For Immediate Release
Chicago, IL – September 28, 2016 – Zacks Equity Research highlights Interface ( (TILE - Free Report) -Free Report ) as the Bull of the Day and American Public Education ( (APEI - Free Report) -Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the AAR Corp. ( (AIR - Free Report) -Free Report ), Carbonite, Inc. ( (CARB - Free Report) -Free Report ) and Hallador Energy Company ( (HNRG - Free Report) -Free Report ) .
Here is a synopsis of all five stocks:
Bull of the Day:
Interface ( (TILE - Free Report) -Free Report ) is the largest manufacturer of modular carpet for commercial and residential applications. The company offers modular carpets and carpet tiles for use in commercial interiors, including offices, healthcare facilities, airports, educational and other institutions, hospitality spaces, and retail facilities, as well as residential interiors. The company is based in Atlanta, Geogia and employs over 3,300 employees. The stock is Zacks Rank #1 (Strong Buy) and todays Bull of the Day.
Interface has a market cap of $1 Billion with a Forward PE of 14. The stock sports Zacks Style Scores of “B” in both Value and Momentum. In addition, the company also sits in an industry that is ranked 34 out of 265 (Top 13%) in the Zacks Industry Rank.
Interface reported Q2 in late July, seeing $0.32 versus the $0.28 expected. Revenue came slightly above expectations at $248.2 million verse $248 million. Gross margins ticked up to 39.9% verse 38.4% last year.
CEO Daniel Hendrix had some comments on margins: “For the sixth quarter in a row, we posted a triple digit year over year increase in gross margin, which was up 150 basis points to a quarterly record 39.9%. The improvement in gross margin offset nearly all of the 6% decline in revenue, and we kept SG&A expenses in check while continuing to invest in growth platforms such as market development and new product introductions.”
Investors applauded the report. Sending TILE up 12% the day after earnings. The stock has since sold off back to pre-earnings levels, putting it at attractive levels. The next earnings report is October 26th and due to rising estimates and its surprise history, there is reason to believe Interface can repeat the move higher.
Last week’s beat was the second straight and the seventh over the last eight quarters. If the company can continue to beat the stock will try to repeat the move it saw in early 2015. This move saw the stock at its current levels, then went all the way to $26, a move of 50% in six months.
Bear of the Day :
American Public Education ( (APEI - Free Report) -Free Report ) is an online provider of higher education focused primarily on serving the military and public service communities. The company operates through two segments, American Public Education and Hondros College of Nursing. American Public Education was founded in 1991 and is headquartered in Charles Town, West Virginia. The stock is the Bear of the Day after being downgraded to a Zacks Rank #5 (Strong Sell) and after poor earnings outlook earlier in the month.
APEI has a market cap of $300 million and a forward PE of 10. The stock sports Zacks Style Scores of “F” in Momentum after the stock lost a third of its value after their last earnings report.
The company reported Q2 EPS on August 9thth, with the numbers coming in at $0.41 verse the $0.39expected. Revenues came in above the expected at $76.7 million against the $75 million expected.
While the quarter saw a beat, the outlook was pretty terrible. The company guided Q3 $0.26-31 verse the $0.37 expected. The company also expects revenues to slow 3-6% year over year. Perhaps the worst part was the new course registration, which was down 22% from last year.
Investors sold the stock down 25% on the EPS miss. There has been no relief since as the stock continues lower, down almost 40% since earnings.
So is it time to buy? Looking at estimate revisions, the answer is no.
Over the last 60 days, estimates have been revised lower for all time frames. For fiscal year 2016, the numbers have been taken down 10%, from $2.04 to $1.84. For 2017, estimates are now seen at $1.52, down from $1.97 or 22%.
Investors should look for the stock to continue to come under pressure until estimates turn around. However, with new course registration down so much, the company might continue to see revisions to the downside.
3 Stocks to Watch After Donald Trump’s Debate Performance
Last night, the first of the three presidential debates witnessed a high-octane face-off between Democrat ex-Secretary of State Hillary Rodham Clinton and Republican Donald Trump. As the discussions traded barbs and skeptical anecdotes, it displayed two starkly different personalities and their visions for the nation.
The debate also served as a precursor to the likely changes in the framework of the government policies and offered a broader hint to the impending changes in the financial markets as a whole and the stock market in particular. Investors across the globe have already started to weigh the pros and cons from the one-on-one political rendezvous to fathom its effect on various industries. Let us also take a closer look at the broad takeaways from the debate to identify potential game-winning stocks, should Trump emerge as the victorious candidate in the Presidential election.
Focus on Defense
In order to combat the barbaric terrorist acts and radical extremist groups like the Islamic State, Trump has urged to increase the defense expenditure for a bigger Army and Marine Corps, improved missile defense systems and more ships and fighter jets. At the same time, he has pledged to end the across-the-board budget cuts known as sequester to increase funding for future defense needs.
Trump is widely viewed as not being risk averse and is likely to advocate an aggressive foreign policy that showcases military strength. Such an oblique reference was also made in the debate when Clinton highlighted the episode wherein Trump wanted the U.S. forces to fire on Iranian boats that had taunted them.
In such a scenario, high-tech defense and aerospace equipment manufacturers like AAR Corp. ( (AIR - Free Report) -Free Report ) are likely to benefit in the long run. Wood Dale, IL-based AAR Corp. provides various products and services to the aviation and defense industries worldwide. This Zacks Rank #1 (Strong Buy) stock has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here .
Cyber Security Threats
Despite several disagreements, both Trump and Clinton were unanimous in their concerns for cyber security threats faced by the country. The U.S. federal government is arguably the largest producer, collector, consumer and disseminator of data in the world. This makes government contractors ideal targets for cyber attacks as they are entrusted with sensitive information related to national security secrets, military and critical infrastructure, and personal information of all U.S. citizens and residents.
The incessant cyber attacks and related security risks offer a great investment proposition for the global cyber security market. In addition, a broad proliferation of smartphones and other hand-held devices make cyber security threats a potent weapon for businesses. While cyber security spending by federal agencies will mostly revolve around the development of cyber weapons, cyber defense products and services, corporate firms will primarily seek to develop technologically robust products and services for the IT domain and equipment. This would include continuous upgrade of technology and skills to counter technological obsolescence.
Consequently, cyber security stocks like Carbonite, Inc. ( (CARB - Free Report) -Free Report ) gain immense prominence. Headquartered in Boston, MA, Carbonite is a leading provider of hybrid backup and recovery solutions for businesses. This Zacks Rank #1 stock offers a comprehensive suite of affordable services for data protection, recovery and anywhere, anytime access. Carbonite has long-term earnings growth expectation of 30%.
Stress on Fossil Fuels
During the debate, Trump made an oblique reference to the now-bankrupt solar company Solyndra and termed the federal investment in it as a failure. Earlier in his campaign, Trump had promised to repeal a host of energy and environmental regulations, save the coal industry and lift restrictions on energy sales. Specifically, he vouched to repeal the Environmental Protection Agency rules that limit carbon emissions from power plants, known as the Clean Power Plan; the EPA’s Waters of the U.S. rule, which brings more water bodies under federal protection; and an Interior Department moratorium on new coal leasing on federal lands.
Although such promises are challenging to fulfill, they have given a fresh lease of life to the beleaguered coal industry stocks like Hallador Energy Company ( (HNRG - Free Report) -Free Report ) . Based in Denver, CL, Hallador is engaged in the mining, production, and sale of steam coal for the electric power generation industry in the U.S. This Zacks Rank #1 stock has a VGM score of B.
Scott Fidel, an analyst of Credit Suisse, perfectly summed up: "Investors often tend to fear the unknown more than anything else. In the 2016 elections, Donald Trump represents the specter of the unknown to a larger degree than any leading presidential candidate in our lifetime." Nevertheless, various presidential campaigns and debates have offered a broad overview of the policy framework of Trump and its likely effect on various industries. Until a clearer picture emerges in the future, investors could be well off if they invest in these stocks that are backed by a solid Zacks Rank and healthy fundamentals.
Confidential: Zacks' Best Investment Ideas
Would you like to see a hand-picked "all-star" selection of investment ideas from the man who heads up Zacks' trading and investing services? Steve Reitmeister knows when key trades are about to be triggered and which of our experts has the hottest hand. Click for his selected trades right now >>
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on TILE - FREE
Get the full Report on APEI - FREE
Get the full Report on AIR - FREE
Get the full Report on CARB - FREE
Get the full Report on HNRG - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
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.