Back to top

Generac, Maximus, Norbord, Boeing and Zimmer Biomet as Zacks Bull and Bear of the Day

Read MoreHide Full Article

For Immediate Release         

Chicago, IL – May 23, 2018 – Zacks Equity Research highlights Generac (GNRC - Free Report) as the Bull of the Day and Maximus (MMS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Norbord (OSB - Free Report) , Boeing (BA - Free Report) and Zimmer Biomet Holdings (ZBH - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:                                              

Generac is a Zacks Rank #1 (Strong Buy) following a solid beat and raise quarter.  Let's take a look a the recent numbers and how they have helped the stock reach the best Zacks Rank.  Today, GNRC is the Bull of the Day.

Description

Generac Holdings Inc. is a manufacturer of backup power generation products serving residential, light commercial and industrial markets. The Company designs, engineers, manufactures, and markets a range of automatic, stationary standby, and portable generators. Generac's power systems range in output from 800 watts to 9 megawatts and are available through a broad network of independent and industrial dealers, retailers and wholesalers. The Company offers generators fueled by natural gas, liquid propane, gasoline, diesel, and Bi-Fuel. It also provides air-cooled engines. In addition, Generac designs, manufactures, sources and modifies engines, alternators, automatic transfer switches and other components necessary for its products. The Company's generators are fueled by natural gas, liquid propane, gasoline, diesel and Bi-Fuel (combined diesel and natural gas). Generac Holdings Inc. is headquartered in Waukesha, Wisconsin.

Recent Earnings

On May 2, GNRC reported earnings of $0.74 and that was $0.11 ahead of the consensus.  Revenues rose 20% from the prior year and came in at $397M and that was ahead of the $390M estimates.

The company also guided FY18 revenues to growth of 6-8%, and that is higher than the 3-5% growth rate that was previously provided.  The math works out to sales of between $1.77B to $1.81B with the consensus at the time at $1.77B.

Earnings Estimates

Following the report, estimates have bounced higher. The Zacks Consensus Estimate was calling for $3.57 for 2018, but that number is now $3.75.  

The 2019 Zacks Consensus Estimate also moved higher following the report.  Analysts have moved numbers up to $3.93 from the $3.75 level it was at before the report.

The current consensus for next quarter is now at $0.91, an increase of 6 cents from the level it was at previous to the most recent earnings release.

Zack Rank #1 (Strong Buy)

The increase in earnings estimate is what drives the Zacks Rank.  When there is a solid move higher in estimates for this year and next, the Rank tends to move up.

That is just what we see here with GNRC.

Bear of the Day:

Maximusis a Zacks Rank #5 (Strong Sell) but it sports some solid style score grades.  Let's take a look a the most recent quarter and the earnings estimates.  Those will tell us why it is a Zacks Rank #5 (Strong Sell) and how it became the Bear Of The Day.

Description

MAXIMUS, Inc. is an extremely dynamic and complex organization that offers government and industry a range of unique services, products, and solutions. The diverse services and products that MAXIMUS offers may be categorized into three groups: Government Program Management and Operations, Consulting, and Systems. Government Program Management and Operations focuses on having a measurable impact on the lives of the citizens we help government serve. The insights of MAXIMUS Consulting, and the technological innovations advanced through Systems, help government gain program efficiencies and pursue improvements that in turn benefit citizens.

Recent Earnings

MMS reported on May 10 and posted $0.84 in EPS.  That was $0.02 below the consensus estimate for the quarter.  Revenue of $612M were also below the $618M estimate and represented a decrease of 1.5% from the previous year levels.

The company lowered guidance for FY18 EPS, moving to $3.30-$3.40 from $3.30-$3.40 as compared to the consensus estimate at the time of $3.49. The revenue range was also lowered and came in below where the consensus estimate stood.

Earnings Estimates

Following the miss and weaker guidance, estimates came in.  The 2018  Zacks Consensus Estimate moved from $3.42 to $3.37.  Included in that move was a 3 cent move lower in the current quarter estimate and a 5 cent decrease for the next quarter.

The 2019 Zacks Consensus Estimate also slipped from $3.74 to $3.54.  That is the primary reason the stock is the Bear of the Day and a Zacks Rank #5 (Strong Sell).

Good Style Scores

Despite the bad news, the company still sports solid style scores with an A for growth and a B for value.  To me, that is reason enough to keep this stock on your radar screen.

3 Stocks Back in Play After U.S.-China Trade War Stalls

On Sunday, the U.S. and China put trade tensions aside in hopes of reaching a stable and broad trade agreement. With previously at-risk stocks beginning to rise, there seems to be room for profit in these formerly questionable markets. Read on for three stocks that investors should reconsider as the trade war is put on hold.

Stocks to Buy

Norbord, a manufacturer of wood-based panels, is the first company investors should keep on their radar. Earlier this year, the U.S. had enacted a 25% tariff on imported steel and 10% tariff on imported aluminum. Between President Trump’s announcement and enactment of Tariffs in late February through mid-March, many construction companies reliant on steel for everyday processes were thought to fail. 

Other construction companies, such as Norbord—a Canadian company that could have been caught in the crossfire if tariffs on other imported goods were imposed, were thought to be the hardest hit, reflective of the company’s Zacks Rank #4 (Sell) at the time. Still, Norbord continued to thrive, with shares increasing 25% from March 1 to date.

Recently, things have become even more bullish for OSB. Current-quarter and next-quarter EPS estimate revisions have seen 100% agreement to the upside, pushing the company to a Zacks Rank #1 (Strong Buy).

On top of this, OSB could considered a great value stock. The company currently sports a P/E ratio of 9.2 and cash flow of $5.74 per share, which compares favorably to industry averages of 23.2 and $3.17 per share.

Boeing was another company thought to struggle in the face of trade tensions. From late February to late March, share prices dropped 11%, largely due to the Chinese government’s announcement that it may order planes from Boeing’s largest international competitor, Airbus. Boeing was also considered to be in the crosshairs of Chinese retaliation to new U.S. tariffs.

But since this point in late March, shares have rebounded 14% to date. The company is currently a Zacks Rank #2 (Buy) and a strong growth stock. With proven historical cash flow growth and a current cash flow growth of an astonishing 37%, the company deserves its “A” grade in the Growth category of our Style Scores System. Boeing also sports a net margin of 9.6%, more than double the industry average of 3.9%.

Stocks to Reconsider

While investors might consider buying these stocks, options such as Zimmer Biomet Holdings, have potential but are not as clear cut. The medical company saw massive drops in March due to its Chinese ventures and the risk of retribution to U.S. tariffs. During this time period, Zimmer was a Zacks Rank #5 (Strong Sell).

Since this point, the company has risen to a Zacks Rank #3 (Hold). Zimmer’s share prices had steadily been decreasing before looming trade wars were present, and ultimately were aggravated by threats to U.S.-Chinese relations. Since early April, the stock has fought back slightly, increasing 7.4%.

The company’s “B” grade for Value in our Style Scores comes from a drop in share prices relative to a lowering of guidance released in its Q1 earnings report. But when Zimmer’s P/B, P/CF, and P/E ratios are now trading at massive discounts to their industry averages, so we can that this drop has brought the stock to an interesting value territory.

Considering the trade war stall, this could be a stock that bounces back and continues to see improvements in share prices. But investors should be worried about continued tension and U.S. action, which would most likely result in fresh volatility.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Follow us on Twitter:  http://twitter.com/zacksresearch

Join us on Facebook:  http://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.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.