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With stocks searching for bottoms here, it’s really beginning to temp the value seekers. The Tuesday morning low could prove to be the swing low of the market here in November. That could potentially lead to a Santa Claus Rally that has the shorts running up the chimney. Rather than blindly buying the dip, I’m looking for stocks which have positive earnings estimate revisions coming from analysts. They always know more than the average Joe. If they are pushing up their estimates on a stock, maybe there’s something good coming around the corner.
One stock with positive earnings momentum is today’s Bull of the Day, Shenandoah. Shenandoah Telecommunications Company, through its subsidiaries, provides regulated and unregulated telecommunications services to customers and other telecommunications providers in central and western Virginia, south-central Pennsylvania, West Virginia, Maryland, North Carolina, Kentucky, Tennessee, and Ohio. It offers integrated voice, video, and data communications services. The company operates in three segments: Wireless, Cable, and Wireline. The Wireless segment provides digital wireless mobile services; and wireless mobility communications network products and services.
Currently, Shenandoah is a Zacks Rank #1 (Strong Buy) in an industry that ranks in the Top 25% of our Zacks Industry Rank. The reason for the favorable Zacks Rank is the series of earnings estimate revisions to the upside coming from analysts. Over the last thirty days, two analysts have increased their estimates for the current quarter and current year. The bullish sentiment has pushed up our Zack Consensus Estimate for the current quarter from 14 cents to 26 cents while the current year number has gone from 55 cents to 81 cents.
The bullish revisions have helped underpin a strong move in the stock. Prior to its last earnings report, SHEN was trading down under $36. A solid beat, coupled with estimate revisions to the upside, have shot the stock up over $48. All this has been taking place while the broad market has come under serious pressure.
I can already see the crowds with their pitchforks and torches while I write this. Before I get into this discussion I want to make one thing perfectly clear; The Bear of the Day is not a recommendation to sell a stock. Rather, it’s meant to point out a particular stock which has seen bearish earnings estimates coming from analysts. It’s not an indictment on the long-term idea of ownership. I’m merely bringing to light issues that investors may not have been aware of. In other words, don’t kill the messenger.
Today’s Bear of the Day is none other than NVIDIA. That’s right folks, the tech giant famous for graphics cards, chips for data centers, and autonomous driving tech. NVIDIA Corporation operates as a visual computing company worldwide. It operates through two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming and mainstream PCs; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for AI utilizing deep learning, accelerated computing, and general purpose computing; GRID provides power of NVIDIA graphics through the cloud and datacenters; DGX for AI scientists, researchers, and developers; and cryptocurrency-specific graphics processing units. The Tegra Processor segment provides processors designed to enable branded platforms - DRIVE and SHIELD; DRIVE automotive computers and software stacks, which offer self-driving capabilities; SHIELD devices and services designed for mobile-cloud in home entertainment, AI, and gaming applications; and Jetson TX 2, an AI computing platform for embedded use.
Ground zero here was the last earnings report. EPS came in just shy of expectations but that wasn’t the reason for the tailspin. You can chalk that up to the abysmal revenue guidance. Analysts were looking for revenues of $3.4 billion for next quarter. NVIDIA came out and guided at $2.7 billion. That’s a huge readjustment for analysts to make. This made for a brutal selloff in the stock and justifiably so. Investors had to readjust their growth expectations, thus changing the valuation model on the stock. Once willing to pay as much as 15.8x TTM sales, that multiple has now been reset to just 7.5x. To give you some perspective, the semiconductor industry average price to sales ratio is 3.3x. Granted, NVDA still enjoys a sales growth rate of 26% for the current year. That growth is expected to slow to 5.9% next year.
This caused a rush of earnings estimates to the downside. Eleven analysts cut their estimates for the current quarter, while twelve cut their numbers for next year. The bearish sentiment has sent the Zacks Consensus Estimate down from $2.03 to $1.41 for the current quarter while next year’s number has been cut from $8.73 to $7.11. It’s the main reason that the stock has dropped down to a Zacks Rank #5 (Strong Sell).
Management simply dropped the ball here. It’s not about missing the number, which is a whole other argument. This is about not managing expectations. Had they done a better job of communicating with analysts, they would have allowed them to adjust their models sooner. This would likely have led to a much softer landing for shares, rather than the downward death spiral they were put on following this disastrous report. It was so bad that it sent the entire NASDAQ down into the gutter along with it.
Additional content:
3 Tech Stocks for Dividend Investors to Buy Now
Tech stocks have been unpredictable at times recently, but the sector has proven it can rebound from volatility strongly, and there is no question that tech has been the leader of the market’s strong multiyear run up to this point.
However, this might mean that income investors—those focused on finding companies with solid dividends—might be feeling left out, as tech stocks aren’t really known for their payouts.
Finding a strong dividend-yielding tech stock might feel like searching for a golden goose, but investors should not feel too intimidated. In fact, dividend-focused investors can search for the best tech stocks by using the Zacks Stock Screener, the perfect one-stop screening tool for investors of all kinds.
By limiting our search to companies in our “Computer and Technology” sector with Zacks Rank #2 (Buy) or better rankings, we can ensure that we are finding the highest quality stocks to buy right now. Throw in your preferred dividend yield and voila—the best tech stocks for dividend investors to target!
Check out three of these stocks to buy now:
1. Garmin Ltd.
Garmin is a designer of GPS navigation and wearable technology equipment. The stock is holding a Zacks Rank #2 (Buy) and presents a dividend yield of about 3.3%. Investors have to pay a slight premium for GRMN right now, but a valuation of 19x forward earnings and a PEG ratio of 2.5 are certainly not outrageous.
Meanwhile, Garmin generates $3.42 in cash per share and sticks out from the rest of the technology group with its net margin of 19.5%, which dramatically outpaces its industry’s average. Garmin is also an efficient company, evidenced by its RoE of 17%.
2. Qualcomm Inc.
Qualcomm is one of the world’s largest telecommunications equipment and semiconductor manufacturing companies in the world. QCOM currently sports a Zacks Rank #1 (Strong Buy) and has a dividend yield of 4.5%. Management has a great track record of adding to the payout and has hiked the dividend annually since 2009.
Chip stocks have been volatile, but Qualcomm offers exposure to different businesses, including large swaths of untapped growth in 5G. This is part of why the company is expected to improve earnings by 9.5% this fiscal year and see a long-term annualized EPS growth rate of 11.5%. This should further improve its financial position and allow it to reward shareholders even more.
3. Hewlett Packard Enterprise Company
Hewlett Packard Enterprise is an integrated systems company focused on enterprise offerings like IT solutions, servers, and cloud-based products. The old Hewlett Packard Company might have been losing some of its clout, but the spinoff has created new efficiencies for HPE, and the potential here is great for income investors.
HPE is sitting at a comfortable Zacks Rank #3 (Hold) and has a dividend yield of 3.1%. The firm will report earnings next week, and analysts expect the quarter to reveal earnings growth of more than 48%. That estimate has also trended higher over the duration of the quarter, so sentiment is trending in the right direction. HPE has only missed once since the spinoff and also looks undervalued at just 9x earnings.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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.
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Shenandoah, NVIDIA, Garmin, Qualcomm and Hewlett Packard Enterprise highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 23, 2018 – Zacks Equity Research highlights Shenandoah (SHEN - Free Report) as the Bull of the Day, NVIDIA (NVDA - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Garmin Ltd. (GRMN - Free Report) , Qualcomm Inc. (QCOM - Free Report) and Hewlett Packard Enterprise Company (HPE - Free Report) .
Here is a synopsis of all the five stocks:
Bull of the Day:
With stocks searching for bottoms here, it’s really beginning to temp the value seekers. The Tuesday morning low could prove to be the swing low of the market here in November. That could potentially lead to a Santa Claus Rally that has the shorts running up the chimney. Rather than blindly buying the dip, I’m looking for stocks which have positive earnings estimate revisions coming from analysts. They always know more than the average Joe. If they are pushing up their estimates on a stock, maybe there’s something good coming around the corner.
One stock with positive earnings momentum is today’s Bull of the Day, Shenandoah. Shenandoah Telecommunications Company, through its subsidiaries, provides regulated and unregulated telecommunications services to customers and other telecommunications providers in central and western Virginia, south-central Pennsylvania, West Virginia, Maryland, North Carolina, Kentucky, Tennessee, and Ohio. It offers integrated voice, video, and data communications services. The company operates in three segments: Wireless, Cable, and Wireline. The Wireless segment provides digital wireless mobile services; and wireless mobility communications network products and services.
Currently, Shenandoah is a Zacks Rank #1 (Strong Buy) in an industry that ranks in the Top 25% of our Zacks Industry Rank. The reason for the favorable Zacks Rank is the series of earnings estimate revisions to the upside coming from analysts. Over the last thirty days, two analysts have increased their estimates for the current quarter and current year. The bullish sentiment has pushed up our Zack Consensus Estimate for the current quarter from 14 cents to 26 cents while the current year number has gone from 55 cents to 81 cents.
The bullish revisions have helped underpin a strong move in the stock. Prior to its last earnings report, SHEN was trading down under $36. A solid beat, coupled with estimate revisions to the upside, have shot the stock up over $48. All this has been taking place while the broad market has come under serious pressure.
Bear of the Day:
I can already see the crowds with their pitchforks and torches while I write this. Before I get into this discussion I want to make one thing perfectly clear; The Bear of the Day is not a recommendation to sell a stock. Rather, it’s meant to point out a particular stock which has seen bearish earnings estimates coming from analysts. It’s not an indictment on the long-term idea of ownership. I’m merely bringing to light issues that investors may not have been aware of. In other words, don’t kill the messenger.
Today’s Bear of the Day is none other than NVIDIA. That’s right folks, the tech giant famous for graphics cards, chips for data centers, and autonomous driving tech. NVIDIA Corporation operates as a visual computing company worldwide. It operates through two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming and mainstream PCs; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for AI utilizing deep learning, accelerated computing, and general purpose computing; GRID provides power of NVIDIA graphics through the cloud and datacenters; DGX for AI scientists, researchers, and developers; and cryptocurrency-specific graphics processing units. The Tegra Processor segment provides processors designed to enable branded platforms - DRIVE and SHIELD; DRIVE automotive computers and software stacks, which offer self-driving capabilities; SHIELD devices and services designed for mobile-cloud in home entertainment, AI, and gaming applications; and Jetson TX 2, an AI computing platform for embedded use.
Ground zero here was the last earnings report. EPS came in just shy of expectations but that wasn’t the reason for the tailspin. You can chalk that up to the abysmal revenue guidance. Analysts were looking for revenues of $3.4 billion for next quarter. NVIDIA came out and guided at $2.7 billion. That’s a huge readjustment for analysts to make. This made for a brutal selloff in the stock and justifiably so. Investors had to readjust their growth expectations, thus changing the valuation model on the stock. Once willing to pay as much as 15.8x TTM sales, that multiple has now been reset to just 7.5x. To give you some perspective, the semiconductor industry average price to sales ratio is 3.3x. Granted, NVDA still enjoys a sales growth rate of 26% for the current year. That growth is expected to slow to 5.9% next year.
This caused a rush of earnings estimates to the downside. Eleven analysts cut their estimates for the current quarter, while twelve cut their numbers for next year. The bearish sentiment has sent the Zacks Consensus Estimate down from $2.03 to $1.41 for the current quarter while next year’s number has been cut from $8.73 to $7.11. It’s the main reason that the stock has dropped down to a Zacks Rank #5 (Strong Sell).
Management simply dropped the ball here. It’s not about missing the number, which is a whole other argument. This is about not managing expectations. Had they done a better job of communicating with analysts, they would have allowed them to adjust their models sooner. This would likely have led to a much softer landing for shares, rather than the downward death spiral they were put on following this disastrous report. It was so bad that it sent the entire NASDAQ down into the gutter along with it.
Additional content:
3 Tech Stocks for Dividend Investors to Buy Now
Tech stocks have been unpredictable at times recently, but the sector has proven it can rebound from volatility strongly, and there is no question that tech has been the leader of the market’s strong multiyear run up to this point.
However, this might mean that income investors—those focused on finding companies with solid dividends—might be feeling left out, as tech stocks aren’t really known for their payouts.
Finding a strong dividend-yielding tech stock might feel like searching for a golden goose, but investors should not feel too intimidated. In fact, dividend-focused investors can search for the best tech stocks by using the Zacks Stock Screener, the perfect one-stop screening tool for investors of all kinds.
By limiting our search to companies in our “Computer and Technology” sector with Zacks Rank #2 (Buy) or better rankings, we can ensure that we are finding the highest quality stocks to buy right now. Throw in your preferred dividend yield and voila—the best tech stocks for dividend investors to target!
Check out three of these stocks to buy now:
1. Garmin Ltd.
Garmin is a designer of GPS navigation and wearable technology equipment. The stock is holding a Zacks Rank #2 (Buy) and presents a dividend yield of about 3.3%. Investors have to pay a slight premium for GRMN right now, but a valuation of 19x forward earnings and a PEG ratio of 2.5 are certainly not outrageous.
Meanwhile, Garmin generates $3.42 in cash per share and sticks out from the rest of the technology group with its net margin of 19.5%, which dramatically outpaces its industry’s average. Garmin is also an efficient company, evidenced by its RoE of 17%.
2. Qualcomm Inc.
Qualcomm is one of the world’s largest telecommunications equipment and semiconductor manufacturing companies in the world. QCOM currently sports a Zacks Rank #1 (Strong Buy) and has a dividend yield of 4.5%. Management has a great track record of adding to the payout and has hiked the dividend annually since 2009.
Chip stocks have been volatile, but Qualcomm offers exposure to different businesses, including large swaths of untapped growth in 5G. This is part of why the company is expected to improve earnings by 9.5% this fiscal year and see a long-term annualized EPS growth rate of 11.5%. This should further improve its financial position and allow it to reward shareholders even more.
3. Hewlett Packard Enterprise Company
Hewlett Packard Enterprise is an integrated systems company focused on enterprise offerings like IT solutions, servers, and cloud-based products. The old Hewlett Packard Company might have been losing some of its clout, but the spinoff has created new efficiencies for HPE, and the potential here is great for income investors.
HPE is sitting at a comfortable Zacks Rank #3 (Hold) and has a dividend yield of 3.1%. The firm will report earnings next week, and analysts expect the quarter to reveal earnings growth of more than 48%. That estimate has also trended higher over the duration of the quarter, so sentiment is trending in the right direction. HPE has only missed once since the spinoff and also looks undervalued at just 9x earnings.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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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.
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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.