For Immediate Release
Chicago, IL – January 4, 2018 – Zacks Equity Research Boeing (BA - Free Report) as the Bull of the Day, Wynn Resorts Limited (WYNN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Azure Power Global Ltd. (AZRE - Free Report) and Canadian Solar Inc. (CSIQ - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Boeing saw its stock price slip Thursday as part of the larger market downturn driven by Apple’s lowered sales guidance that pointed directly to a slowing Chinese economy. Despite trade war worries, Boeing recently lifted its quarterly dividend by 20%, landed new U.S. defense contracts, and sees a massive opportunity in India.
The Pentagon announced last Friday that it awarded Boeing a $400 million U.S. defense contract for B-1 and B-52 bomber engineering services. The firm also landed multiple other contracts last week as it bolsters its business amid tariff worries.
On top of that, Boeing detailed near the end of December the overall outlook for growth in one of the largest emerging markets in the world. Boeing raised its forecast for commercial airplanes in India because of massive domestic passenger traffic and expanding low-cost carriers are set to drive the need for 2,300 new jets in the country over the next 20 years, which are valued at $320 billion.
One of Boeing’s market research divisions noted that India’s commercial aviation industry recently hit 51 consecutive months of double-digit growth. Plus, the aerospace firm said that the Indian economy is projected to expand by nearly 350% over the next 20 years to become the world’s third-biggest economy. "This will continue to drive the growth of India's middle class and its propensity to travel both domestically and internationally, resulting in the need for more new fuel-efficient short- and long-haul airplanes," Boeing’s Dinesh Keskar said in a statement.
"The success of this market segment will mean more than 80 percent of all new airplane deliveries in India will be single-aisles. And the superior economics and fuel efficiency of the new 737 MAX airplane will be the perfect choice for Indian carriers."
Along with the potential for years of growth in a rapidly expanding economy and the continuation of its successful relationship with the U.S. government, Cowen aerospace analyst Cai von Rumohr told clients at the end of November that BA is his number one pick for 2019 because it is in a “production sweet spot.”
Boeing also declared in December a new quarterly dividend of $2.055 a share. This marked a 20% climb from the $1.71 per share Boeing paid throughout 2018. Boeing’s new quarterly dividend will be payable on March 1, to shareholders of record as of February 8. Boeing also replaced its existing share repurchase program with a new $20 billion authorization, which is up from the $18 billion approved last December.
Overall, Boeing stock has climbed roughly 5% over the last year to help it crush its peer group’s roughly 19% slide.
Despite Boeing topping its industry and the S&P 500’s climb during the last 12 months, shares of BA rest roughly 21% below their 52-week high of $394.28. This alone could set up a solid buying opportunity for those high on Boeing.
Bear of the Day:
Wynn Resorts Limited had a rough 2018. The year started off on the wrong foot after gambling mogul Steve Wynn resigned as CEO and chairman in February amid sexual misconduct allegations. Plus, Wynn’s vital Macau revenues have slowed as its Las Vegas revenues fall. And its overall revenues and earnings appear to be headed in the wrong direction.
Wynn Resorts owns and operates both Wynn and Encore in Las Vegas, along with two locations in Macau. Shares of Wynn plummeted in August after the company reported massive declines in revenues and profit at its original Macau resort. The casino giant’s revenues slipped 15% at the Wynn Macau. Meanwhile, sales at the two-year-old Wynn Palace surged 57%, which likely signals cannibalization problems.
Still, the Asian gambling mecca has become Wynn’s biggest market. Last quarter, revenues at Wynn Macau climbed 3.1% to reach $579.6 million. Meanwhile, Wynn Palace revenues in Macau surged 39.1% to hit $730.6 million. Wynn’s new Macau location helped the firm’s total revenues pop 10.2% to reach $1.71 billion.
With that said, Wynn’s revenues in Las Vegas tumbled 14% to $464.3 million. And Wynn’s adjusted quarterly earnings fell short of expectations.
As we mentioned at the top, shares of Wynn have suffered over the last year as investors digest the company’s future following its namesake CEO’s departure and its slumping Vegas revenues. Still, Wynn’s peer group nearly matched Wynn’s 2018 decline.
Shares of Wynn closed regular trading Thursday down 0.97% at $103.39. This marked a roughly 50% downturn from its 52-week high of $203.63 a share.
Outlook & Earnings Trends
Moving on, let’s dive into the most important reasons that Wynn is Friday’s Bull of the Day: its top and bottom-line outlook. Our current Zacks Consensus Estimate calls for Wynn’s fourth-quarter revenues to sink 10.9% to reach $1.51 billion. Jumping ahead, the company’s Q1 fiscal 2019 revenues are projected to fall 5.3% to touch $1.62 billion.
At the other end of the income statement, the company’s Q4 earnings are expected to drop 16.4% from the year-ago period to hit $1.17 a share. Meanwhile, Wynn’s first quarter 2019 revenues are projected to plummet 25.7%. Peeking even further ahead, the company’s full-year 2019 earnings are projected to sink 9.3% below our 2018 estimate.
Investors should also note that Wynn’s earnings revision activity has trended completely in the wrong direction recently. This signals that at least some analysts have turned more negative about the firm’s bottom-line outlook.
We should note that earnings growth has been proven to be one of the most effective indicators of positive stock price movement and vice versa. Therefore, Wynn’s dismal looking earnings outlook is likely a bad sign for Wynn stock in the short term.
CSIQ vs. AZRE: Which Solar Stock Should You Invest In?
Renewable energy is gaining prominence on positive impacts to environment as well as the economy. Apart from reducing carbon emissions, alternative sources of energy improve public health and create job opportunities.
A major growth area in the renewable space is solar energy. In Solar industry, few companies are involved in the designing and production of high-efficiency solar modules, panels and cells. Other players are engaged in installation of entire solar power systems. Falling costs of solar panels is boosting global growth of renewable energy.
The U.S. Energy Information Administration (EIA) projects that average U.S. solar generation will increase from 212,000 megawatt hours per day (MWh/d) in 2017 to 303,000 MWh/d in 2019 (up 13%).
In this article we do a comparative analysis on two solar stocks — Azure Power Global Ltd. and Canadian Solar Inc.— to ascertain which is a better performer and a suitable investment option right now.
Zacks Rank & Market Cap
Azure Power Global sports a Zacks Rank #1 (Strong Buy). The company has a market capitalization of around $369.45 million.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Canadian Solar sports a Zacks Rank #1. It has a market capitalization of $831.77 million.
Azure Power Global’s average positive earnings surprise for the trailing four quarters is 76.07%. Canadian Solar came up with an average positive earnings surprise of 49.66% in the last four quarter.
The Zacks Consensus Estimate for Canadian Solar’s 2019 EPS is at $2.40 up 31.8% in the last 60 days. Its long-term earnings growth rate (3 to 5 yrs) is pegged at 32%.
The Zacks Consensus Estimate for Azure Power Global’s 2019 earnings per share (EPS) is pegged at 29 cents remained unchanged in last 60 days.
The debt-to-capital ratio is a good indicator of the financial position of a company. The indicator shows how much debt is used to conduct business. Azure Power Global has a debt-to-capital ratio of 84.10% compared with Canadian Solar’s 9.09%. Canadian Solar’s debt-to-capital ratio is lower than the industry’s 32.59% and Zacks S&P Composites’ 41.34%.
Shares of Canadian Solar have gained 18.3%, against the industry’s decline of 19.6% in the past six months. Shares Azure Power Global have lost 39.2% in the same time frame.
Our verdict tips toward Canadian Solar considering better growth projections, price performances, debt-to-capital and return on equity.
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