For Immediate Release
Chicago, IL – March 13, 2018 – Zacks Equity Research highlights Kulicke and Soffa (KLIC - Free Report) as the Bull of the Day, First Financial Bankshares (FFIN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Texas Instruments (TXN - Free Report) , ON Semiconductor Corporation (ON - Free Report) and Intel Corporation (INTC - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Kulicke and Soffa is a Zacks Rank #1 (Strong Buy) and carries a growth Style Score of "A" and that alone with get the stock on my aggressive growth radar screen. Let's take a look at why this stock is a Zacks Rank #1 (Strong Buy) and why it became the Bull Of The Day.
Kulicke & Soffa is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments. As a pioneer in the semiconductor space, K&S has provided customers with market leading packaging solutions for decades. In recent years, K&S has expanded its product offerings through strategic acquisitions and organic development, adding advanced packaging, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings. Combined with its extensive expertise in process technology and focus on development, K&S is well positioned to help customers meet the challenges of packaging and assembling the next-generation of electronic devices.
KLIC has an impressive streak of 9 beats of the Zacks Consensus Estimate. The last four have been very impressive with the company posting a posting an average positive earnings surprise of 49%.
The most recent report saw the company come in with $0.51 when $0.26 was expected. That $0.25 beat translates into a 96% positive earnings surprise.
Following the most recent earnings report, estimates have moved higher.
60 days ago, the Zacks Consensus Estimate was at $1.69, but it has shot higher following the big beat. The current year estimate now states at $2.23.
The move was not regulated to this year alone, as estimates for next fiscal year also moved higher. Prior to the beat, the Zacks Consensus Estimate was at $1.98 and is now at $2.45.
KLIC trades at 12x trailing and 11.2x forward earnings estimates and that is well below the industry average of 18x. The company also shows a discount to the industry multiple for price to book at 2x compared to 3.3x as well as price to sales of 2x compared to an industry average of 3.1x.
Bear of the Day:
First Financial Bankshares is a Zacks Rank #5 (Strong Sell) following an earnings miss. Estimates have fallen and the stock now has the lowest Zacks Rank. Let's explore why this is the case in the Bear Of The Day.
First Financial Bankshares provides commercial banking products and services primarily in Texas. First Financial Bankshares, Inc. was founded in 1890 and is based in Abilene, Texas.
After putting together a string of 5 consecutive beats of the Zacks Consensus Estimate, FFIN missed on its most recent earnings report. The company posted EPS of $0.43 but the consensus was calling for one penny more.
I cannot sit here an think that missing one of 6 quarters is really bad at all, especially since the one miss was just a penny. Let's look at the estimates.
As I look at the detailed estimates page, I only see good news. The estimates are moving higher, and have been for the past 90 days.
Clearly, this stock dropped in Rank due to the miss, but could also be impacted by the fact that most other stocks also beat and did so by larger margins.
3 “Internet of Things” Stocks to Buy Now
Semiconductor stocks were hit hard by the recent market sell-off, but the underlying business of this industry is growing—and should continue that trend in 2018 and beyond. Throughout the chip-making space, companies have successfully adapted to the changing needs of the consumer, including an increased demand for small, high-powered chips that enable “Internet of Things” (IoT) devices.
For those that don’t know, the Internet of Things is the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
For example, consumer-level IoT products include things like Amazon’s Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.
(Also Read: How to Invest in the "Internet of Things")
As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. And 2018 promises to be another marquee year for these suppliers, with the number of connected devices worldwide set to continue its rapid growth.
With that said, we’ve found three already-strong stocks that are looking to benefit even more from further IoT growth in 2018:
1. Texas Instruments
Although you might recognize the brand because of its calculators, Texas Instruments is actually one of the leading suppliers of advanced semiconductors in the world. The company’s IoT profile falls under its Embedded Processors division, which includes the Connectivity, Microcontrollers, and Processors categories.
Texas Instruments reported year-over-year growth of 20% in its Embedded Processors division during the most recent quarter. The firm also surpassed revenue estimates and released in-line guidance. TXN is now sporting a Zacks Rank #2 (Buy). Meanwhile, the stock has a P/E of 22.4 and a PEG of 2.3, so investors are getting a decent price for its earnings and earnings growth outlook.
2. ON Semiconductor Corporation
ON Semiconductor has traditionally been known as a power management and commodity chip maker, but the company has started to carve out a budding IoT division. ON is now heavily involved with automotive solutions, and its IoT offerings also include products catered to wearables, smart city development, and industrial automation.
ON is currently a Zacks Rank #2 (Buy) and has emerged as an interesting earnings growth pick. The company is expected to post EPS growth of 86% in its current quarter and 19% for the full year. Overall, the firm is projected to improve its earnings at an annualized rate of more than 12% over the next three to five years. But the stock is also trading with a P/E of 15.4 and a P/S of 2.0, so it looks pretty cheap right now.
3. Intel Corporation
Intel is one of the world’s largest semiconductor companies, and it has proven to be a leader in the Internet of Things chip business. Intel’s core IoT businesses cater to the automotive, retail, industrial, and smart video markets. But the firm also believes in the wide-ranging power of IoT technology and stands ready to influence the industry, wherever it may go.
Intel recently crushed earnings estimates by nearly 26%, extending its strong earnings surprise streak and inspiring positive revisions for upcoming quarters. The stock is now carrying a Zacks Rank #2 (Buy). The company is also extremely financially sound, generating about $5.32 in cash per share and operating with a better-than-industry-average net margin of 15%. Intel also offers a respectable 2.3% dividend.
The Internet of Things is one of the most exciting emerging tech markets in the world. And while these specific products are interesting, the real moneymakers in these situations are the companies that are building the tech that powers these products. The Internet of Things needs semiconductors to function, and as the IoT grows, so too will semiconductor companies.
The best way for investors to cash in on this growing trend is to identify semiconductor companies that are not only investing in the Internet of Things, but are also displaying solid fundamentals and impressive Zacks metrics.
Want more 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.
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