Author: Zacks Equity Research

PUMP – ProPetro (PUMP) Stock Down 11.8% Since Wider Loss Posted for Q2

Shares of ProPetro Holding Corp. (PUMP Free Report) have dropped 11.8% since the company’s second-quarter 2021 earnings announcement on Aug 3.

This southbound stock movement is induced by a wider-than-anticipated loss reported for the second quarter as well as higher service cost resulting from increased levels of activity and inflationary effects from other direct expenditures.

Insight Into the Earnings Report

ProPetro reported second-quarter adjusted net loss of 8 cents per share, wider than the Zacks Consensus Estimate of a loss of 6 cents. This underperformance was due to escalated service costs.

However, the bottom line narrowed from the year-ago quarter’s loss of 26 cents per share attributable to better-than-expected revenue contribution from the Pressure Pumping unit. The segment reported revenues of $213.5 million, outpacing the consensus mark of $200 million.

Quarterly revenues of $216.89 million outpaced the Zacks Consensus Estimate of $203 million and also increased from the year-ago quarter’s $106.11 million.

This oilfield service provider’s adjusted EBITDA in the second quarter amounted to $36 million, up from $25.4 million in the year-ago quarter. Full-quarter contributions from fleet reactivation during the first quarter of this year led to the increase in Adjusted EBITDA.

ProPetro’s adjusted EBITDA of $46.83 million in its Pressure Pumping unit during the June quarter surpassed the Zacks Consensus Estimate of $46.36 million. Investors should know that pressure pumping is the main contributor to the company’s earnings.

Pressure Pumping Division

The Midland, TX-based company provides hydraulic fracturing, cementing and acidizing functions through the Pressure Pumping segment. The business contributed 98.4% to the company’s total revenues in the quarter under review. Service revenues soared 105.6% from the prior-year quarter’s levels to $213.5 million, attributable to higher fleet strength and a stable operating environment following the first-quarter weather woes.

Costs & Expenses

ProPetro reported service cost of $162.8 million for the second quarter, up 138.7% from the year-ago quarter’s level. General and administrative expenses were $17.53 million, down 13.6% from $20.3 million in the prior-year quarter.

Balance Sheet & Capital Expenditures

As of Jun 30, 2021, ProPetro had cash and cash equivalents worth $72.7 million and did not incur any long-term debt. It also had $68 million under its revolving credit facility. Capital expenditures in the June quarter of 2021 summed $31 million, up 160.5% from the second-quarter 2020 level.

Guidance

ProPetro expects full-year capital expenditures in the $115-$130 million range, based on its current and expected activity levels. It allocated approximately $37 million to its Tier IV DGB dual-fuel equipment investment of 90,000 HHP while the rest constitutes maintenance spending, mainly.

ProPetro CEO Phillip Gobe said, “Our commitment to our employees, customers and stakeholders will continue to bolster the value proposition for our company. We believe, the pressure pumping industry is faced with an impending reinvestment cycle that will require innovative solutions to meet the needs of the market. We believe, ProPetro’s focused business model, commitment to innovation, capital discipline and conservative capital structure will result in a sustainable company going forward that is well positioned for the future.”

Zacks Rank & Stocks to Consider

ProPetro has a Zacks Rank #3 (Hold), currently. Some better-ranked stocks in the  energy  space are Matador Resources Company (MTDR Free Report) , Devon Energy Corporation (DVN Free Report) and Continental Resources, Inc. (CLR Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SPTN – SpartanNash's (SPTN) Earnings Beat in Q2, Sales Decline Y/Y

SpartanNash Company (SPTN Free Report) posted mixed results for the second quarter of 2021 wherein the bottom line beat the Zacks Consensus Estimate while the top line missed the same. Both metrics plunged year over year.

This presently Zacks Rank #3 (Hold) company posted adjusted earnings from continuing operations of 54 cents a share, outshining the Zacks Consensus Estimate by a penny. However, the bottom line decreased nearly 26% from 73 cents a share earned in the same quarter a year ago.

Consolidated net sales of $2,106.6 million declined 3.6% year over year due to the absence of the prior-year period’s favorable sales, aided by elevated consumer demand with respect to the pandemic across all segments. The top line also lagged the Zacks Consensus Estimate of $2,129 million. The company saw a sales decline across all three segments, somewhat offset by strong growth in some existing Food Distribution customers.

SpartanNash Company Price, Consensus and EPS Surprise

Gross profit dipped 1.4% year over year to $333.6 million. However, gross margin expanded 30 basis points (bps) to 15.8% on growth across the Food Distribution and Military units, and higher proportion of margin accretive Retail and Food Distribution segment sales. This was somewhat offset by elevated LIFO expenses.

Adjusted operating earnings came in at $29.3 million, which decreased 22.3% from $37.7 million reported in the year-ago quarter. Adjusted EBITDA fell 8.1% to $54.4 million with a margin contraction of 10 bps to 2.6%.

Segmental Analysis

Net sales at Food Distribution dipped 3.1% to $1,056.5 million due to lack of higher sales prevalent in the prior year on the back of elevated consumer demand. The same was mitigated with persistent growth in some existing Food Distribution customers. The segment’s sales jumped 13% from the second-quarter 2019 actuals. The unit accounted for 50.2% of the company’s consolidated sales in the second quarter of 2021.

Retail’s net sales slipped 1.8% to $620 million in the reported quarter, mainly due to the absence of last year’s favorable sales, attributable to higher coronavirus-led demand. However, the metric was partly offset by better fuel sales in the quarter. Retail comparable store sales also slid 2.7% year over year even though the metric rose 12.1% on a two-year comparable basis. The retail segment represented 29.4% of total sales in the period.

Finally, net sales at Military, which constituted 20.4% of the overall quarterly sales, were down 7.1% to $430.1 million. This was mainly due to persistently lower volumes at domestic commissaries caused by limited base access. The segment’s sales tumbled 12.3% from the second-quarter 2019 reading.

Other Financials

SpartanNash ended the quarter with cash and cash equivalents of $24.1 million, net long-term debt of $427.2 million and total shareholders’ equity of $756.2 million. The company paid long-term debt of $75.8 million in the reported quarter.

Cash generated from operating activities was $105.4 million during the second quarter. The company had free cash flow of $33.7 million in the 28-week ended Jul 17, 2021. Capital expenditures and IT capital totaled $43.8 million in the first half of 2021. For 2021, management still projects capital expenditures and IT capital in the band of $80-$90 million.

In the first half of the current year, management declared cash dividends worth $14.4 million, equal to 20 cents a share. It also bought back 265,000 shares for $5.3 million in the same period.

Guidance

Management expects sustained momentum in the Retail business. However, it continues facing challenges in the distribution operations, mainly considering the ongoing pandemic-related conditions. The company revised 2021 outlook, which includes the improved trends in Retail and headwinds associated with sales trends in its Military business. SpartanNash also completed drafting the blueprint of its supply-chain transformation initiative.

The company continues projecting total net sales in the band of $8,800-$9,000 million, indicating a decline from $9,348 million generated in 2020. Retail comparable sales are likely to be a negative 2-5% for the current year compared with a negative 5-7% predicted earlier. Food Distribution sales are anticipated to decrease 1-3% while Military Distribution sales are estimated to fall 9-13% in 2021.

Adjusted EBITDA for 2021 is likely to fall in the range of $200-$210 million from $239 million delivered last year. The metric was earlier estimated in the $195-$210 million band.

The company estimates reported earnings per share between $1.56 and $1.69, implying a decline from the prior-year’s tally of $2.12. Adjusted earnings per share are envisioned to be $1.70-$1.80 for the current year, indicating a decrease from $2.53 registered in 2020. Adjusted earnings per share were previously anticipated in the bracket of $1.65-$1.80.

Price Performance

This grocery retailer’s stock has decreased 15.6% in the past six months compared with the industry’s 5.1% decline.

Better-Ranked Stocks to Consider

Medifast (MED Free Report) has an earnings surprise of 16% in the last four quarters, on average, and a Zacks Rank #1 (Strong Buy), currently. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Chewy (CHWY Free Report) , also presently a Zacks #1 Ranked stock, has an expected long-term earnings growth rate of 20%.

Sysco (SYY Free Report) has an expected long-term earnings growth rate of 9% and a Zacks Rank #2 (Buy) at present.

HUM – Humana (HUM) Acquires Remaining Shares at Kindred at Home

Humana Inc. (HUM Free Report) completes its previously announced buyout of Kindred at Home or KAH, which is the nation’s largest home health and hospice company. The deal, which was announced in April this year, strengthened the company’s position as the nation’s leading home-care provider. This is expected to enhance health outcomes of patients who prefer care at home.

Demand for at-home care is at its peak right now and expected to continue for years to come. The leading health insurer is committed to providing clinical care across its lines of business.

KAH caregivers offer home health, hospice and personal care services to more than 550,000 patients every year. Addition of their skills will help Humana expand its home health offering with focus on clinical innovation, better patient outcomes, cost reduction for availing medical care, etc.

In this regard, KAH’s home health operations are integrated into the acquirer’s Home Solutions business. The same will adopt the latter’s new payer-agnostic healthcare services brand CenterWell, which is set to transition to CenterWell Home Health beginning 2022.

The health insurer acquired 40% ownership stake in Kindred for $2.4 billion in 2018. The buyout of the remaining interest will allow it to more quickly scale up its plans to launch value-based care models and innovative care.

In June, Humana inked a deal to purchase the home health provider One Homecare Solutions (onehome) from the private equity group WayPoint Capital Partners. These deals definitely place this currently Zacks Rank #3 (Hold) company as a value-based home health care provider on a national scale. You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

These strategic initiatives carved a growth path for the company. Some of the acquisitions made by the company helped it achieve long-term growth.
These include the purchase of Family Physicians Group, Your Home Advantage and Curo among others, which aided the company to widen its reach in the home health and hospice market.

Humana also closed the Enclara deal in January, expanding its hospice pharmacy business line. The company announced its iCare buyout in Wisconsin during December 2020, which extended its Medicare business.
The health insurance industry is poised for tremendous growth in the long term, driven by the aging U.S. population, patients’ desire for independence and the emergence of home health as a cheaper care modality. Players in the industry should continue to benefiting from the demographics of U.S. senior citizens and the need for looking after higher-acuity patients in a home-nursing environment.  

Price Performance

Shares of Humana have lost 0.8% in a year’s time against its  industry’s growth of 29.4%.

Zacks Investment Research
Image Source: Zacks Investment Research

Other companies in the same space, such as Anthem Inc. (ANTM Free Report) , Centene Corporation (CNC Free Report) and The Joint Corp. (JYNT Free Report) have gained 32.7%, 0.6% and 370.5% each in the same time frame.

MOH – Molina (MOH) Arm's Medicaid Contract to Aid Service in Nevada

Molina Healthcare, Inc.’s (MOH Free Report) Nevada health plan subsidiary won a Medicaid-managed care contract from the Nevada Department of Health and Human Services — Division of Health Care Financing and Policy (DHCFP).

The new four-year contract comes with the feasibility of two-year extension and will be effective Jan 1, 2022. The health insurer’s Nevada health plan is one of the four Managed Care Organizations providing healthcare coverage to around 630,000 Medicaid beneficiaries in Clark County (Las Vegas area) and Washoe County (Reno area) through the TANF, CHIP and Medicaid Expansion programs.

The company will also take part in the state-based Affordable Care Act Exchange. The latest deal is likely to empower Molina in dispensing enhanced healthcare services and programs on a continual basis, thereby serving the regional residents with greater efficiency.

The recent move seems a time opportune one, considering the ample prospects prevalent in the Medicaid market. Per a McKinsey report, continuous program expansions and the inclination of complex high-need population toward managed care programs can be cited as one of the major factors driving growth across the Medicaid market.

The same article highlighted another important fact put forward by the Centers for Medicare & Medicaid Services (CMS), which projects the Medicaid plan to evolve into a roughly $1-trillion program by 2026 from the $629-billion program in 2018.

In April, the health insurer’s Ohio health plan unit was chosen as an awardee in all three regions across the state to the Medicaid managed care RFA. The contract was granted by the Ohio Department of Medicaid or ODM on Sep 30, 2020.

The leading company, currently carrying a Zacks Rank #3 (Hold), offers managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces. Molina is focused on government-sponsored healthcare programs for families and individuals.

In 2020, the Medicaid premium revenues contributed to 73% of the company’s top line. Its Medicaid contracts with the states of California, Ohio, Texas and Washington accounted for around 10% or more of the consolidated Medicaid premium revenues in the years 2019 and 2020. Other healthcare providers boasting a strong Medicaid business across the United States include Humana Inc. (HUM Free Report) , Centene Corporation (CNC Free Report) and Cigna Corporation (CI Free Report) . 

Price Performance

Shares of Molina have gained 33.3% in a year’s time, outperforming its industry‘s rally of 29.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

Zacks Investment Research
Image Source: Zacks Investment Research

ISRG – Intuitive Surgical, Inc. (ISRG) Up 10% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Intuitive Surgical, Inc. (ISRG Free Report) . Shares have added about 10% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Intuitive Surgical, Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Intuitive Surgical Q2 Earnings & Revenues Top Estimates

Intuitive Surgical, Inc. reported second-quarter 2021 adjusted earnings per share of $3.92, which beat the Zacks Consensus Estimate of $3.16 by 24.1%. The bottom line improved significantly on a year-over-year basis.

GAAP earnings per share in the quarter was $4.25, compared with the year-ago quarter’s figure of 57 cents.

Revenue Details

The company reported revenues of $1.46 billion, which soared 71.8% from the prior-year quarter. The top line outpaced the Zacks Consensus Estimate by 13.9%.

Segment Details

Instruments & Accessories

Revenues at the segment amounted to $796.4 million, reflecting year-over-year improvement of 72.8%. This can be attributed to 68% growth in da Vinci procedure volume.

Systems

In the reported quarter, System revenues soared 68.4% year over year to $439.6 million. In fact, the company shipped 328 da Vinci Surgical Systems in the quarter, compared to 178 systems in the prior-year quarter.

Services

Services revenues were $228 million, up 74.9% from the year-ago quarter.

Outside the United States, revenues totaled $458.2 million, up 44.7% on a year-over-year basis.

Outside the United States, Intuitive Surgical placed 115 systems in the second quarter compared with 72 in the prior-year quarter. Of these, 63 were in Europe, 16 in Japan and 19 in China.

Margins

Adjusted gross profit in the reported quarter was $1.05 billion, up 97.4% year over year. As a percentage of revenues, gross margin in the quarter was 71.7%, up 930 basis points (bps).

Adjusted operating income totaled $629.9 million, up 225.9% year over year. As a percentage of revenues, operating margin in the quarter was 43%, up 2030 bps.

Financial Position

The company exited the second quarter with cash, cash equivalents and investments of $7.73 billion, compared with $7.23 billion in the previous quarter.

Total assets were $12.29 billion, compared with $11.54 billion sequentially.

Outlook

Due to persistent uncertainty surrounding the extent and duration of the pandemic, and the timing of global recovery and economic normalization; the company cannot ascertain the future impact on its operations and financial performance during this time. Consequently, the company has refrained from issuing any guidance for 2021.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 14.32% due to these changes.

VGM Scores

At this time, Intuitive Surgical, Inc. has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Intuitive Surgical, Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

NFLX – Netflix (NFLX) Up 1.6% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Netflix (NFLX Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Netflix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Netflix Q2 Earnings Miss, User Growth Beats Expectations

Netflix reported second-quarter 2021 earnings of $2.97 per share that missed the Zacks Consensus Estimate by 6.01% and also fell short of the guidance of $3.16. The figure surged 86.8% year over year.

Revenues of $7.34 billion increased 19.4% year over year and beat the consensus mark by 0.4%. Average revenue per membership increased 8% year over year on a reported basis (4% on a foreign-exchange neutral basis).

The streaming giant added 1.54 million paid subscribers globally compared with 10.1 million in the year-ago quarter and beat its guidance of 1 million paid-subscriber addition.

At the end of the second quarter, Netflix had 209.18 million paid subscribers globally, up 8.4% year over year, beating management’s expectation of 208.64 million paid subscribers.

The subscription growth reflects Netflix’s solid content portfolio amid growing competition from services launched by Apple, Disney, ViacomCBS, AT&T, Discovery and Comcast.

Notably, this company now expects paid net additions to be 3.5 million compared with the year-ago quarter’s 2.2 million.

Shares of Netflix slipped 2% in after-hours trading following the results.

Segmental Revenue Details

United States and Canada (UCAN) reported revenues of $3.23 billion, which rose 13.9% year over year and accounted for 44.1% of total revenues. ARPU grew 9% from the year-ago quarter on a foreign-exchange neutral basis.

Paid-subscriber base increased 1.4% from the year-ago quarter to 73.95 million. The company lost 0.43 million paid subscribers, down 114.6% year over year.

Europe, Middle East & Africa (EMEA) reported revenues of $2.4 billion, which increased 26.8% year over year and accounted for 32.7% of total revenues. ARPU grew 2% from the year-ago quarter on a foreign-exchange neutral basis.

Paid-subscriber base increased 11.7% from the year-ago quarter to 68.7 million. The company added 0.19 million paid subscribers, down 93.1% year over year.

Latin America’s (LATAM) revenues of $861 million increased 9.7% year over year, contributing 11.7% of total revenues. ARPU grew 2% from the year-ago quarter on a foreign-exchange neutral basis.

Paid-subscriber base rose 7.2% from the year-ago quarter to 38.6 million. The company added 0.76 million paid subscribers, down 56.6% year over year.

Asia Pacific’s (APAC) revenues of $799 million soared 40.4% year over year and accounted for 10.9% of total revenues. ARPU increased 1% year over year on a foreign-exchange neutral basis.

Paid-subscriber base jumped 24% from the year-ago quarter to 27.88 million. The company added 1.02 million paid subscribers, down 61.7% year over year.

Content Details

Netflix’s second-quarter content slate included Shadow and Bone, Sweet Tooth, Too Hot to Handle Season 2, The Circle, Lupin Season 2, Elite Season 4, Who Killed Sara? Season 2 and docu-series The Sons of Sam.

Movies included Army of the Dead, Fatherhood and The Mitchells vs. The Machines among others.

Netflix has a strong content portfolio for the third quarter of 2021 that includes new seasons of La Casa de Papel (aka Money Heist), Sex Education, Virgin River and Never Have I Ever. Movies include Sweet Girl, Kissing Booth 3, Kate and Vivo.

Netflix plans to spend more than $17 billion in cash on content this year. Through the first half of 2021, the company spent $8 billion in cash on content, up 41% year over year. The company also plans to launch more originals compared to 2020.

Last week, Netflix series and specials received 129 Emmy nominations. With 24 nominations, The Crown tied for the most nominated series. Bridgerton with 12 nominations was also nominated for Best Drama series while The Queen’s Gambit received 18 nominations including Best Limited Series. Cobra Kai, Emily In Paris and the finale season of The Kominsky Method were all nominated for Best Comedy series.

Operating Details

Marketing expenses increased 39% year over year to $604 million. As a percentage of revenues, marketing expenses expanded 120 basis points (bps) to 8.2%.

Moreover, consolidated operating income increased 36.1% year over year to $1.84 billion, driven by higher-than-expected revenue and subscriber growth. Consolidated operating margin expanded 310 bps on a year-over-year basis to 25.2%.

Balance Sheet & Free Cash Flow

Netflix had $7.77 billion of cash and cash equivalents as of Jun 30, 2021, compared with $8.4 billion as of Mar 31, 2021.

Long-term debt was $14.9 billion as of Jun 30, 2021, up from $14.86 billion as of Mar 31, 2021. Streaming content obligations were $21.8 billion compared with $20.73 billion as of Mar 31, 2021.

Netflix reported free cash outflow of $175 million against free cash flow of $691.7 million in the previous quarter.

Guidance

For the third quarter of 2021, Netflix forecasts earnings of $2.55 per share. The Zacks Consensus Estimate is pegged at $3.16 per share, higher than the company’s expectation, indicating growth of 98.7% from the figure reported in the year-ago quarter.

Netflix expects to end the third quarter of 2021 with 212.68 million paid subscribers globally, indicating growth of 9% from the year-ago quarter.

Total revenues are anticipated to be $7.47 billion, suggesting growth of 16.2% year over year. The Zacks Consensus Estimate for revenues stands at $7.31 billion, lower than the company’s expectation.

Operating margin is projected to be 20.7% compared with 20.4% in the year-ago quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 19.82% due to these changes.

VGM Scores

At this time, Netflix has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Netflix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

MAN – Why Is Manpower (MAN) Up 9.2% Since Last Earnings Report?

It has been about a month since the last earnings report for ManpowerGroup (MAN Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Manpower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

ManpowerGroup Beats On Q2 Earnings & Revenues Estimates

ManpowerGroup reported better-than-expected second-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate.

Quarterly adjusted earnings of $2.02 per share beat the consensus mark by 68.2% and improved more than 100%. Revenues of $5.28 billion beat the consensus mark by 2%. The top line inched up 41% year over year on a reported basis and 31.3% on a constant-currency (cc) basis.

Segmental Revenues

Revenues from America totaled $1.04 million, up 24.8% year over year on a reported basis and 22.8% at cc. In the United States, revenues came in at $628.8 million, up 21.9% year over year. In the Other Americas subgroup, revenues of $415.5 million grew 29.6% on a reported basis and 24.3% at cc.

Revenues from Southern Europe were up 64.7% on a reported basis and 51% at cc to $2.42 billion. Revenues from France came in at $1.35 billion, up 83% on a reported basis and 67.3% at cc. Revenues from Italy amounted to $469.1 million, up 74.7% on a reported basis and 59.6% at cc. The Other Southern Europe sub segment generated revenues of $606.5 million, up 30.1% on a reported basis and 20.4% at cc.

Northern Europe revenues moved up 37.5% on a reported basis and 23.1% at cc to $1.19 billion.

APME revenues totaled $619.9 million, up 8.9% on a reported basis and 5.5% at cc.

Operating Performance

Gross profit in the quarter was $860.1 million, up 49.1% year over year on a reported basis and 0.5% at cc. Gross profit margin rose to 49.1% compared with 39.8% in the year-ago quarter.

The company incurred operating profit of $169.9 million against loss of $50 million in the year-ago quarter.

Balance Sheet and Cash Flow

ManpowerGroup, carrying a Zacks Rank #2 (Buy), exited the quarter with cash and cash equivalents balance of $1.46 billion compared with the prior quarter’s level of $1.52 billion. Long-term debt at the end of the quarter was $1.07 billion compared with $1.06 billion reported in the preceding quarter.

The company generated $54.5 million of cash from operating activities, while Capex was $11.9 million in the quarter.

Guidance

ManpowerGroup expects third-quarter 2021 earnings between $1.86 and $1.94 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 9.5% due to these changes.

VGM Scores

At this time, Manpower has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Manpower has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

NEOG – Neogen (NEOG) Down 4.1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Neogen (NEOG Free Report) . Shares have lost about 4.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Neogen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Neogen Misses Q4 Earnings, Tops Revenue Estimates

Neogen’s fourth-quarter fiscal 2021 earnings per share of 15 cents were flat with the year-ago quarter’s figure. It missed the Zacks Consensus Estimate by 6.3%.

Full-year earnings per share of 57 cents per share rose 1.8% from the year-ago 56 cents per share but missed the Zacks Consensus Estimate by 3.4%.

Revenues for the fiscal fourth quarter increased 16.8% on a year-over-year basis to $127.4 million despite the ongoing difficult global business environment. Revenues surpassed the Zacks Consensus Estimate by 2%. Per the company, the fourth quarter was the 116th of the past 122 quarters that Neogen reported revenue increases as compared to the same period in the previous year.

The company reported revenues of $468.5 million in fiscal 2021, up 12% from the year-ago period. The same beat the Zacks Consensus Estimate by 0.5%.

Segments in Detail

For the quarter, the company registered Food Safety revenues of $64.1 million, reflecting 18% (up 12% organically) year-over-year growth. The Megazyme acquisition strongly contributed to the company’s quarterly revenues. Further, growth was boosted by continued strong sales of the recently-launched Soleris Next Generation (NG) rapid microbial testing solution and increase in sales of natural toxin (up 10%) and allergen (up 19%) test kits as businesses began to rebound from the COVID-19 pandemic.

Animal Safety revenues in fiscal fourth quarter were $63.3 million, up 15.6% year over year. The upside can be attributed to strong growth in the veterinary instruments line (up 50%), primarily needles and syringes and the animal care line (up 51%), driven by significant spending on companion animal during the COVID-19 pandemic. Further, a 33% increase in sales of rodent control products and a 26% rise in insect control products, enhanced by revenues from the company’s acquisition of the StandGuard product line in July 2020, contributed to the segment’s impressive performance.

Revenues from Neogen’s worldwide genomics business increased 21% in fiscal fourth quarter on a year-over-year basis. The upside was primarily driven by continued strength in companion animal testing services in the United States and Australia and new bovine and porcine business in China.

Neogen’s International business, which primarily reports through the Food Safety segment, increased 11% in fiscal 2021. Neogen’s U.K. business increased 4% in pounds in fiscal 2021 on strong sales of cleaners and disinfectants, partially offset by sluggish sales of diagnostic test kits due to the COVID-19 pandemic.

Neogen’s revenue from China for fiscal 2021 doubled on increased demand for biosecurity products due to African swine fever outbreaks. Neogen’s Latinoamerica business and its Brazilian operations grew 13% and 15%, respectively, in local currency for fiscal 2021.

Margin Details

Neogen’s fiscal fourth-quarter gross profit increased 11.5% year over year to $57.7 million. Yet, gross margin contracted 215 basis points (bps) to 45.3%.

Sales and marketing expenses rose 24.5% to $20.5 million, whereas administrative expenses rose 8.4% from the prior-year quarter to $12.9 million. Research & development expenses were $4.1 million, up 17.9% from the year-ago quarter. Operating costs totaled $37.4 million, up 17.8% year over year.

In the reported quarter, operating income was $20.3 million, up 1.6% from the year-ago quarter’s level. Nevertheless, operating margin contracted 239 bps to 15.9%.

Cash Position

The company exited fiscal fourth quarter with cash and investments of $381.1 million, up from $353.3 million at the end of the fiscal third quarter and $343.7 in the year-ago period. The company had no debt on the balance sheet at year-end.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Neogen has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Neogen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

OMC – Omnicom (OMC) Down 1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Omnicom (OMC Free Report) . Shares have lost about 1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Omnicom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Omnicom Q2 Earnings and Revenues Beat Estimates

Omnicom reported impressive second-quarter 2021 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Earnings of $1.46 per share beat the consensus mark by 9.8% and increased 58.7% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 6.7% and increased 27.5% year over year.

The top line was driven by increase in revenues from organic growth of 24.4% and positive impact of 5.4% due to foreign currency translations, but partially offset by a fall in acquisition revenues and net of disposition revenues of 2.2%.

Other Quarterly Details

Across fundamental disciplines, advertising was up 29.8%, CRM Precision marketing jumped 25%, CRM Execution & Support increased 22.7%, CRM Commerce and Brand Consulting was up 15.2%, CRM Experiential improved 53%, Public Relations was up 15.1% and Healthcare increased 4.5%, organically, year over year.

Across regional markets, year-over-year growth was 19.9% in the United States, 23.8% in the United Kingdom, 37.1 % in the Other North America, 34.5% in the Euro Markets & Other Europe, 20.8% in Latin America and 42.8% in the Middle East and Africa. Asia Pacific was up 27.9% year over year.

Operating profit in the quarter came in at $568.4 million, compared with 62.5 million in the year-ago quarter. Operating margin increased to 15.9% from the year-ago quarter’s 2.2%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -8.25% due to these changes.

VGM Scores

Currently, Omnicom has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Omnicom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

SNV – Synovus (SNV) Up 0.9% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Synovus Financial (SNV Free Report) . Shares have added about 0.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Synovus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Synovus Q2 Earnings Beat Estimates, Provisions Fall

Synovus reported second-quarter 2021 adjusted earnings of $1.20 per share, which handily beat the Zacks Consensus Estimate of $1.03 per share, aided by solid mortgage banking income. Also, the bottom line compares favorably with the earnings of 23 cents per share recorded in the year-ago quarter.

Results were driven by rising NII, lower expenses and reversal of provisions. Moreover, solid capital position stoked organic growth. However, lower non-interest income and loans were undermining factors.

Including certain non-recurring items, net income available to common shareholders came in at $177.9 million or $1.19 per share compared with the $84.2 million or 57 cents recorded in the prior-year quarter.

Revenues Fall on Lower Non-Interest Income, Expenses Down

Adjusted revenues (fully tax-equivalent basis) in the second quarter came in at $488.95 million, down 11.1% from the prior-year quarter. Yet, the top line outpaced the Zacks Consensus Estimate by 0.98%.

NII inched up 1.4% year over year to $381.9 million. However, net interest margin shrunk 11 basis points (bps) to 3.02%.

Non-interest income plunged 38% on a year-over-year basis to $107.1 million. Fall in mortgage banking, income from bank-owned life insurance, capital markets income and other non-interest revenues led to this downside.

Non-interest expenses were $270.5 million, down 5% year over year. This upside mainly resulted from lower professional fees, FDIC insurance and other regulatory fees and Other operating expenses.

Adjusted tangible efficiency ratio came in at 54.41% compared with the 57.71% reported in the year-earlier quarter. A fall in ratio indicates an improvement in profitability.

Total deposits were $47.2 billion, down 0.4% sequentially. Also, total loans fell 4.2% sequentially to $38.2 billion.

Credit Quality: A Mixed Bag

Synovus’ credit metrics witnessed a mixed performance during the June-end quarter.

Non-performing loans rose 9% year over year to $161 million. Net charge-offs increased 10% to $26.5 million. The annualized net charge-off ratio was 0.28% compared with the year-ago quarter’s 0.24%. Total non-performing assets amounted to $177.8 million, underlining a marginal year-over-year jump.

Reversal of provision for credit losses of $24.6 million was recorded in the second quarter against provision expense of $141.9 in the prior-year quarter. Non-performing loan ratio came in at 0.46%, shrinking 4 bps sequentially.

Robust Capital & Profitability Ratio

Tier 1 capital ratio and total risk-based capital ratio were 10.99% and 13.25%, respectively, compared with 10.15% and 12.70% as of Jun 30, 2020.

Moreover, as of Jun 30, 2021, Common Equity Tier 1 Ratio (fully phased-in) was 9.75% compared with the 8.90% witnessed in the year-ago quarter. Tier 1 Leverage ratio was 8.72% compared with the 8.38% recorded in the year-earlier period.

Return on average assets was 1.36% compared with the prior-year quarter’s 0.71%. Return on average common equity was 15.40%, up from the 7.48%.

2021 Outlook

Excluding all paycheck protection program balance changes and third-party consumer loan, the company expects period-end loan growth at the low end of 2-4% for 2021.

Overall, total adjusted revenues are expected to decline 1% and increase 1% in 2021. It expects adjusted non-interest expenses decline between 1% and 2% for 2021.

CET1 ratio of less or equal 9.5% is expected for 2021. The company expects an effective tax rate of 22% to 24%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 7.06% due to these changes.

VGM Scores

Currently, Synovus has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Synovus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.