For Immediate Release
Chicago, IL – January 31, 2020 –
Zacks Equity Research Shares of KB Home KBH as the Bull of the Day, National Beverage Corp. FIZZ asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon AMZN, Visa V and Amgen ( AMGN Quick Quote AMGN - Free Report) . Here is a synopsis of all five stocks: : Bull of the Day
KB Home stock is in the midst of a stellar year-plus run and the firm topped fourth quarter earnings estimates in early January. The home builder also looks poised to benefit from renewed life in the U.S. housing market and its 2020 outlook supports the recent statistics.
KB Home’s Pitch
KB Home operates in 42 markets in eight different states, mostly in highly desirable areas from Colorado and Arizona to California and Washington. The firm allows home buyers to customize their homes. They can choose their lots and floor plans, as well as interiors, which includes everything from countertops to cabinets. The Los Angeles-based firm has also rolled out more energy-efficient homes recently.
KB Home posted stronger-than-projected Q4 earnings results on January 9 and saw its sales climb. The firm’s home deliveries popped 16% to just under 4,000, with an average selling price of $392,500. Plus, its backlog value jumped 26% to $1.8 billion.
For fiscal 2019, KBH’s deliveries climbed 5% to nearly 12,000 with an average price of $380,000. “Our net orders advanced 38% year over year, reflecting strong demand for our built-to-order product at affordable price points, together with limited inventory in our served markets,” CEO Jeffrey Mezger said in prepared Q4 remarks.
Along with KB Home’s strong individual performance, the U.S. housing market is flashing signs of strength. Housing starts hit a 13-year high in December 2019. The National Association of Home Builders also said that home-builder sentiment was higher than it has been during any month since 1999.
On top of that, 30-year fixed mortgage rates rest at around 3.5% at the moment, down from around 4.2% in the year-ago period. These favorable rates, coupled with positive housing industry sentiment, low U.S. unemployment, and continued U.S. GDP growth in 2020, could set up KBH for another solid year in 2020.
Shares of KB Home have soared 78% in the last 12 months to crush its industry’s 33% climb and S&P 500’s 20% expansion. Investors will also see in the nearby chart that KBH’s current run began in mid-November 2018, with the stock up 115% since then.
Despite outpacing its industry, KBH still trades at a discount against the Construction-Building Services Market’s average forward 12-month earnings estimates (10.4X vs. 12.5X). Plus, KB Home is trading far below its own three-year high of 16.8X, even though its stock price has soared.
KB Home currently sports a “B” grade for Value and an “A” for Growth in our Style Scores system to help it earn an overall “B” VGM score. The firm is also part of any industry that rests in the top 7% of our more than 250 Zacks industries.
Plus, KBH’s annualized dividend of $0.36 per share currently yields 0.94%. This is hardly a great payout compared to the 10-year U.S. Treasury’s 1.57%, but it roughly matches fellow industry peer PulteGroup, Inc.
Our Zacks estimates call for KB Home’s first quarter 2020 sales jump to 17%, which would top Q4’s 16% top-line expansion. Looking ahead, the company’s fiscal 2020 sales are projected to climb 14.5% to $5.21 billion, with 2021 expected to come in 7% higher at $5.58 billion. These would both easily top 2019’s flat growth and 2018’s 4.1% expansion.
At the bottom end of the income statement, its adjusted quarterly earnings are projected to soar roughly 42% and 45%, in Q1 and Q2, respectively.
In terms of fiscal 2020, KB Home’s EPS figure is projected to pop 29%, which would come on top of 2019’s roughly 67% bottom-line expansion. And in a sign of continued momentum, KBH’s fiscal 2021 earnings are projected to pop another 9.3% higher to reach $4.02 per share.
KB Home’s fiscal 2020 and 2021 earnings estimates have climbed completely upward since it reported its Q4 results. This helps KBH stock earn a Zacks Rank #1 (Strong Buy) right now.
Bear of the Day:
LaCroix maker National Beverage Corp. has become a victim of its own success. The company’s sales had soared for years and its stock price came along for the ride, but its flagship flavored seltzer drink became so popular that Coca-Cola, PepsiCo and many others flooded the quickly expanding seltzer market.
Lost its Fizz?
National Beverage makes roughly 70% of its sales from LaCroix. The flavored seltzer brand, with multiple flavors, has been around for decades, but really kicked things into high gear over the last five-plus years as consumers searched for alternatives to sugary sodas.
LaCroix began to fly off shelves and helped create the current seltzer drink craze that has slipped over into the alcoholic beverage market, from Anheuser Busch Inbev to Boston Beer.
National Beverage’s success saw PepsiCo launch its Bubly brand, while Coca-Cola bought Topo Chico in 2017. Coca-Cola is now set to launch its new sparkling water brand AHA in March.
Plus, retail giants such as Target sell their own store brands and startups are popping up all the time. On top that, the company has been sued in a class-action lawsuit based on claims that its all-natural claims are false. National Beverage has denied the allegations.
In the end, the crowded market makes things harder on National Beverage, and some brands have undercut LaCroix on price. FIZZ still holds the largest market share, based on the most recent industry reports. However, the company’s sales have slipped against hard to compare periods.
National Beverage’s sales have fallen over the last four quarters, and are down 4.2% in the trailing 12 months. The firm’s earnings have also fallen.
Looking ahead, our Zacks estimates call for the company’s sales to sink 5.1% in its current fiscal year and another 3.1% next year. Worse still, FIZZ is projected to see its adjusted earnings fall over 19% this year and nearly 8% during the next fiscal year.
The nearby chart shows investors just how far FIZZ shares have spilled, down 63% since the fall of 2018. Despite the downturn, National Beverage stock is still trading at 19.7X forward 12-months earnings estimates, which marks a premium compared to the S&P 500’s 18.8X and remains well above its year-long low of 11.7X.
National Beverage has also seen its earnings estimate revision activity trend in the wrong direction recently, which helps it hold a Zack Rank #5 (Strong Sell).
Additional content: Amazon (AMZN) Beats Big on Q4 Bottom Line; Plus V, AMGN Amazon shares climbed more than 13% immediately following its Q4 2019 earnings release, whereby earnings per share blew away estimates -- $6.47 per share versus $3.98 expected, on $87.44 billion in revenues than outpaced the $86.00 billion anticipated. Expectations for Q4 earnings were on the low side, both at Zacks and on the street, so take this giant bottom-line beat with a grain of salt.
Guidance for Q1 revenues were a range of $69 billion to $73 billion, which puts the current Zacks consensus on $71.34 squarely in the middle. North America revenues reached $53.7 billion, while AWS outperformed expectations to $9.95 billion for the quarter. Online sales grew 15% in the all-important holiday shopping season. Also, consider that Amazon had been the worst-performing of the Big Tech players of late, trading down year to date until today's after market.
Visa met earnings projections of $1.46 per share on $6.05 billion in quarterly revenues, which was a smidge below forecasts. The company's Q1 Payments Volume grew 8% year over year, and it has announced a $9.5 billion share buyback program. That said, Visa shares are down more than 1% in late trading Thursday; not only did the credit card giant post a slight sales miss, but this is a company that has never once posted a negative earnings surprise -- so just meeting estimates must feel a bit strange. For more on V's earnings, click here.
Amgen, however, posted better-than-expected results on both top and bottom lines Thursday afternoon -- $3.64 per share easily surpassed the $3.47 expected and the $3.42 per share from the year-ago quarter, and revenues of $6.2 billion pushed comfortably above expectations of $6.01 billion. Full-year 2020 guidance also moved higher than the initial Zacks consensus figures: $14.85 - 15.60 is now expected for full-year earnings on sales of between $25 - 25.6 billion, as opposed to the $14.63 and $23.18 billion analysts were looking for, respectively. Yet shares are down 2.7% in the late session, and down year to date. Just Released: 5 Stocks Set to Double
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