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GigaCloud Technology and Winnebago Industries have been highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – April 8, 2024 – Zacks Equity Research shares GigaCloud Technology (GCT - Free Report) as the Bull of the Day and Winnebago Industries (WGO - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walmart Inc. (WMT - Free Report) ), The Home Depot, Inc. (HD - Free Report) and Costco Wholesale Corp. (COST - Free Report) ).

Here is a synopsis of all five stocks:

Bull of the Day:

GigaCloud Technology is a Zacks Rank #1 (Strong Buy) that provides end-to-end B2B ecommerce solutions for large parcel merchandise.

The Company's offers GigaCloud Marketplace that seamlessly connects manufacturers, primarily in Asia, with resellers, primarily in the U.S., Asia, and Europe, to execute cross-border transactions

The stock has seen a big run since December, moving from $10 all the way to a recent high of $45. After posting positive earnings, the stock ran into some profit taking and pulled back.

After a nice bounce off the recent lows, buyers are taking back control and aiming for fresh highs.

About the Company

The company was formerly known as Oriental Standard Human Resources Holdings, but and changed its name to GigaCloud Technology in February 2021.

The stock has a Zacks Style Score of "A" in Growth and "A" in Momentum. It sports a Style Score of "B" in Value. The company has a market cap of $1.4 billion and a Forward PE of 13. GCT pays no dividend.

Q4 Earnings Beat

On March 15th, GCT reported a Q4 earnings beat of 50%. EPS came in at $0.87 v the $0.58 expected, and up from $0.31 last year.

Revenues came in at $244.7M v the $125.6M last year. Product revenue from GigaCloud was $88.3M, which was a 50.9% increase from the year prior. Off-platform ecommerce revenues were up 179.7% y/y.

Adjusted EDITBA was $43.8M v the $12.2M last year and margins increased to 28.5%, up from 21.2% last year.

Analyst Estimates

Analyst held estimates after earnings until recently. Over the last 7 days, we see numbers going up across each time frame. While there are not many analysts covering the name, those who are seem to be getting bullish.

For the current quarter, estimates have been taken higher by 38%, moving from $0.37 to $0.51.

For the current year, estimates have moved from $2.23 to $2.58, or 15% higher.

For next year, estimates have moved 33% higher, from $2.72 to $3.64.

Roth MKM recently reiterated GCT with a Buy and a $35 price target on healthy fundamentals.

Volatile Trading

The stock is very volatile, with a beta at 2.26. Investors should be picky with their entries as the intraday moves can be large.

Some insiders have been selling as of late, which has brought some negativity to the name. However, long-term buyers that enter at technical support will be rewarded if the fundamental story gains momentum.

The Technicals

GCT is up 90% so far this year, but the current price is 30% below 2024 highs. This year's trading range has seen lows at $18 and highs above $45. This range can scare an investor so let's look at some buyable levels.

When looking at moving averages, the 21-day and 50-day MA's are lined up at $31.50-32. This is a good spot to play momentum for shorter term traders.

The 200-day is way down at $16.50, so it's likely that doesn't come into play anytime soon.

When looking at Fibonacci retracements, the 61.8% is at $23. This can be found by drawing December lows to recent highs. The stock did come close to this area in March, trading just above $25.

A move back above $40 and all-time highs would likely be in play.

Bottom Line

GigaCloud Technology is a momentum driven stock that is starting to gain attention from investors. With a market cap so low and volatility so big, investors should be patient with their entries.

If the earnings momentum can continue through the year, the stock should have no problem taking out the recent highs and moving toward the $60 area.

Bear of the Day:

Winnebago Industries is a Zacks Rank #5 (Strong Sell) that manufactures and sells recreation vehicles and marine products primarily for use in leisure travel and outdoor recreation activities.

The stock has rallied after an earnings beat, but analysts are dropping estimates as of late. Investors might want to be cautious on rallies as the stock failed to break December highs and is pulling back to support levels.

About the Company

Winnebago was founded in 1958 and is headquartered in Eden Prairie, MN. The company employs about 6,250 people and operates through three segments: Towable RV, Motorhome RV, and Marine.

WGO is valued at $2 billion and has a Forward PE of 13. The stock holds Zacks Style Scores of "C" in Value, but F in Momentum and Growth. Winnebago pays a dividend of 1.8%.

Q2 Earnings

In late March, Winnebago reported an earnings beat of 8%. Revenues were light, but the management said it was "encouraged by data indicating that RV inventory levels are returning to an equilibrium stage."

While the optimism was welcomed from the bulls, revenues were down across every category year over year:

- Motorhome revenues were $338M v $404M y/y

- Motorhome Backlog was $452M v $873M y/y

- Towable Revenues were $285M v $343M y/y

- Towable Backlog was $222M v $278M y/y

With numbers down year over year, margins fell 190 basis points from last year.

The stock reacted positively after the earnings report, likely due to promising signs of a turn around based on management's comments.

However, analysts are more skeptical as estimates fall across the board.

Earnings Estimates

Over the last 30 days, earnings estimates for the current quarter have fallen from $2.05 to $1.53. This is a drop of 25% since reporting earnings.

For the next quarter, there is only a slight downtick, but we see bigger drops looking into the future.

For the current year, estimates have dropped from $5.77 to $5.28, or 8% over the last 30 days.

For next year, earnings estimates have dropped from $7.64 to $7.16 over the last 90 days, a move lower of 6%.

While price reaction to the earnings report was positive, the current bull market might have helped investors get ahead of themselves.

Technical Take

After earnings the stock took off, rallying about 14% in just over a week. The recent high almost took out 2023 highs, but sellers came in and the stock is trading just over technical support.

Both the 21-day MA and the 50-day MA are currently at the $68 level. Investors must watch this area for support and if it fails, the stock likely closes the earnings gap and tests the 200-day MA just under $66.

In Summary

Winnebago's price action has improved, but analysts are not seeing earnings improvement. The stock has been stuck around the $65 area for almost four years and there doesn't seem to be a reason for a breakout yet.

Additional content:

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Walmart: This omnichannel retail giant has been diligently working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships, and significant improvements in its delivery and payment systems. Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.

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The Zacks Consensus Estimate for Walmart's current financial-year sales and earnings suggests growth of 3.6% and 6.3%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of about 21 cents per share (83 cents annualized), giving a 1.4% yield at the current stock price. WMT's payout ratio is 34, with a five-year dividend growth rate of 1.8%. (Check WMT's dividend history here)

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The Zacks Consensus Estimate for Costco's current financial-year sales and EPS suggests growth of 4.1% and 8.9%, respectively, from the year-ago period's actuals. The company pays out a quarterly dividend of $1.02 per share ($4.08 annualized), giving a 0.6% yield at the current stock price. COST's payout ratio is 26, with a five-year dividend growth rate of 11.7%.

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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 information about the performance numbers displayed in this press release.

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