For Immediate Release
Chicago, IL – November 17, 2016 – Zacks Equity Research highlights Addus HomeCare (NASDAQ: -Free Report ) as the Bull of the Day and Monster Beverage (NASDAQ: (MNST - Free Report) -Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on ConocoPhillips (NYSE:(COP - Free Report) -Free Report ) and Diamondback Energy Inc. (NASDAQ:(FANG - Free Report) -Free Report )
Here is a synopsis of all the four stocks:
Bull of the Day :
Addus HomeCare (NASDAQ: -Free Report ) is a comprehensive provider of a broad range of social and medical services in the home. The company's services include personal care and assistance with activities of daily living, skilled nursing and rehabilitative therapies, and adult day care.
Its consumers are individuals with special needs who are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Its payor clients include federal, state and local governmental agencies, the Veterans Health Administration, commercial insurers and private individuals.
Q3 Impresses Analysts
On November 7 the company delivered a big Q3 earnings beat and reported net service revenues that grew 22.7% to $103.5 million for the quarter from $84.3 million in Q3 of 2015. Shares popped over 30% last week and analysts were eager to raise estimates.
While the earnings beat was only 10-cents, the consensus estimate for the full-year 2016 rose 22-cents from $1.05 to $1.27. And 2017 estimates rose 20% from $1.15 to $1.38.
What's encouraging about this growth picture is how quickly the company is emerging from a restructuring process where they took a $0.23 charge. Addus reported Q3 adjusted EPS of $0.39. The adjusted results excluded the $0.23 of restructuring charges, $0.02 of severance, $0.03 of stock-based compensation and a $0.04 credit for normalization of effective tax rate.
According to the company press release, "While the majority of the growth in billable hours per day was attributable to the first-quarter acquisition of South Shore, same store revenues contributed meaningfully to revenue growth for the quarter."
Dirk Allison, President and Chief Executive Officer of Addus, remarked, "We are pleased to report an outstanding third quarter for Addus. We achieved substantial growth in revenues - including same store growth of 4.1% - and in adjusted EPS. We produced strong cash flow from operations and significantly strengthened our balance sheet, due both to our increased adjusted earnings and to the pay down of the past-due Illinois non-Medicaid accounts receivable."
Analysts see cost-cutting and restructuring moves as improving the company's short-term liquidity to pursue further accretive M&A opportunities.
Company Structure Addus operates its business through two divisions, Home & Community services and Home Health services.
The Home & Community services are social, or non-medical, in nature and include assistance with bathing, grooming, dressing, personal hygiene and medication reminders, and other activities of daily living. The Home Health services are medical in nature and include physical, occupational and speech therapy, as well as skilled nursing.
Addus currently holds approximately 300 home care contracts throughout the country. The company provides health care services to over 30,000 consumers weekly from over 120 offices located in 21 states.
Bear of the Day:
Monster Beverage (NASDAQ: (MNST - Free Report) -Free Report ) reported Q3 earnings on November 3 and missed the top and bottom-line consensus estimates. Shares are off over 12% since then, with over 18 million changing hands on November 4 as some institutions decided it was clearly time to exit the stock.
And now, many other investors are wondering if this is a buying opportunity just another 10% from 52-week lows, or if there is something more to be concerned about.
Earnings and revenues did improve 4.1% and 17.9% year over year, respectively, driven largely by impressive gross margins – courtesy of cost of goods savings, the AFF transaction and product mix.
But the results failed to impress in every other aspect. Operating expenses rose over 22%, leading to roughly flat operating income growth. The U.S. market was softer than international figures with only 1.9% net sales growth.
And results were also hurt by weaker foreign currencies and purchases by retailers ahead of a price hike. However, although net sales growth of 4.1% was weaker than 14% recorded in the first half of the year, Monster Beverage’s sales bounced back in October, rising 12%, including 10% growth in the key U.S. market.
Given this mixed picture, analysts leaned on the side of bringing estimates down, and that's what brought the stock down to a Zacks #5 Rank (Strong Sell).
Full-year 2016 EPS estimates were taken down from $1.30 to $1.24 while 2017 profit projections were clipped from $1.60 to $1.53.
Third Quarter Details
Monster Beverage’s third-quarter diluted earnings of 33 cents per share missed the Zacks Consensus Estimate of $0.37 by 10.8%. Meanwhile, earnings increased 17.9% year over year on lower share count as a result of the completion of the modified Dutch auction in June 2016.
Net sales of $787.95 million missed the Zacks Consensus Estimate of $817.20 million by 3.6%. However, the figure improved 4.1% year over year.
Foreign currency had an unfavorable impact of $2.6 million on net sales. Net sales outside the U.S. rose 11.8% to $190.8 million on a year-over-year basis.
USGS Just Discovered the Biggest Shale Oil Field in America
On Tuesday, the U.S. Geological Survey (USGS) announced that it has discovered the biggest deposit of untapped oil in the United States, located in the Wolfcamp shale formation in the Midland Basin portion of Texas’ Permian Basin.
Wolfcamp has an estimated average of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids there for the taking. To put this into perspective, according to USGS, the Prudhoe Bay formation on the North Slope of Alaska—the largest producing oil field in North America to date—has only produced roughly 12 billion barrels of oil in the past 43 years. And the East Texas Field, which is the biggest producing oil field in the lower 48 states, has produced just over 7 billion barrels of oil since the 1930s.
In other words, the magnitude of this oil discovery is incredible. And based on current oil prices, the newly found untapped oil is worth almost $900 billion.
“The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,” said Walter Guidroz, program coordinator for the USGS Energy Resources Program.
“Changes in technology and industry practices can have significant effects on what resources are technically recoverable, and that’s why we continue to perform resource assessments throughout the United States and the world,” Guidroz continues.
USGS notes that over 3,000 horizontal oil wells have already been drilled and finished in the Wolfcamp section of the Midland Basin. According to Bloomberg, Wolfcamp has been one of the primary targets for shale drillers like ConocoPhillips (NYSE:(COP - Free Report) -Free Report ) and Diamondback Energy Inc. (NASDAQ:(FANG - Free Report) -Free Report ) in recent years, as intensive drilling and fracturing techniques, or fracking, became more commonly used.
Stocks that Aren't in the News…Yet
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