For Immediate Release
Chicago, IL – June 13, 2019 – Zacks Equity Research Berry Petroleum Company, LLC (BRY - Free Report) as the Bull of the Day, Vishay Intertechnology (VSH - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on lululemon athletica (LULU - Free Report) and Restoration Hardware (RH - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Berry Petroleum Company, LLCis part of the oil revolution. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth this year even as Wall Street completely ignores it.
Berry Petroleum is a small cap California-based independent exploration and production company with reserves located in the western United States, particularly in the San Joaquin basin of California.
Full Year Production and Spending are on Track
On May 8, Berry reported its first quarter results and missed on the Zacks Consensus Estimate by just a penny. Earnings were $0.30 compared to the consensus of $0.31.
While the first quarter saw lower oil prices than the fourth quarter, the company was protected by its oil hedge.
California oil prices before hedges for the first quarter averaged $59.16/Bbl which were 6% lower than the $62.65/Bbl realized in Q4. Berry's realized oil prices before hedges of $56.88/Bbl were 8% lower than the fourth quarter average of $61.48.
Berry CEO Trem Smith commented that the full-year production and spending were on track.
It maintained capital expenditures of $49 million, with about 87% of that directed to California oil development.
One negative in the quarter was the weather. Berry saw a negative impact from the cool and wet winter which increased the demand for natural gas, which therefore increased pricing and negatively impacted the company's results for the quarter.
Analysts Raise Full Year 2019 and 2020 Estimates
Despite the penny miss, and the awful weather to start the year, the analysts are optimistic about earnings for both 2019 and 2020.
4 estimates were raised for 2019 in the last 60 days, with one estimate being raised in the last month as well.
The 2019 Zacks Consensus Estimate has jumped to $1.56 from $1.36 in the last 90 days. This is earnings growth of 23.8% from 2019 where the company made $1.26.
2020 is also looking bullish as 3 estimates have moved higher over the last 60 days and 1 higher in the prior month.
The 2020 Zacks Consensus Estimate has jumped to $1.69 from $1.07 over the last 3 months. That's earnings growth of 8.3%.
Berry is one of the few small cap E&Ps that pays a dividend. It's currently yielding a juicy 4.6%.
It has paid the dividend 4 quarters in a row now.
No dividend is ever guaranteed, but the company says it's committed to the dividend.
Shares Fall as Crude Weakens
No sector is as hated as energy on Wall Street. Not even retail.
Most of the E&Ps have seen significant weakness in 2019 as crude has weakened again. Berry shares have fallen 20.8% year-to-date but they're not yet at the end of 2018 lows, where the doom was being priced into the industry.
Still, the shares are dirt cheap here.
Berry has a forward P/E of just 6.6 and a PEG ratio of 0.4.
It's a rare value stock that also has growth. And investors get the dividend.
Is it time to start looking at the oil stocks again?
Bear of the Day:
Vishay Intertechnologyis in a tough semiconductor market in 2019. This Zacks Rank #5 (Strong Sell) is still seeing its 2019 earnings estimates cut. When will the semis bottom?
Vishay Intertechnology is one of the world's largest manufacturers of discrete semiconductors (diodes, rectifiers, MOSFETs, optoelectronics, and selected ICs) and passive electronic components (resistors, inductors, and capacitors).
These components are used in virtually all types of electronic devices and equipment, in the industrial, computing, automotive, consumer, telecommunications, military, aerospace, power supplies, and medical markets.
As of May 2019, its largest segments were Industrial and Automotive, which represented 38% and 28%, respectively of sales.
A Beat in the First Quarter
On May 9, Vishay reported its first quarter earnings and beat the Zacks Consensus by a penny. Earnings were $0.51 versus the consensus of $0.50.
Revenue fell sequentially to $745.2 million from $775.9 million in Q4, but was still up year-over-year as it made $716.8 million in the year ago quarter.
Gross margins were 28.3%.
It had strong free cash flow of $109 million in the quarter.
Additionally, for those wondering about concentration risk, no single OEM customer represents over 7% of the company's sales.
Raised Quarterly Dividend Again
In May 2019, the company raised its quarterly dividend 12%. It is currently yielding 2.5%.
It has raised the dividend each of the last 4 years.
Analysts Cut Estimates
The semiconductor industry is cyclical. While many believed the worst was over for it by the end of 2018, they were too early.
The estimates continue to be cut on most of the semiconductors for 2019 and 2020. Vishay is no exception. That's why it is a Zacks #5 (Strong Sell).
For 2019, 3 estimates were cut in the last 60 days which pushed the Zacks Consensus Estimate down to $1.65 from $2.16. That's an earnings decline of 22% as the company made $2.12 a year ago when the semi boom was still going full throttle.
Two estimates were also lowered for 2020 in the last 2 months, pushing down the 2020 Zacks Consensus Estimate to $1.76 from $2.07. That's an earnings increase of 6.5%, but will those estimates stick?
Shares Falling Again
After a dismal end to 2018, the semiconductor stocks, including Vishay, staged a big recovery. But recently, the bears have returned and have pushed the shares down 13.6% year-to-date.
Over the last year, they've fallen 36.2%.
They're pretty cheap, even with the earnings estimate cuts.
Vishay trades with a forward P/E of 9.6. But be warned. With the estimates still being cut, the semiconductors look like value traps.
lululemon, Restoration Hardware Beat Q1 Estimates
lululemon athletica reported earnings Wednesday afternoon for its fiscal Q1 of 74 cents per share, 3 cents better than the Zacks consensus. Revenues came in well above estimates: $782 million depicts 20% growth year over year, and is well beyond the $757 million we had expected. Comps in the quarter were up a robust 14%, partially due to 33% growth in direct-to-consumer sales.
Further, gross margins rose 80 basis points year over year to 53.9% in the quarter. This marks the ninth straight earnings report LULU has posted a positive earnings surprise, with the trailing 4-quarter average around +20%.
Guidance was a tad lighter than anticipated, however, considering the big moves above expectations: Full-year earnings of $4.51-4.58 per share is below the Zacks consensus $4.60, while the revenue range of $3.73 billion - $3.77 billion compares with the previous Zacks estimate of $3.76 billion. Shares are up 2.8% in the late session, after initially trading down on the news. For more on LULU's earnings, click here.
Restoration Hardware blew the doors off its Q1 expectations, putting up $1.85 per share on $599 million in sales, compared to Zacks consensus figures of $1.54 per share and $583 million, respectively. The high-end furniture retailer has not missed an earnings estimate in 3 full years.
Full-year guidance was also well beyond what analysts were looking for: for the full year, RH expects earnings of $8.76-9.27 per share -- leaving the Zacks consensus $8.33 in the dust. Revenues are guided to a range of $2.64-2.66 billion, whereas the Zacks consensus estimate had been for $2.61 billion. After-market trading has RH up a whopping 24% at this hour.
CEO Gary Friedman will be leading a conference call for Restoration Hardware at the 5pm PT to let analysts know how he was able to pull off the magic once again. I thought this was supposed to be a weak economy for retail? For more on RH's earnings, click here.
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