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American Woodmark and Victoria's Secret have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – June 22, 2023 – Zacks Equity Research shares American Woodmark Corp. (AMWD - Free Report) as the Bull of the Day and Victoria's Secret & Co. (VSCO - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PulteGroup (PHM - Free Report) , Lennar (LEN - Free Report) , and Toll Brothers (TOL - Free Report) .
American Woodmark Corp. is riding the wave of stronger housing demand into fiscal 2024. This Zacks Rank #1 (Strong Buy) posted a big earnings beat in the fiscal fourth quarter.
American Woodmark is one of the largest cabinet manufacturers in the United States. It partners with major home centers, builders and independent dealers and distributors on kitchen, bath and other cabinets.
A Big Earnings Surprise in Fiscal Q4
On May 25, American Woodmark reported its fiscal fourth quarter 2023 earnings and blew by the Zacks Consensus Estimate by $0.86. Earnings were $2.21 versus the Zacks Consensus of $1.35, for a beat of 63.7%.
It has beat 3 out of the last 4 quarters.
Sales fell 4.1% in the quarter to $481.1 million with free cash flow of $61.9 million. For the fiscal year, sales rose 11.3% to $2.066 billion with free cash flow of $153.5 million.
As of the end of fiscal 2023, on Apr 30, 2023, American Woodmark had $41.7 million in cash plus access to $323.2 million of additional availability under its revolving credit facility.
"The strengthening in our operational performance throughout the year combined with the platform changes we began executing in fiscal year 2023, gives us the confidence that we can deliver strong margin performance in the dynamic market conditions," said Scott Culbreth, CEO.
Analysts Bullish About Fiscal 2024
American Woodmark gave fiscal 2024 guidance of low double digit net sales decline but given the margin improvement, that didn't deter the analysts from raising their earnings estimates.
2 estimates were raised in the last 30 days for fiscal 2024 pushing the Zacks Consensus up to $6.53 from $5.34. That's still an earnings decline of 14.3% because the beginning of last year was still red hot before the housing market froze up.
Shares at 1-Year Highs
Shares of American Woodmark have rallied in 2023, adding 72.2% in the last year. Even just over the last month, shares are up 31%. This follows along with many of the homebuilder stocks that have also had big rallies this spring.
But shares are still lagging compared to earlier in the pandemic. Over the last 2 years, shares are down 12.3%.
American Woodmark is cheap, with a forward P/E of just 11.
If you're looking for a way to play the pick-up in the housing market without buying a homebuilder, American Woodmark should be on your short list.
Victoria's Secret & Co. recently lowered full year guidance as North America sales slowed. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall 50% this year.
Victoria's Secret is a specialty retailer of signature bras, panties, lingerie, casual sleepwear, athleisure and swim as well as fragrances and body care. Its brands include Victoria's Secret and PINK as well as Adore Me, a digital-first innovative intimates brand serving women of all sizes and budgets.
Victoria's Secret has approximately 1,350 retail stores in about 70 countries.
First Ever Earnings Miss in Q1 2023
On May 31, 2023, Victoria's Secret reported its first quarter 2023 results and missed on the Zacks Consensus for the first time since it went public in 2021.
It reported earnings of just $0.28 versus the consensus of $0.54. That's an earnings miss of $0.26.
What went wrong in the quarter? Sales were in-line with the original expectations but Victoria's Secret was more promotional than planned.
Sales were particularly challenging in the core categories where there was significant decline in the overall stores and digital intimates market in North America.
The good news was that inventory levels in Victoria's Secret and PINK divisions ended the quarter down low-double digits compared to the prior year. Excess inventory has been a big issue for many retailers over the last year.
Additionally, international business continued to see stellar growth with China as a bright spot.
Adore Me, which was recently acquired, also met the company's expectations in the quarter.
Full Year 2023 Forecast Lowered
Given the results of Q1 and the recent trends, Victoria's Secret updated its forecast and now sees full year 2023 net sales in the range of flat to down low-single digits compared to last year's net sales of $6.344 billion.
The analysts are bearish on earnings as well. 5 estimates have been lowered in the last 30 days, pushing the Zacks Consensus Estimate down to $2.45 from $4.90.
That's an earnings decline of 50.5% as the company made $4.95 last year.
Shares Near All-Time Lows
Victoria's Secret went public in 2021 when L Brands split into two companies: Victoria's Secret and Bath & Body Works. Shares of Victoria's Secret have fallen this year, losing 48.9%. It is trading near all-time lows.
But even with the cuts to earnings estimates, it's still cheap with a forward P/E of just 7.7.
It also has a PEG ratio of 0.8. A PEG under 1.0 usually indicates a company has both value and growth.
But Victoria's Secret itself even sees a challenging environment for the rest of 2023. Investors might want to stay on the sidelines until earnings turn around.
Additional content:
3 Housing Stocks to Buy on Bullish Homebuilders’ Sentiment
An uptick in raw materials coupled with higher mortgage rates has impacted housing activity for quite some time. However, for the first time in almost a year, homebuilders’ sentiment about the housing market has turned bullish, thanks to strong housing demand.
The National Association of Home Builders (NAHB)/ Wells Fargo Housing Market Index (HMI) jumped five points to 55 in June, indicating that builders are feeling good about the newly built single-family housing market. The NAHB Index moved above the midpoint of 50 for the first time in 11 months, while sentiment among builders improved for the sixth successive month.
The NAHB Index’s, June reading of 55, in reality, was the strongest since July 2022 as steady improvements in supply chains and low levels of inventory boost builders’ confidence. Further, the NAHB index’s readings on current and future sales conditions in the housing market also improved. Home builders, at present, have begun to curtail sales incentives, a tell-tale sign that demand for single-family homes is increasing.
And with the Federal Reserve almost nearing the end of its tightening cycle, the future of the housing market certainly looks brighter. This is because a pause in interest rate hikes will make it easier to purchase physical properties, which won’t be expensive.
Meanwhile, housing starts have picked up pace in the country despite economic headwinds, added the U.S. Census Bureau. Housing starts soared by 21.7% in May, to a seasonally adjusted annual rate (SAAR) of 1.63 million units, with both multifamily and single-family starts ticking up.
Construction of single-family homes picked up pace mostly in the Midwest region, as the weather warmed up. Building permits for single-family homes also increased 5.2% last month. Thus, with homebuilder sentiment improving, and builders ramping up the construction of single-family homes, housing stocks like PulteGroup, Lennar, and Toll Brothers are well-poised to benefit in the near term.
These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
PulteGroup is primarily involved in homebuilding activities in the United States. PHM aims to increase its investment in land acquisition and development initiatives mostly due to strong buyer demand, and an uptick in construction activities.
PHM, currently, has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up almost 23.9% over the past 60 days. PHM’s expected earnings growth rate for the next five-year period is 16%. Its shares have already gained 33.4% in the past five-year period.
Lennar mostly engages in homebuilding services in the United States and is currently benefiting from higher operating leverage and effective cost-control measures.
LEN, presently, has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up almost 2% over the past 60 days. LEN’s expected earnings growth rate for the next five-year period is 6%. Its shares have already gained 29.6% in the past five-year period.
Toll Brothers primarily build single-family homes in the United States. Toll Brothers’ dominance in the luxury housing market and focus on the build-to-order model is expected to drive growth.
TOL, currently, sports a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up almost 22.5% over the past 60 days. TOL’s expected earnings growth rate for the next five-year period is 11%. Its shares have already gained 23.9% in the past five-year period.
Shares of PulteGroup, Lennar and Toll Brothers, by the way, have gained 64.5%, 34.3% and 50.9%, respectively, so far this year.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. 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.
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American Woodmark and Victoria's Secret have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – June 22, 2023 – Zacks Equity Research shares American Woodmark Corp. (AMWD - Free Report) as the Bull of the Day and Victoria's Secret & Co. (VSCO - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PulteGroup (PHM - Free Report) , Lennar (LEN - Free Report) , and Toll Brothers (TOL - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
American Woodmark Corp. is riding the wave of stronger housing demand into fiscal 2024. This Zacks Rank #1 (Strong Buy) posted a big earnings beat in the fiscal fourth quarter.
American Woodmark is one of the largest cabinet manufacturers in the United States. It partners with major home centers, builders and independent dealers and distributors on kitchen, bath and other cabinets.
A Big Earnings Surprise in Fiscal Q4
On May 25, American Woodmark reported its fiscal fourth quarter 2023 earnings and blew by the Zacks Consensus Estimate by $0.86. Earnings were $2.21 versus the Zacks Consensus of $1.35, for a beat of 63.7%.
It has beat 3 out of the last 4 quarters.
Sales fell 4.1% in the quarter to $481.1 million with free cash flow of $61.9 million. For the fiscal year, sales rose 11.3% to $2.066 billion with free cash flow of $153.5 million.
As of the end of fiscal 2023, on Apr 30, 2023, American Woodmark had $41.7 million in cash plus access to $323.2 million of additional availability under its revolving credit facility.
"The strengthening in our operational performance throughout the year combined with the platform changes we began executing in fiscal year 2023, gives us the confidence that we can deliver strong margin performance in the dynamic market conditions," said Scott Culbreth, CEO.
Analysts Bullish About Fiscal 2024
American Woodmark gave fiscal 2024 guidance of low double digit net sales decline but given the margin improvement, that didn't deter the analysts from raising their earnings estimates.
2 estimates were raised in the last 30 days for fiscal 2024 pushing the Zacks Consensus up to $6.53 from $5.34. That's still an earnings decline of 14.3% because the beginning of last year was still red hot before the housing market froze up.
Shares at 1-Year Highs
Shares of American Woodmark have rallied in 2023, adding 72.2% in the last year. Even just over the last month, shares are up 31%. This follows along with many of the homebuilder stocks that have also had big rallies this spring.
But shares are still lagging compared to earlier in the pandemic. Over the last 2 years, shares are down 12.3%.
American Woodmark is cheap, with a forward P/E of just 11.
If you're looking for a way to play the pick-up in the housing market without buying a homebuilder, American Woodmark should be on your short list.
Bear of the Day:
Victoria's Secret & Co. recently lowered full year guidance as North America sales slowed. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall 50% this year.
Victoria's Secret is a specialty retailer of signature bras, panties, lingerie, casual sleepwear, athleisure and swim as well as fragrances and body care. Its brands include Victoria's Secret and PINK as well as Adore Me, a digital-first innovative intimates brand serving women of all sizes and budgets.
Victoria's Secret has approximately 1,350 retail stores in about 70 countries.
First Ever Earnings Miss in Q1 2023
On May 31, 2023, Victoria's Secret reported its first quarter 2023 results and missed on the Zacks Consensus for the first time since it went public in 2021.
It reported earnings of just $0.28 versus the consensus of $0.54. That's an earnings miss of $0.26.
What went wrong in the quarter? Sales were in-line with the original expectations but Victoria's Secret was more promotional than planned.
Sales were particularly challenging in the core categories where there was significant decline in the overall stores and digital intimates market in North America.
The good news was that inventory levels in Victoria's Secret and PINK divisions ended the quarter down low-double digits compared to the prior year. Excess inventory has been a big issue for many retailers over the last year.
Additionally, international business continued to see stellar growth with China as a bright spot.
Adore Me, which was recently acquired, also met the company's expectations in the quarter.
Full Year 2023 Forecast Lowered
Given the results of Q1 and the recent trends, Victoria's Secret updated its forecast and now sees full year 2023 net sales in the range of flat to down low-single digits compared to last year's net sales of $6.344 billion.
The analysts are bearish on earnings as well. 5 estimates have been lowered in the last 30 days, pushing the Zacks Consensus Estimate down to $2.45 from $4.90.
That's an earnings decline of 50.5% as the company made $4.95 last year.
Shares Near All-Time Lows
Victoria's Secret went public in 2021 when L Brands split into two companies: Victoria's Secret and Bath & Body Works. Shares of Victoria's Secret have fallen this year, losing 48.9%. It is trading near all-time lows.
But even with the cuts to earnings estimates, it's still cheap with a forward P/E of just 7.7.
It also has a PEG ratio of 0.8. A PEG under 1.0 usually indicates a company has both value and growth.
But Victoria's Secret itself even sees a challenging environment for the rest of 2023. Investors might want to stay on the sidelines until earnings turn around.
Additional content:
3 Housing Stocks to Buy on Bullish Homebuilders’ Sentiment
An uptick in raw materials coupled with higher mortgage rates has impacted housing activity for quite some time. However, for the first time in almost a year, homebuilders’ sentiment about the housing market has turned bullish, thanks to strong housing demand.
The National Association of Home Builders (NAHB)/ Wells Fargo Housing Market Index (HMI) jumped five points to 55 in June, indicating that builders are feeling good about the newly built single-family housing market. The NAHB Index moved above the midpoint of 50 for the first time in 11 months, while sentiment among builders improved for the sixth successive month.
The NAHB Index’s, June reading of 55, in reality, was the strongest since July 2022 as steady improvements in supply chains and low levels of inventory boost builders’ confidence. Further, the NAHB index’s readings on current and future sales conditions in the housing market also improved. Home builders, at present, have begun to curtail sales incentives, a tell-tale sign that demand for single-family homes is increasing.
And with the Federal Reserve almost nearing the end of its tightening cycle, the future of the housing market certainly looks brighter. This is because a pause in interest rate hikes will make it easier to purchase physical properties, which won’t be expensive.
Meanwhile, housing starts have picked up pace in the country despite economic headwinds, added the U.S. Census Bureau. Housing starts soared by 21.7% in May, to a seasonally adjusted annual rate (SAAR) of 1.63 million units, with both multifamily and single-family starts ticking up.
Construction of single-family homes picked up pace mostly in the Midwest region, as the weather warmed up. Building permits for single-family homes also increased 5.2% last month. Thus, with homebuilder sentiment improving, and builders ramping up the construction of single-family homes, housing stocks like PulteGroup, Lennar, and Toll Brothers are well-poised to benefit in the near term.
These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
PulteGroup is primarily involved in homebuilding activities in the United States. PHM aims to increase its investment in land acquisition and development initiatives mostly due to strong buyer demand, and an uptick in construction activities.
PHM, currently, has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up almost 23.9% over the past 60 days. PHM’s expected earnings growth rate for the next five-year period is 16%. Its shares have already gained 33.4% in the past five-year period.
Lennar mostly engages in homebuilding services in the United States and is currently benefiting from higher operating leverage and effective cost-control measures.
LEN, presently, has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up almost 2% over the past 60 days. LEN’s expected earnings growth rate for the next five-year period is 6%. Its shares have already gained 29.6% in the past five-year period.
Toll Brothers primarily build single-family homes in the United States. Toll Brothers’ dominance in the luxury housing market and focus on the build-to-order model is expected to drive growth.
TOL, currently, sports a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up almost 22.5% over the past 60 days. TOL’s expected earnings growth rate for the next five-year period is 11%. Its shares have already gained 23.9% in the past five-year period.
Shares of PulteGroup, Lennar and Toll Brothers, by the way, have gained 64.5%, 34.3% and 50.9%, respectively, so far this year.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. 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/performance for information about the performance numbers displayed in this press release.