game. Every good stock also has its bad day, which adds to the risk. With uncertainty ruling the markets, it is not surprising that dividend investing has emerged as one of the most popular investing themes.
Dividend stocks are always investors' preferred choices as they provide steady income and cushion against market risks. These stocks are generally less volatile in nature and hence, are dependable when it comes to long-term investment planning. They not only offer higher income but also protect against equity market risks.
Dividend stocks are safe bets to create wealth, as the payouts generally act as a hedge against economic uncertainty and simultaneously provide downside protection by offering sizable yields on a regular basis. Finally, dividend growth can also help investors to offset some of the value destruction of the high inflationary environment prevailing at the moment.
How to Pick the Best Dividend Stocks?
Although the benefits of dividend investing cannot be stressed enough, one should keep in mind that not every company can keep up with its dividend-paying momentum. Hence, a cautious strategy needs to be followed to select the best dividend stocks with the potential for steady returns.
To guide investors to the right picks, we recommend stocks with a payout ratio of less than 60 and a dividend yield of at least 2%. Moreover, these companies have hiked their dividends over the past five years.
Calculated by dividing dividend per share by earnings per share, the payout ratio indicates how comfortably a firm can pay the dividend from its earnings. It is one of the key metrics that dividend growth investors consider when looking for potential investments. A payout ratio below 60 looks quite sustainable and leaves enough scope for future dividend hikes.
With our objective to build a dividend income portfolio, we look for companies that at least have better yields than the S&P 500. A representative of the broader market, the index currently yields 1.59%. While our yield criterion isn't very high, it's at a level where the company can weather all kinds of commodity price environments and provide a reliable income stream to investors.
Finally, we only consider stocks that have a consistent dividend, i.e., paying and increasing offerings over the past five years. It also acts as an indicator of what to expect from the company in the next few years on the payout front.
Our Choices
We have used the above criteria to narrow down three dividend-paying energy stocks.
HF Sinclair Corp.: A producer and marketer of gasoline, diesel fuel and other specialty products, HF Sinclair pays out a quarterly dividend of 40 cents ($1.60 annualized) per share that gives it a 3% yield at the current stock price. The Zacks Rank #3 (Hold) company's payout ratio is 14, with a five-year dividend growth rate of 4.78%. (Check HF Sinclair's dividend history here)
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
DINO is valued at some $10.7 billion. The Zacks Consensus Estimate for HF Sinclair's 2022 earnings has been revised 5.5% upward over the past 90 days. The downstream operator has a trailing four-quarter earnings surprise of roughly 695.8%, on average. DINO shares have gained 61.5% in a year.
ExxonMobil: ExxonMobil is one of the largest publicly traded oil and gas companies in the world, which participates in every aspect related to energy — from oil production to refining and marketing. XOM's dividend of 91 cents per share ($3.64 annualized) represents a 3.29% yield. The Zacks #3 Ranked ExxonMobil's payout ratio is 28, with a five-year dividend growth rate of 2.17%. (Check ExxonMobil's dividend history here)
ExxonMobil is valued at some $455.5 billion. The Zacks Consensus Estimate for XOM's 2022 earnings has been revised 5.4% upward over the past 90 days. ExxonMobil, headquartered in Irving, TX, has a trailing four-quarter earnings surprise of roughly 5.1%, on average. XOM shares have gained 54.2% in a year.
Diamondback Energy: Diamondback Energy is an independent oil and gas exploration & production company with its primary focus on the Permian Basin. FANG's dividend of $2.26 per share comprises 75 cents ($3 annualized) in regular payout, plus a variable cash component of $1.51 apiece. The regular component represents a 2.08% yield. The #3 Ranked Diamondback's payout ratio is 13, with a five-year dividend growth rate of 55.31%. (Check Diamondback Energy's dividend history here)
Diamondback is valued at some $25.4 billion. For 2022, FANG has a projected earnings growth rate of 115.1%. Diamondback, headquartered in Midland, TX, has a trailing four-quarter earnings surprise of roughly 5.7%, on average. FANG shares have gained 24.1% in a year.
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.