We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Vertiv and Aaron's have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – November 17, 2023 – Zacks Equity Research shares Vertiv Holdings Co. (VRT - Free Report) as the Bull of the Day and The Aaron's Company, Inc. (AAN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Urban Outfitters, Inc. (URBN - Free Report) , Build-A-Bear Workshop (BBW - Free Report) and Costco (COST - Free Report) .
Vertiv Holdings Co. is a digital infrastructure and continuity solutions provider that crushed our bottom-line estimates and boosted its guidance during the first three quarters of 2023, including a big beat-and-raise Q3 near the end of October.
Vertiv stock has skyrocketed to new highs over the last 12 months, topping Meta’s run and nearly matching Nvidia. Yet VRT trades at a solid discount to the wider Zacks Tech sector and its own highs. Wall Street also loves that Vertiv is benefitting from the broader AI investment cycle as companies big and small race to increase their computing capacity.
Behind-the-Scenes Tech Essentials
Vertiv’s various products, services, and solutions are designed to help keep its customers’ vital applications running "continuously, perform optimally, and grow with their business needs." The Ohio-based company’s portfolio of power, cooling, and IT infrastructure solutions and services operates across data centers, communication networks, commercial and industrial facilities, and beyond.
Vertiv’s product categories include critical power, thermal management, racks & enclosures, and monitoring & management, while its services range from DC power and electrical reliability to safety and compliance and much more. The company and its other solutions serve small and medium-sized businesses as well as enterprises across healthcare, retail, telecom, education, and various other parts of the economy.
Simply put, if investors think about data centers, communication networks, and other critical technology as highly complex systems, Vertiv's role is to provide the behind-the-scenes tech that keeps everything working properly and running smoothly.
Growth and Outlook
Vertiv went public via a SPAC in late 2019, posting 14% revenue growth during its first two full years as a public firm. VRT grew its Q3 FY23 revenue by 18% and it closed the period with a record-high $5 billion backlog.
The company’s adjusted operating margins climbed from 9.1% in the year-ago period to 17% in Q3, driven by "benefits from pricing, volume and productivity partially offset by net inflation and growth investments in R&D and capacity." Vertiv posted an impressive beat and raise period on October 25, boosting its guidance for all of its key financial metrics because its "end markets remain healthy and momentum continues."
Wall Street is gravitating to all things AI, and Vertiv is poised to benefit from the ongoing investment and a possible artificial intelligence supercycle. "We are still in the early stages, but the industry is gearing up to deploy the data center infrastructure needed to meet the compute capacity that AI is demanding," CEO Giordano Albertazzi said in prepared remarks.
Zacks estimates call for VRT’s revenue to climb 20% this year and 9% higher in 2024 to hit $7.47 billion. Better yet, its adjusted earnings are projected to soar by 225% and 28%, respectively, from $0.53 a share last year to $2.20 in FY24.
Vertiv’s FY23, FY24, and FY25 EPS estimates have surged to help it land a Zacks Rank #1 (Strong Buy) right now. VRT’s FY23 consensus has climbed 68% over the last year from $1.02 a share to the current consensus of $1.72, with its FY24 outlook 80% higher during this stretch.
Performance, Technical Levels & Valuation
Vertiv shares have skyrocketed a whopping 205% during the past 12 months to top Meta’s (META) 198% and nearly match Nvidia’s (NVDA) 213% climb. VRT has climbed by 131% over the last three years vs. the Zacks Tech sector’s 24% and its industry’s -1% decline.
VRT touched new all-time highs on November 15 and it still trades below its average Zacks price target. Vertiv currently trades solidly above its 50-day moving average and it has fallen from way above overbought RSI levels to closer to neutral over the last several months.
Despite its outperformance, Vertiv trades at a 36% discount to its industry and roughly 15% below the Zacks Tech sector at 20.4X forward 12-month earnings. This also represents 18% value vs. its own highs.
Bottom Line
Vertiv operates in a somewhat unglamorous area of tech that is of vital and constant importance, which turns out to be a striking combination. Wall Street is very high on the stock, with nine of the 10 brokerage recommendations Zacks has for Vertiv coming in at “Strong Buys.”
The Aaron's Company, Inc. operates a rent-to-own business under multiple brands focused on furniture, appliances, electronics, and beyond.
Aaron’s earnings revisions started falling off a cliff during the summer of 2022 as higher rates and inflation began to eat into broader discretionary spending. On top of that, consumers simply pulled back from spending on big-ticket items after the massive Covid-era splurge on TVs and more.
AAN posted a huge Q3 bottom line miss on October 23, with analysts lowering their earnings outlooks once again.
The Basics
Aaron's, in its own words, is a “technology-enabled, omnichannel provider of lease-to-own and retail purchase solutions of appliances, electronics, furniture, and other home goods.” The Atlanta-based firm operates under its namesake brands, as well as BrandsMart U.S.A., BrandsMart Leasing, and Woodhaven.
Aaron’s posted solid growth in 2021 and 22% top-line expansion in 2022. But Aaron’s earnings outlook started falling rather quickly in the middle of last year amid higher rates and inflation. Plus, many U.S. consumers already bought all of the TVs and furniture that they needed for the foreseeable future during the massive Covid-era shopping spree.
Aaron’s is suffering a similar fate as Target and other discretionary-focused retailers. In contrast, Walmart had thrived in 2023 due to the more essential nature of its offerings.
Aaron’s posted adjusted earnings of $0.01 per share in Q3 vs. our $0.06 Zacks Consensus estimate. The company’s fiscal 2023 earnings estimate is now down 37% over the last year from $1.59 a share to its current $1.09 a share. Worst still, AAN’s FY24 EPS consensus has fallen by 46% over the last 12 months.
Bottom Line
AAN stock has fallen by -66% during the last two years vs. Target’s -49% decline and Walmart’s 10% gain. This downturn includes a 30% tumble over the trailing three months, compared to Target and Walmart’s sideways movement.
Aaron’s overall downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now. Current Zacks estimates call for its FY23 earnings to fall 47% YoY and then slip another 9% next year.
Investors might want to stay away from Aaron’s stock for the moment, especially as Wall Street grows a bit more worried about slowing consumer spending.
Additional content:
What to Expect from Urban Outfitters' (URBN - Free Report) Earnings
Urban Outfitters, Inc. is likely to report top and bottom-line numbers when it releases third-quarter fiscal 2024 results on Nov 21, after market close. The top-line estimate for the quarter is currently $1,261 million, indicating a 7.3% rise from the prior-year period’s level.
The Zacks Consensus Estimate for earnings is pinned at 81 cents per share, indicating growth of more than 100% from earnings of 40 cents a share recorded in the prior-year period. The consensus mark has increased a penny over the past seven days.
The company delivered an average earnings surprise of 19.2% in the trailing four quarters.
Factors to Note
Urban Outfitters’ fiscal third-quarter performance is likely to have benefited from its strategic efforts, including technological advancements, store rationalization and merchandising initiatives. The company has been strengthening its direct-to-consumer business, enhancing productivity in the existing channels, expanding product assortment and optimizing inventory level. URBN has also been strengthening its presence with the rapid expansion of digital activities. Its FP Movement initiative to boost growth at the Free People brand is also promising. The company’s Nuuly, the subscription-based rental service, has also been contributing.
All these factors are expected to have favored Urban Outfitters’ to-be-reported quarterly results. On its last earnings call, management cited that it is impressed with the sturdy overall consumer demand at the start of the fiscal third quarter and projected total company sales to grow in the high-single digits. This growth will be backed by a mid-single-digit increase in the Retail segment comp sales and a high double-digit rise in the Nuuly segment’s sales. It anticipates the gross margin for the quarter to improve more than 400 basis points year over year backed by increased initial product margins from reduced inbound freight costs and merchandise markdowns. We foresee an increase of 410 basis points in the adjusted gross margin and an expansion of 280 basis points in the operating margin.
The company further highlighted that the Free People Group's Retail segment performance will be positive in the impending quarter. It expects the Anthropologie brand to deliver strong comps in the third quarter. Management has forecast the Free People brand’s Retail segment performance to be positive for the fiscal third quarter. Our model suggests a net sales increase of 10.1% and 18.8% in the Anthropologie Group and Free People brands, respectively, for the third quarter.
On the flip side, a tough operating backdrop, including inflationary pressures and currency headwinds, is likely to have acted as a deterrent. Urban Outfitters has also been grappling with higher selling, general & administrative (SG&A) expenses and lower sales across its wholesale unit for a while now. We note that the company’s overall sales in the fiscal third quarter are likely to be partly offset by a decline in sales at the Wholesale unit. We expect the wholesale segment to witness a fall of 2.5% year over year in the quarter under review. We anticipate SG&A costs to rise 12.9% and as a rate of sales, the metric will increase 140 basis points during the quarter under discussion.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Urban Outfitters this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here, as you can see below. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
The Zacks Consensus Estimate for third-quarter fiscal 2023 earnings per share is pegged at 51 cents, flat year over year.
Build-A-Bear Workshop’s top line is expected to increase year over year. The consensus estimate for quarterly revenues is pegged at $107.6 million, which indicates an increase of 3% from the figure reported in the prior-year quarter. BBW has a trailing four-quarter earnings surprise of 21.6%, on average.
Costco currently has an Earnings ESP of +4.26% and a Zacks Rank of 2. COST is likely to register a bottom-line increase when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $3.43 suggests an increase of 10.7% from the year-ago fiscal quarter’s reported number.
Costco’s top line is expected to improve from the prior-year fiscal quarter’s reported number. The consensus estimate for quarterly revenues is pegged at $57.7 billion, suggesting growth of 6% from the prior-year fiscal quarter’s reported figure. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Vertiv and Aaron's have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 17, 2023 – Zacks Equity Research shares Vertiv Holdings Co. (VRT - Free Report) as the Bull of the Day and The Aaron's Company, Inc. (AAN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Urban Outfitters, Inc. (URBN - Free Report) , Build-A-Bear Workshop (BBW - Free Report) and Costco (COST - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Vertiv Holdings Co. is a digital infrastructure and continuity solutions provider that crushed our bottom-line estimates and boosted its guidance during the first three quarters of 2023, including a big beat-and-raise Q3 near the end of October.
Vertiv stock has skyrocketed to new highs over the last 12 months, topping Meta’s run and nearly matching Nvidia. Yet VRT trades at a solid discount to the wider Zacks Tech sector and its own highs. Wall Street also loves that Vertiv is benefitting from the broader AI investment cycle as companies big and small race to increase their computing capacity.
Behind-the-Scenes Tech Essentials
Vertiv’s various products, services, and solutions are designed to help keep its customers’ vital applications running "continuously, perform optimally, and grow with their business needs." The Ohio-based company’s portfolio of power, cooling, and IT infrastructure solutions and services operates across data centers, communication networks, commercial and industrial facilities, and beyond.
Vertiv’s product categories include critical power, thermal management, racks & enclosures, and monitoring & management, while its services range from DC power and electrical reliability to safety and compliance and much more. The company and its other solutions serve small and medium-sized businesses as well as enterprises across healthcare, retail, telecom, education, and various other parts of the economy.
Simply put, if investors think about data centers, communication networks, and other critical technology as highly complex systems, Vertiv's role is to provide the behind-the-scenes tech that keeps everything working properly and running smoothly.
Growth and Outlook
Vertiv went public via a SPAC in late 2019, posting 14% revenue growth during its first two full years as a public firm. VRT grew its Q3 FY23 revenue by 18% and it closed the period with a record-high $5 billion backlog.
The company’s adjusted operating margins climbed from 9.1% in the year-ago period to 17% in Q3, driven by "benefits from pricing, volume and productivity partially offset by net inflation and growth investments in R&D and capacity." Vertiv posted an impressive beat and raise period on October 25, boosting its guidance for all of its key financial metrics because its "end markets remain healthy and momentum continues."
Wall Street is gravitating to all things AI, and Vertiv is poised to benefit from the ongoing investment and a possible artificial intelligence supercycle. "We are still in the early stages, but the industry is gearing up to deploy the data center infrastructure needed to meet the compute capacity that AI is demanding," CEO Giordano Albertazzi said in prepared remarks.
Zacks estimates call for VRT’s revenue to climb 20% this year and 9% higher in 2024 to hit $7.47 billion. Better yet, its adjusted earnings are projected to soar by 225% and 28%, respectively, from $0.53 a share last year to $2.20 in FY24.
Vertiv’s FY23, FY24, and FY25 EPS estimates have surged to help it land a Zacks Rank #1 (Strong Buy) right now. VRT’s FY23 consensus has climbed 68% over the last year from $1.02 a share to the current consensus of $1.72, with its FY24 outlook 80% higher during this stretch.
Performance, Technical Levels & Valuation
Vertiv shares have skyrocketed a whopping 205% during the past 12 months to top Meta’s (META) 198% and nearly match Nvidia’s (NVDA) 213% climb. VRT has climbed by 131% over the last three years vs. the Zacks Tech sector’s 24% and its industry’s -1% decline.
VRT touched new all-time highs on November 15 and it still trades below its average Zacks price target. Vertiv currently trades solidly above its 50-day moving average and it has fallen from way above overbought RSI levels to closer to neutral over the last several months.
Despite its outperformance, Vertiv trades at a 36% discount to its industry and roughly 15% below the Zacks Tech sector at 20.4X forward 12-month earnings. This also represents 18% value vs. its own highs.
Bottom Line
Vertiv operates in a somewhat unglamorous area of tech that is of vital and constant importance, which turns out to be a striking combination. Wall Street is very high on the stock, with nine of the 10 brokerage recommendations Zacks has for Vertiv coming in at “Strong Buys.”
Bear of the Day:
The Aaron's Company, Inc. operates a rent-to-own business under multiple brands focused on furniture, appliances, electronics, and beyond.
Aaron’s earnings revisions started falling off a cliff during the summer of 2022 as higher rates and inflation began to eat into broader discretionary spending. On top of that, consumers simply pulled back from spending on big-ticket items after the massive Covid-era splurge on TVs and more.
AAN posted a huge Q3 bottom line miss on October 23, with analysts lowering their earnings outlooks once again.
The Basics
Aaron's, in its own words, is a “technology-enabled, omnichannel provider of lease-to-own and retail purchase solutions of appliances, electronics, furniture, and other home goods.” The Atlanta-based firm operates under its namesake brands, as well as BrandsMart U.S.A., BrandsMart Leasing, and Woodhaven.
Aaron’s posted solid growth in 2021 and 22% top-line expansion in 2022. But Aaron’s earnings outlook started falling rather quickly in the middle of last year amid higher rates and inflation. Plus, many U.S. consumers already bought all of the TVs and furniture that they needed for the foreseeable future during the massive Covid-era shopping spree.
Aaron’s is suffering a similar fate as Target and other discretionary-focused retailers. In contrast, Walmart had thrived in 2023 due to the more essential nature of its offerings.
Aaron’s posted adjusted earnings of $0.01 per share in Q3 vs. our $0.06 Zacks Consensus estimate. The company’s fiscal 2023 earnings estimate is now down 37% over the last year from $1.59 a share to its current $1.09 a share. Worst still, AAN’s FY24 EPS consensus has fallen by 46% over the last 12 months.
Bottom Line
AAN stock has fallen by -66% during the last two years vs. Target’s -49% decline and Walmart’s 10% gain. This downturn includes a 30% tumble over the trailing three months, compared to Target and Walmart’s sideways movement.
Aaron’s overall downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now. Current Zacks estimates call for its FY23 earnings to fall 47% YoY and then slip another 9% next year.
Investors might want to stay away from Aaron’s stock for the moment, especially as Wall Street grows a bit more worried about slowing consumer spending.
Additional content:
What to Expect from Urban Outfitters' (URBN - Free Report) Earnings
Urban Outfitters, Inc. is likely to report top and bottom-line numbers when it releases third-quarter fiscal 2024 results on Nov 21, after market close. The top-line estimate for the quarter is currently $1,261 million, indicating a 7.3% rise from the prior-year period’s level.
The Zacks Consensus Estimate for earnings is pinned at 81 cents per share, indicating growth of more than 100% from earnings of 40 cents a share recorded in the prior-year period. The consensus mark has increased a penny over the past seven days.
The company delivered an average earnings surprise of 19.2% in the trailing four quarters.
Factors to Note
Urban Outfitters’ fiscal third-quarter performance is likely to have benefited from its strategic efforts, including technological advancements, store rationalization and merchandising initiatives. The company has been strengthening its direct-to-consumer business, enhancing productivity in the existing channels, expanding product assortment and optimizing inventory level. URBN has also been strengthening its presence with the rapid expansion of digital activities. Its FP Movement initiative to boost growth at the Free People brand is also promising. The company’s Nuuly, the subscription-based rental service, has also been contributing.
All these factors are expected to have favored Urban Outfitters’ to-be-reported quarterly results. On its last earnings call, management cited that it is impressed with the sturdy overall consumer demand at the start of the fiscal third quarter and projected total company sales to grow in the high-single digits. This growth will be backed by a mid-single-digit increase in the Retail segment comp sales and a high double-digit rise in the Nuuly segment’s sales. It anticipates the gross margin for the quarter to improve more than 400 basis points year over year backed by increased initial product margins from reduced inbound freight costs and merchandise markdowns. We foresee an increase of 410 basis points in the adjusted gross margin and an expansion of 280 basis points in the operating margin.
The company further highlighted that the Free People Group's Retail segment performance will be positive in the impending quarter. It expects the Anthropologie brand to deliver strong comps in the third quarter. Management has forecast the Free People brand’s Retail segment performance to be positive for the fiscal third quarter. Our model suggests a net sales increase of 10.1% and 18.8% in the Anthropologie Group and Free People brands, respectively, for the third quarter.
On the flip side, a tough operating backdrop, including inflationary pressures and currency headwinds, is likely to have acted as a deterrent. Urban Outfitters has also been grappling with higher selling, general & administrative (SG&A) expenses and lower sales across its wholesale unit for a while now. We note that the company’s overall sales in the fiscal third quarter are likely to be partly offset by a decline in sales at the Wholesale unit. We expect the wholesale segment to witness a fall of 2.5% year over year in the quarter under review. We anticipate SG&A costs to rise 12.9% and as a rate of sales, the metric will increase 140 basis points during the quarter under discussion.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Urban Outfitters this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here, as you can see below. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Urban Outfitters, Inc. price-eps-surprise | Urban Outfitters, Inc. Quote
Urban Outfitters currently has an Earnings ESP of -1.69% and a Zacks Rank of 3.
Stocks Poised to Beat Earnings Estimates
Here are a few companies, which according to our model, have the right combination of elements to come up with an earnings beat this reporting cycle:
Build-A-Bear Workshop currently has an Earnings ESP of +0.66% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for third-quarter fiscal 2023 earnings per share is pegged at 51 cents, flat year over year.
Build-A-Bear Workshop’s top line is expected to increase year over year. The consensus estimate for quarterly revenues is pegged at $107.6 million, which indicates an increase of 3% from the figure reported in the prior-year quarter. BBW has a trailing four-quarter earnings surprise of 21.6%, on average.
Costco currently has an Earnings ESP of +4.26% and a Zacks Rank of 2. COST is likely to register a bottom-line increase when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $3.43 suggests an increase of 10.7% from the year-ago fiscal quarter’s reported number.
Costco’s top line is expected to improve from the prior-year fiscal quarter’s reported number. The consensus estimate for quarterly revenues is pegged at $57.7 billion, suggesting growth of 6% from the prior-year fiscal quarter’s reported figure. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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 >>
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/performance for information about the performance numbers displayed in this press release.