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Pinterest and Clorox have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – November 6, 2023 – Zacks Equity Research shares Pinterest (PINS - Free Report) as the Bull of the Day and Clorox (CLX - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ardmore Shipping (ASC - Free Report) , DHT Holdings (DHT - Free Report) and GXO Logistics (GXO - Free Report) .
Zacks Rank #1 (Strong Buy) stock Pinterest is a social media platform and visual discovery engine that empowers users to discover, save, and share ideas and inspirations on virtual pinboards. Users can create themed boards and “pin” images, videos, and links from the internet or within the platform, organizing them based on their interests, hobbies, or projects.
Pinterest serves as a digital hub for users to find inspiration for various aspects of life, including home décor, fashion, recipes, travel, and more. Pinterest is unique because it enables users to explore content curated by others and drives connections with people who share similar interests.
Blockbuster Q3 Earnings
On October 31st, Pinterest announced stellar third-quarter results:
· Revenue growth reached 11% year-over-year, the highest quarterly revenue growth in the past four quarters.
· Global monthly active users (MAUs) came in 8% higher and are growing steadily.
Meanwhile, EPS grew at a robust 155% year-over-year, smashing Zacks Consensus Estimates by 33%.
Amazon Partnership Begins to Bear Fruit
Pinterest generates most of its revenues by delivering ads on its website and mobile applications. Earlier this year, Pinterest inked a multiyear ads partnership with Amazon. On Pinterest’s earnings call, the CEO touted the partnership by saying:
"..we see really good progress. We're testing, learning, iterating and we're focused on creating a really great relevant user experience and valuable merchant experience. And we're really pleased with what we're seeing on that front. That's the biggest breakthrough and this is demonstrating the increase in relevancy from bringing on third-party demand. As I noted in the prior question, 50% increase in relevance on search and 100% increase in relevance on related items, I think that just bodes really well for where we can go with that. So those are the biggest things to solve for. As we've been calling out, it is a multi-quarter implementation with the most meaningful revenue to hit early in '24."
Analysts Playing Catchup
Zacks exhaustive studies of the biggest stock market winners proves that increasing earnings estimates is the single most important critical factor to consider. Recently, several analysts revised Pinterest’s earnings estimates higher, and Zacks Consensus Estimates now predict blistering growth of 50% or more for the next three quarters.
The Magic of Post-Earnings Drift
Post-earnings drift refers to the tendency of a stock’s price to continue moving in the same direction as the initial price reaction. When a company reports stronger than anticipated results, institutional investors pile into shares. However, because these deep-pocketed investors tend to accumulate shares over time, often the initial gap in price is just the beginning. In other words, powerful earnings gaps lead to big trends. Nvidia’stwo positive earnings reactions in 2016 represent an example of this phenomenon.
Following its Q3 earnings, Pinterest shares launched higher by 19% on volume 5x the norm. Large price moves coupled with heavy volume are indicative of institutional accumulation. PINS is now hovering near the $30 mark – an area where the stock has run into resistance several times.
Bottom Line
Pinterest shares have been stagnant for years. However, improved earnings, a key partnership, and higher analyst expectations suggest that Pinterest has turned the corner and is poised to move much higher over the next year.
Zacks Rank #5 (Strong Sell) stock Clorox is a prominent multinational consumer goods company specializing in the development, production, and marketing of a broad range of household and professional products. Founded in 1913, Clorox is among the most trusted consumer brands globally, and is best known for its cleaning and disinfecting products, namely bleach and disinfecting wipes, which fall under the flagship Clorox brand. In addition to household cleaners, Clorox manufactures a diverse array of products, such as healthcare and personal care items, lifestyle solutions, and natural cleaning products.
Sophisticated Cyber Attack Disrupts Operations
Early last month, Clorox informed investors it expects to post a first-quarter loss after a cyberattack in August led to wide-ranging operational disruptions. The sophisticated cyber-attack was so successful that it impacted other public companies such as casino operator MGM Resorts.While the cyber-attack affected this quarter’s earnings, it may have further impacts to supply chain and product output beyond this quarter.
Beaten Down, Yet Overvalued
Clorox has a reputation as being a value stock. However, to be a true value stock, CLX must be undervalued. Clorox’s p/e ratio is 24.17x, which is above the S&P 500’s 24.17.
What’s worse is that the company has negative quarterly EPS growth of 47% and negative revenue growth of 20%. In other words, Clorox’s lackluster growth does not make up for its above-average valuation.
Investment Opportunity Cost
Many investors will own a stock like Clorox for its juicy dividend. However, CLX’s falling stock price has outweighed any dividend gains. Furthermore, as investors, we each have limited resources to invest. With the Nasdaq, S&P 500 Index, and Russell 2000 Index showing clear signs of a bottom, there are much better areas to allocate money to than “Old Economy” stocks.
Bottom Line
Clorox is facing significant challenges after a sophisticated cyber-attack disrupted its operations. Despite its reputation as a value stock, CLX’s overvaluation, negative quarterly EPS growth, and declining stock prices are concerning.
Additional content:
3 Transportation Stocks Likely to Surpass Earnings Estimates
The majority of the players in the Zacks Transportation sector have already released third-quarter 2023 results. While the picture with respect to earnings growth remains dull, as expected, the percentage of companies beating earnings estimates is impressive.
Among transportation companies yet to report third-quarter results, we expect the likes of Ardmore Shipping,DHT Holdings and GXO Logistics to report better-than-expected earnings per share despite headwinds like high fuel costs, supply-chain woes and high inflation-induced economic uncertainty.
Let’s delve into the factors that are likely to boost the third-quarter results of the sector participants who are yet to announce earnings.
With most yet-to-report companies in the sector belonging to the shipping sub-group, improvement in the demand scenario from the pandemic lows is a major positive. The uptick in trading volumes is likely to have aided the performance of shipping companies in the soon-to-be-reported quarter, as the industry is responsible for transporting the bulk of the goods involved in global trade.
Upbeat demand for liquefied natural gas (LNG) represents a huge positive for shipping stocks. The elevated levels of inflation raised oil and natural gas prices. Moreover, amid the prolonged Russia-Ukraine war, Europe is likely to seek gas supplies outside Russia. This is expected to have driven demand for LNG vessels in the September quarter.
Efforts to control costs for bottom-line growth amid the prevalent demand weakness are also likely to have aided the performance of the companies that are yet to report. Moreover, the fact that e-commerce is still a force to reckon with bodes well.
It is hardly surprising that the pace of growth of e-commerce demand has slowed from the levels witnessed at the peak of the pandemic with the reopening of economies. However, it remains impressive, driven by the convenience associated with online shopping. The race to digitization also supports the momentum in e-commerce growth. E-commerce demand strength should aid the results of the sector participants.
Here’s How to Pick the Right Stocks
Quite a few transportation stocks are likely to report earnings shortly. It is always a daunting task for investors to pick a winning basket of stocks with the potential to deliver better-than-expected earnings.
While there is no foolproof method of choosing outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks with high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this perfect mix of elements, the odds of an earnings beat are as high as 70%.
Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our Choices
Ardmore Shipping currently has an Earnings ESP of +4.65% and a Zacks Rank of 1. ASC is slated to report third-quarter 2023 results on Nov 7.
We expect Ardmore Shipping’s results to reflect the bullishness surrounding the tanker market, as product tanker rates are currently at healthy levels despite minor hiccups. Also, the normalization of economic activities and an uptick in world trade following the removal of COVID-19-induced restrictions are expected to have boosted ASC’s performance.
ASC beat the Zacks Consensus Estimate in three of the last four quarters and matched once, the average beat being 3.34%.
We expect the company’s performance to have been aided by the optimism surrounding LNG charter rates. Efforts to modernize its fleet also bode well. High fuel costs are, however, likely to hurt results.
DHT beat the Zacks Consensus Estimate in one of the last four quarters and missed thrice, the average miss being 14.35%.
GXO Logistics currently has an Earnings ESP of +0.02% and a Zacks Rank #3. GXO will release results on Nov 7.
The rapid growth of e-commerce, automation and outsourcing should aid GXO’s third-quarter results. The company’s efforts to strengthen its logistics capabilities also bode well.
GXO beat the Zacks Consensus Estimate in each of the last four quarters, the average beat being 11.26%.
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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Pinterest and Clorox have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 6, 2023 – Zacks Equity Research shares Pinterest (PINS - Free Report) as the Bull of the Day and Clorox (CLX - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ardmore Shipping (ASC - Free Report) , DHT Holdings (DHT - Free Report) and GXO Logistics (GXO - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Company Overview
Zacks Rank #1 (Strong Buy) stock Pinterest is a social media platform and visual discovery engine that empowers users to discover, save, and share ideas and inspirations on virtual pinboards. Users can create themed boards and “pin” images, videos, and links from the internet or within the platform, organizing them based on their interests, hobbies, or projects.
Pinterest serves as a digital hub for users to find inspiration for various aspects of life, including home décor, fashion, recipes, travel, and more. Pinterest is unique because it enables users to explore content curated by others and drives connections with people who share similar interests.
Blockbuster Q3 Earnings
On October 31st, Pinterest announced stellar third-quarter results:
· Revenue growth reached 11% year-over-year, the highest quarterly revenue growth in the past four quarters.
· Global monthly active users (MAUs) came in 8% higher and are growing steadily.
· Double-digit forward earnings growth expectation,
Meanwhile, EPS grew at a robust 155% year-over-year, smashing Zacks Consensus Estimates by 33%.
Amazon Partnership Begins to Bear Fruit
Pinterest generates most of its revenues by delivering ads on its website and mobile applications. Earlier this year, Pinterest inked a multiyear ads partnership with Amazon. On Pinterest’s earnings call, the CEO touted the partnership by saying:
"..we see really good progress. We're testing, learning, iterating and we're focused on creating a really great relevant user experience and valuable merchant experience. And we're really pleased with what we're seeing on that front. That's the biggest breakthrough and this is demonstrating the increase in relevancy from bringing on third-party demand. As I noted in the prior question, 50% increase in relevance on search and 100% increase in relevance on related items, I think that just bodes really well for where we can go with that. So those are the biggest things to solve for. As we've been calling out, it is a multi-quarter implementation with the most meaningful revenue to hit early in '24."
Analysts Playing Catchup
Zacks exhaustive studies of the biggest stock market winners proves that increasing earnings estimates is the single most important critical factor to consider. Recently, several analysts revised Pinterest’s earnings estimates higher, and Zacks Consensus Estimates now predict blistering growth of 50% or more for the next three quarters.
The Magic of Post-Earnings Drift
Post-earnings drift refers to the tendency of a stock’s price to continue moving in the same direction as the initial price reaction. When a company reports stronger than anticipated results, institutional investors pile into shares. However, because these deep-pocketed investors tend to accumulate shares over time, often the initial gap in price is just the beginning. In other words, powerful earnings gaps lead to big trends. Nvidia’stwo positive earnings reactions in 2016 represent an example of this phenomenon.
Following its Q3 earnings, Pinterest shares launched higher by 19% on volume 5x the norm. Large price moves coupled with heavy volume are indicative of institutional accumulation. PINS is now hovering near the $30 mark – an area where the stock has run into resistance several times.
Bottom Line
Pinterest shares have been stagnant for years. However, improved earnings, a key partnership, and higher analyst expectations suggest that Pinterest has turned the corner and is poised to move much higher over the next year.
Bear of the Day:
Zacks Rank #5 (Strong Sell) stock Clorox is a prominent multinational consumer goods company specializing in the development, production, and marketing of a broad range of household and professional products. Founded in 1913, Clorox is among the most trusted consumer brands globally, and is best known for its cleaning and disinfecting products, namely bleach and disinfecting wipes, which fall under the flagship Clorox brand. In addition to household cleaners, Clorox manufactures a diverse array of products, such as healthcare and personal care items, lifestyle solutions, and natural cleaning products.
Sophisticated Cyber Attack Disrupts Operations
Early last month, Clorox informed investors it expects to post a first-quarter loss after a cyberattack in August led to wide-ranging operational disruptions. The sophisticated cyber-attack was so successful that it impacted other public companies such as casino operator MGM Resorts.While the cyber-attack affected this quarter’s earnings, it may have further impacts to supply chain and product output beyond this quarter.
Beaten Down, Yet Overvalued
Clorox has a reputation as being a value stock. However, to be a true value stock, CLX must be undervalued. Clorox’s p/e ratio is 24.17x, which is above the S&P 500’s 24.17.
What’s worse is that the company has negative quarterly EPS growth of 47% and negative revenue growth of 20%. In other words, Clorox’s lackluster growth does not make up for its above-average valuation.
Investment Opportunity Cost
Many investors will own a stock like Clorox for its juicy dividend. However, CLX’s falling stock price has outweighed any dividend gains. Furthermore, as investors, we each have limited resources to invest. With the Nasdaq, S&P 500 Index, and Russell 2000 Index showing clear signs of a bottom, there are much better areas to allocate money to than “Old Economy” stocks.
Bottom Line
Clorox is facing significant challenges after a sophisticated cyber-attack disrupted its operations. Despite its reputation as a value stock, CLX’s overvaluation, negative quarterly EPS growth, and declining stock prices are concerning.
Additional content:
3 Transportation Stocks Likely to Surpass Earnings Estimates
The majority of the players in the Zacks Transportation sector have already released third-quarter 2023 results. While the picture with respect to earnings growth remains dull, as expected, the percentage of companies beating earnings estimates is impressive.
Among transportation companies yet to report third-quarter results, we expect the likes of Ardmore Shipping,DHT Holdings and GXO Logistics to report better-than-expected earnings per share despite headwinds like high fuel costs, supply-chain woes and high inflation-induced economic uncertainty.
Let’s delve into the factors that are likely to boost the third-quarter results of the sector participants who are yet to announce earnings.
With most yet-to-report companies in the sector belonging to the shipping sub-group, improvement in the demand scenario from the pandemic lows is a major positive. The uptick in trading volumes is likely to have aided the performance of shipping companies in the soon-to-be-reported quarter, as the industry is responsible for transporting the bulk of the goods involved in global trade.
Upbeat demand for liquefied natural gas (LNG) represents a huge positive for shipping stocks. The elevated levels of inflation raised oil and natural gas prices. Moreover, amid the prolonged Russia-Ukraine war, Europe is likely to seek gas supplies outside Russia. This is expected to have driven demand for LNG vessels in the September quarter.
Efforts to control costs for bottom-line growth amid the prevalent demand weakness are also likely to have aided the performance of the companies that are yet to report. Moreover, the fact that e-commerce is still a force to reckon with bodes well.
It is hardly surprising that the pace of growth of e-commerce demand has slowed from the levels witnessed at the peak of the pandemic with the reopening of economies. However, it remains impressive, driven by the convenience associated with online shopping. The race to digitization also supports the momentum in e-commerce growth. E-commerce demand strength should aid the results of the sector participants.
Here’s How to Pick the Right Stocks
Quite a few transportation stocks are likely to report earnings shortly. It is always a daunting task for investors to pick a winning basket of stocks with the potential to deliver better-than-expected earnings.
While there is no foolproof method of choosing outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks with high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this perfect mix of elements, the odds of an earnings beat are as high as 70%.
Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our Choices
Ardmore Shipping currently has an Earnings ESP of +4.65% and a Zacks Rank of 1. ASC is slated to report third-quarter 2023 results on Nov 7.
We expect Ardmore Shipping’s results to reflect the bullishness surrounding the tanker market, as product tanker rates are currently at healthy levels despite minor hiccups. Also, the normalization of economic activities and an uptick in world trade following the removal of COVID-19-induced restrictions are expected to have boosted ASC’s performance.
ASC beat the Zacks Consensus Estimate in three of the last four quarters and matched once, the average beat being 3.34%.
Ardmore Shipping Corporation price-eps-surprise | Ardmore Shipping Corporation Quote
DHT Holdings has an Earnings ESP of +4.76% and a Zacks Rank #3. DHT will release results on Nov 6. You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect the company’s performance to have been aided by the optimism surrounding LNG charter rates. Efforts to modernize its fleet also bode well. High fuel costs are, however, likely to hurt results.
DHT beat the Zacks Consensus Estimate in one of the last four quarters and missed thrice, the average miss being 14.35%.
DHT Holdings, Inc. price-eps-surprise | DHT Holdings, Inc. Quote
GXO Logistics currently has an Earnings ESP of +0.02% and a Zacks Rank #3. GXO will release results on Nov 7.
The rapid growth of e-commerce, automation and outsourcing should aid GXO’s third-quarter results. The company’s efforts to strengthen its logistics capabilities also bode well.
GXO beat the Zacks Consensus Estimate in each of the last four quarters, the average beat being 11.26%.
GXO Logistics, Inc. price-eps-surprise | GXO Logistics, Inc. Quote
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.