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Sanderson Farms, Hertz Global, Sony, HSBC and Tencent highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – September 12, 2017 – Zacks Equity Research Sanderson Farms(Nasdaq: (SAFM - Free Report) – Free Report)as the Bull of the Day, Hertz Global Holdings (NYSE: (HTZ - Free Report)  – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onto Sony Corp (NYSE: (SNE - Free Report) – Free Report), HSBC Holdings (NYSE: (HSBC - Free Report) – Free Report) and Tencent Holdings (OTCMKTS: (TCEHY - Free Report) – Free Report).

Here is a synopsis of all five stocks:

Bull of the Day:

Sanderson Farms(Nasdaq: (SAFM - Free Report) – Free Report), a Zacks Ranked #1 (Strong Buy) is a fully-integrated poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. The company sells ice pack, chill pack and frozen chicken, in whole, cut-up and boneless form, primarily under the Sanderson Farms7 brand name to retailers, distributors, and fast food operators principally in the southeastern, southwestern and western United States.

Recent Earnings Success

The company recently reported Q3 17 earnings where they easily beat both the Zacks consensus earnings and revenue estimates for the second consecutive quarter.  On a year over year basis the company saw net sales up +28%, and net income rose by +111.7%.  The main drivers behind the great quarterly results were increased market prices and a decline in feed cost; jumbo boneless breast meat prices were up almost +24.5%, bulk leg quarters rose by +15.8%, and jumbo wing prices increased by +40% while the company’s average feed cost per pound fell by $0.32 cents per pound (-1.3%) compared to the year ago data.  

Management also stated that they are starting construction this month on a new Tyler Texas facilities, and that their new facility in St Pauls North Carolina is now operating at three quarters capacity and remains on track to reach full capacity in January of 2018.

Management’s Take

According to Joe F. Sanderson, Jr., chairman and chief executive officer, “Sanderson Farms’ financial results for the third quarter of fiscal 2017 reflect a continued favorable balance of supply and demand for fresh chicken sold to retail grocery store customers. That balance was reflected in relatively strong market prices for that product during the current third fiscal quarter. Market prices for boneless breast meat, bulk leg quarters and jumbo wings produced at our plants that process a larger bird were all higher this year when compared to last year’s third fiscal quarter. Food service traffic and demand in the United States remain below pre-recession levels, but demand from and the popularity of local chain concepts and restaurants that focus on wings are offsetting reduced traffic at casual dining restaurants. This demand contributed to a good supply and demand balance during the quarter.” 

Bear of the Day:

Hertz Global Holdings(NYSE: (HTZ - Free Report) – Free Report) a Zacks Rank #5 (Strong Sell) operates car rental business. The company's product and services consists of Hertz Gold Plus Rewards, NeverLost(R), Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections. It operates primarily in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz Global Holdings, Inc. is based in FL, United States.

Recent Earnings Results

In the company’s most recent earnings report, Hertz missed the Zacks consensus revenue estimate, and came in short of the Zacks consensus earnings estimate for the fourth consecutive quarter.  The company reported a second quarter net income from continuing operations net loss of $158 million.  Further, HTZ saw total revenues fall by -2.0%, and losses from continuing operations before income taxes for the quarter were $245 million, which included $86 million in impairment charges; the year ago quarter saw only losses of $35 million.  Finally, adjusted corporate EBITDA fell from $184 million last year to $35 million this year.  

Management’s Take

According to Kathryn V. Marinello, president and chief executive officer of Hertz, “We have made significant progress in the first half of the year, executing on our operating turnaround plan. Of course, the hard work always comes before the pay off as reflected in our second quarter results, where increased spending to fix areas of weakness and invest in areas of opportunity were exacerbated by a challenging vehicle residual environment in the U.S. On the upside, we have now completed our U.S. fleet transformation, redesigned 37 Hertz airport locations for Ultimate Choice, updated our financial and revenue management systems, and introduced new management tools and resources to drive service excellence. Admittedly, we still have a lot of work to do, but these early wins are evidence that we have the right plan in place to ultimately achieve best-in-class outcomes.”

Additional content:

Low Rates, No Inflation: Global Week Ahead

For the Global Week Ahead, the newsroom Reuters produced five big themes likely to dominate the thinking of investors and traders.

Be mostly concerned about how to solve this riddle: Rates are at record lows. Why no consumer price inflation?

(1) CONSUMER INFLATION STAYS ELUSIVE

Inflation remains elusive in both the United States and the Eurozone, complicating efforts to normalize monetary policy after years of extraordinary stimulus.

U.S. inflation will get another reading on Thursday, Sept. 14th. A Reuter’s poll of economists forecast prices in August rose +0.3%. Stripping out the volatile food and energy components, core CPI is expected to rise +1.6% in the 12 months through August, still well below the U.S. Fed’s +2.0% target.

(2) THE BANK OF ENGLAND MEETS – WEAKER POUND IN PLAY

While the European Central Bank (ECB) struggles with low inflation and a strong currency that exacerbates the problem, the Bank of England (BoE), which meets in the coming week, faces the opposite scenario — above-target consumer inflation and a U.K. pound that some see falling to parity with the euro.

Traders cite the possibility BoE policymakers might express concern about the weak pound’s impact on inflation. Analysts place a one in four chance the pound sterling will reach parity with the euro in the next year.

(3) BANKS WANT HIGHER RATES – ECB HIKES WON’T HAPPEN

If anyone needs a “normalization” of monetary policy, it’s the banks. Earlier this year, as an improving global economy brought the prospect of steadily rising interest rates, investors scooped up bank shares in a big bet on recovery.
Yet as ECB President Mario Draghi made clear after last week’s policy meeting, rate hikes, which have a major impact on lenders’ revenue and profits, remain a distant prospect in the Eurozone.

An index of bank stocks has underperformed the wider market. Not that everyone is giving up on banks. With Eurozone growth picking up so, eventually, must interest rates.

(4) CHINA‘S YUAN – NEW SAFE HAVEN

Is the Yuan’s sudden surge driven by a bid for safe havens against North Korea’s nuclear threats? Or has the market taken on board the People’s Bank of China’s desire to root out depreciation expectations?

The Yuan currency had its best monthly gains ever in August and has wiped out all of the 6.5% losses it suffered against the dollar in 2016. Its rise immediately after North Korea’s sixth nuclear test on Sept. 3 was two standard deviations more than average daily moves in the past year, far outpacing the gains seen in the yen and gold.

FX reserves rose $11 billion in August, suggesting the People’s Bank of China (PBOC) might have reined in the currency through some form of intervention. But it can’t do more without giving Washington the ammunition to complain about currency manipulation.

(5) RUSSIA MAY CUT RATES… TO MATCH BRAZIL

Russia’s central bank will ponder a cut in its key rate to as low as 8.5% when policymakers meet on Friday, according to a senior official. The bank has already flagged that rate cuts are on the cards.

Brazil’s 100 basis point rate cut last Wednesday ramped up the pressure, leaving Russia in the top spot for the highest forward-looking real interest rate among major emerging market economies.

Top Zacks #1 Rank (STRONG BUY) Stocks--

Sony Corp (NYSE: (SNE - Free Report) – Free Report):This is Japan’s electronics giant. The market cap is $50 billion and the stock prices just under $40 a share, after a good recent run. The Zacks long-term VGM score is B, with an A for Value. That means there may be more momentum in store here.

HSBC Holdings (NYSE: (HSBC - Free Report) – Free Report): This is an enormous European banking group, with a $192 billion in market capitalization. The long-term Zacks VGM score is B. The shares have moved up from $40 to $48 this year.

Tencent Holdings (OTCMKTS: (TCEHY - Free Report) – Free Report):This is an enormous $387 billion in market cap Chinese company now. But the long-term Zacks VGM score is B with a Growth score of A -- but a Value score of D. Big China Tech stocks have been steamrollers. Yet, there may be sufficient earnings upside ahead, given the high Growth score.

Key Global Macro—

Don’t lose sight of the quiet, ongoing NAFTA negotiations.

Also, keep a lookout on moves in advance of Mainland China’s 19th National Congress. This will commence in Beijing on October 18th and is held every five years.

Closer in, a Bank of England policy meeting wraps this Thursday. It will be the most watched event in Europe this week.

On Monday, India’s exports came in higher than forecast at +6% y/y, vs. a prior reading of +3.9%. Also, Imports came in higher at +17%W y/y, vs. +15.4%.

Malaysia’s industrial production came in higher also, at +6.1% y/y vs. +4.0%.

Turkey’s GDP landed at +5.1% y/y. That sounds good, given the political turmoil.

In comparison, Italy’s industrial production was up +4.3% y/y.

On Tuesday, Argentina’s 7-day repo rate should remain at 26.25%.

The U.K.’s CPI is running hot at +2.6% y/y.

The U.S. NFIB small business optimism index stands at 105.2. We get a fresh reading.

Brazil’s broad retail sales are forecast to be +2.8% y/y, down slightly from +3.0% prior.

South Korea’s unemployment rate is 3.6%.

On Wednesday, the U.K.’s ILO unemployment rate will come in. The last had 4.4%.

Germany’s key HICP inflation rate came in at +1.8% y/y before. We get a fresh reading.

The Swiss National Bank (SNB) gives us a Monetary Policy Assessment.

On Thursday, there is a U.K. Bank of England (BoE) monetary policy meeting and rate decision. The bank rate is at 0.25%.  Stuck there since Brexit.

A proxy GDP growth rate (IBR) in Brazil comes out. It is at -0.56% y/y.  It could get to +0.8% y/y. That spells the end of recession there.

U.S. initial claims look strong at 298K.

On Friday, the unemployment rate for Turkey comes out. It is high at 10.2%.

There is a Eurogroup meeting.

Russia sets its key monetary policy rate. It is at 9.0%.

Unemployment in Iceland is 3.4%.

The U.S. University of Michigan consumer sentiment survey comes out. It was 98.6.

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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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 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.

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