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Ralph Lauren and Avis Budget Group have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – February 20, 2024 – Zacks Equity Research shares Ralph Lauren (RL - Free Report) as the Bull of the Day and Avis Budget Group (CAR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Uber Technologies (UBER - Free Report) , Shopify (SHOP - Free Report) and Zscaler (ZS - Free Report) .
Ralph Lauren is a Zacks Rank #1 (Strong Buy) that is a major designer, marketer, and distributor of premium lifestyle products. The company offers apparel, including a range of men's, women's, and children's clothing
The stock has rallied after an impressive earnings beat and a positive outlook.
After struggling for more than a decade, the stock is close to all-time highs. The question for investors is if they should get in now or wait for a better entry point.
About the Company
Ralph Lauren was founded in 1967 and is headquartered in New York, NY. The company has about 15,000 full-time employees and has a market cap of $12 billion.
The company possesses a strong portfolio of globally recognized brand names such as Polo Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Double RL, Lauren Ralph Lauren, Polo Golf Ralph Lauren, Ralph Lauren Golf, RLX Ralph Lauren, Polo Ralph Lauren Children, Chaps, Club Monaco and American Living.
The stock has a Zacks Style Score of “A” in Growth and “A” in Momentum. It sports a Style Score of “C in Value, with a Forward PE of 17. The company also pays a small dividend of 1.6%.
Q3 Earnings Beat
Earlier In February, Ralph Lauren reported Q3 EPS at $4.17 v $3.53 expected, or an 18% surprise to the upside. Revenues came in at $1.93B v the $1.86B expected.
The company affirmed FY24 guidance but raised gross margins to +140-180bps v the +120-170bps prior. Management credited margin improvement to reduced freight costs, favorable channel and geographic mix, and continued growth in AUR more than offsetting product cost inflation.
Analyst Estimates
Since earnings, analysts have been aggressively hiking their numbers. Over the last 30 days earnings estimates for RL have been going higher for all time frames.
For the current quarter, analysts have lifted estimates from $1.50 to $1.62, or 8%.
Looking at the current year, estimates have gone from $9.43 to $10.11 or 7%
Analysts expect the momentum next year to continue. Over the last 30 days, estimates have been hiked by 6%.
Price targets are also going higher with UBS recently lifting its price target from $190 to $240.
The Technicals
The stock is up 25% since reporting EPS, so investors might hesitate to chase RL higher.
If the stock pulls back, watch the 21-day MA, which is currently at $155. The 200-day MA is at $125 and the 50-day is $147.
Looking at the chart back to 2013, the stock was seeing resistance at $150, which is the 61.8% Fibonacci retracement drawn from 2013 highs to COVID lows. Since that level has broken, investors can target the 161.8% extension, which is $275. This would imply a move of 50% higher.
Bottom Line
Retail seems to be back and with Ralph Lauren finding success in managing costs, the company is more profitable. This is great news for investors and the technical break of the $150 level signals the bull run has just begun.
Avis Budget Group is a Zacks Rank #5 (Strong Sell) that provides car and truck rentals, car sharing, and ancillary products and services to businesses and consumers.
The company is a leading global provider of mobility solutions through its three most recognized brands — Avis, Budget, and Zipcar.
The stock took a tumble after an earnings report and took out 2023 lows. Investors should avoid buying this dip until the earnings momentum turns.
About the Company
Avis Budget was founded in 1946 and is headquartered in Parsippany, NJ. The company has approximately 24,500 employees working across 10,250 rental locations in over 180 countries.
CAR is valued at $4.4 billion and has a Forward PE of 6. The stock holds Zacks Style Scores of “A” in Value, and “B” in both Momentum and Growth. The company pays no dividend.
Q4 Earnings
Adjusted earnings of $7.1 per share beat the consensus estimate by 62.8% but this was down 32.1% year over year. Total revenues of $2.76 billion missed the consensus estimate by 1.3%, which was slightly below last year's figures.
The stock was sold on the Q1 EBITDA miss and the company’s bearish expectations for higher depreciation expense in 2024.
The company is looking to aggressively de-fleet to improve utilization levels, but used vehicle values have dropped. This is going to make for a tough 2024 for investors.
Since earnings, the stock has fallen from the $170 mark to $115, a drop of 30%.
Earnings Estimates
Earnings estimates have plunged since earnings as analysts try to factor in the depreciation factor.
Over the last 7 days, the current quarter estimates have fallen from $0.90 to a negative $0.67. For the current year, estimates have dropped from $24.74 to $21.67, a drop of 12%.
Next year things do get better, with estimates dropping from $22.88 to $21.95.
Technical Take
Avis went wild during the “Meme Stock” days, but fell off a cliff like the rest of the hot names from 2021. Since then, the stock has traded sideways in a 100-point range.
The recent move lower takes out the lows of that range. So anybody that bought over the last two years is out of the money. This likely takes some time to digest and investors that are interested in this name should wait for lower prices.
In Summary
The one thing CAR has working for it is a very low PE at 6. This will bring in some buyers, but there is no rush to get into this name as it is a 2025 business due to the depreciation factor.
Additional content:
Uber Stock Skyrockets on Inaugural Buyback Announcement
Shares of Uber Technologies performed exceedingly well on Feb 14, ending the trading session at $79.15 per share, up 14.73% from Feb 13’s closing price. The uptick followed management’s announcement that it would be buying back stock for the first time in its history, thereby rewarding its shareholders.
The board of directors of the ride hailing company authorized up to $7 billion in share repurchases. The decision to buyback its own stock suggests that the board believes shares are currently undervalued. Per chief financial officer, Prashanth Mahendra-Rajah, UBER will first use the buyback plan to offset its stock-based compensation.
When a company buys back its own stock, it retires those shares, thereby causing a reduction in total number of shares outstanding. This implies that the denominator of earnings per share is decreased, thereby boosting the bottom line.
Price Performance
Shares of UBER, which was recently added to the S&P500 index, have risen 47.2% in the past three months, outperforming S&P 500’s 10.6% growth.
The company recently reported strong fourth-quarter 2023 results as the ride share market improves from pandemic lows.
Investors interested in the same industry may also consider some other top-ranked stocks like Shopify and Zscaler.
Shopify has outshined the Zacks Consensus Estimate in each of the past four quarters, the average beat being 82%. Shopify’s focus on developing merchant base, international expansion, addition of fulfillment network functionalities, rich partner ecosystem and mobile focus are key growth drivers. The growth in e-commerce spending bodes well for Shopify.
Zscaler has also outpaced the Zacks Consensus Estimate in each of the past four quarters, the average beat being 27.3%. Zscaler is benefiting from the rising demand for cyber-security solutions due to the slew of data breaches. The increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Ralph Lauren and Avis Budget Group have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – February 20, 2024 – Zacks Equity Research shares Ralph Lauren (RL - Free Report) as the Bull of the Day and Avis Budget Group (CAR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Uber Technologies (UBER - Free Report) , Shopify (SHOP - Free Report) and Zscaler (ZS - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Ralph Lauren is a Zacks Rank #1 (Strong Buy) that is a major designer, marketer, and distributor of premium lifestyle products. The company offers apparel, including a range of men's, women's, and children's clothing
The stock has rallied after an impressive earnings beat and a positive outlook.
After struggling for more than a decade, the stock is close to all-time highs. The question for investors is if they should get in now or wait for a better entry point.
About the Company
Ralph Lauren was founded in 1967 and is headquartered in New York, NY. The company has about 15,000 full-time employees and has a market cap of $12 billion.
The company possesses a strong portfolio of globally recognized brand names such as Polo Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Double RL, Lauren Ralph Lauren, Polo Golf Ralph Lauren, Ralph Lauren Golf, RLX Ralph Lauren, Polo Ralph Lauren Children, Chaps, Club Monaco and American Living.
The stock has a Zacks Style Score of “A” in Growth and “A” in Momentum. It sports a Style Score of “C in Value, with a Forward PE of 17. The company also pays a small dividend of 1.6%.
Q3 Earnings Beat
Earlier In February, Ralph Lauren reported Q3 EPS at $4.17 v $3.53 expected, or an 18% surprise to the upside. Revenues came in at $1.93B v the $1.86B expected.
The company affirmed FY24 guidance but raised gross margins to +140-180bps v the +120-170bps prior. Management credited margin improvement to reduced freight costs, favorable channel and geographic mix, and continued growth in AUR more than offsetting product cost inflation.
Analyst Estimates
Since earnings, analysts have been aggressively hiking their numbers. Over the last 30 days earnings estimates for RL have been going higher for all time frames.
For the current quarter, analysts have lifted estimates from $1.50 to $1.62, or 8%.
Looking at the current year, estimates have gone from $9.43 to $10.11 or 7%
Analysts expect the momentum next year to continue. Over the last 30 days, estimates have been hiked by 6%.
Price targets are also going higher with UBS recently lifting its price target from $190 to $240.
The Technicals
The stock is up 25% since reporting EPS, so investors might hesitate to chase RL higher.
If the stock pulls back, watch the 21-day MA, which is currently at $155. The 200-day MA is at $125 and the 50-day is $147.
Looking at the chart back to 2013, the stock was seeing resistance at $150, which is the 61.8% Fibonacci retracement drawn from 2013 highs to COVID lows. Since that level has broken, investors can target the 161.8% extension, which is $275. This would imply a move of 50% higher.
Bottom Line
Retail seems to be back and with Ralph Lauren finding success in managing costs, the company is more profitable. This is great news for investors and the technical break of the $150 level signals the bull run has just begun.
Bear of the Day:
Avis Budget Group is a Zacks Rank #5 (Strong Sell) that provides car and truck rentals, car sharing, and ancillary products and services to businesses and consumers.
The company is a leading global provider of mobility solutions through its three most recognized brands — Avis, Budget, and Zipcar.
The stock took a tumble after an earnings report and took out 2023 lows. Investors should avoid buying this dip until the earnings momentum turns.
About the Company
Avis Budget was founded in 1946 and is headquartered in Parsippany, NJ. The company has approximately 24,500 employees working across 10,250 rental locations in over 180 countries.
CAR is valued at $4.4 billion and has a Forward PE of 6. The stock holds Zacks Style Scores of “A” in Value, and “B” in both Momentum and Growth. The company pays no dividend.
Q4 Earnings
Adjusted earnings of $7.1 per share beat the consensus estimate by 62.8% but this was down 32.1% year over year. Total revenues of $2.76 billion missed the consensus estimate by 1.3%, which was slightly below last year's figures.
The stock was sold on the Q1 EBITDA miss and the company’s bearish expectations for higher depreciation expense in 2024.
The company is looking to aggressively de-fleet to improve utilization levels, but used vehicle values have dropped. This is going to make for a tough 2024 for investors.
Since earnings, the stock has fallen from the $170 mark to $115, a drop of 30%.
Earnings Estimates
Earnings estimates have plunged since earnings as analysts try to factor in the depreciation factor.
Over the last 7 days, the current quarter estimates have fallen from $0.90 to a negative $0.67. For the current year, estimates have dropped from $24.74 to $21.67, a drop of 12%.
Next year things do get better, with estimates dropping from $22.88 to $21.95.
Technical Take
Avis went wild during the “Meme Stock” days, but fell off a cliff like the rest of the hot names from 2021. Since then, the stock has traded sideways in a 100-point range.
The recent move lower takes out the lows of that range. So anybody that bought over the last two years is out of the money. This likely takes some time to digest and investors that are interested in this name should wait for lower prices.
In Summary
The one thing CAR has working for it is a very low PE at 6. This will bring in some buyers, but there is no rush to get into this name as it is a 2025 business due to the depreciation factor.
Additional content:
Uber Stock Skyrockets on Inaugural Buyback Announcement
Shares of Uber Technologies performed exceedingly well on Feb 14, ending the trading session at $79.15 per share, up 14.73% from Feb 13’s closing price. The uptick followed management’s announcement that it would be buying back stock for the first time in its history, thereby rewarding its shareholders.
The board of directors of the ride hailing company authorized up to $7 billion in share repurchases. The decision to buyback its own stock suggests that the board believes shares are currently undervalued. Per chief financial officer, Prashanth Mahendra-Rajah, UBER will first use the buyback plan to offset its stock-based compensation.
When a company buys back its own stock, it retires those shares, thereby causing a reduction in total number of shares outstanding. This implies that the denominator of earnings per share is decreased, thereby boosting the bottom line.
Price Performance
Shares of UBER, which was recently added to the S&P500 index, have risen 47.2% in the past three months, outperforming S&P 500’s 10.6% growth.
The company recently reported strong fourth-quarter 2023 results as the ride share market improves from pandemic lows.
Zacks Rank & Other Key Picks
UBER currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the same industry may also consider some other top-ranked stocks like Shopify and Zscaler.
Shopify has outshined the Zacks Consensus Estimate in each of the past four quarters, the average beat being 82%. Shopify’s focus on developing merchant base, international expansion, addition of fulfillment network functionalities, rich partner ecosystem and mobile focus are key growth drivers. The growth in e-commerce spending bodes well for Shopify.
Zscaler has also outpaced the Zacks Consensus Estimate in each of the past four quarters, the average beat being 27.3%. Zscaler is benefiting from the rising demand for cyber-security solutions due to the slew of data breaches. The increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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.