For Immediate Release
Chicago, IL – December 5, 2018 – Zacks Equity Research Casey’s General Stores (CASY - Free Report) as the Bull of the Day, Hasbro (HAS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on TD Ameritrade Holding (AMTD - Free Report) and E*TRADE Financial Corp. (ETFC - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Woof. After that rough day in the market I bet that most of you are wondering if the bear market is back. I don’t believe it is, and neither do many investors who are astutely seeking opportunities. In a market like this, it’s important to not just blindly throw money at stocks. Rather, you need to be calculated and buy based on fundamentals. Among those, earnings should be one of your main targets. And not just earnings in the form of a great P/E valuation, but earnings growth. Today, I’ve picked a Bull of the Day based on a strong earnings story.
Today’s Bull of the Day is Zacks Rank #1 (Strong Buy) Casey’s General Stores. Casey's General Stores, Inc., together with its subsidiaries, operates convenience stores under the Casey's and Casey's General Store names. The company's stores offer a selection of food, including freshly prepared foods, such as pizza, donuts, and sandwiches; beverage and tobacco products; health and beauty aids; automotive products; school supplies, housewares, and pet supplies; and other nonfood items. Its stores also provide fuel for sale on a self-service basis.
Casey’s is a Zacks Rank #1 (Strong Buy) in an industry that ranks in the Top 1% of our Zacks Industry Rank. The reason for the favorable Zacks Rank is over the last 30 days, analysts have increased their earnings estimates for the current quarter and next year. The bullish sentiment has pushed up the Zacks Consensus Estimate from $1.57 to $1.62 for the current quarter while next year’s number has gone from $4.89 to $5.03.
Bear of the Day:
Picking a Bear of the Day after the blood bath we’ve seen in the market feels like kicking a dead horse. So many stocks were crushed in the aftermath of yesterday’s selloff that it’s easy to find one that’s down in the dumps. That’s not the purpose of the Bear of the Day. The purpose is to point out stocks that have seen earnings estimate revisions to the down side. While price is a fickle beast, earnings trends take a long time to develop. Today I’m pointing out one of those negative earnings stories for our Bear of the Day.
Today’s Bear of the Day is Hasbro. Hasbro, Inc., together with its subsidiaries, operates as a play and entertainment company. The company's U.S. and Canada segment markets and sells action figures, arts and crafts, and creative play products; electronic toys and related electronic interactive products; fashion and other dolls, infant products, play sets, preschool toys, plush products, and sports action blasters and accessories; and vehicles and toy-related specialty products, as well as traditional board games, and trading card and role-playing games primarily in the United States and Canada.
Currently, Hasbro is a Zacks Rank #5 (Strong Sell). The reason for the unfavorable Zacks Rank is the series of negative revisions over the last sixty days. Seven analysts have cut their estimates for the current year and next year. The bearish moves have cut the Zacks Consensus Estimates for the current year from $4.72 to $4.22 while next year’s number has come down from $5.38 to $5.09. That negative pressure has put the stock under some serious stress.
TD Ameritrade or E*TRADE: Which Is the Better Stock?
Benefits from an improving economy and higher interest rates have positioned the investment bank industry well. As such, performance of investment banks, which are part of the Zacks Finance sector, was quite impressive in third-quarter 2018.
Therefore, we are focusing on two major investment banks, namely TD Ameritrade Holding and E*TRADE Financial Corp., with market capitalization of $30.6 billion and $13.3 billion, respectively. Both are part of the same industry, which has a Zacks Industry Rank #59 (top 23%). Our back testing shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
In the quarters ahead, both TD Ameritrade and E*TRADE are expected to continue benefiting from increase in interest rates. TD Ameritrade carries a Zacks Rank #2 (Buy), while E*TRADE sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Though both investment brokers have similar business trends, an insight into the financials will help decide which investment option is better.
Both banks have outperformed the industry (down 15.8%) year to date, witnessing stellar growth. While shares of TD Ameritrade have rallied 7%, E*TRADE has risen 6.7%. So, TD Ameritrade has performed better than E*TRADE.
Both the companies have been deploying capital in terms of dividend payments and share purchases to enhance shareholder value.
TD Ameritrade announced 43% dividend hike in October. Further, the company has a share buyback authorization in place. It has a dividend yield of 2.23%.
Recently, E*TRADE initiated dividend payment. Further, the company has a share repurchase authorization in place. It has a dividend yield of 1.07%.
As visible in the above charts, TD Ameritrade has an edge over E*TRADE. Not only is TD Ameritrade’s dividend yield better than E*TRADE but is also above the industry average of 0.89%.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. TD Ameritrade’s ROE for the trailing 12-month period is 24.54% while that for E*TRADE is 15.45% compared with the industry’s level of 11.89%. Therefore, TD Ameritrade reinvests its earnings more efficiently.
Earnings Estimate Revisions & Growth Projections
The Zacks Consensus Estimate for fiscal 2019 earnings of TD Ameritrade has moved up 1% over the past 30 days. Meanwhile, the same for E*TRADE has jumped 1.3% for this year during the same time frame.
Moreover, fiscal 2019 earnings for TD Ameritrade are projected to jump 18.9% year over year. For E*TRADE, the Zacks Consensus Estimate is pegged at $3.85 for 2018, reflecting a year-over-year increase of a massive 75.8%.
Hence, E*TRADE reflects better earnings growth prospects.
Sales for TD Ameritrade for fiscal 2019 are projected to increase 8.1% year over year to $5.9 billion. For E*TRADE, the Zacks Consensus Estimate is pegged at $2.9 billion for 2018, indicating year-over-year growth of 22.1%.
Therefore, E*TRADE has an edge here as well.
TD Ameritrade has a VGM Score of B, while E*TRADE has a VGM Score of C. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Therefore, TD Ameritrade holds an edge over E*TRADE here.
Our comparative analysis shows that E*TRADE is better positioned than TD Ameritrade in terms of sales and earnings growth expectations. However, TD Ameritrade wins on price performance, reinvestment potential, dividend yield and valuation.
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