For Immediate Release
Chicago, IL – July 9, 2018 – Zacks Equity Research highlights CVR Refining (CVRR - Free Report) as the Bull of the Day, Carriage Services Inc. (CSV - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Mitsui and Co. (MITSY - Free Report) , Marathon Oil Corp (MRO - Free Report) and Car Mart (CRMT - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
CVR Refining, a Zacks Ranked #1 (Strong Buy) is engaged in the refining of petroleum primarily in the United States. It has refining and related logistics assets that operate in the mid-continent region. The company operates in Coffeyville, Kansas, Wynnewood and Oklahoma. CVR Refining, LP is headquartered in Sugar Land, Texas.
Recent Earnings Results
In the company’s Q1 18 results it crushed the Zacks consensus earnings estimates by producing an EPS of $0.59, well above the expected level of $0.12. Revenues also came in better than expected at $1.45 billion. Specifically, net income rose by +119.4%, net sales grew by +2.4%, and EPS improved by +31.1%. Also, quarterly refined margin adjusted for FIFO improved by +19.3% due to stronger crack spreads.
According to David Lamp, CEO, “CVR Refining reported solid financial results for the 2018 first quarter. The quarter’s fiscal performance was driven by stronger crack spreads, hedging gains, a reduction to our estimated Renewable Volume Obligation and lower Renewable Identification Number prices. Combined crude oil throughput was approximately 178,000 barrels per day (bpd) for the quarter and was negatively impacted by the extended fluid catalytic cracking unit outage at our Coffeyville refinery. The strong financial results for the quarter, revisions to our capital spending plan and delay of our Wynnewood turnaround until 2019 allowed CVR Refining to reward unitholders with a strong quarterly distribution.”
Bear of the Day:
Carriage Services Inc., a Zacks Rank #5 (Strong Sell) is a leading provider of death care services and products in the United States. Carriage provides a complete range of services relating to funerals, burials and cremations, including the use of funeral homes and motor vehicles, the performance of cemetery interment services and the management and maintenance of cemetery grounds. They also sell related products and merchandise including caskets, burial vaults, garments, cemetery interment rights, stone and bronze memorials, as well as other items.
Recent Earnings Data
In the company’s most recent earnings report it missed both the Zacks consensus earnings and revenue estimates. On the positive earnings grew by +31.1%, and revenues improved by +7.4% when compared to the year ago quarter.
According to Mel Payne, CEO, “We got off to a good start in 2018 by setting numerous historical first quarter performance records including Total Revenue of $73.4 million (up 7.7%), Total Field EBITDA of $31.2 million (up 5.8%), Consolidated EBITDA of $22.4 million (up 9.2%), GAAP and Adjusted Net Income of $9.4 million and $10.5 million, respectively (up 32.1% and 29.5%), GAAP and Adjusted Diluted EPS of $0.52 and $0.59, respectively (up 33.3% and 31.1%), and Free Cash Flow of $13.4 million (up 110.4%).”
But later in the press release, Mr. Payne stated, “We are lowering the midpoint of our Rolling Four Quarter Outlook Ranges on revenues by 2.5%, Consolidated EBITDA by 4.2% and Adjusted Diluted EPS by 9.9% due to three specific issues, i.e. an acquisition under LOI (has since lapsed) that didn’t close in the fourth quarter as expected, rising interest costs on our floating rate debt, and a higher diluted share count related to our convertible debt and recent increase in our share price.”
Zacks July Market Strategy
It’s July. Covering analysts have moved on to looking at the 2nd half of 2018 now.
At the start of 2018, the price trend of the stock market was more positive than now. We are listless with Trade War concerns.
As for estimate revisions, grouped together, we enter the 2nd half of 2018 with the “Bull Market Sectors” (Tech, Industrials, Energy, and Consumer Discretionary) at the top of Zacks sectors. “Bear Market Sectors” (Utilities, Telcos, and Consumer Staples) are at the bottom.
In addition, small and mid cap stocks have outperformed large cap stocks so far in 2018. This is Bullish and Cyclical too.
Short-term interest rates moved higher with Fed tightening, while long-term rates are flat, due to European “QE”. This has reduced the short versus long risk-free spreads. In turn, this has kept Financials at a Market Weight, as banks borrow short and lend long.
(1) Industrials are Very Attractive again. Metal Fabricating is Hot, and Aerospace & Defense, Conglomerates, and Pollution Control all look good.
Top Zacks Stock: Mitsui and Co.
The Mitsui Group is a global empire comprising more than 860 subsidiaries and associated companies with operations in chemicals, foodstuffs, general merchandise, iron and steel, machinery, nonferrous metals, textiles, energy, and real estate and service industries.
(2) Energy is now a Very Attractive sector, with the rise in oil prices. Energy-Alternates, Oil & Gas Integrated, and Oil Exploration and Production are the spots to study.
Top Zacks Stock: Marathon Oil Corp
Marathon Oil Corporation is a leading exploration and production company with extensive operations across four core regions - Africa, Middle East, Europe and North America.
(3) Consumer Discretionaryrises back to Market Weight. The best industry niches are Non-Food Retail/Wholesale, and Autos/Tires/Trucks.
Top Zacks Stock: America’s Car Mart
America's Car-Mart operates automotive dealerships and is one of the largest automotive retailers in the United States focused exclusively on the Buy Here/Pay Here segment of the used car market.
The company operates its dealerships primarily in small cities and rural locations throughout the South-Central United States, selling quality used vehicles and providing financing for substantially all of its customers.
(4) Info Tech is back to an Attractive sector. The Semis are hot, once again.
(5) Materials are back to an Attractive sector. The leader is Paper, followed by Steel and Metals non-Ferrous, and Chemicals.
(6) Health Care is still Attractive. The best niche is Medical Care.
(7) Financials are Market Weight. The top niches are Investment Banking & Brokering and Insurance.
(8) Utilities remain Unattractive.
(9) Consumer Staples stay Very Unattractive. The best is Agri-business and Food/Drug Retail. But they are just Market Weight niches.
(10) Telcosremain Very Unattractive.
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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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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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