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Interface, American Public Education, AAR, Carbonite and Hallador Energy highlighted as Zacks Bull and Bear of the Day


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For Immediate Release

Chicago, IL – September 28, 2016 – Zacks Equity Research highlights Interface ( (TILE - Snapshot Report) -Free Report ) as the Bull of the Day and American Public Education ( (APEI - Analyst Report) -Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the AAR Corp. ( (AIR - Analyst Report) -Free Report ), Carbonite, Inc. ( (CARB - Snapshot Report) -Free Report ) and Hallador Energy Company ( (HNRG - Snapshot Report) -Free Report ) .

Here is a synopsis of all five stocks:

Bull of the Day:

Interface ( (TILE - Snapshot 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.

Q2 Earnings

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.

Surprise History

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 - Analyst 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.

Q2 results

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.

Estimate Revisions

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.

Additional content:

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 - Analyst 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 - Snapshot 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 - Snapshot 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.

Moving Forward

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.

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