For Immediate Release
Chicago, IL – October 9, 2019 – Zacks Equity Research Maxar Technologies (MAXR - Free Report) as the Bull of the Day, ABM Industries (ABM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Maxar Technologiesis a Zacks Rank #1 (Strong Buy) and has some really strong style scores. This is the type of stock that I love to profile as it has come in from recent highs and looks to launch back to that level and beyond. Let's review why this stock is a Zacks Rank #1 (Strong Buy) in this Bull of the Day article
Maxar Technologies Inc. provides space technology solutions. The company engages in developing and sustaining the infrastructure and delivering the information, services, systems of space for commercial and government markets. It offers vertically integrated capabilities and expertise including satellites, Earth imagery, robotics, geospatial data and analytics. The company's portfolio of commercial space brands includes MDA, SSL, DigitalGlobe and Radiant Solutions. Maxar Technologies Inc. is based in Westminster, United States.
The Zacks data set does not have an estimate for one of the last four quarters, so we have one beat and two misses over the last four quarters... with that one NA. The thing to key on is the most recent beat.
The company reported ESP of $0.24 when $0.05 was expected. That is a beat of $0.19 or 380% better than expectations. That type of beat has a way of waking up the analyst community.
Despite that big beat, the estimates for this quarter and next have held still.
As I look out to the full year numbers, I see the loss decreasing from $2.11 to $1.51, so we like to see that.
For next year I see the loss moving from $2.42 to $1.47 -- and that is a huge move in the right direction.
Since there are no earnings, we have to rely on the other metrics to tell the valuation story. I see a 0.6x price to book, and that alone should make the value oriented investors start to salivate. A 0.23x price to sales multiple is a lot lower than I would like to see, but that can change quickly with a solid earnings report.
Bear of the Day:
ABM Industries (ABM - Free Report) is a Zacks Rank #5 (Strong Sell) but still sports some solid Zacks Style Scores. I see a C for Value and an A for Growth, but the chart tells a bad story as the stock has slid from the low 40's to the mid 30's over the last two months. Let's take a look at why this stock is a Zacks Rank #5 (Strong Sell) in this Bear Of The Day article.
ABM Industries Inc. is a leading provider of facility solutions throughout the United States and various international locations. ABM's comprehensive capabilities include janitorial, electrical & lighting, energy solutions, facilities engineering, HVAC & mechanical, landscape & turf, mission critical solutions and parking, provided through stand-alone or integrated solutions. ABM provides custom facility solutions in urban, suburban and rural areas to properties of all sizes - from schools and commercial buildings to hospitals, data centers, manufacturing plants and airports. ABM Industries, Inc. provides parking and security services to thousands of commercial, industrial and institutional customers who outsource these services in hundreds of cities across North America.
I see a really good earnings history for ABM. Four of the last four reports have all come in ahead of the Zacks Consensus Estimate.
The average positive earnings surprise over the last year has been 8.6%, with two reports coming in more than 14% ahead of expectations.
The foundation of the Zacks Rank is the move in earnings estimate revisions. When a stock sees negative revisions, the Rank slides and that is generally not good news for investors.
I see estimate coming in across the board. This quarter, next quarter, this year and next year are all seeing decreases in estimates.
The good news is that it is just a few pennies in each time period... so it can easily be made up. The key is to right the ship as soon as possible and get estimates moving back higher.
With estimates coming in and the stock falling, the valuation tends to look a little better. For ABM, that is the case with a 17x forward earnings multiple and a 1.5x book multiple. Those are both good numbers when you have 1.5% topline growth, but the 0.3x price to sales multiple gives me pause as it tells me the market doesn't value incremental sales by the company.
Amazon Deepens Focus on LATAM: Should Google Worry?
Amazonis making every effort to strengthen cloud presence on the back of its increasing number of data centers.
Its cloud computing arm, Amazon Web Services (AWS), intends to invest $800 million to build a regional data center in a free-trade zone in Argentina. Notably, the data center will be located in the Bahia Blanca-Coronel Rosales districts of the province of Buenos Aires.
Notably, this move bodes well for the company’s initiatives to expand presence in the Latin America’s (LATAM) cloud space.
Further, Amazon will save on taxes by building the data center under review. It will get export tax breaks and income tax reduction from 35% to 15%, courtesy of the new Knowledge Economy Law of Argentina.
Additionally, the company will be exempted from national or provincial taxes on energy consumption owing to the location of the new data center. Consequently, these tax benefits are likely to aid margin expansion within AWS segment.
Further, AWS will achieve more efficiency and accuracy in data management with the rising number of data centers. This in turn will aid Amazon in sustaining dominance in the cloud computing space.
Moreover, these factors are likely to provide Amazon a competitive edge in the cloud computing market, where it is facing stiff competition from the likes of Alphabet.
LATAM is Gaining Steam
Growing adoption of IoT, AI and big data within the cloud infrastructure remain the key catalysts in the infrastructure as a service (IaaS) market in LATAM. According to a report from Frost & Sullivan, this market is anticipated to reach $7.4 billion by 2022 at a CAGR of 31.9%.
Moreover, IoT, AI and big data are aiding growth in the LATAM’s data center market. Per a report from Arizton Advisory & Intelligence, this market is expected to generate revenues above $1 billion by 2023 at a CAGR of more than 11% between 2018 and 2023.
Given the scenario, LATAM is an attractive market for technology providers.
Intensifying Cloud Battle in LATAM
We note that Amazon, Google, IBM and Microsoft are leaving no stone unturned to capitalize on the immense growth opportunities present in LATAM.
Google Cloud intends to invest $140 million in its Chilean data center located in Quilicura, Santiago. Notably, this is in addition to the company’s initial investment of $150 million. We believe this will expand the company’s storage capabilities and size of the data center.
Further, it has also three regions in LATAM with the newest one located at Sao Paulo.
Meanwhile, Microsoft Azure provides cloud facilities in LATAM through its data center in Brazil. Further, it has an availability zone in the country.
Further, IBM owns three data centers in LATAM – one located in Hortolandia, Sao Paulo, one in Jundiai, Sao Paulo and one in Queretaro, Mexico. Further, IBM Cloud Direct Link is now part of Ascenty’s connectivity portfolio. Notably, Ascenty is the largest data center infrastructure provider of LATAM.
Nevertheless, AWS’ growing initiatives in LATAM are likely to give a tough competition to these abovementioned companies. It recently selected Buenos Aires as the new location to set up its seventh Edge location in LATAM. Further, it is gearing up to set up a sixth location in Colombia with others being located in Sao Paolo and Rio de Janeiro.
Further, AWS has plans to set up advanced data centers in Chile. Moreover, it has three availability zones in LATAM, which are located in Sao Paulo, Brazil. Furthermore, it has offices in Brazil, Chile, Colombia, Argentina and Mexico.
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