For Immediate Release

Chicago, IL – December 4, 2023 – Zacks Equity Research shares CBOE Global Markets (CBOE Quick QuoteCBOE - Free Report) as the Bull of the Day and Issuer Direct (ISDR Quick QuoteISDR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Suncor Energy (SU Quick QuoteSU - Free Report) , EOG Resources (EOG Quick QuoteEOG - Free Report) and Murphy Oil (MUR Quick QuoteMUR - Free Report) .

Here is a synopsis of all five stocks.

Bull of the Day:

CBOE Global Markets, a Zacks Rank #1 (Strong Buy), is one of the largest stock exchange operators by volume in the United States. The company boasts a compelling inorganic growth story given its prudent string of acquisitions. CBOE shares are widely outperforming the market this year with the backing of a leading industry group. The stock is hitting all-time highs and displaying relative strength as buying pressure accumulates in this market leader.

The market operator is part of the Zacks Securities and Exchanges industry group, which currently ranks in the top 25% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months. This industry really picked up momentum over the past 3 months.

Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.

Company Description

CBOE Global Markets operates primarily as a global options exchange. The company offers cutting-edge trading and investment solutions and operates through five segments: Options, North American Equities, European Equities, Futures, and Global FX. CBOE also provides exchange-traded products (ETP) transaction and listing services.

In addition, the company offers CBOE Clear Digital, a regulated clearinghouse. CBOE Global Markets has strategic relationships with well-known industry players such as S&P Dow Jones Indices, IHS Markit Ltd., and MSCI Inc. CBOE was founded in 1973 and is based in Chicago, IL.

Strategic acquisitions are improving CBOE’s competitive edge by diversifying its portfolio, generating expense synergies, and expanding into new geographies. The purchase of BATS Global extended and diversified its product portfolio with the addition of U.S. and European cash equities. The company’s acquisition of Trade Alert enabled it to provide real-time data, market information and alerts. The buyout of MATCHNow also helped CBOE venture into Canada; since then, the company closed the investment in Aequitas Innovations (rebranded to CBOE Canada) in an effort to strengthen its foothold in a key capital market.

Earnings Trends and Future Estimates

CBOE has built up an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Last month, the company reported third-quarter earnings of $2.06/share, a 10.75% surprise over the $1.86/share consensus estimate. Earnings grew 18.4% year-over-year; CBOE has established a healthy track record of rising earnings and sales.

The established market exchange has delivered a trailing four-quarter average earnings surprise of 4.07%. Consistently beating earnings estimates is a recipe for success.

Analysts covering CBOE are in agreement and have been increasing their earnings estimates across the board. For the current quarter, analysts have bumped up earnings estimates by 6.08% in the past 60 days. The Q4 Zacks Consensus EPS Estimate now stands at $1.92/share, reflecting potential growth of 6.7% relative to the prior year. Revenues are projected to climb 7.88% to $493.1 million.

Let’s Get Technical

CBOE shares have advanced more than 45% this year. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.

Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of higher highs. With both strong fundamentals and technicals, CBOE is poised to continue its outperformance.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, CBOE Global Markets has recently witnessed positive revisions. As long as this trend remains intact (and CBOE continues to deliver earnings beats), the stock will likely continue its bullish run this year.

Bottom Line

As trading volumes continue to increase, the future looks bright for this highly-ranked, leading stock. CBOE has shown an ability to adapt to the ever-changing technological landscape, which puts the company in a strong position moving forward.

Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why this company is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix.

Bear of the Day:

Issuer Direct operates as a communications and compliance firm. The company provides press release distribution, media databases and monitoring, and news dissemination. Issuer Direct also offers a cloud-based webcast and virtual meeting platform that delivers live and on-demand streaming of events.

The company delivers its solutions to both public relations and investor relations professionals in the United States and internationally. Its clients include mutual funds, law firms, brokerage firms, investment banks, and other public and private institutions.

The Zacks Rundown

Issuer Direct, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Commercial Printing industry group. This industry ranks in the bottom 8% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has over the prior 3 months.

Candidates in the bottom tiers of industries can often be potential candidates for short positions. While individual stocks have the ability to outperform even when included in a lackluster industry group, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.

Despite a rebound in stocks over the past month, ISDR shares have not been printing lately. The stock has experienced considerable volatility over the past year. Shares recently hit a 52-week low following a disappointing earnings report and represent a compelling short or hedge opportunity.

Recent Earnings Misses and Deteriorating Outlook

ISDR has fallen short of earnings estimates in two of the last four quarters. The communications company most recently reported third-quarter earnings last month of $0.27/share, missing the $0.35/share consensus EPS estimate by -22.86%. Earnings were flat relative to the same quarter in the prior year.

Issuer Direct has posted a trailing four-quarter average earnings miss of -7.04%. Consistently falling short of earnings estimates is a recipe for underperformance, and ISDR is no exception.

The company has been on the receiving end of negative earnings estimate revisions as of late. The current quarter’s outlook has been slashed by -18.75%. Looking ahead, the 2024 Zacks Consensus EPS Estimate stands at $1.08/share, reflecting negative earnings growth of -22.3% relative to this year.

Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.

Technical Outlook

ISDR stock is in a sustained downtrend. Notice how shares have plunged below both the 50-day and 200-day moving averages. The stock is making a series of lower lows, with no respite from the selling in sight. Both moving averages have rolled over and are sloping down – another good sign for the bears.

ISDR stock has also experienced what is known as a ‘death cross,’ wherein the stock’s 50-day moving average crosses below its 200-day moving average. Issuer Direct would have to make a surprising move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. ISDR shares have fallen more than 38% this year alone, all while the major indexes have shown strength.

Final Thoughts

A deteriorating fundamental and technical backdrop show that this stock is not set to print new highs anytime soon. The fact that ISDR stock is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.

Highlighted underperformance bodes well for the bears. Potential investors may want to consider including this stock as part of a short or hedge strategy. Bulls will want to steer clear of ISDR shares until the situation shows major signs of improvement, as there are plenty of better alternatives in the current market environment.

Additional content:

How Will OPEC's Supply Cuts and Brazil's Entry Impact Oil?

In a bid to counter falling oil prices, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) led by Saudi Arabia and Russia have announced plans for an additional 1 million barrel cut to daily production. This move supplements an earlier cut of equal size that was set to expire, signaling a commitment to stabilize prices. However, these reductions are voluntary and raise questions about their sustainability. The surprise move by major producer Brazil to join the cartel next year was another talking point.

Despite OPEC+ announcing nearly 2 million barrels per day (bpd) of cuts, American benchmark prices fell by over 2% yesterday. The voluntary nature of the cuts left investors nonplussed. Further, the cuts, while substantial, include extensions of existing curbs by Saudi Arabia and Russia, leaving the market seeking stronger commitments.

According to us, any weakness in oil allows long-term-oriented market participants to buy shares in quality companies at attractive prices. As it is, the commodity is still trading above $75 per barrel — a healthy enough level for market participants. As such, investors interested in the sector could benefit from having quality stocks like Suncor Energy, EOG Resources and Murphy Oil.

OPEC Action Failed to Prop Up Prices

As prices at U.S. gasoline stations keep on sliding to an average of $3.25 per gallon, OPEC+ strives to address economic challenges and fears of flat oil prices without further output caps. Despite the latest reduction, analysts remain cautious, pointing to global economic uncertainties, expanding production capabilities outside OPEC, and abundant oil inventories. As a matter of fact, the price of WTI crude fell $1.90, or 2.4%, to $75.96 per barrel in response to news of the voluntary cuts.

Brazil’s Entry Makes Things Challenging

In a surprising development, Brazil has joined OPEC+, a move that adds complexity to global oil dynamics. The South American nation, a potential partner for the United States in efforts to influence gasoline prices, has aligned with OPEC+, which already controls 40% of the world's oil supply. This decision poses a setback for U.S. attempts to keep pump prices down and reflects a significant market power victory for OPEC+.

OPEC Grappling With Several Complex Questions

Internally, OPEC+ faced challenges in reaching a consensus on voluntary cuts due to tensions among member nations. Externally, a glut of oil in the market, driven in part by increased U.S. production — currently the highest on record — presents a hurdle. China's economic struggles further dampen global demand forecasts. Despite OPEC+'s efforts, the road to higher oil prices seems uncertain amid these challenges.

Investor Considerations

Having gone through the OPEC+ decision, investors interested in the energy space might consider the operators mentioned below. Each of these companies currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Suncor Energy: SU beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters at an average of 15.7%.

Suncor Energy is valued at around $42.5 billion. SU has seen its shares move down 4.3% in a year.

EOG Resources: EOG Resources beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. EOG has a trailing four-quarter earnings surprise of 9.2%, on average.

EOG Resources is valued at around $72 billion. EOG has seen its shares drop 9.6% in a year.

Murphy Oil: Over the past 60 days, Murphy Oil saw the Zacks Consensus Estimate for 2023 move up 11.5%. MUR beat the Zacks Consensus Estimate for earnings in each of the last four quarters, representing an average surprise of 13.4%.

Murphy Oil is valued at around $6.7 billion. MUR has seen its shares lose 8.5% in a year.

Last Words

While OPEC+ attempts to stabilize falling oil prices through voluntary cuts and welcomes Brazil into its fold, the road ahead remains uncertain. Given the unpredictable nature of the oil market, a balanced and informed approach will position investors to navigate potential challenges and capitalize on opportunities.

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