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Wingstop and Marriott Vacations Worldwide have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – December 29, 2023 – Zacks Equity Research shares Wingstop Inc. (WING - Free Report) as the Bull of the Day and Marriott Vacations Worldwide Corp. (VAC - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cardinal Health (CAH - Free Report) , Atmos Energy (ATO - Free Report) and NextEra Energy (NEE - Free Report) .
Nothing seems to stop Wingstop Inc. from hitting new highs. This Zacks Rank #1 (Strong Buy) has outperformed the S&P 500 again in 2023, gaining 87.4% year-to-date compared to the S&P's 24.5%.
Wingstop operates and franchises more than 2,050 Wingstop restaurant locations worldwide. It offers classic and boneless wings, tenders and chicken sandwiches, which are cooked to order and hand sauced-and-tossed in 11 different flavors.
It also has signature sides including fresh-cut, seasoned fries and ranch and bleu cheese dips.
Another Beat in the Fiscal Q3 of 2023
On Nov 1, 2023, Wingstop reported its fiscal third quarter 2023 results and beat on the Zacks Consensus for the 6th consecutive quarter. Earnings were $0.69 versus the consensus of just $0.52, for a $0.17 beat.
Domestic same-store-sales, a key metric in the restaurant industry, rose 15.3% year-over-year primarily due to transaction growth.
System-wide sales increased 26.5% to $885 million.
Wingstop saw a benefit as the cost of bone-in chicken wings fell 13.5% compared to the year ago quarter.
"We are measuring record levels in brand health metrics, demonstrating the underlying momentum at Wingstop, and putting us on a path to deliver our 20th consecutive year of domestic same-store sales growth," said Michael Skipworth, President and CEO.
Accelerated Share Repurchases Done in the Third Quarter
The board had previously approved a share repurchase program with authorization to purchase up to $250 million of the outstanding shares. Pursuant to that program, Wingstop also entered into an accelerated share repurchase agreement (the "ASR Agreement") to repurchase $125 million of its common stock.
During the fiscal third quarter, Wingstop made the initial payment of $125 million and retired 567,151 shares of its common stock under the ASR Agreement. This represented about 75% of the total shares expected to be delivered under the ASR agreement.
The delivery of the remaining shares is expected to take place in the fiscal fourth quarter of 2023. But as of Sep 30, 2023, the company had a total remaining authorized amount for share repurchases under the program of about $125 million.
Wingstop Raised Same-Store-Sales Guidance for the Full Year
Wingstop said it continued to see momentum in its business. It raised domestic same-store-sales growth to approximately 16% from its previous guidance of 10% to 12%. That's a dramatic increase to close out the year.
The analysts are bullish about earnings for the full year too. 10 estimates were revised higher in the last 2 months, with one being revised just this week.
The F2023 Zacks Consensus Estimate has jumped to $2.40 from $2.20 over the last 60 days. That's earnings growth of 29.7% as Wingstop only made $1.85 last year.
They are bullish about next year too. 10 estimates have been revised higher in the last 60 days, including one this week, for fiscal 2024 as well. The Zacks Consensus has jumped to $2.84 from $2.56 in that time, up another 18.2%.
Shares Are At New Highs
Shares of Wingstop had been red hot during the initial first year of the pandemic, when everyone was stuck at home and ordering takeout. But those days are long over, yet Wingstop's shares continue to move higher.
Not only is it a big winner this year, but over the last 5 years, Wingstop is easily beating both the S&P 500 and the Invesco QQQ ETF, with a 5-year gain of 299%.
I'm not going to lie. The shares are not cheap. Wingstop trades with a forward P/E of 109 and has a PEG ratio of 5.0. A PEG ratio under 1.0 usually indicates a company has both growth and value.
But clearly, growth investors are seeing something they like in Wingstop as they keep piling in.
In addition to the share repurchase program, Wingstop also pays a dividend, currently yielding 0.3%.
For investors looking for a red-hot restaurant stock with rising earnings estimates, Wingstop should be on your short list.
Marriott Vacations Worldwide Corp. is feeling the impact of the Maui wildfire on business. This Zacks Rank #5 (Strong Sell) will see declining earnings this year.
Marriott Vacations is a global vacation company that offers vacation ownership, exchange, rental and resort and property management. It has over 120 vacation ownership resorts and approximately 700,000 owner families across its diverse portfolio. It's brands include Marriott Vacation Club, Sheraton Vacation Club, Westin Vacation Club, The Ritz Carlton Club, Grand Residences by Marriott, the St Regis Residence Club, and the Hyatt Vacation Club, among others.
It also has an exchange network and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries, and provides management services to other resorts and lodging properties.
A Big Miss in the Third Quarter
On Nov 1, 2023, Marriott Vacations Worldwide reported its third quarter results and missed for the second quarter in a row. It reported just $1.20 versus the Zacks Consensus of $2.19. That's a miss of 45.2%.
Consolidated vacation ownership contract sales were $438 million and volume per guest ("VPG") increased $87 sequentially from the second quarter, or 2% to $4,055. Marriott Vacations estimated that the Maui wildfires negatively impacted contract sales by $28 million and VPG by about $66, or 2%, in the quarter.
On Aug 8, 2023, a wildfire devastated parts of West Maui. The company operates 4 vacation ownership resorts and sales centers in the area of the fire, but none of them sustained any physical damage. However, the fire still impacted contract sales as the island has been slow to regain confidence with tourists.
It also recorded a $59 million charge to its loan loss provision in the third quarter.
"We had a difficult quarter between the devastating wildfires in Maui and default rates on our loan portfolio remaining above our recent experience. However, our loan delinquencies are stabilizing and with Maui reopen for tourism we have started to see our resort occupancies recover," said John Geller, president and CEO.
Estimates Cut for the Full Year
Marriott Vacations expects to continue to see impacts from the fire in the fourth quarter. Contract sales are expected to be impacted by $32 to $37 million.
For the full year, the fire is expected to impact contract sales by $60 to $65 million. The new full year contract sales guidance is for $1.75 billion to $1.77 billion.
Earnings for the full year are now expected to be between $7.44 to $7.78, with impacts from the fire of $0.85 to $0.94.
As a result, the analysts have had to cut their earnings estimates. 6 have been lowered in the last 2 months for 2023, which has pushed the Zacks Consensus Estimate down to $7.49 from $9.15. That's at the lower end of the guidance.
It's also a decline of 27% from last year when Marriott Vacations made $10.26.
Analysts are bearish on 2024 too. 7 estimates were lowered in the last two months, pushing the Zacks Consensus down to $7.85 from $10.04.
Shares Sink in 2023
Shares of Marriott Vacations have sunk 35.1% year-to-date. That's going the opposite direction of the S&P 500.
While the fire struck in August, the shares were already weak in the months prior to that event.
However, Marriott Vacations is now cheap, with a forward P/E of just 11.7. It also pays a dividend, which it recently raised 5%. It is currently yielding 3.5%.
But between the impacts of the fire and the loan losses, 2024 looks uncertain. Investors interested in the vacation club companies like Marriott Vacations might want to wait on the sidelines for the earnings to improve.
Additional content:
3 Top Dividend Aristocrats to Buy Ahead of 2024
It's been a tough year for income-focused investors as Wall Street is all set to conclude 2023 with solid gains and is also banking on the Santa Claus rally to notch record highs. The Federal Reserve's intention to trim interest rates in 2024, following signs that inflation is ebbing, gave the stock market the wherewithal to scale northward.
The U.S. economy, meanwhile, registered the best quarterly gains in almost two years in the third quarter, while the labor market remained strong and consumer outlays picked up. But despite the economy's unending resilience amid recessionary concerns, the fear of a slowdown, to a certain degree, lingers.
After all, the Conference Board recently projected a mild recession in the first half of 2024. The Conference Board's Leading Economic Index (LEI), which forecasts a possible downturn, soon fell 0.5% to 103.0 in November, following October's downwardly revised reading of a decline of 1%.
The LEI has fallen for the 20th successive month, the longest declining stretch since the Great Recession. The LEI, by the way, contracted 3.5% in the six months from May to November, following a contraction of 4.3% in the prior six months.
Thus, investing in sound dividend aristocrats should be the most-favored investment strategy as of now since a decline in economic activity is likely to happen soon.
Dividend aristocrats have paid dividends consistently for a long period and have created shareholder value. These stocks have mostly outperformed heading into a recession, which makes them a compelling buy ahead of the new year.
Some of the prominent names are Cardinal Health, Atmos Energy and NextEra Energy. These stocks have a better-quality business and strong underlying fundamentals. They also flaunt a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here.
Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers.
The company's diversified product portfolio and acquisition initiatives are expected to boost its profits in the quarters ahead. Cardinal Health is known for having raised its dividend for 35 years.
Cardinal Health has a dividend yield of 1.98%. CAH's payout ratio presently sits at 32% of earnings. CAH's payout has advanced by 1.02% in the past five years. Check Cardinal Health's dividend history here.
The company's expected earnings growth rate for next year is 11.6%. CAH's projected earnings growth rate for the next five-year period is 15.2%.
Atmos Energy is engaged in the regulated natural gas distribution and storage business.
While a solid capital expenditure plan is boosting Atmos Energy's performance, the company is also gaining from steady customer additions. Atmos Energy is known for having raised its dividend for 39 consecutive years.
Atmos Energy has a dividend yield of 2.78%. ATO's payout ratio presently sits at 48% of earnings. ATO's payout has advanced by 8.6% in the past five years. Check Atmos Energy's dividend history here.
The company's expected earnings growth rate for next year is 6.4%. ATO's projected earnings growth rate for the next five-year period is 7.3%.
NextEra Energy is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy.
Sufficient liquidity, acquisitions and consistent renewable asset additions will boost NextEra Energy's performance in the upcoming quarters. NextEra Energy is known for having raised its dividend for over 25 consecutive years.
NextEra Energy has a dividend yield of 3.11%. NEE's payout ratio presently sits at 59% of earnings. NEE's payout has advanced by 10.8% in the past five years. Check NextEra Energy's dividend history here.
The company's expected earnings growth rate for next year is 8.7%. NEE's projected earnings growth rate for the next five-year period is 8.2%.
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/performancefor information about the performance numbers displayed in this press release.
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Wingstop and Marriott Vacations Worldwide have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – December 29, 2023 – Zacks Equity Research shares Wingstop Inc. (WING - Free Report) as the Bull of the Day and Marriott Vacations Worldwide Corp. (VAC - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cardinal Health (CAH - Free Report) , Atmos Energy (ATO - Free Report) and NextEra Energy (NEE - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Nothing seems to stop Wingstop Inc. from hitting new highs. This Zacks Rank #1 (Strong Buy) has outperformed the S&P 500 again in 2023, gaining 87.4% year-to-date compared to the S&P's 24.5%.
Wingstop operates and franchises more than 2,050 Wingstop restaurant locations worldwide. It offers classic and boneless wings, tenders and chicken sandwiches, which are cooked to order and hand sauced-and-tossed in 11 different flavors.
It also has signature sides including fresh-cut, seasoned fries and ranch and bleu cheese dips.
Another Beat in the Fiscal Q3 of 2023
On Nov 1, 2023, Wingstop reported its fiscal third quarter 2023 results and beat on the Zacks Consensus for the 6th consecutive quarter. Earnings were $0.69 versus the consensus of just $0.52, for a $0.17 beat.
Domestic same-store-sales, a key metric in the restaurant industry, rose 15.3% year-over-year primarily due to transaction growth.
System-wide sales increased 26.5% to $885 million.
Wingstop saw a benefit as the cost of bone-in chicken wings fell 13.5% compared to the year ago quarter.
"We are measuring record levels in brand health metrics, demonstrating the underlying momentum at Wingstop, and putting us on a path to deliver our 20th consecutive year of domestic same-store sales growth," said Michael Skipworth, President and CEO.
Accelerated Share Repurchases Done in the Third Quarter
The board had previously approved a share repurchase program with authorization to purchase up to $250 million of the outstanding shares. Pursuant to that program, Wingstop also entered into an accelerated share repurchase agreement (the "ASR Agreement") to repurchase $125 million of its common stock.
During the fiscal third quarter, Wingstop made the initial payment of $125 million and retired 567,151 shares of its common stock under the ASR Agreement. This represented about 75% of the total shares expected to be delivered under the ASR agreement.
The delivery of the remaining shares is expected to take place in the fiscal fourth quarter of 2023. But as of Sep 30, 2023, the company had a total remaining authorized amount for share repurchases under the program of about $125 million.
Wingstop Raised Same-Store-Sales Guidance for the Full Year
Wingstop said it continued to see momentum in its business. It raised domestic same-store-sales growth to approximately 16% from its previous guidance of 10% to 12%. That's a dramatic increase to close out the year.
The analysts are bullish about earnings for the full year too. 10 estimates were revised higher in the last 2 months, with one being revised just this week.
The F2023 Zacks Consensus Estimate has jumped to $2.40 from $2.20 over the last 60 days. That's earnings growth of 29.7% as Wingstop only made $1.85 last year.
They are bullish about next year too. 10 estimates have been revised higher in the last 60 days, including one this week, for fiscal 2024 as well. The Zacks Consensus has jumped to $2.84 from $2.56 in that time, up another 18.2%.
Shares Are At New Highs
Shares of Wingstop had been red hot during the initial first year of the pandemic, when everyone was stuck at home and ordering takeout. But those days are long over, yet Wingstop's shares continue to move higher.
Not only is it a big winner this year, but over the last 5 years, Wingstop is easily beating both the S&P 500 and the Invesco QQQ ETF, with a 5-year gain of 299%.
I'm not going to lie. The shares are not cheap. Wingstop trades with a forward P/E of 109 and has a PEG ratio of 5.0. A PEG ratio under 1.0 usually indicates a company has both growth and value.
But clearly, growth investors are seeing something they like in Wingstop as they keep piling in.
In addition to the share repurchase program, Wingstop also pays a dividend, currently yielding 0.3%.
For investors looking for a red-hot restaurant stock with rising earnings estimates, Wingstop should be on your short list.
Bear of the Day:
Marriott Vacations Worldwide Corp. is feeling the impact of the Maui wildfire on business. This Zacks Rank #5 (Strong Sell) will see declining earnings this year.
Marriott Vacations is a global vacation company that offers vacation ownership, exchange, rental and resort and property management. It has over 120 vacation ownership resorts and approximately 700,000 owner families across its diverse portfolio. It's brands include Marriott Vacation Club, Sheraton Vacation Club, Westin Vacation Club, The Ritz Carlton Club, Grand Residences by Marriott, the St Regis Residence Club, and the Hyatt Vacation Club, among others.
It also has an exchange network and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries, and provides management services to other resorts and lodging properties.
A Big Miss in the Third Quarter
On Nov 1, 2023, Marriott Vacations Worldwide reported its third quarter results and missed for the second quarter in a row. It reported just $1.20 versus the Zacks Consensus of $2.19. That's a miss of 45.2%.
Consolidated vacation ownership contract sales were $438 million and volume per guest ("VPG") increased $87 sequentially from the second quarter, or 2% to $4,055. Marriott Vacations estimated that the Maui wildfires negatively impacted contract sales by $28 million and VPG by about $66, or 2%, in the quarter.
On Aug 8, 2023, a wildfire devastated parts of West Maui. The company operates 4 vacation ownership resorts and sales centers in the area of the fire, but none of them sustained any physical damage. However, the fire still impacted contract sales as the island has been slow to regain confidence with tourists.
It also recorded a $59 million charge to its loan loss provision in the third quarter.
"We had a difficult quarter between the devastating wildfires in Maui and default rates on our loan portfolio remaining above our recent experience. However, our loan delinquencies are stabilizing and with Maui reopen for tourism we have started to see our resort occupancies recover," said John Geller, president and CEO.
Estimates Cut for the Full Year
Marriott Vacations expects to continue to see impacts from the fire in the fourth quarter. Contract sales are expected to be impacted by $32 to $37 million.
For the full year, the fire is expected to impact contract sales by $60 to $65 million. The new full year contract sales guidance is for $1.75 billion to $1.77 billion.
Earnings for the full year are now expected to be between $7.44 to $7.78, with impacts from the fire of $0.85 to $0.94.
As a result, the analysts have had to cut their earnings estimates. 6 have been lowered in the last 2 months for 2023, which has pushed the Zacks Consensus Estimate down to $7.49 from $9.15. That's at the lower end of the guidance.
It's also a decline of 27% from last year when Marriott Vacations made $10.26.
Analysts are bearish on 2024 too. 7 estimates were lowered in the last two months, pushing the Zacks Consensus down to $7.85 from $10.04.
Shares Sink in 2023
Shares of Marriott Vacations have sunk 35.1% year-to-date. That's going the opposite direction of the S&P 500.
While the fire struck in August, the shares were already weak in the months prior to that event.
However, Marriott Vacations is now cheap, with a forward P/E of just 11.7. It also pays a dividend, which it recently raised 5%. It is currently yielding 3.5%.
But between the impacts of the fire and the loan losses, 2024 looks uncertain. Investors interested in the vacation club companies like Marriott Vacations might want to wait on the sidelines for the earnings to improve.
Additional content:
3 Top Dividend Aristocrats to Buy Ahead of 2024
It's been a tough year for income-focused investors as Wall Street is all set to conclude 2023 with solid gains and is also banking on the Santa Claus rally to notch record highs. The Federal Reserve's intention to trim interest rates in 2024, following signs that inflation is ebbing, gave the stock market the wherewithal to scale northward.
The U.S. economy, meanwhile, registered the best quarterly gains in almost two years in the third quarter, while the labor market remained strong and consumer outlays picked up. But despite the economy's unending resilience amid recessionary concerns, the fear of a slowdown, to a certain degree, lingers.
After all, the Conference Board recently projected a mild recession in the first half of 2024. The Conference Board's Leading Economic Index (LEI), which forecasts a possible downturn, soon fell 0.5% to 103.0 in November, following October's downwardly revised reading of a decline of 1%.
The LEI has fallen for the 20th successive month, the longest declining stretch since the Great Recession. The LEI, by the way, contracted 3.5% in the six months from May to November, following a contraction of 4.3% in the prior six months.
Thus, investing in sound dividend aristocrats should be the most-favored investment strategy as of now since a decline in economic activity is likely to happen soon.
Dividend aristocrats have paid dividends consistently for a long period and have created shareholder value. These stocks have mostly outperformed heading into a recession, which makes them a compelling buy ahead of the new year.
Some of the prominent names are Cardinal Health, Atmos Energy and NextEra Energy. These stocks have a better-quality business and strong underlying fundamentals. They also flaunt a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here.
Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers.
The company's diversified product portfolio and acquisition initiatives are expected to boost its profits in the quarters ahead. Cardinal Health is known for having raised its dividend for 35 years.
Cardinal Health has a dividend yield of 1.98%. CAH's payout ratio presently sits at 32% of earnings. CAH's payout has advanced by 1.02% in the past five years. Check Cardinal Health's dividend history here.
The company's expected earnings growth rate for next year is 11.6%. CAH's projected earnings growth rate for the next five-year period is 15.2%.
Atmos Energy is engaged in the regulated natural gas distribution and storage business.
While a solid capital expenditure plan is boosting Atmos Energy's performance, the company is also gaining from steady customer additions. Atmos Energy is known for having raised its dividend for 39 consecutive years.
Atmos Energy has a dividend yield of 2.78%. ATO's payout ratio presently sits at 48% of earnings. ATO's payout has advanced by 8.6% in the past five years. Check Atmos Energy's dividend history here.
The company's expected earnings growth rate for next year is 6.4%. ATO's projected earnings growth rate for the next five-year period is 7.3%.
NextEra Energy is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy.
Sufficient liquidity, acquisitions and consistent renewable asset additions will boost NextEra Energy's performance in the upcoming quarters. NextEra Energy is known for having raised its dividend for over 25 consecutive years.
NextEra Energy has a dividend yield of 3.11%. NEE's payout ratio presently sits at 59% of earnings. NEE's payout has advanced by 10.8% in the past five years. Check NextEra Energy's dividend history here.
The company's expected earnings growth rate for next year is 8.7%. NEE's projected earnings growth rate for the next five-year period is 8.2%.
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/performancefor information about the performance numbers displayed in this press release.