For Immediate Release
Chicago, IL – September 6, 2019 – Zacks Equity Research Paylocity (PCTY - Free Report) as the Bull of the Day, Macy’s (M - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Henry Schein (HSIC - Free Report) , DENTSPLY SIRONA, Inc. (XRAY - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Enterprise-cloud technology and demand for it are accelerating in our increasingly digitalized world. Paylocity is a cloud-based service that provides payroll and human capital management software solutions and has positioned itself to take shareholder returns to the clouds. Sell-side analysts are becoming increasingly optimistic about this company propelling it into a Zacks Rank #1 (Strong Buy).
PCTY has demonstrated insane share price appreciation so far in 2019, with shareholder returns of 77.5% in the past 8 months, trading just off its all-time highs.
Paylocity provides payroll and HCM software solutions to medium-sized US businesses, defined as businesses that employ anywhere from 20 to 999 individuals. The company currently services about 20,200 clients as of the end of June.
Paylocity has adopted the golden standard of cloud-based software-as-a-service (SaaS). Subscription-based services provide the company with a consistent and growing revenue stream that allows investors to be comfortable with excessively high multiples.
PCTY’s SaaS subscription-based software has been attracting an accelerating number of clients as its functionality progresses, and more medium-sized businesses find a competitive need to attain cloud-based HR software solutions. Without the infrastructure of a large corporation, it is more economical to use Paylocity’s cloud instead of investing in in-house infrastructure.
Paylocity has seen an accelerating client base that expanded 21% this past year with an over 92% retention rate. The company has been able to consistently grow its revenue per client through its broadening product offering that’s meeting more client needs.
This business has plenty of room to grow. There are over 638,000 medium-sized businesses in the US employing more than 45 million people according to Paylocity’s most recent 10-K, meaning that they have only penetrated 3% of their total accessible market (TAM). The company continues to advance its current portfolio of diversified products and services to attract a growing customer base.
PCTY is allowing smaller businesses to receive the same level of payroll and HCM support as a fortune 500 company through its diverse breadth of cloud-based platforms.
Bear of the Day:
Macy’s has continued to disappoint shareholders and investors alike. The once retail behemoth has lost 75% of its value in the past 5 years. It is now trading at its lowest levels in over a decade. This year alone took out almost 50% of M’s value as the company fails to meet the already conservative estimates for Q2.
Sell-side analysts are progressively more pessimistic about these share’s ability to appreciate pushing M into a Zacks Rank #5 (Strong Sell).
Macy’s Q2 results provoked a devastating blow to its share price as well as its competitors. It missed big on both top and bottom-lines illustrating its worst Q2 EPS in a decade and worst Q2 sales in 9 years. M’s share price has plummeted over 20% since its earnings release last month. Macy’s poor results was a cautionary tale to investors about the department store sector. A consumer shift is occurring, and department retailers are no longer on the front line.
The Consumer Shift
Millennials are changing the landscape in which businesses operates, with Silicon Valley leading the charge. Our world is becoming centered on the interconnected digital network we call the internet. The internet was built to hold and share data, making the transfer of data timely and seamless. Today the internet is allowing for a timely and seamless transfer of goods.
We, as millennials have grown up to recognize convenience and value as standards of living. Why go to the store when you can just make a few taps on your phone and get almost anything delivered to you? Why pay more at Macy’s when you could get the same thing cheaper at TJ Maxx? At least these were the ideals instill into me by my generation.
Department retailers like Macy’s are massive, cumbersome stores that cause anxiety to me and my cohort. Navigating these stores is a chore in and of itself. These firms have all invested in an ecommerce platform and run an increasing number of promotions to bolster foot traffic, but their core business model just doesn’t appeal to as many millennials.
Target , Walmart and TJ Maxx have all been able to meet the shifting consumer’s needs successfully. Target provides customers with both value and a manageable store layout that is aesthetically pleasing. Target brand products have become increasingly popular amongst millennials who see Target’s fashionably comparable clothes a deal at their lower price point.
Walmart is the largest retailer in the world and has gained this title with its price leadership in the retail space. They have continued to invest in their online presence, which has been yielding ecom market share gains. Walmart has consistently displayed topline growth as it shifts to meet consumer needs.
TJ Maxx has seemed to weather the brick-and-mortar retail storm, being able to meet consumer needs through its brand name value proposition. As Amazon and the rest of ecommerce force more and more retailers into bankruptcy, venders have an increasing need to offloading old/unwanted inventory. TJ Maxx has been able to fill that gap while pulling in more foot-traffic. Millennials like the hunt for a great deal and TJ Maxx is one of the best places for that with name brand products sold at deep discounts.
A consumer shift has been destroying department store stocks over the last 5 years or so, but the devastation has escalated even further this year with the retail apocalypse hitti them with full force. Macy’s has been attempting to adapt to the changing consumer, but they have been unsuccessful. They can’t get away from the archaic stigma that consumers associate with the company.
Macy’s is ostensibly trading at its lowest valuations ever it appears with no one wanting to take the chance on this dying retailer. Their still could be some value if they can make substantial systemic changes. The clock is ticking for this company as their bond rating slips into junk territory.
3 Best Dental Stocks to Keep an Eye On
The U.S. dental supply industry has been of late seeing a rise in the usage of dental practice management software. While prominent players like Henry Schein are striving to make an entry into this space, it is time investors cash in on this industry’s untapped prospects.
A Glance at Henry Schein’s Deal
Henry Schein recently entered Italy’s dental practice management software market with the takeover of Elite Computer Italia S.r.L. — a full-service software company providing high-tech management solutions to dental practices and laboratories in the country. The acquisition is in sync with Henry Schein One's strategy to deliver integrated technology platforms that enhance the productivity of dental teams and patient experience.
Dental Practices Management Software in Demand
Dental practice management software comprises tools and products which enable dentists and associated healthcare professionals monitor day-to-day operations like appointment scheduling, document storage and sharing, contact databases, filing and tracking insurance claims, dental history charting, patient records, and treatment plans. This software also helps dental businesses run smoothly by ensuring safe storage and easy access of critical information.
Meanwhile, rising use of digital automation technologies is reshaping the labor market across industries. Within the dental space, experts are massively adopting practice management tools to restructure, organize and lessen the pressure of daily processes, both in and outside offices.
Further, with rising awareness of oral health in the United States and Europe, and rapid innovation within the dental space, this space is currently the focal point of industry majors.
Per Mordor Intelligence, the dental practice management software market is expected to see a CAGR of 10.5% in the 2019-2024 period.
3 Dental Stocks to Focus On
We have selected three companies, which we believe are well poised to provide impressive long-term returns given the encouraging prospects of the global dental supply industry. These stocks have a favorable estimate revision trend.
DENTSPLY SIRONA, Inc.
This Zacks Rank #2 (Buy) company is a global leader in the design, development, manufacture and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products. Over the past 60 days, eight estimates for the company's current-year earnings have been revised higher. Resultantly, the Zacks Consensus Estimate for earnings per share rose around 1.7% to $2.39. The stock has gained 31.9% against the industry’s fall of 8.3% over the past year.
The company is fortifying its foothold in the highly competitive MedTech space with high-end products like PrimeScan and GP Ortho software. Apart from this, new products like WaveOne GOLD, X-Smart iQ, VDW and CONNECT Drive are expected to expand the company’s presence in Europe.
Henry Schein, Inc.
This Zacks Rank #3 (Hold) company is a leading distributor of health care products and services across the globe, with the lion’s share of revenues coming from its Dental business. Meanwhile, over the past 30 days, three estimates for the company's current-year earnings have been revised higher. Resultantly, the Zacks Consensus Estimate for earnings per share inched up 0.3% to $3.46. The stock has risen 5.9% compared with the industry’s rise of 2.3% over the past six months.
Henry Schein’s strategy to expand digital dentistry globally is encouraging.
The company’s recent joint venture (JV), Henry Schein One, is working on combining a host of unique and powerful dental software tools that help dentists build awareness for their practice and better communicate with existing patients. In line with this, a number of major imaging vendors have now signed up for Henry Schein’s Dentrix Smart image integration solution. Apart from this, through its cloud-based dental practice management system, Dentrix Ascend, Henry Schein continues to focus on enhancing practice and patient experience.
Henry Schein recently entered into an agreement to buy Lighthouse 360 from the Web.com which will enable the company to provide easy-to-use dental practice management and patient communication software.
Patterson Companies, Inc.
This Zacks Rank #3 company is one of the leading distributors of dental and animal health products. Over the past 30 days, two estimates for the company’s current-year earnings have moved up. However, the Zacks Consensus Estimate for the same was unchanged in this period. The stock has lost 33% compared with the industry’s fall of 8.3% over the past year. Despite the stock’s underperformance, it is well poised to make a comeback on solid long-term prospects.
It is encouraging to note that Patterson Companies witnessed a solid pick-up in dental sales in the last-reported quarter, driven by robust equipment performance on double-digit growth in the CAD/CAM and core equipment categories.
Patterson Companies has been expanding through strategic acquisitions. In the recent past, Patterson Dental Supply, Inc., a business unit of Patterson Companies, announced the takeover of Fitzpatrick Dental Design, a dental office design and dental equipment dealer. The deal has helped strengthen Patterson Companies’ equipment designs and expand its dental business capabilities.
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