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Eli Lilly and Company is one of the few stocks that is breaking out to new multi-year highs in 2020. This Zacks Rank #1 (Strong Buy) is still expected to see double digit earnings growth in 2020, despite the coronavirus.
Lilly is a global drug manufacturer with an interest in diabetes, oncology, immunology and neuroscience.
Another Beat in the First Quarter
On Apr 23, Eli Lilly reported first quarter results and beat on the Zacks Consensus by $0.20. Earnings were $1.75 versus the consensus of $1.55.
It was the company's fifth consecutive earnings beat.
Revenue rose 15% as volume growth jumped 22%.
Lilly saw strong underlying demand for key growth products, including Trulicity, Taltz, Verzenio, Jardiance, Emgality, Olumiant, Basaglar, Tyvyt, Cyramza, and Baqsimi,
These products contributed 19 percentage points of revenue growth and represented approximately 51% of total revenue.
Instead of being hurt by the COVID-19 crisis in the first quarter, it was helped as customers rushed out to stock up on their medicines as the shutdowns hit.
Still Issued Full Year Guidance
Lilly is one of the few companies that is NOT withdrawing its full year guidance although it did warn that its financial performance could still be hit by the virus in later quarters as the total impacts are still uncertain.
For that reason, while it provided full year EPS guidance, it did widen the guidance range it had given previously, to between $6.70-$6.90.
The analysts remain bullish, however, as 3 raised their estimates after the earnings report.
The Zacks Consensus is up $0.04 to $6.81 over the last week.
That's 2020 earnings growth of 12.8%.
Additionally, analysts are bullish on 2021 with 3 estimates being revised higher there as well.
The 2021 Zacks Consensus jumped to $8.02 from $7.92 over the prior 7 days. That's another 17.8% earnings growth.
Shares Soar to New Highs
Are the shares simply too expensive now?
Shares busted out to new 5-year highs while the rest of the stock market was sinking due to the coronavirus sell-off.
They're up 19.7% year-to-date.
Eli Lilly has a forward P/E of 23.7.
It's also still paying its dividend, which is currently yielding 1.8%.
For investors looking for somewhere to "hide out" during this uncertain year, Eli Lilly is one to keep on your short list.
PVH Corporation is just trying to get through 2020 as retail shutdowns around the world hurt. This Zacks Rank #5 (Strong Sell) is expected to see a 63% decline in earnings this year.
PVH is a global apparel company which operates in the wholesale, retail, digital commerce and licensing channels. It's led by its two largest brands, Calvin Klein and Tommy Hilfiger, which represent 85% of the companies revenue.
It's a global business, with nearly 60% of its revenue generated outside of the United States, and includes a significant presence in China.
A Beat in the Fourth Quarter
On Apr 1, PVH reported its fourth quarter and fiscal 2020 full year results and beat on the Zacks Consensus by $0.08. Earnings were $1.88 versus the consensus of $1.80.
PVH had momentum across both of its brands during the holiday quarter but COVID-19 struck in China in January and then spread worldwide by March.
The company said it could not provide fiscal 2021 guidance given the uncertainty across the global economy.
Cutting Costs
On Apr 7, PVH announced it was taking steps to shore up its finances including furloughing employees in the United States.
The Board was foregoing compensation while the crisis continued.
Additionally, the CEO, Manny Chirico, who actually had COVID-19 himself, would forego his salary during the crisis and 250 top level executives would see salary cuts up to 50%.
Preserving Liquidity
PVH also announced that it drew down $750 million from its $1 billion revolving credit facility.
It sold its Speedo North American business for $170 million in cash.
And it also suspended share repurchases and its cash dividend, beginning with the second quarter of 2020.
Estimates Cut for Fiscal 2021 and 2022
There's no doubt that the apparel retailers are going to take it on the chin this year.
Over the last 90 days, the Zacks Consensus Estimate for fiscal 2021 has fallen off a cliff.
It fell to just $3.46 from $9.94 just 3 months ago.
PVH made $9.54 last year, so that's an earnings decline of 63.7%.
Are Shares Cheap?
PVH shares have fallen 51.8% year-to-date but are off their March lows.
They've actually rallied 33% in the last month on the belief that the worst is already priced into the shares.
Even with the estimate cuts, they're still trading with a value P/E of just 13.8.
Additional content:
Google Mixed, Starbucks Tops and Ford Misses
Search giant Google’s parent company Alphabet has posted Q1 2020 earnings results, missing on the bottom line while outperforming on the top. Earnings of $9.87 per share was notably below the $10.97 in the Zacks consensus, as well as the $11.90 reported in the year-ago quarter. The company’s revenue headline of $41.16 billion (+13% year over year) does not subtract Traffic Acquisition Costs (TAC); after doing this math, Alphabet reported $33.6 billion in quarterly sales, an improvement over the $32.82 billion expected.
Alphabet’s CFO Ruth Porat told shareholders that the first two months of Q1 performed stronger than expected, with a sharp advertising revenue slowdown in March, aligning with the lockdown orders to combat coronavirus contagion, and the subsequent lack of ad spending for companies marketing on Google, YouTube, ands other Alphabet properties. Ad volume came in at $33.7 billion for the quarter. Digital ad revenue from the travel industry typically makes up 10-15% for Alphabet, while digital ad revenues from small businesses are north of 50%.
This report brings about the 4th earnings miss in the past 14 quarters for the company, and the 2nd in the last 3 quarters. Even still, shares are up 4% in the after-hours session Tuesday afternoon; year to date, share losses had been nearly 8% prior to this report.
Starbucks outperformed fiscal Q2 earnings estimates by a penny Tuesday afternoon to 32 cents per share, while revenues for the quarter came in at $6.00 billion, up from the $5.74 billion expected. Comps were disappointing both globally and in the U.S. — -10% and -3%, respectively — offset somewhat by a 5% increase in average ticket price. Starbucks has not missed an earnings estimate since Q4 2015. Shares of the company are down 1.4% immediately following the earnings release, and roughly -15% year to date. For more on SBUX’s earnings, click here.
Ford Motor Company posted disappointing results for its Q1 top and bottom lines: -23 cents per share on $31.34 billion in sales, below the -10 cents and $32.7 billion expected. The American car giant now projects revenue losses of $5 billion in its Q2, and currently has a cash balance of $35 billion. Of the companies reporting after Tuesday’s bell, Ford may be hit hardest of all. Shares are down 5.76% in late trading following the earnings release.
Free Book: Finding #1 Stocks
In this 300-page hardcover, Zacks' Executive VP Kevin Matras reveals almost every stock-picking secret he’s learned from the system that since 1988 has more than doubled the average yearly gain of the S&P 500.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Eli Lilly and Company, PVH, Alphabet, Starbucks and Ford Motor highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 29, 2020 – Zacks Equity Research Shares of Eli Lilly and Company (LLY - Free Report) as the Bull of the Day, PVH Corporation (PVH - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Alphabet (GOOGL - Free Report) , Starbucks (SBUX - Free Report) and Ford Motor Company (F - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Eli Lilly and Company is one of the few stocks that is breaking out to new multi-year highs in 2020. This Zacks Rank #1 (Strong Buy) is still expected to see double digit earnings growth in 2020, despite the coronavirus.
Lilly is a global drug manufacturer with an interest in diabetes, oncology, immunology and neuroscience.
Another Beat in the First Quarter
On Apr 23, Eli Lilly reported first quarter results and beat on the Zacks Consensus by $0.20. Earnings were $1.75 versus the consensus of $1.55.
It was the company's fifth consecutive earnings beat.
Revenue rose 15% as volume growth jumped 22%.
Lilly saw strong underlying demand for key growth products, including Trulicity, Taltz, Verzenio, Jardiance, Emgality,
Olumiant, Basaglar, Tyvyt, Cyramza, and Baqsimi,
These products contributed 19 percentage points of revenue growth and represented approximately 51% of total revenue.
Instead of being hurt by the COVID-19 crisis in the first quarter, it was helped as customers rushed out to stock up on their medicines as the shutdowns hit.
Still Issued Full Year Guidance
Lilly is one of the few companies that is NOT withdrawing its full year guidance although it did warn that its financial performance could still be hit by the virus in later quarters as the total impacts are still uncertain.
For that reason, while it provided full year EPS guidance, it did widen the guidance range it had given previously, to between $6.70-$6.90.
The analysts remain bullish, however, as 3 raised their estimates after the earnings report.
The Zacks Consensus is up $0.04 to $6.81 over the last week.
That's 2020 earnings growth of 12.8%.
Additionally, analysts are bullish on 2021 with 3 estimates being revised higher there as well.
The 2021 Zacks Consensus jumped to $8.02 from $7.92 over the prior 7 days. That's another 17.8% earnings growth.
Shares Soar to New Highs
Are the shares simply too expensive now?
Shares busted out to new 5-year highs while the rest of the stock market was sinking due to the coronavirus sell-off.
They're up 19.7% year-to-date.
Eli Lilly has a forward P/E of 23.7.
It's also still paying its dividend, which is currently yielding 1.8%.
For investors looking for somewhere to "hide out" during this uncertain year, Eli Lilly is one to keep on your short list.
Bear of the Day:
PVH Corporation is just trying to get through 2020 as retail shutdowns around the world hurt. This Zacks Rank #5 (Strong Sell) is expected to see a 63% decline in earnings this year.
PVH is a global apparel company which operates in the wholesale, retail, digital commerce and licensing channels. It's led by its two largest brands, Calvin Klein and Tommy Hilfiger, which represent 85% of the companies revenue.
It's a global business, with nearly 60% of its revenue generated outside of the United States, and includes a significant presence in China.
A Beat in the Fourth Quarter
On Apr 1, PVH reported its fourth quarter and fiscal 2020 full year results and beat on the Zacks Consensus by $0.08. Earnings were $1.88 versus the consensus of $1.80.
PVH had momentum across both of its brands during the holiday quarter but COVID-19 struck in China in January and then spread worldwide by March.
The company said it could not provide fiscal 2021 guidance given the uncertainty across the global economy.
Cutting Costs
On Apr 7, PVH announced it was taking steps to shore up its finances including furloughing employees in the United States.
The Board was foregoing compensation while the crisis continued.
Additionally, the CEO, Manny Chirico, who actually had COVID-19 himself, would forego his salary during the crisis and 250 top level executives would see salary cuts up to 50%.
Preserving Liquidity
PVH also announced that it drew down $750 million from its $1 billion revolving credit facility.
It sold its Speedo North American business for $170 million in cash.
And it also suspended share repurchases and its cash dividend, beginning with the second quarter of 2020.
Estimates Cut for Fiscal 2021 and 2022
There's no doubt that the apparel retailers are going to take it on the chin this year.
Over the last 90 days, the Zacks Consensus Estimate for fiscal 2021 has fallen off a cliff.
It fell to just $3.46 from $9.94 just 3 months ago.
PVH made $9.54 last year, so that's an earnings decline of 63.7%.
Are Shares Cheap?
PVH shares have fallen 51.8% year-to-date but are off their March lows.
They've actually rallied 33% in the last month on the belief that the worst is already priced into the shares.
Even with the estimate cuts, they're still trading with a value P/E of just 13.8.
Additional content:
Google Mixed, Starbucks Tops and Ford Misses
Search giant Google’s parent company Alphabet has posted Q1 2020 earnings results, missing on the bottom line while outperforming on the top. Earnings of $9.87 per share was notably below the $10.97 in the Zacks consensus, as well as the $11.90 reported in the year-ago quarter. The company’s revenue headline of $41.16 billion (+13% year over year) does not subtract Traffic Acquisition Costs (TAC); after doing this math, Alphabet reported $33.6 billion in quarterly sales, an improvement over the $32.82 billion expected.
Alphabet’s CFO Ruth Porat told shareholders that the first two months of Q1 performed stronger than expected, with a sharp advertising revenue slowdown in March, aligning with the lockdown orders to combat coronavirus contagion, and the subsequent lack of ad spending for companies marketing on Google, YouTube, ands other Alphabet properties. Ad volume came in at $33.7 billion for the quarter. Digital ad revenue from the travel industry typically makes up 10-15% for Alphabet, while digital ad revenues from small businesses are north of 50%.
This report brings about the 4th earnings miss in the past 14 quarters for the company, and the 2nd in the last 3 quarters. Even still, shares are up 4% in the after-hours session Tuesday afternoon; year to date, share losses had been nearly 8% prior to this report.
Starbucks outperformed fiscal Q2 earnings estimates by a penny Tuesday afternoon to 32 cents per share, while revenues for the quarter came in at $6.00 billion, up from the $5.74 billion expected. Comps were disappointing both globally and in the U.S. — -10% and -3%, respectively — offset somewhat by a 5% increase in average ticket price. Starbucks has not missed an earnings estimate since Q4 2015. Shares of the company are down 1.4% immediately following the earnings release, and roughly -15% year to date. For more on SBUX’s earnings, click here.
Ford Motor Company posted disappointing results for its Q1 top and bottom lines: -23 cents per share on $31.34 billion in sales, below the -10 cents and $32.7 billion expected. The American car giant now projects revenue losses of $5 billion in its Q2, and currently has a cash balance of $35 billion. Of the companies reporting after Tuesday’s bell, Ford may be hit hardest of all. Shares are down 5.76% in late trading following the earnings release.
Free Book: Finding #1 Stocks
In this 300-page hardcover, Zacks' Executive VP Kevin Matras reveals almost every stock-picking secret he’s learned from the system that since 1988 has more than doubled the average yearly gain of the S&P 500.
Learn more now >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.