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Skechers and The Mosaic Company have been highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – May 19, 2023 – Zacks Equity Research shares Skechers U.S.A., Inc. (SKX - Free Report) as the Bull of the Day and The Mosaic Company (MOS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA - Free Report) , HP Inc. (HPQ - Free Report) and NetApp (NTAP - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

Skechers U.S.A., Inc. continues to give customers what they want: great shoes. This Zacks Rank #1 (Strong Buy) had record first quarter sales.

Skechers designs, develops and markets lifestyle and performance footwear, apparel and accessories for men, women and children. Its collections are available in 180 countries and territories through department and specialty stores, online, and at over 4,500 company, and third-party-owned, physical retail stores.

Big Beat in the First Quarter

On Apr 27, 2023, Skechers reported its first quarter 2023 results and crushed the Zacks Consensus Estimate by $0.41. It reported earnings of $1.02 versus the consensus of $0.61.

It was the third beat in the last four quarters.

Quarterly sales were a record, up 10% to $2 billion from $1.81 billion last year. Skechers saw broad strength in most markets globally, including regional sales improvements of 21% in both EMEA and APAC, which includes 3% growth in China.

Direct-to-Consumer increased 24.5% worldwide due to improved inventory availability in stores and strong demand for its new comfort product offering.

Gross margins expanded by 360 basis points to 48.9% from 45.3% last year.

Inventory, which has been the bane of many retailers, fell 17.4%, or $315.8 million, to $1.5 billion from Dec 31, 2022. Inventory levels decreased in AMER, EMEA and APAC.

Analysts Raise Full Year Estimates

Skechers gave 2023 earnings guidance of between $3.00 to $3.20.

The analysts had been too conservative. Business is hotter than they thought. 8 estimates for 2023 have been revised higher in the last 30 days. The Zacks Consensus has jumped to $3.14 from $2.93, which is in the higher end of the company's guidance range.

This is earnings growth of 31.9% over last year as the company made just $2.38.

The analysts are also bullish about 2024, with 7 estimates revised higher for next year too in the last month. The 2024 Zacks Consensus Estimate has jumped to $3.78 from $3.63. That's another 20.3% growth.

Shares at 5-Year Highs

It's been a wild ride for Skechers shares. They performed well during the pandemic and hit new highs in summer of 2021 before selling off the next 12 months.

But in the last year, the shares are up 41.3% and are back to those 2021 5-year highs.

It's still attractively valued, with a forward P/E of 17.1.

Skechers doesn't pay a dividend, but it does have a share repurchase program. During the first quarter Skechers repurchased $30 million in shares. As of Mar 31, 2023, it had approximately $395.7 million remaining in the program.

If you're looking for a global retailer that has growth and is still a value, Skechers should be on your short list.

Bear of the Day:

The Mosaic Company is expected to see earnings decline this year after the Ukraine War spiked fertilizer prices last year. But this Zacks Rank #5 (Strong Sell) is still bullish on fertilizer demand in 2023.

The Mosaic Company, headquartered in Tampa, FL, is one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients. It supplies phosphates and potash fertilizers and feed ingredients for the global agriculture industry.

Another Earnings Miss in Q1

On May 3, Mosaic reported its first quarter 2023 earnings and it reported earnings of $1.14 which was a miss of 10.9%, or $0.14. The Zacks Consensus was looking for $1.28.

It was the fifth earnings miss in a row.

Revenue fell 8% to $3.6 billion reflecting the impact of lower prices which were somewhat offset by higher volumes.

In its three big categories, volumes were higher in 2023 than in 2022. In Potash, sales volume million tonnes was 1.9 compared to 1.8 last year. In Phosphate, sales volume million tonnes was 1.8 compared to 1.7 last year and in Mosaic Fertilizantes sales volume million tonnes was 2.1 compared to 1.8.

But it was the opposite in sales price.

Potash MOP Selling Price fell to $421 from $582 last year. Phosphate DAP Selling Price fell to $660 from $785. Mosaic Fertilizantes finished product selling price was $646, down from $817.

Gross margins fell to 18.6% from 36.7% last year.

Earnings Estimates Slashed

The analysts have been aggressively cutting their earnings estimates for 2023 and 2024 the last 3 months as fertilizer prices have softened.

For 2023, 4 have cut the last 30 days and 1 in just the last week. The 2023 Zacks Consensus Estimate has plunged to $5.05 from $8.45 in just the last 3 months.

That's an earnings decline of 54% from 2022, when it made $11.01.

The cuts extend into 2024 as well. 5 estimates were cut in the last month for 2024 pushing the Zacks Consensus down to $4.02 from $5.48 just 3 months before.

That's another 20.4% drop.

Mosaic Optimistic About Demand

To counter all that analyst bearishness, which is the reason the stock is a Zacks Rank #5 (Strong Sell), is the company's industry outlook.

It expects the grain and oilseed markets to remain tight through 2023 and beyond. Mosaic said in North America, sentiment has improved "significantly" compared to the second half of 2022.

Mosaic also said spring nutrient application rates were trending toward normal levels. And for both potash and phosphates, supply constraints remain.

Shares Down Big

But until earnings turn around and get raised, instead of cut, investors have decided to flee the stock. Year-to-date, shares are down 18.4%, but over the last year shares have fallen 45.5%.

It's dirt cheap, even with the earnings cuts. It's trading with a forward P/E of just 7.

Mosaic is also generating plenty of free cash flow. Mosaic is standing by its 2023 Capital Allocation Strategy, which is to return largely all of the 2023 free cash flow back to shareholders.

In the first quarter, that meant $608 million was returned through share repurchases and dividends. It's dividend is currently yielding 2.3%.

Fertilizers are a commodity. It's a challenging industry in which to invest. For investors interested in the fertilizers, and Mosaic, you may want to wait until the Zacks Rank moves higher. Keep Mosaic on your watch list.

Additional content:

Is NVIDIA (NVDA - Free Report) Likely to Beat Q1 Earnings?

NVIDIA Corp. is likely to beat expectations when it reports first-quarter fiscal 2024 results after market close on May 24.

For the fiscal first quarter, the company expects revenues of $6.5 billion (+/-2%). The Zacks Consensus Estimate for the same is pegged at $6.51 billion, indicating a 21.5% decline from the year-ago reported figure.

The Zacks Consensus Estimate for quarterly earnings is pegged at 92 cents per share. This suggests a year-over-year decline of 32.4%.

The company's earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being -3.2%.

Let's see how things have shaped up before the announcement.

Factors to Consider

NVIDIA's first-quarter performance is likely to have benefited from the recovery across its Gaming and Professional Visualization end markets. The Gaming end market's last quarter results had shown early signs of recovery as inventory with channel partners reached normal levels. The company also registered strong demand across most regions for its gaming products.

Revenues from the Gaming end market increased 16% sequentially in the last reported quarter. NVIDIA's Professional Visualization segment performance also reflected recovery, with revenues increasing 13% sequentially. We believe that the trend is likely to have continued in the first quarter for both end markets.

Moreover, the continued strength of its Datacenter business on the growing adoption of cloud-based solutions amid the growing hybrid working trend is expected to have boosted NVDA's first-quarter revenues. An increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds in the to-be-reported quarter.

Further, the company's Automotive segment showed an improvement in trends in five of the last seven quarters. The positive trend is likely to have continued in the fiscal first quarter, mainly due to increasing investments in self-driving and artificial intelligence cockpit solutions.

However, we opine that ongoing macroeconomic headwinds, like high inflation and interest rates, are likely to have continued to hurt the sales of NVIDIA's desktop workstation GPUs in the first quarter. Additionally, disruptions in retail channel sales due to travel restrictions and social-distancing measures implemented across several parts of China might have weighed on the overall financial performance in the fiscal first quarter.

Earnings Whispers

Our proven model predicts an earnings beat for NVDA this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (94 cents per share) and the Zacks Consensus Estimate (92 cents per share), is +2.43%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: NVIDIA carries a Zacks Rank #3.

Other Stocks with the Favorable Combination

Per our model, HP Inc. and NetApp also have the right combination of elements to post an earnings beat in their upcoming releases.

HP is set to report second-quarter fiscal 2023 results on May 30. The company has a Zacks Rank #2 and an Earnings ESP of +2.29% at present. HP's earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 1.1%. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HPQ's second-quarter earnings is pegged at 76 cents per share, suggesting a decline of 29.6% from the year-ago quarter's earnings of $1.11. HP's quarterly revenues are estimated to decrease 20.7% year over year to $13.07 billion.

NetApp carries a Zacks Rank #3 and has an Earnings ESP of +0.22%. The company is slated to report fourth-quarter fiscal 2025 results on May 31. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 9%.

The Zacks Consensus Estimate for NTAP's fourth-quarter earnings is pegged at $1.35 per share, indicating a year-over-year decline of 4.9%. The consensus mark for revenues stands at $1.55 billion, suggesting a year-over-year drop of 7.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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