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The Zacks Analyst Blog Highlights: Alcoa, Nutrien, Cosco Shipping and Mohawk Industries
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For Immediate Release
Chicago, IL – September 28, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alcoa Corporation (AA - Free Report) , Nutrien Ltd. (NTR - Free Report) , COSCO SHIPPING Holdings Co., Ltd. (CICOY - Free Report) and Mohawk Industries, Inc. (MHK - Free Report) .
Here are highlights from Monday’s Analyst Blog:
The End of Q3: Global Week Ahead
In the Global Week Ahead, on Friday, the Third Quarter of 2021 comes to a close.
That means Q3 earnings season approaches.
The usual leader of the S&P 500 earnings season Alcoa reports on October 14th.
Zacks Research Director's Six Key Points on S&P 500 Earnings—
(1) We know that the earnings picture remains strong, even though the growth pace is expected to decelerate significantly in Q3 and beyond.
What we don't know at this stage is whether the incremental change in the earnings outlook over the coming days, as reflected in earnings estimate revisions, will be positive or negative.
(2) Estimates for 2021 Q3, whose early reports have started coming out, have not moved up as much as had been the case in comparable periods in the last few quarters.
That said, the revisions trend remains positive and could very well gain steam as the reporting cycle gets underway.
(3) Total Q3 earnings for the S&P 500 index are expected to be up +26.0% from the same period last year on +13.7% higher revenues.
This would follow the +94.9% earnings growth on +25.2% higher revenues in Q2.
(4) While Q3 earnings growth is undoubtedly on track to decelerate from the first-half's breakneck speed, largely a reflection of base effects.
Other positive features of the earnings picture from the first half, namely broad-based revenue momentum and a favorable revision trend, are expected to remain in place.
(5) Rising cost pressures amid supply-chain disruptions and labor/material shortages will keep the spotlight on margins, which are expected to be up year-over-year as well as sequentially in Q3.
The margin trajectory over the coming periods is a key source of uncertainty in the earnings outlook, given the lack of visibility with respect to the duration of inflationary pressures.
(6) Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +42.6% on +13.4% higher revenues in 2021 and increase +9.5% on +6.6% higher revenues in 2022.
This would follow the -13.0% earnings decline on -1.7% lower revenues in 2020.
Next are Reuters' five world market themes, reordered for equity traders.
(1) China Looks Fragile, Property Worries Mount
The woes of debt-saddled Chinese developer Evergrande are gnawing at global markets. Unsurprising because the property sector has a bearing, direct or indirect, on a quarter of the country's huge economy.
The developer has more payment deadlines next week, but the bigger picture, the sheer size of the Chinese economy, implies the risk is high of a global growth hit -- commodity prices, emerging market currencies and even European elevator-makers have all felt the heat.
BIS data shows Chinese banks had around $1.6 trillion of cross-border liabilities as of early 2021. Given their exposure to real estate, through mortgage loans and lending to property companies, any implosion could send ripples worldwide.
(2) U.S. Macro Data Gets a Refresh
The Federal Reserve has cut its 2021 U.S. growth forecasts and projects a 5.9% rate, versus 7% previously. Upcoming data will show if the coronavirus continues to undermine the recovery.
Consumer confidence in September is on tap, after August readings came in well short of estimates, dropping to a six-month low.
Markets will get a fresh view on the housing market in the form of data on home prices and home sales, while the personal consumption expenditures (PCE) index will offer a glimpse of inflation. A Reuters poll forecasts a 3.7% annual rise in the Fed's favorite inflation gauge, a touch above 3.6% in July.
(3) Inflation Worries Are Global, Not Just in the USA. Exhibit A: Europe's HICP
The ECB reportedly expects inflation to hit 2% by 2025. Despite analysts' skepticism, surging power prices and the seep-through elsewhere, including into inflation expectations, could mean it may not be too far off that mark.
In that light, advance readings of German and Eurozone HICP -- the harmonized index of consumer prices used by the ECB -- due Thursday and Friday respectively -- are of interest. German HICP hit a 13-year high of 3.4% in August, while consumer inflation at 3.9% was the highest since 1993.
Euro area consumer inflation expectations have doubled this year, surveys suggest, while bloc-wide HICP hit 3% in August, the highest since 2012. Power price rises have already impacted headline readings and September may show another increase.
(4) A Major German Election Happens
Sunday's German election is a close call and stakes for Europe's biggest economy couldn't be higher. After 16 years of steady, center-right leadership, Chancellor Angela Merkel will be stepping down.
Polls suggest the center-left Social Democrats (SPD) will form a coalition with the Greens and the liberal FDP, dubbed the traffic light alliance because of the parties' red, green and yellow colors.
But the number of undecided voters is at its highest in recent memory, so other outcomes are possible. The SPD's Olaf Scholz is the voters' choice to succeed Merkel, but coalition talks could take weeks, even months. Initial market reactions to the election outcome could prove premature.
(5) A Major Japanese Election Happens, Too
Japan's ruling party votes for its new leader on Wednesday, with the victor set to be the next prime minister. And it's a tight race.
Of the four candidates, vaccine minister Taro Kono is the ostensible frontrunner, while former foreign minister Fumio Kishida is the challenger. Sanae Takaichi and Seiko Noda, also former ministers, are each vying to be the first woman in the top job but are considered long shots.
Kono is favored by the Liberal Democratic Party's rank-and-file, but his reputation as a maverick makes party veterans wary. Kishida is more traditional, but is hobbled by a bland image.
Should Kono not win an outright majority, the top two will contest a run-off, where Kishida is expected to have an edge.
Investors seem to be betting on Kono. Renewable energy and office tech shares that could benefit from his policies have outperformed shares in medical services, where Kishida advocates higher spending.
Zacks #1 Rank (STRONG BUY) Stocks
Let's take a look at an agricultural/food play, a shipping play, and a housing play.
(1) Nutrien: This is a $37B market cap fertilizer stock, at a share price of $64.50. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of A.
(2) Cosco Shipping: This is a $28.5B market cap china shipping stock, at a share price of $9. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of A.
(3) Mohawk Industries: This is a $12.8B market cap home carpeting stock, at a share price of $185. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of C.
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/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Alcoa, Nutrien, Cosco Shipping and Mohawk Industries
For Immediate Release
Chicago, IL – September 28, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alcoa Corporation (AA - Free Report) , Nutrien Ltd. (NTR - Free Report) , COSCO SHIPPING Holdings Co., Ltd. (CICOY - Free Report) and Mohawk Industries, Inc. (MHK - Free Report) .
Here are highlights from Monday’s Analyst Blog:
The End of Q3: Global Week Ahead
In the Global Week Ahead, on Friday, the Third Quarter of 2021 comes to a close.
That means Q3 earnings season approaches.
The usual leader of the S&P 500 earnings season Alcoa reports on October 14th.
Zacks Research Director's Six Key Points on S&P 500 Earnings—
(1) We know that the earnings picture remains strong, even though the growth pace is expected to decelerate significantly in Q3 and beyond.
What we don't know at this stage is whether the incremental change in the earnings outlook over the coming days, as reflected in earnings estimate revisions, will be positive or negative.
(2) Estimates for 2021 Q3, whose early reports have started coming out, have not moved up as much as had been the case in comparable periods in the last few quarters.
That said, the revisions trend remains positive and could very well gain steam as the reporting cycle gets underway.
(3) Total Q3 earnings for the S&P 500 index are expected to be up +26.0% from the same period last year on +13.7% higher revenues.
This would follow the +94.9% earnings growth on +25.2% higher revenues in Q2.
(4) While Q3 earnings growth is undoubtedly on track to decelerate from the first-half's breakneck speed, largely a reflection of base effects.
Other positive features of the earnings picture from the first half, namely broad-based revenue momentum and a favorable revision trend, are expected to remain in place.
(5) Rising cost pressures amid supply-chain disruptions and labor/material shortages will keep the spotlight on margins, which are expected to be up year-over-year as well as sequentially in Q3.
The margin trajectory over the coming periods is a key source of uncertainty in the earnings outlook, given the lack of visibility with respect to the duration of inflationary pressures.
(6) Looking at the calendar-year picture for the S&P 500 index, earnings are projected to climb +42.6% on +13.4% higher revenues in 2021 and increase +9.5% on +6.6% higher revenues in 2022.
This would follow the -13.0% earnings decline on -1.7% lower revenues in 2020.
Next are Reuters' five world market themes, reordered for equity traders.
(1) China Looks Fragile, Property Worries Mount
The woes of debt-saddled Chinese developer Evergrande are gnawing at global markets. Unsurprising because the property sector has a bearing, direct or indirect, on a quarter of the country's huge economy.
The developer has more payment deadlines next week, but the bigger picture, the sheer size of the Chinese economy, implies the risk is high of a global growth hit -- commodity prices, emerging market currencies and even European elevator-makers have all felt the heat.
BIS data shows Chinese banks had around $1.6 trillion of cross-border liabilities as of early 2021. Given their exposure to real estate, through mortgage loans and lending to property companies, any implosion could send ripples worldwide.
(2) U.S. Macro Data Gets a Refresh
The Federal Reserve has cut its 2021 U.S. growth forecasts and projects a 5.9% rate, versus 7% previously. Upcoming data will show if the coronavirus continues to undermine the recovery.
Consumer confidence in September is on tap, after August readings came in well short of estimates, dropping to a six-month low.
Markets will get a fresh view on the housing market in the form of data on home prices and home sales, while the personal consumption expenditures (PCE) index will offer a glimpse of inflation. A Reuters poll forecasts a 3.7% annual rise in the Fed's favorite inflation gauge, a touch above 3.6% in July.
(3) Inflation Worries Are Global, Not Just in the USA. Exhibit A: Europe's HICP
The ECB reportedly expects inflation to hit 2% by 2025. Despite analysts' skepticism, surging power prices and the seep-through elsewhere, including into inflation expectations, could mean it may not be too far off that mark.
In that light, advance readings of German and Eurozone HICP -- the harmonized index of consumer prices used by the ECB -- due Thursday and Friday respectively -- are of interest. German HICP hit a 13-year high of 3.4% in August, while consumer inflation at 3.9% was the highest since 1993.
Euro area consumer inflation expectations have doubled this year, surveys suggest, while bloc-wide HICP hit 3% in August, the highest since 2012. Power price rises have already impacted headline readings and September may show another increase.
(4) A Major German Election Happens
Sunday's German election is a close call and stakes for Europe's biggest economy couldn't be higher. After 16 years of steady, center-right leadership, Chancellor Angela Merkel will be stepping down.
Polls suggest the center-left Social Democrats (SPD) will form a coalition with the Greens and the liberal FDP, dubbed the traffic light alliance because of the parties' red, green and yellow colors.
But the number of undecided voters is at its highest in recent memory, so other outcomes are possible. The SPD's Olaf Scholz is the voters' choice to succeed Merkel, but coalition talks could take weeks, even months. Initial market reactions to the election outcome could prove premature.
(5) A Major Japanese Election Happens, Too
Japan's ruling party votes for its new leader on Wednesday, with the victor set to be the next prime minister. And it's a tight race.
Of the four candidates, vaccine minister Taro Kono is the ostensible frontrunner, while former foreign minister Fumio Kishida is the challenger. Sanae Takaichi and Seiko Noda, also former ministers, are each vying to be the first woman in the top job but are considered long shots.
Kono is favored by the Liberal Democratic Party's rank-and-file, but his reputation as a maverick makes party veterans wary. Kishida is more traditional, but is hobbled by a bland image.
Should Kono not win an outright majority, the top two will contest a run-off, where Kishida is expected to have an edge.
Investors seem to be betting on Kono. Renewable energy and office tech shares that could benefit from his policies have outperformed shares in medical services, where Kishida advocates higher spending.
Zacks #1 Rank (STRONG BUY) Stocks
Let's take a look at an agricultural/food play, a shipping play, and a housing play.
(1) Nutrien: This is a $37B market cap fertilizer stock, at a share price of $64.50. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of A.
(2) Cosco Shipping: This is a $28.5B market cap china shipping stock, at a share price of $9. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of A.
(3) Mohawk Industries: This is a $12.8B market cap home carpeting stock, at a share price of $185. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of C.
These are three hot industry areas, now.
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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/performance for information about the performance numbers displayed in this press release.