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Pilgrim's Pride and Malibu Boats have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – November 14, 2023 – Zacks Equity Research shares Pilgrim's Pride (PPC - Free Report) as the Bull of the Day and Malibu Boats (MBUU - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Walt Disney Company (DIS - Free Report) , Apple Inc. (AAPL - Free Report) and Amazon.com, Inc. (AMZN - Free Report) .
Pilgrim's Pride is a Zacks Rank #1 (Strong Buy) that engages in the production, processing, marketing and distribution of fresh, frozen, and value-added chicken, and pork products to retailers, distributors, and foodservice operators.
The stock is trading at 52-week highs after a revenue and earnings beat. While PPC is trading up about 15% on the year, it is still down 25% from 2022 highs.
Investors should be looking for more upside if the stock can break the resistance level at $26.50.
More About Pilgrim's Pride
The company was founded in 1946 and is headquartered in Greeley, Colorado. It employs over 61,000 people and has a market cap of $6 billion.
Pilgrim's Pride offers its products under the Pilgrim's, Just BARE, Gold'n Pump, Gold Kist, County Pride, Pierce Chicken, Pilgrim's Mexico, County Post, Savoro, To-Ricos, Del Dia, Moy Park, O'Kane, Richmond, Fridge Raiders, and Denny brands.
The company sells its products to chain restaurants, food processors, broad-line distributors, and the retail market.
PPC has a Zacks Style Score of "A" in Value and "B" in Growth. The stock has a Forward PE of 17 and pays no dividend.
Q3 Earnings
In late October, PPC reported a 14% earnings beat on revenues. This the seventh straight earnings beat for the company who has not missed on earnings expectations since late 2021.
Q3 came in at $0.58 v $0.42 expected and revenues were $4.4B v $4.29Be. Adjusted EBITDA margins were 7.4%, which was down from the 10.3% last year.
While the company expected tighter protein supplies into year end, lower grain prices are helping chicken profits.
Management cited operational excellence efforts and promotional activity as reasons for margin growth. Moreover, PPC saw net sales net sales grow 65% collectively in the Just Bare and Pilgrim's brands.
Estimates Trend Higher
Looking at earnings estimates, we only have data for the longer-term. However, the move in this data is noticeable.
For the current year, we see analyst lifting estimates since earnings. For the last 30 days, numbers have been taken from $1.24 to $1.53, an up move of 23%.
Next year the numbers continue to move higher, with estimates going from $2.10 to $2.48, up 18%.
The Technical Take
For the most part, the stock has gone sideways over the last 10 years. While there was an attempted breakout in 2022, that up move failed and the stock sold down to the $20 support level.
While the PPC is up nice this year, the $26.50 level has been a headache for the bulls. A break over that level and we could start to see some serious upwards movement to the $29.50 level. This is the 61.8% Fibonacci retracement, drawn from 2022 highs to recent lows and should be the next area of resistance.
Looking longer term, if the bulls get price over the $30 level, they can start to target those 2022 highs above $34
For those looking for an entry, below are some levels to watch:
21-day Moving Average (MA): $25
50-day MA: $24.35
200-day MA: $23.70
In Summary
Pilgrim's Pride investors have seen struggles, but nothing like their main competitors in Tyson Foods. Management's comments seem to point out the difference here is the execution and management.
Bullish inventors can place their bets on the good team over at PPC. But they also can count on solid fundamentals and the technicals offering support.
There should be plenty of meat on the bone for PPC as the year ends and investors can look for a strong start to 2024 if inflation keeps trending lower.
Malibu Boats is a Zacks Rank #5 (Strong Sell) that designs, engineers, manufactures, markets, and sells a range of recreational powerboats.
The stock is trading at 52-week lows after a recent earnings report. While the company beat on earnings, its outlook was stormy.
The consumer remains strong, but they have shifted to spending on smaller everyday items instead of big-ticket items like boats. For this reason, investors and the company look to be cautious going into 2024.
About the Company
Malibu was founded in 1982 and is headquartered in London, Tennessee.The company sells its products through independent dealers and employs over 3,000 people.
The company provides performance sport boats, and sterndrive and outboard boats under the Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt brands.
Malibu is valued at $800 million and has a Forward PE of 8. The stock holds Zacks Style Scores of "B" in Value and Growth, and "A" in Momentum. The stock pays no dividend.
Q4 Earnings
Malibu reported in late October, beating EPS by 24%. The company is used to beating expectations as they have not missed since 2016.
However, management reduced its FY24 outlook as they no longer see improvement in retail trends in 2H. The company sees net sales declining in the high teens/low 20% range vs. down mid-/high teens prior. EBITDA margins are now expected to contract 350-450bps from last year.
Analyst commentary says consumers are backing away with higher interest rates. While market share is still there for Malibu, only the cash buyers for higher end boats are outperforming. The credit buyers look to be on the sidelines until interest rates come in.
Estimates
Analysts have been cutting estimates since earnings and the lower guidance.
Over the last 30 days, numbers for the current quarter plunged from $1.12 to $0.51 or 66%.
For the current year, analysts have lowered estimates 13% over that same time frame.
Looking at the longer term, numbers are trending lower as well. For next year, estimates have fallen from $7.47 to $6.27 over the last 90 days, or almost 16%.
Technical Take
While the S&P is up 15% on the year MBUU is down 20% in 2023. This underperformance is a consequence of higher interest rates taking demand away. And when you look at the chart, you can see the MBUU breakdown happened when interest rates started to spike late in the summer.
The stock has broken the 2022 lows and a 61.8% Fibonacci retracement drawn from COVID lows to highs.
The next support area is $40, but if that fails the stock had risk down to $34.
Any bounce will likely be sold. Investors can look for the 50-day moving average at $47.50. The 200-day MA is at $54.50 and likely won't be tested unless there is a fundamental change in the current earnings situation.
In Summary
Malibu is going to have trouble over the next six months as consumer demand weakens into the off season. While the interest rate situation looks to be improving over that time frame, the company does not see demand coming back quickly.
Additional content:
What's in Store for Disney (DIS - Free Report) After Promising Earnings?
Entertainment behemoth The Walt Disney Company reported encouraging quarterly earnings last week that surpassed Wall Street's estimates.
The media giant posted fiscal fourth-quarter revenues of $21.2 billion, up 5% from a year ago. Earnings came in at 82 cents a share in the quarter ending in September, up from 30 cents in the year-ago quarter.
An increase in streaming users helped Disney post solid quarterly earnings. Notably, the Disney+ streaming service added almost 7 million core subscribers in the reported quarter and increased the total number of subscribers to 112.6 million.
Disney's CEO Robert Iger recently said that acceptance of movies and original series such as Elemental, Guardians of the Galaxy Vol.3, Little Mermaid, Moving, and Ahsoka boosted subscriber growth significantly.
The entertainment segment, which includes movies, generated revenues of $9.5 billion in the fiscal fourth quarter, up 2% from the same period a year ago.
Similarly, the experience segment, which includes hotels, cruises and theme parks, posted revenues of $8.2 billion, up 13% from the same quarter a year ago.
Disney also expects its overall revenues and profits to improve further in the December quarter, while its management vowed to reduce costs.
The company, in reality, is expecting its free cash flow to increase and achieve pre-pandemic levels in the next year. The company assumes $8 billion in free cash flow in fiscal 2024.
However, weaker results at ESPN have primarily impacted the company for quite some time now. The cost of sports rights is increasing at a faster pace than the revenues generated from ESPN, which undoubtedly is a headache for Disney.
In the fiscal fourth quarter, the sports segment, or mostly ESPN, posted revenues of $3.9 billion, but it was more or less flat with the same period last year.
It's also worth pointing out that the growth in the streaming segment is much softer at the moment as the company continues to face stiff competition from other media giants like Apple Inc. and Amazon.com, Inc. Disney's move to increase streaming prices in August hasn't gone down well with users.
To top it off, linear TV viewing has reduced considerably, and along with lower advertising revenues, things are looking challenging for Disney in the near term.
To make matters worse, Disney continues to face a prolonged actors strike, a decline in footfall at Disney World Resort, and ambiguity related to a CEO succession plan.
Therefore, despite posting upbeat results in its latest quarterly earnings, the Zacks Consensus Estimate for Disney's current-year earnings has decreased 10.3% over the past 60 days.
The Zacks Rank #5 (Strong Sell) company's shares are trading at their lowest level in almost a decade. Shares of Disney have gained a meager 1.6% so far this year, while the S&P 500 Index has soared 16%. You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
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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Pilgrim's Pride and Malibu Boats have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 14, 2023 – Zacks Equity Research shares Pilgrim's Pride (PPC - Free Report) as the Bull of the Day and Malibu Boats (MBUU - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Walt Disney Company (DIS - Free Report) , Apple Inc. (AAPL - Free Report) and Amazon.com, Inc. (AMZN - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Pilgrim's Pride is a Zacks Rank #1 (Strong Buy) that engages in the production, processing, marketing and distribution of fresh, frozen, and value-added chicken, and pork products to retailers, distributors, and foodservice operators.
The stock is trading at 52-week highs after a revenue and earnings beat. While PPC is trading up about 15% on the year, it is still down 25% from 2022 highs.
Investors should be looking for more upside if the stock can break the resistance level at $26.50.
More About Pilgrim's Pride
The company was founded in 1946 and is headquartered in Greeley, Colorado. It employs over 61,000 people and has a market cap of $6 billion.
Pilgrim's Pride offers its products under the Pilgrim's, Just BARE, Gold'n Pump, Gold Kist, County Pride, Pierce Chicken, Pilgrim's Mexico, County Post, Savoro, To-Ricos, Del Dia, Moy Park, O'Kane, Richmond, Fridge Raiders, and Denny brands.
The company sells its products to chain restaurants, food processors, broad-line distributors, and the retail market.
PPC has a Zacks Style Score of "A" in Value and "B" in Growth. The stock has a Forward PE of 17 and pays no dividend.
Q3 Earnings
In late October, PPC reported a 14% earnings beat on revenues. This the seventh straight earnings beat for the company who has not missed on earnings expectations since late 2021.
Q3 came in at $0.58 v $0.42 expected and revenues were $4.4B v $4.29Be. Adjusted EBITDA margins were 7.4%, which was down from the 10.3% last year.
While the company expected tighter protein supplies into year end, lower grain prices are helping chicken profits.
Management cited operational excellence efforts and promotional activity as reasons for margin growth. Moreover, PPC saw net sales net sales grow 65% collectively in the Just Bare and Pilgrim's brands.
Estimates Trend Higher
Looking at earnings estimates, we only have data for the longer-term. However, the move in this data is noticeable.
For the current year, we see analyst lifting estimates since earnings. For the last 30 days, numbers have been taken from $1.24 to $1.53, an up move of 23%.
Next year the numbers continue to move higher, with estimates going from $2.10 to $2.48, up 18%.
The Technical Take
For the most part, the stock has gone sideways over the last 10 years. While there was an attempted breakout in 2022, that up move failed and the stock sold down to the $20 support level.
While the PPC is up nice this year, the $26.50 level has been a headache for the bulls. A break over that level and we could start to see some serious upwards movement to the $29.50 level. This is the 61.8% Fibonacci retracement, drawn from 2022 highs to recent lows and should be the next area of resistance.
Looking longer term, if the bulls get price over the $30 level, they can start to target those 2022 highs above $34
For those looking for an entry, below are some levels to watch:
21-day Moving Average (MA): $25
50-day MA: $24.35
200-day MA: $23.70
In Summary
Pilgrim's Pride investors have seen struggles, but nothing like their main competitors in Tyson Foods. Management's comments seem to point out the difference here is the execution and management.
Bullish inventors can place their bets on the good team over at PPC. But they also can count on solid fundamentals and the technicals offering support.
There should be plenty of meat on the bone for PPC as the year ends and investors can look for a strong start to 2024 if inflation keeps trending lower.
Bear of the Day:
Malibu Boats is a Zacks Rank #5 (Strong Sell) that designs, engineers, manufactures, markets, and sells a range of recreational powerboats.
The stock is trading at 52-week lows after a recent earnings report. While the company beat on earnings, its outlook was stormy.
The consumer remains strong, but they have shifted to spending on smaller everyday items instead of big-ticket items like boats. For this reason, investors and the company look to be cautious going into 2024.
About the Company
Malibu was founded in 1982 and is headquartered in London, Tennessee.The company sells its products through independent dealers and employs over 3,000 people.
The company provides performance sport boats, and sterndrive and outboard boats under the Malibu, Axis, Pursuit, Maverick, Cobia, Pathfinder, Hewes, and Cobalt brands.
Malibu is valued at $800 million and has a Forward PE of 8. The stock holds Zacks Style Scores of "B" in Value and Growth, and "A" in Momentum. The stock pays no dividend.
Q4 Earnings
Malibu reported in late October, beating EPS by 24%. The company is used to beating expectations as they have not missed since 2016.
However, management reduced its FY24 outlook as they no longer see improvement in retail trends in 2H. The company sees net sales declining in the high teens/low 20% range vs. down mid-/high teens prior. EBITDA margins are now expected to contract 350-450bps from last year.
Analyst commentary says consumers are backing away with higher interest rates. While market share is still there for Malibu, only the cash buyers for higher end boats are outperforming. The credit buyers look to be on the sidelines until interest rates come in.
Estimates
Analysts have been cutting estimates since earnings and the lower guidance.
Over the last 30 days, numbers for the current quarter plunged from $1.12 to $0.51 or 66%.
For the current year, analysts have lowered estimates 13% over that same time frame.
Looking at the longer term, numbers are trending lower as well. For next year, estimates have fallen from $7.47 to $6.27 over the last 90 days, or almost 16%.
Technical Take
While the S&P is up 15% on the year MBUU is down 20% in 2023. This underperformance is a consequence of higher interest rates taking demand away. And when you look at the chart, you can see the MBUU breakdown happened when interest rates started to spike late in the summer.
The stock has broken the 2022 lows and a 61.8% Fibonacci retracement drawn from COVID lows to highs.
The next support area is $40, but if that fails the stock had risk down to $34.
Any bounce will likely be sold. Investors can look for the 50-day moving average at $47.50. The 200-day MA is at $54.50 and likely won't be tested unless there is a fundamental change in the current earnings situation.
In Summary
Malibu is going to have trouble over the next six months as consumer demand weakens into the off season. While the interest rate situation looks to be improving over that time frame, the company does not see demand coming back quickly.
Additional content:
What's in Store for Disney (DIS - Free Report) After Promising Earnings?
Entertainment behemoth The Walt Disney Company reported encouraging quarterly earnings last week that surpassed Wall Street's estimates.
The media giant posted fiscal fourth-quarter revenues of $21.2 billion, up 5% from a year ago. Earnings came in at 82 cents a share in the quarter ending in September, up from 30 cents in the year-ago quarter.
An increase in streaming users helped Disney post solid quarterly earnings. Notably, the Disney+ streaming service added almost 7 million core subscribers in the reported quarter and increased the total number of subscribers to 112.6 million.
Disney's CEO Robert Iger recently said that acceptance of movies and original series such as Elemental, Guardians of the Galaxy Vol.3, Little Mermaid, Moving, and Ahsoka boosted subscriber growth significantly.
The entertainment segment, which includes movies, generated revenues of $9.5 billion in the fiscal fourth quarter, up 2% from the same period a year ago.
Similarly, the experience segment, which includes hotels, cruises and theme parks, posted revenues of $8.2 billion, up 13% from the same quarter a year ago.
Disney also expects its overall revenues and profits to improve further in the December quarter, while its management vowed to reduce costs.
The company, in reality, is expecting its free cash flow to increase and achieve pre-pandemic levels in the next year. The company assumes $8 billion in free cash flow in fiscal 2024.
However, weaker results at ESPN have primarily impacted the company for quite some time now. The cost of sports rights is increasing at a faster pace than the revenues generated from ESPN, which undoubtedly is a headache for Disney.
In the fiscal fourth quarter, the sports segment, or mostly ESPN, posted revenues of $3.9 billion, but it was more or less flat with the same period last year.
It's also worth pointing out that the growth in the streaming segment is much softer at the moment as the company continues to face stiff competition from other media giants like Apple Inc. and Amazon.com, Inc. Disney's move to increase streaming prices in August hasn't gone down well with users.
To top it off, linear TV viewing has reduced considerably, and along with lower advertising revenues, things are looking challenging for Disney in the near term.
To make matters worse, Disney continues to face a prolonged actors strike, a decline in footfall at Disney World Resort, and ambiguity related to a CEO succession plan.
Therefore, despite posting upbeat results in its latest quarterly earnings, the Zacks Consensus Estimate for Disney's current-year earnings has decreased 10.3% over the past 60 days.
The Zacks Rank #5 (Strong Sell) company's shares are trading at their lowest level in almost a decade. Shares of Disney have gained a meager 1.6% so far this year, while the S&P 500 Index has soared 16%. You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com
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.