|By PR Newswire||
|February 7, 2014 09:30 AM EST||
CHICAGO, Feb. 7, 2014 /PRNewswire/ -- Zacks Equity Research highlights Manitowoc Company (NYSE:MTW-Free Report) as the Bull of the Day and Regis Corporation (NYSE:RGS -Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onTesla Motors, Inc. (Nasdaq:TSLA-Free Report), Goodyear Tire & Rubber Company (Nasdaq:GT-Free Report) and SPX Corporation (NYSE:SPW-Free Report).
Here is a synopsis of all five stocks:
Analysts have revised their estimates significantly higher for both 2014 and 2015 following the report, sending the stock to a Zacks Rank #1 (Strong Buy).
While shares of Manitowoc have jumped higher on the news, there is plenty of upside left considering its reasonable valuation and strong growth projections.
The Manitowoc Company, Inc. provides crawler cranes, tower cranes, and mobile cranes for the heavy construction industry and also manufactures commercial foodservice equipment. Its 'Crane' segment accounted for 62% of sales in 2013 while 'Foodservice' made up the other 38%. The company was founded in 1902 and is headquartered in Manitowoc, Wisconsin.
Manitowoc delivered better-than-expected Q4 results on January 30. Adjusted earnings per share came in at 47 cents, crushing the Zacks Consensus Estimate by 42%. It was a 74% increase over the same quarter last year.
Regis Corporation (NYSE:RGS -Free Report) recently delivered another disappointed earnings report as same-store sales continued to fall, prompting analysts to revise their estimates significantly lower yet again. The company has missed the Zacks Consensus Estimate is 5 out of the last 6 quarters.
It is a Zacks Rank #5 (Strong Sell) stock.
Since I last wrote about Regis Corporation as the 'Bear of the Day' on October 18, 2013, the stock has fallen more than -13%. Considering the negative earnings momentum and lofty valuation, the near-term future still doesn't look very bright for the stock.
Regis Corporation is focused primarily on hair salons. It owns, franchises or holds ownership interests in nearly 10,000 locations across the globe under the brands Supercuts, Sassoon Salon, Regis Salons, MasterCuts and Cost Cutters, among others.
Regis Corporation delivered disappointing quarterly results once again. On January 27, it reported adjusted EPS of -$0.04 for the second quarter of its fiscal 2014, missing the Zacks Consensus Estimate that called for EPS of +$0.01. It was the company's 5th earnings miss in the last 6 quarters.
3 Auto Stocks Racing Towards Earnings Beats
Leaving the worst of recession behind, the automobile market is now enjoying a smooth ride. Recovery in the U.S. economy and high growth in Asia have worked highly in favor of global auto sales. Other drivers of the industry's growth include strategies such as cost cutting and shifting of production facilities from the high-cost North America and European Union to low-cost regions such as China, India and South America.
The shift in production facilities has a disadvantage too, as developing a supplier network in unfamiliar regions is a big challenge. Moreover, market share concentration increases auto market suppliers' dependence on a few automakers, making the former vulnerable to pricing pressure and production cuts.
In spite of all downsides, the auto sector has managed to show impressive fourth-quarter results. At least, the companies reported so far have signaled an upbeat quarter. Moreover, the estimated increase for the quarter is an impressive 20.3% for earnings and 4.4% for revenues.
As a result, the companies that have the potential to beat earnings in their upcoming release are worth a look at this point. An earnings beat will increase investors' confidence, which will lead to immediate price appreciation.
The Way to Pick Right Stocks
A huge number of industry participants makes it difficult to shortlist stocks that have earnings beat potential. This is where our proprietary methodology comes in handy. According to this strategy, one could narrow down the list by looking at stocks that have the combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) – and a positive Zacks Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their next earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Here we have selected 3 auto stocks that have the right combination of elements to report earnings beat this announcement.
Tesla delivered positive earnings surprises in two of the trailing four quarters. The stock has gained almost 16% this year and is set to gain further on the back of increased sales and expected earnings beat. Moreover, the launch of Model X, expansion of the Supercharger network and foray into new markets are expected to provide additional momentum.
Palo Alto, California-based Tesla designs, produces and sells electric cars and powertrains components. The company is expected to report its fourth quarter results on Feb 19.
Goodyear delivered positive earnings surprises in the trailing four quarters with an average beat of 49.27%. This trend of earnings beat is expected to continue in the fourth quarter as well, driven by the company's efforts to increase market share, expand in emerging markets and improve productivity.
Headquartered in Ohio, Goodyear is one of the world's largest tire manufacturing companies. It sells tires, undertakes automotive repairs and provides other services through 1,300 tire and auto service centers. The company is expected to report its fourth quarter results on Feb 13.
SPX generated positive earnings surprises in three of the last four quarters with an average beat of 4.48%. The company is expected to beat earnings when it releases its fourth quarter results on Feb 12.
Headquartered in Charlotte, North Carolina, SPX was initially a manufacturer of automotive components. However, the company has now diversified its operations and provides support products and services to the power and energy; and foods and beverages industries.
The auto sector looks ready to tide over the weakness in Euro zone, safety recalls and high competition, and report growth in 2014. This confidence comes from pent-up demand due to aging vehicles on U.S. roads, easier car financing, low gas price, low interest rates, a better job picture and housing recovery. Rising requirement in Asian countries, especially China and India, is also expected to contribute significantly to the industry's growth over the next five to seven years.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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