Day: July 22, 2021

DGX – Quest Diagnostics (DGX) Q2 Earnings Beat, Base Testing Strong

Quest Diagnostics Incorporated’s (DGX Free Report) second-quarter 2021 adjusted earnings per share of $3.18 surpassed the Zacks Consensus Estimate by 10.8%. Adjusted earnings registered a stupendous 123.9% rise from the year-ago adjusted figure of $1.42 per share.

Certain one-time expenses like the ones related to amortization expenses, and certain restructuring and integration charges were excluded from the quarter’s adjusted figures.

GAAP earnings from continuing operations came in at $4.96 per share, marking a 264.7% rise from the year-ago period.

Reported revenues in the second quarter improved 39.5% year over year to $2.55 billion. The same beat the consensus estimate by 6.7%.

Quarterly Details

Diagnostic information services revenues in the quarter were up 40.2% on a year-over-year basis to $2.47 billion.

Volumes (measured by the number of requisitions) improved 45.2% year over year in the second quarter (up 40.1% organically). Revenue per requisition, however, dropped 3.6% year over year.

Margins

Cost of services during the reported quarter was $1.57 billion, up 28.2% year over year. Gross margin was 38.6%, reflecting expansion of 546 basis points (bps) from the year-ago figure.

Selling, general and administrative expenses increased 19.2% to $429 million in the quarter under review. Adjusted operating margin of 21.8% represented an 834-bps expansion year over year.

Cash, Capital Structure and Solvency

Quest Diagnostics exited the second quarter of 2021 with cash and cash equivalents of $560 million compared with $1.23 billion at the end of the first quarter. Cumulative net cash provided by operating activities through the end of the second quarter was $1.19 billion compared with $602 million in the year-ago period.

Till the second quarter, the company has repurchased 12.5 million shares for $1.6 billion. At the end of the second quarter, the company had $1.3 billion available under its existing share repurchase authorization.

2021 Guidance

The company initiated its full-year 2021 guidance.

Currently, the company expects to report net revenues in the range of $9.54 billion to $9.79 billion, implying an expected 1.1% to 3.7% growth from the year-ago period. The Zacks Consensus Estimate is pegged at $9.54 billion, implying 0.2% growth.

Full-year adjusted EPS is expected in the band of $10.65 to $11.35. The Zacks Consensus Estimate is pegged at $11.22.

2021 operating cash flow is expected to be at least $1.9 billion. Capital expenditures are expected to be at least $400 million.

Our Take

Quest Diagnostics reported better-than-expected second-quarter adjusted earnings and revenues. According to the company, this is the first quarter since 2019 in which it recorded organic base testing revenue growth. This was primarily driven by contributions from new hospital lab management contracts as well as people returning to the healthcare system.

However, despite a very strong first-half performance, the company’s sluggish full-year revenue growth projection worries us. In terms of COVID-19 diagnostic testing, we expect to see the company registering considerable reduction in numbers over the next few months due to a drastic fall in COVID-19 cases in the United States and other major developed countries.

Zacks Rank & Key Picks

Currently, Quest Diagnostics carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the same space are AMN Healthcare Services Inc (AMN Free Report) , Catalent, Inc. (CTLT Free Report) and Align Technology, Inc. (ALGN Free Report) .

Catalent currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its fourth-quarter fiscal 2021 adjusted EPS is currently pegged at $1.04. The consensus estimate for fourth-quarter revenues is pegged at $1.13 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AMN Healthcare’s second-quarter 2021 adjusted EPS is currently pegged at $1.47. The consensus estimate for second-quarter revenues is pegged at $829.4 million. The company currently carries a Zacks Rank #2 (Buy).

Align Technology currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its second-quarter 2021 adjusted EPS is currently pegged at $2.56. The consensus estimate for its revenues stands at $937.5 million.

NEM – Newmont's (NEM) Earnings and Sales Surpass Estimates in Q2

Newmont Corporation (NEM Free Report) reported net income from continuing operations of $640 million or 80 cents per share in second-quarter 2021, up from $412 million or 51 cents per share in the year-ago quarter.

Barring one-time items, adjusted earnings were 83 cents per share that beat the Zacks Consensus Estimate of 76 cents.

Newmont reported revenues of $3,065 million, up 29.6% year over year.  The figure topped the Zacks Consensus Estimate of $3,063.8 million. The upside was driven by higher average realized metal prices and sales volume.

 

Operational Highlights

Newmont’s attributable gold production in the second quarter increased 15.1% year over year to 1.45 million ounces in the quarter, driven by higher production from sites that saw lower operations or were placed into care and maintenance last year due to the pandemic, higher ore grade milled as well as increased mill throughput at Boddington.

Average realized prices of gold increased 6% year over year to $1,823 per ounce.

The company’s costs applicable to sales (CAS) for gold was $1,091 per ounce, up 16% year over year.

All-in sustaining costs (AISC) for gold fell 6% year over year at $1,035 per ounce, mainly due to care and maintenance costs in the prior-year quarter. This was partly offset by increased sustaining capital spend.

Regional Performance

North America: Attributable gold production in the second quarter in North America was 397,000 ounces, up 71% year over year. Gold CAS in the region was $769 per ounce, up 5% year over year.

South America: Attributable gold production in South America was 189,000 ounces, up 39% year over year. Gold CAS for the region declined 8% on a year-over-year basis to $721 per ounce.

Australia: Attributable gold in the region was 299,000 ounces, up 2% year over year. Gold CAS in the region rose 6% year over year to $764 per ounce.

Africa: Production in the region totaled 202,000 ounces of gold in the quarter, up 5% year over year. Gold CAS was $763 per ounce, up 10% year over year.

Nevada: Production totaled 284,000 ounces of gold in the quarter, down 13% year over year. Gold CAS was $753 per ounce, down 6% year over year.

Financial Position

The company ended the quarter with cash and cash equivalents of $4,583 million, up 20.3% year over year. At the end of the quarter, the company had long-term debt of $4,989 million.

Net cash from operating activities amounted to $995 million in the quarter, up 49.8% year over year.

Outlook

For 2021, Newmont expects attributable gold production of 6.5 million ounces. The company also expects gold CAS to be $750 per ounce and AISC to be $970 per ounce.

Newmont expects an increase in gold production and is undertaking investments in its operating assets and other growth prospects. Its development project, Yanacocha Sulfides is expected to reach execution stage in December 2021. Other development projects that have not reached execution stage reflect upside to guidance.

Price Performance

Newmont’s shares have declined 8.3% in the past year against 27.9% rally of the industry.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Key Picks

Newmont currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Nucor Corporation (NUE Free Report) , Dow Inc. (DOW Free Report) and Cabot Corporation (CBT Free Report) .

Nucor has a projected earnings growth rate of around 447.6% for the current year. The company’s shares have surged 118.1% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dow has an expected earnings growth rate of around 359.6% for the current year. The company’s shares have skyrocketed 39.5% in the past year. It currently sports a Zacks Rank #1.

Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have surged 35.5% in the past year. It currently flaunts a Zacks Rank #1.

IPG – Is Interpublic Group (IPG) a Great Value Stock Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the “Value” category. Stocks with high Zacks Ranks and “A” grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Interpublic Group (IPG Free Report) . IPG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.42, while its industry has an average P/E of 14.14. Over the last 12 months, IPG’s Forward P/E has been as high as 15.88 and as low as 9.48, with a median of 13.07.

We also note that IPG holds a PEG ratio of 1.31. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. IPG’s PEG compares to its industry’s average PEG of 1.45. Over the last 12 months, IPG’s PEG has been as high as 10.09 and as low as 1.30, with a median of 6.19.

Finally, we should also recognize that IPG has a P/CF ratio of 15.46. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. IPG’s current P/CF looks attractive when compared to its industry’s average P/CF of 25.83. IPG’s P/CF has been as high as 16.89 and as low as 6.99, with a median of 13.52, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Interpublic Group is likely undervalued currently. And when considering the strength of its earnings outlook, IPG sticks out at as one of the market’s strongest value stocks.

HAS – Why Earnings Season Could Be Great for Hasbro (HAS)

Investors are always looking for stocks that are poised to beat at earnings season and Hasbro, Inc. (HAS Free Report) may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.

That is because Hasbro is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends underneath the surface for HAS in this report.

In fact, the Most Accurate Estimate for the current quarter is currently at 55 cents per share for HAS, compared to a broader Zacks Consensus Estimate of 50 cents per share. This suggests that analysts have very recently bumped up their estimates for HAS, giving the stock a Zacks Earnings ESP of +10.00% heading into earnings season.

Why is this Important?

A positive reading for the Zacks Earnings ESP has proven to be very powerful in producing both positive surprises, and outperforming the market. Our recent 10-year backtest shows that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns (see more Top Earnings ESP stocks here).

Given that HAS has a Zacks Rank #3 and an ESP in positive territory, investors might want to consider this stock ahead of earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Clearly, recent earnings estimate revisions suggest that good things are ahead for Hasbro, and that a beat might be in the cards for the upcoming report.

ONEW – Is OneWater Marine (ONEW) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system’s “Value” category. Stocks with both “A” grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is OneWater Marine (ONEW Free Report) . ONEW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Another valuation metric that we should highlight is ONEW’s P/B ratio of 3.18. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks solid versus its industry’s average P/B of 7.20. Within the past 52 weeks, ONEW’s P/B has been as high as 3.84 and as low as 1.61, with a median of 2.71.

Finally, investors will want to recognize that ONEW has a P/CF ratio of 10.20. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ONEW’s P/CF compares to its industry’s average P/CF of 37.71. Over the past 52 weeks, ONEW’s P/CF has been as high as 16.16 and as low as 7.03, with a median of 10.66.

Value investors will likely look at more than just these metrics, but the above data helps show that OneWater Marine is likely undervalued currently. And when considering the strength of its earnings outlook, ONEW sticks out at as one of the market’s strongest value stocks.

HOG – Should Value Investors Buy Harley-Davidson (HOG) Stock?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

Harley-Davidson (HOG Free Report) is a stock many investors are watching right now. HOG is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.94. This compares to its industry’s average Forward P/E of 37.30. HOG’s Forward P/E has been as high as 18.95 and as low as 11.16, with a median of 14.83, all within the past year.

Investors should also note that HOG holds a PEG ratio of 0.57. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. HOG’s PEG compares to its industry’s average PEG of 1.68. Over the past 52 weeks, HOG’s PEG has been as high as 3.16 and as low as 0.54, with a median of 2.40.

Another valuation metric that we should highlight is HOG’s P/B ratio of 3.41. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 7.64. HOG’s P/B has been as high as 4.03 and as low as 2.13, with a median of 3.21, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. HOG has a P/S ratio of 1.34. This compares to its industry’s average P/S of 1.58.

Finally, investors should note that HOG has a P/CF ratio of 14.68. This metric focuses on a firm’s operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. HOG’s P/CF compares to its industry’s average P/CF of 23.57. HOG’s P/CF has been as high as 23.94 and as low as 9.58, with a median of 15.28, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Harley-Davidson is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HOG feels like a great value stock at the moment.

SQ – Square (SQ) Expands Financial Offerings With Square Banking

Square (SQ Free Report) is leaving no stone unturned to provide enhanced financial solutions to small business owners.

This is evident from the company’s latest introduction of a suite of financial tools called Square Banking, which offers a range of banking solutions to small business owners.

Square Banking includes two new deposit accounts, Square Savings and Square Checking. These tools have become part of the company’s another financial solution, Square Loans.

These tools are directly linked to sellers’ payments and provide them access to their sales, savings along with various financial offerings according to their needs.

These tools easily work with payments and Square Payroll solutions, thus providing sellers a one-stop platform for viewing their payments, account balances, expenditures and financing options.

The recent launch expands key offerings of the company. This is expected to aid Square in gaining a strong seller ecosystem.

Expanding Portfolio

Square is continuing efforts to expand offerings for supporting businesses and individual sellers to gain customers online and in person, manage their business as well as access financing.

Apart from the recent launch, Square recently acquired Crew in a bid to bolster workforce management solutions and offer a better team communication platform to business owners.

Square also introduced Automated Clearing House payments on Square Invoices in April, which is expected to offer efficient payment solutions to both businesses and customers.

Additionally, the company introduced new features in inventory management for Square for Retail including easy item create, quick inventory counting and smart stock alerts, which are expected to aid retailers for efficient inventory control.

Further, it announced three new developer tools in May, Snippets API, Web Payments SDK and Loyalty API. While Snippets API is developed to help sellers engage customers online in interactive ways, Web Payments SDK and Loyalty API extend the benefits of online selling.

Intensifying Competition

The digital payment space is witnessing a significant improvement as it offers hassle-free and cashless transaction. Additionally, the ongoing coronavirus pandemic is driving this space as more people are shifting to contactless payments.

As online and contactless transaction is becoming the new norm, the digital payment market competition is intensifying with growing efforts of not only Square but also other companies including Square, PayPal (PYPL Free Report) , Alphabet’s (GOOGL Free Report) Google, Intuit and Shopify (SHOP Free Report) .

Recently, PayPal introduced PayPal Zettle to help small business owners accept payments in-person and manage their sales, inventory, reporting as well as payments across all channels in a single platform.

Meanwhile, Google’s Google Pay for Business application helps business owners receive payments directly in their bank accounts, and to get discovered as well as gain new customers.

Intuit QuickBooks recently launched QuickBooks Card Reader to help small businesses get faster payments and speed up in-person sales.

Further, Shopify’s money management platform, Balance, which includes a range of solutions to help merchants run their businesses effectively, remains noteworthy.

Currently, Square carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

VSTO – Are Investors Undervaluing Vista Outdoor (VSTO) Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system’s “Value” category. Stocks with “A” grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Vista Outdoor (VSTO Free Report) . VSTO is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 11.16. This compares to its industry’s average Forward P/E of 29.98. VSTO’s Forward P/E has been as high as 47.08 and as low as 7.87, with a median of 11.60, all within the past year.

Another valuation metric that we should highlight is VSTO’s P/B ratio of 3.12. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 7.20. Over the past year, VSTO’s P/B has been as high as 3.62 and as low as 1.74, with a median of 2.56.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VSTO has a P/S ratio of 1.03. This compares to its industry’s average P/S of 2.15.

Value investors will likely look at more than just these metrics, but the above data helps show that Vista Outdoor is likely undervalued currently. And when considering the strength of its earnings outlook, VSTO sticks out at as one of the market’s strongest value stocks.

HRI – Herc Holdings Q2 Result Tops Consensus; Raises FY21 Guidance

Herc Holdings Q2 Result Tops Consensus; Raises FY21 Guidance

  • Herc Holdings Inc (NYSE: HRIreported second-quarter FY21 net revenue growth of 33.4% year-on-year to $490.9 million, beating the analyst consensus of $459.79 million.
  • Equipment rental revenue increased 36.8% Y/Y to $448.0 million.
  • Selling, general and administrative expenses rose 30.3% Y/Y to $74.0 million.
  • Adjusted EBITDA rose 39.0% Y/Y to $207.7 million, and Adjusted EBITDA margin increased 170 basis points Y/Y to 42.3%.
  • Cash and equivalents totaled $34.6 million as of June 30, 2021.
  • EPS of $1.57 beat the analyst consensus of $1.24.
  • “Tight supply of new equipment and steady demand from a number of key markets have provided a positive operating environment,” said CEO Larry Silber.
  • The company said it is reviewing the capital allocation plan, with net leverage now below the target range of 2x to 3x.
  • Outlook: Herc raised FY21 adjusted EBITDA guidance to $840 million – $870 million from the prior view of $800 million – $840 million.
  • Price action: HRI shares are trading higher by 0.90% at $118.5 on the last check Thursday.

ANF – Forecast Of The Day: Abercrombie & Fitch's Hollister Revenue Per Square Foot

What?

Trefis expects Abercrombie & Fitch’s (NYSE:ANF) Hollister stores revenue per square foot to rise from $520 in 2020 to $598 in 2021 and to $616 in 2022.

Why?

While revenues declined in 2020, due to the Covid-19 related lockdowns, the company is seeing a nice recovery in demand this year, with vaccination rates picking up and people heading outdoors.

So What?

However, we think the recovery is fully priced into Abercrombie & Fitch stock, which remains up by almost 2x year-to-date. We value the stock as $42 per share, in line with the market price..

See Our Complete Analysis For Abercrombie & Fitch

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016

See all Trefis Price Estimates and Download Trefis Data here