We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
United Rentals is a Zacks Rank #1 (Strong Buy) that is the largest equipment rental company in the world. The company offers 4,000 classes of equipment for rent to customers in construction, industrials, utilities, municipalities, government agencies, independent contractors and individuals. These customers use the rented equipment for projects that range from simple repairs to major renovations.
The Stamford, CT-based company has over 19,000 full time employees and is valued at over $11 billion. URI has a Zacks Style Score of “A” in Value which is derived from its low Forward PE, which is currently at 13.
The stock collapsed during the March panic, but has returned to February levels. This move higher in the stock price is signaling that traders see opportunity looking forward. With a potential $1 Trillion infrastructure bill on the way later this year, the stock has a shot to hit all time highs by the end of 2020.
The COVID Impact and Earnings
The March panic caused the stock to fall from its February highs of $160, all the way to a low of $58.85. The fear in March that business would be frozen caused a massive opportunity as the stock has rallied over 170% from the lows and is back at the $160 level.
In May, the company reported a slight beat on revenues and 43% surprise beat on EPS. Like most companies, United Rentals withdrew its guidance due to the pandemic. The company is set to report on July 29th which will give clarity to investors on how the last three months have gone. URI has a great track record of beating on EPS, with the last miss coming back in January of 2016.
United rentals CEO Matt Flannery had the following comments on the quarter:
“Our business tracked as we expected through early March, when the outlook for 2020 became far more uncertain due to the pandemic. While we’ve withdrawn our guidance at this time, we're confident in our ability to leverage the resiliency inherent in our business model. We’re in the strongest position in our history to respond to this crisis and to prepare for the recovery to come.”
Estimates Rising
Analysts cut estimates drastically during the early stages of the pandemic. However, we are now starting to see a rise in analyst estimates over the last month. This is a positive sign as we head into earnings on July 29th.
Over the last 30 days, estimates have ticked higher by 7% for the current quarter, going from $1.70 to $1.82. For the current year, we have seen a 1.9% rise over that same time frame.
Infrastructure Boom on the Way?
Because of the uncertainty caused by the pandemic, it wouldn’t be surprising to see URI miss expectations. However, the bull side might look past this quarter to what might be coming later in the year.
Congress is working on an infrastructure bill that could be up to $1.5 trillion that would be used on everything from roads to broadband. URI would benefit from an increase in non-residential construction and infrastructure activity that would come with such a large spending bill.
The Technical Take
The stock is above all moving averages, with the 200-day at $136. With earnings coming up, investors looking for a pullback can target the 50-day at $143. However, a surprise beat or news on infrastructure spending could send this stock to 2019 highs at $170.
Looking at upside Fibonacci targets, the 161.8% level around $225 looks like a great spot for long-term investors to take profits. This is found by drawing a Fibonacci retracement from 2020 highs to the March lows.
In Summary
United Rentals has had a volatile year when it comes to its stock price, but the fact that’s it's back to Pre-COVID levels in positive. Investors are looking forward to what maybe come, instead of the fear that swept the market over the last few months.
For investors that appreciate a value story, with a potential catalyst in infrastructure, this stock one to keep an eye on.
The Walt Disney Company is a Zacks Rank #5 (Strong Sell) that is a global leader in entertainment. The company is valued at over $214 billion and pays a dividend of 1.5%. The company is headquartered in Burbank, California and has 223,000 full time employees
Company Breakdown and COVID
The company’s Media Networks segment operates popular cable networks EPSN, Disney, Freeform, FX, National geographic as well as the ABC network. This segment accounts for about 35% of revenues.
The Studio Entertainment produces all the popular Disney movies and live action motion pictures, as well as musical recording and live stage plays. This segment is about 16% of revenues.
The Parks, Experiences & Consumer Products segment combines Parks and Resorts and their consumer products. The parks include the Disney theme parks all over the world, which help this segment produce 38% of the company revenue.
The Direct-to-Consumer includes Disney’s streaming services and the rest of the company’s revenues.
Looking at these segments, we can easily sniff out why there might be a problem with Disney's upcoming earnings on August 4th. With the parks, sports, and movies shut down over the last few months due to COVID-19, there will be a major hit to revenues. While streaming of Disney Plus and Hulu likely hit record numbers, that segment won’t fill the hole.
The question investors have to ask themselves is if the short-term pain is worth the long-term investment. Considering the stock has rallied 50% off its March lows and is struggling to break technical resistance, buyers might want to wait for a better opportunity at lower prices.
COVID Troubles Persist
Economies have reopened and so have some of the parks, but there are concerns that a surge in cases, especially in Florida, might force shutdowns again. Even if they remain open, there is uncertainty on if people will consistently want to go with COVID-19 still in the air.
Cowen recently downgraded the stock citing parks and film disruptions are taking longer than initially hoped. The firm says valuation looks full on their new 2022 numbers.
Estimates are Falling
Analysts have taken down numbers drastically due to the lockdowns. Over the last 90 days, estimates have gone from $3.03 to $1.44 for the current year, a drop of 52%. The pain remains for next year, as estimates have fallen 26% over the same time period.
Technical Take
The stock rallied to the 200-day moving average at $128 and has since fallen back to support around the 50-day. Earnings will likely disappoint and we will see that support break, where the stock might head to test the $100 level. A long-term buy is warranted there.
In Summary
The mouse has a couple hurdles to get over before investors can get the stock. Longer-term, Disney has an empire that will pay off once the pandemic is over. However, all signs point to a rough back half of the year for the company and the stock.
Additional content:
Should You Hold Microsoft (MSFT - Free Report) Through Earnings?
The first member of the 4-comma club (>$1 trillion in market value), Microsoft, is preparing to release its quarterly report on Wednesday (July 22nd) after the bell. MSFT is trading right off its all-time highs (which it hit earlier this month) as investors brace themselves for this highly anticipated report.
The company was one of the rare enterprises to provide guidance for its fiscal Q4 (June ending quarter), which has given investors added confidence in their equity position, especially considering the business has beaten top and bottom-line estimates for 14 quarters straight.
Analysts are incredibly optimistic about the COVID tailwind that has ostensibly filled Microsoft’s sails this past quarter, supplying the markets with the most massive top and bottom-line estimates in the company’s history. According to Zacks Consensus estimates, MSFT is expected to report an EPS of $1.39 on sales of $36.6 billion.
Should We Hold The Stock Through Earnings?
I will be maintaining my MSFT positions because of its leadership standing in innovation-driving cloud-computing and essential software. MSFT was the largest publicly at the turn of the century. Its consistent technological drive to stay ahead of the innovative curve has propelled Microsoft market value over $1.5 trillion, making it the largest software company in the world two decades later.
MSFT is battling it out with its 4-comma club cohorts, Apple and Amazon, to obtain a firm market value lead on US exchanges.
There is no doubt that Microsoft will continue to provide the world with the most cutting-edge cloud software for a more productive economy and society.
My concerns about MSFT remain short-term. These shares have run up about 60% from their March lows and 33% year-to-date. I am concerned that investors will pull profits once they see what they want (or don’t want) from this earnings report and subsequent call. This would only cause short-term volatility with the long-term thesis remaining intact. Still, I wouldn’t add to my position going into these results.
The Takeaway
Be cautious with your trading activity as big tech starts releasing June quarter reports. Many tech stocks have seen parabolic returns in the past quarter. These gains are going to be tested in the coming weeks.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
United Rentals, Disney, Microsoft, Apple and Amazon highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 21, 2020 – Zacks Equity Research Shares of United Rentals, Inc. (URI - Free Report) as the Bull of the Day, The Walt Disney Company (DIS - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft Corporation (MSFT - Free Report) , Apple Inc. (AAPL - Free Report) and Amazon.com, Inc. (AMZN - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
United Rentals is a Zacks Rank #1 (Strong Buy) that is the largest equipment rental company in the world. The company offers 4,000 classes of equipment for rent to customers in construction, industrials, utilities, municipalities, government agencies, independent contractors and individuals. These customers use the rented equipment for projects that range from simple repairs to major renovations.
The Stamford, CT-based company has over 19,000 full time employees and is valued at over $11 billion. URI has a Zacks Style Score of “A” in Value which is derived from its low Forward PE, which is currently at 13.
The stock collapsed during the March panic, but has returned to February levels. This move higher in the stock price is signaling that traders see opportunity looking forward. With a potential $1 Trillion infrastructure bill on the way later this year, the stock has a shot to hit all time highs by the end of 2020.
The COVID Impact and Earnings
The March panic caused the stock to fall from its February highs of $160, all the way to a low of $58.85. The fear in March that business would be frozen caused a massive opportunity as the stock has rallied over 170% from the lows and is back at the $160 level.
In May, the company reported a slight beat on revenues and 43% surprise beat on EPS. Like most companies, United Rentals withdrew its guidance due to the pandemic. The company is set to report on July 29th which will give clarity to investors on how the last three months have gone. URI has a great track record of beating on EPS, with the last miss coming back in January of 2016.
United rentals CEO Matt Flannery had the following comments on the quarter:
“Our business tracked as we expected through early March, when the outlook for 2020 became far more uncertain due to the pandemic. While we’ve withdrawn our guidance at this time, we're confident in our ability to leverage the resiliency inherent in our business model. We’re in the strongest position in our history to respond to this crisis and to prepare for the recovery to come.”
Estimates Rising
Analysts cut estimates drastically during the early stages of the pandemic. However, we are now starting to see a rise in analyst estimates over the last month. This is a positive sign as we head into earnings on July 29th.
Over the last 30 days, estimates have ticked higher by 7% for the current quarter, going from $1.70 to $1.82. For the current year, we have seen a 1.9% rise over that same time frame.
Infrastructure Boom on the Way?
Because of the uncertainty caused by the pandemic, it wouldn’t be surprising to see URI miss expectations. However, the bull side might look past this quarter to what might be coming later in the year.
Congress is working on an infrastructure bill that could be up to $1.5 trillion that would be used on everything from roads to broadband. URI would benefit from an increase in non-residential construction and infrastructure activity that would come with such a large spending bill.
The Technical Take
The stock is above all moving averages, with the 200-day at $136. With earnings coming up, investors looking for a pullback can target the 50-day at $143. However, a surprise beat or news on infrastructure spending could send this stock to 2019 highs at $170.
Looking at upside Fibonacci targets, the 161.8% level around $225 looks like a great spot for long-term investors to take profits. This is found by drawing a Fibonacci retracement from 2020 highs to the March lows.
In Summary
United Rentals has had a volatile year when it comes to its stock price, but the fact that’s it's back to Pre-COVID levels in positive. Investors are looking forward to what maybe come, instead of the fear that swept the market over the last few months.
For investors that appreciate a value story, with a potential catalyst in infrastructure, this stock one to keep an eye on.
Bear of the Day:
The Walt Disney Company is a Zacks Rank #5 (Strong Sell) that is a global leader in entertainment. The company is valued at over $214 billion and pays a dividend of 1.5%. The company is headquartered in Burbank, California and has 223,000 full time employees
Company Breakdown and COVID
The company’s Media Networks segment operates popular cable networks EPSN, Disney, Freeform, FX, National geographic as well as the ABC network. This segment accounts for about 35% of revenues.
The Studio Entertainment produces all the popular Disney movies and live action motion pictures, as well as musical recording and live stage plays. This segment is about 16% of revenues.
The Parks, Experiences & Consumer Products segment combines Parks and Resorts and their consumer products. The parks include the Disney theme parks all over the world, which help this segment produce 38% of the company revenue.
The Direct-to-Consumer includes Disney’s streaming services and the rest of the company’s revenues.
Looking at these segments, we can easily sniff out why there might be a problem with Disney's upcoming earnings on August 4th. With the parks, sports, and movies shut down over the last few months due to COVID-19, there will be a major hit to revenues. While streaming of Disney Plus and Hulu likely hit record numbers, that segment won’t fill the hole.
The question investors have to ask themselves is if the short-term pain is worth the long-term investment. Considering the stock has rallied 50% off its March lows and is struggling to break technical resistance, buyers might want to wait for a better opportunity at lower prices.
COVID Troubles Persist
Economies have reopened and so have some of the parks, but there are concerns that a surge in cases, especially in Florida, might force shutdowns again. Even if they remain open, there is uncertainty on if people will consistently want to go with COVID-19 still in the air.
Cowen recently downgraded the stock citing parks and film disruptions are taking longer than initially hoped. The firm says valuation looks full on their new 2022 numbers.
Estimates are Falling
Analysts have taken down numbers drastically due to the lockdowns. Over the last 90 days, estimates have gone from $3.03 to $1.44 for the current year, a drop of 52%. The pain remains for next year, as estimates have fallen 26% over the same time period.
Technical Take
The stock rallied to the 200-day moving average at $128 and has since fallen back to support around the 50-day. Earnings will likely disappoint and we will see that support break, where the stock might head to test the $100 level. A long-term buy is warranted there.
In Summary
The mouse has a couple hurdles to get over before investors can get the stock. Longer-term, Disney has an empire that will pay off once the pandemic is over. However, all signs point to a rough back half of the year for the company and the stock.
Additional content:
Should You Hold Microsoft (MSFT - Free Report) Through Earnings?
The first member of the 4-comma club (>$1 trillion in market value), Microsoft, is preparing to release its quarterly report on Wednesday (July 22nd) after the bell. MSFT is trading right off its all-time highs (which it hit earlier this month) as investors brace themselves for this highly anticipated report.
The company was one of the rare enterprises to provide guidance for its fiscal Q4 (June ending quarter), which has given investors added confidence in their equity position, especially considering the business has beaten top and bottom-line estimates for 14 quarters straight.
Analysts are incredibly optimistic about the COVID tailwind that has ostensibly filled Microsoft’s sails this past quarter, supplying the markets with the most massive top and bottom-line estimates in the company’s history. According to Zacks Consensus estimates, MSFT is expected to report an EPS of $1.39 on sales of $36.6 billion.
Should We Hold The Stock Through Earnings?
I will be maintaining my MSFT positions because of its leadership standing in innovation-driving cloud-computing and essential software. MSFT was the largest publicly at the turn of the century. Its consistent technological drive to stay ahead of the innovative curve has propelled Microsoft market value over $1.5 trillion, making it the largest software company in the world two decades later.
MSFT is battling it out with its 4-comma club cohorts, Apple and Amazon, to obtain a firm market value lead on US exchanges.
There is no doubt that Microsoft will continue to provide the world with the most cutting-edge cloud software for a more productive economy and society.
My concerns about MSFT remain short-term. These shares have run up about 60% from their March lows and 33% year-to-date. I am concerned that investors will pull profits once they see what they want (or don’t want) from this earnings report and subsequent call. This would only cause short-term volatility with the long-term thesis remaining intact. Still, I wouldn’t add to my position going into these results.
The Takeaway
Be cautious with your trading activity as big tech starts releasing June quarter reports. Many tech stocks have seen parabolic returns in the past quarter. These gains are going to be tested in the coming weeks.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
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.