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AGCO Corporation and General Electric highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – February 16, 2022 – Zacks Equity Research Shares AGCO Corporation (AGCO - Free Report) as the Bull of the Day, General Electric (GE - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Roku, Inc. (ROKU - Free Report) .
AGCO Corporation (AGCO - Free Report) is a Zacks Rank #1 (Strong Buy) that is a leading manufacturer and distributor of agricultural equipment and replacement parts. The company offers its products through a network of dealers in 140 countries.
The stock saw a nice pullback over the back half of 2022, falling about 30% from the 2021 highs. However, AGCO has turned higher after a big EPS beat. Price is now above all moving averages and investors seem to be coming back into the stock.
More About AGCO
The company was founded in 1990 and is headquartered in Duluth, Georgia. It employs over 21,000 and has a market cap of almost $10 billion.
The stock has a Forward PE of 11, making it a value play. AGCO has a Zacks Style Score of “A” in Value and Growth, but “D” in Momentum. The stock also pays a small dividend of 0.6%.
The company’s full range of agricultural equipment includes tractors, combines, sprayers, hay tools and forage equipment, grain storage and protein production systems.
Higher grain prices and a hot agricultural market have helped AGCO over the last few years, with the company seeing eight straight EPS beats since 2020. Last quarter didn’t disappoint, as the company reported one of the biggest beats during that earnings win streak.
Earnings Beat
AGCO reported earlier this month, seeing a 79% EPS surprise to the upside. The company saw revenues come in above expectations and guided higher on both the top and bottom line.
AGCO saw regional tractor sales up 14% in North America, 22% in South America and 16% in Western Europe. Net sale standouts were North America (+38.8%) and South America (+56.2%).
Management commented that they expect supply chain issues to persist, but their teams work tirelessly to mitigate the impact of these issues. They see sales growth and margin expansion in 2022 as demand trends positively.
AGCO went on to guide FY22 production up 5-10% year over year and operating margin at 9.8%. They see pricing up 7-8% year over year and both NA and SA sales at 5-10% year over year.
AGCO guided Q1 margins -100 bps year over year and Q2 margins flat year over year. These margins are seen lower due to ongoing chip shipping delays, but they were optimistic that margins will improve in the back half of the year.
While short-term estimates are lower due to supply chain issues, the numbers are looking better towards the back half of the year. Analysts are raising estimates for both the current year and next year. For the current year, we see a 9% jump over the last 7 days, from $10.51 to $11.49. For next year, we see a 10% jump over the same time frame.
Oppenheimer is one firm very bullish on the stock, with an Outperform rating and a $164 price target. The analyst cites margin durability, order book strength and global demand as reasons to be bullish.
The Technical Take
AGCO’s run started in 2020 as earnings improved. The stock was trading around $50 for more than a decade, but after the COVID crash, the stock started to trend higher. The stock more than doubled from the pre-COVID range to the recent highs. You can’t blame investors for taking profits after that run, especially after the supply chain issues that arose.
After about six months of poor price action, the charts are looking bullish again. The stock popped above the 200-day moving average for the first time since October. The bulls are close to taking out those highs and a move over $135 could start a trend back to the all-time high area around $150-155.
In Summary
AGCO is doing a great job sorting through the supply chain issues and it shows in this recent quarter. Demand is still strong, so if things do improve in the back half of the year, the bottom line should benefit.
Investors looking for a trade to highs can lean on the 200-day moving average at $127 and even the 50-day moving average at $119.50 for those wanting to take more risk.
General Electric (GE - Free Report) is a Zacks Rank #5 (Strong Sell) that is a high-tech industrial company that operates all over the world. It operates through four segments: Power, Renewable Energy, Aviation and Healthcare segments.
The company has struggled over the last decade as poor earnings and too much debt drove the stock lower and lower. However, GE has been trying to turn things around by spinning off some divisions and going through a reverse stock split.
While the stock is well off its 2020 lows, investors might be getting ahead of themselves as it teases levels just below 2021 highs.
About the Company
General Electric is headquartered in Boston, MA and employs over 168,000. The company was founded in 1892 and has become a household name.
While the stock saw huge success over its history, the financial crisis brought GE to its knees. After a decade of struggle, GE is now valued at $110 billion. It has a Forward PE of 27, which gives it a Zacks Style Score of “D” in Value. While there are valuation questions, the stock has a Zacks Style Score of “A” in Growth.
Q4 Earnings
General Electric saw a Q4 earnings beat of 10% in late January. However, revenues came in below expectations and the company guided FY22 lower. FY22 is now expected to come in at $2.80-3.50 v the $4.05 expected.
While the guide was pretty bad, there were some positives. The company sees FY22 organic revenue at “high single digits growth” and guides FY23 FCF on a path to greater than $7 Billion.
Management commented on opportunities for sustainable profit growth and sees the dramatic debt reduction as a way to “play offense.”
While the quarter gave some reasons for the bulls to buy the stock, analysts have lowered estimates since the earnings report.
Estimates
Over the last month, estimates have dropped across all time frames. For the current quarter, we see a drop from $0.61 to $0.41, or 32%. For the current year, we see a drop of 12%, from $4.05 to $3.54.
Technical Take
The stock saw a reverse stock split over the summer. This took the stock to the $100-105 area, where it traded until it spiked to $116 in early November. From there, it went straight down to $90 on a market sell off.
Since then, the stock has traded under the 200-day Moving average, hitting new 2021 lows after Q4 earnings.
However, the stock has bounced nicely since then and is back to that $100 area. Investors should be cautious at current levels as the stock approaches the 200-day MA once again. If GE can get over $106, the bulls could be in the clear. If the 200-day holds again, watch out for a move back to that $90 area.
In Summary
General Electric is a household name, but the stock performance over the last decade has helped people forget what it used to be.
Additional content:
Buy Roku (ROKU - Free Report) Before Earnings for Huge Growth Upside?
Roku, Inc. is set to release its fourth quarter fiscal 2021 financial results after the closing bell on Thursday, February 17. The pure-play streaming TV stock has been crushed for months alongside many other growth names and technology companies.
Despite the near-term market uncertainties and rising interest rates, some investors might want to consider buying Roku at its current levels.
Streaming & Digital Ads
Roku has come a long way from a tiny firm that made small streaming TV players into an industry standout with a $20 billion market cap. Roku and its array of devices and smart TV OS help make it one of the largest players in the somewhat crowded world of streaming devices that includes Amazon, Google, and Apple.
Roku’s streaming TV devices that allow people to watch their favorite services has come under pressure in the past year amid supply chain setbacks. These near-term setbacks will subside eventually. More importantly, Roku’s much larger advertising-heavy platform segment, which has driven growth in the past few years, continues to gain steam as companies of all shapes and sizes clamor to find consumers in the changing media landscape.
Roku allows marketers and advertisers to buy targeted ads, promote their streaming movies, shows, platforms, and whatever else they are selling. Roku has gone all-in on improving its appeal to advertisers. This includes buying Nielsen’s Advanced Video Advertising business, landing deals with Shopify, spending on its own content, and more.
Digital advertising is now bigger than legacy media spending. And streaming is one of the most important ad markets out there, especially as established social media companies compete for attention against upstarts. Plus, app-focused advertising is being disrupted by Apple’s privacy policies. And Roku will thrive even if a clear winner emerges in the wars between Netflix, Disney, HBO and others.
Recent Performance and Outlook
Roku’s ad-focused platform revenue accounted for 85% of total Q3 sales and 71% in 2020. The unit jumped 82% last quarter, while its player segment fell 26% YoY amid supply chain disruptions and slowing TV sales.
Roku’s active accounts climbed 23% to 56.4 million and its average revenue per user surged 49% to $40.10. Plus, Roku’s investment in its streaming TV content via The Roku Channel has paid off, with it coming in as a “top 5 channel on the platform by active account reach.”
Looking ahead, Zacks estimates call for Roku’s FY21 revenue to surge 58% from $1.78 billion to $2.80 billion. The streaming TV firm’s sales are then set to climb another 38% or $1 billion higher in 2022. Wall Street has talked about “slowing growth,” yet these estimates would compare favorably against FY20’s 58% sales expansion, FY19’s 52%, and FY18’s 45%.
Roku is also projected to swing from an adjusted loss of -$0.14 a share to +$1.55 in FY21 and then pop slightly higher in FY22. Roku’s history of big bottom-line beats is extensive, including a 700% beat in Q3 ($0.48 vs. $0.06 projection). Despite its downturn and near-term setback fears, Roku’s FY21 and FY22 consensus earnings estimates are largely unchanged since its last report.
Bottom Line
Taking into account its recent fall, Roku has soared 575% since its 2017 debut and 200% in the last three years. The stock started to show signs of cracking in February of 2021, alongside other pandemic winners and Cathie Wood stars. Roku, which currently lands a Zacks Rank #3 (Hold), did manage to make a brief comeback before it started to really tumble in July.
The stock closed regular trading Monday 66% below its records ($490 a share) at $159.02 per share. Roku has climbed out of oversold RSI territory since the end of January but it’s still far below neutral. And its current Zacks consensus price target represents 130% upside to Monday’s close.
Roku’s fall reset its valuation, with it trading at its lowest levels since the initial covid selloff and back where it was in the early part of 2019 at 5.5X forward 12-month sales—not too far above Netflix’s 5.1X. However, Roku is still trading at really high forward earnings multiples (92X). This alone could stop some investors in their tracks.
The firm’s earnings are being weighed down by its device business that’s suffering a substantial margin crunch amid ongoing supply chain disruptions. And Wall Street is still somewhat high on Roku stock, with 17 of the 23 brokerage recommendations Zacks has at “Strong Buys,” and only three below “Holds.”
Some investors might decide now is not the best time to take a chance on a pure growth stock, especially ahead of earnings. Others who can handle further downside potential might want to consider buying Roku as a long-term streaming TV play because Roku is prepared to thrive no matter who wins the streaming wars.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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/performance for information about the performance numbers displayed in this press release.
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AGCO Corporation and General Electric highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – February 16, 2022 – Zacks Equity Research Shares AGCO Corporation (AGCO - Free Report) as the Bull of the Day, General Electric (GE - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Roku, Inc. (ROKU - Free Report) .
Here is a synopsis of all three stocks:
Bull of the Day:
AGCO Corporation (AGCO - Free Report) is a Zacks Rank #1 (Strong Buy) that is a leading manufacturer and distributor of agricultural equipment and replacement parts. The company offers its products through a network of dealers in 140 countries.
The stock saw a nice pullback over the back half of 2022, falling about 30% from the 2021 highs. However, AGCO has turned higher after a big EPS beat. Price is now above all moving averages and investors seem to be coming back into the stock.
More About AGCO
The company was founded in 1990 and is headquartered in Duluth, Georgia. It employs over 21,000 and has a market cap of almost $10 billion.
The stock has a Forward PE of 11, making it a value play. AGCO has a Zacks Style Score of “A” in Value and Growth, but “D” in Momentum. The stock also pays a small dividend of 0.6%.
The company’s full range of agricultural equipment includes tractors, combines, sprayers, hay tools and forage equipment, grain storage and protein production systems.
Higher grain prices and a hot agricultural market have helped AGCO over the last few years, with the company seeing eight straight EPS beats since 2020. Last quarter didn’t disappoint, as the company reported one of the biggest beats during that earnings win streak.
Earnings Beat
AGCO reported earlier this month, seeing a 79% EPS surprise to the upside. The company saw revenues come in above expectations and guided higher on both the top and bottom line.
AGCO saw regional tractor sales up 14% in North America, 22% in South America and 16% in Western Europe. Net sale standouts were North America (+38.8%) and South America (+56.2%).
Management commented that they expect supply chain issues to persist, but their teams work tirelessly to mitigate the impact of these issues. They see sales growth and margin expansion in 2022 as demand trends positively.
AGCO went on to guide FY22 production up 5-10% year over year and operating margin at 9.8%. They see pricing up 7-8% year over year and both NA and SA sales at 5-10% year over year.
AGCO guided Q1 margins -100 bps year over year and Q2 margins flat year over year. These margins are seen lower due to ongoing chip shipping delays, but they were optimistic that margins will improve in the back half of the year.
AGCO Corporation price-eps-surprise | AGCO Corporation Quote
Estimates Rising
While short-term estimates are lower due to supply chain issues, the numbers are looking better towards the back half of the year. Analysts are raising estimates for both the current year and next year. For the current year, we see a 9% jump over the last 7 days, from $10.51 to $11.49. For next year, we see a 10% jump over the same time frame.
Oppenheimer is one firm very bullish on the stock, with an Outperform rating and a $164 price target. The analyst cites margin durability, order book strength and global demand as reasons to be bullish.
The Technical Take
AGCO’s run started in 2020 as earnings improved. The stock was trading around $50 for more than a decade, but after the COVID crash, the stock started to trend higher. The stock more than doubled from the pre-COVID range to the recent highs. You can’t blame investors for taking profits after that run, especially after the supply chain issues that arose.
After about six months of poor price action, the charts are looking bullish again. The stock popped above the 200-day moving average for the first time since October. The bulls are close to taking out those highs and a move over $135 could start a trend back to the all-time high area around $150-155.
In Summary
AGCO is doing a great job sorting through the supply chain issues and it shows in this recent quarter. Demand is still strong, so if things do improve in the back half of the year, the bottom line should benefit.
Investors looking for a trade to highs can lean on the 200-day moving average at $127 and even the 50-day moving average at $119.50 for those wanting to take more risk.
Bear of the Day:
General Electric (GE - Free Report) is a Zacks Rank #5 (Strong Sell) that is a high-tech industrial company that operates all over the world. It operates through four segments: Power, Renewable Energy, Aviation and Healthcare segments.
The company has struggled over the last decade as poor earnings and too much debt drove the stock lower and lower. However, GE has been trying to turn things around by spinning off some divisions and going through a reverse stock split.
While the stock is well off its 2020 lows, investors might be getting ahead of themselves as it teases levels just below 2021 highs.
About the Company
General Electric is headquartered in Boston, MA and employs over 168,000. The company was founded in 1892 and has become a household name.
While the stock saw huge success over its history, the financial crisis brought GE to its knees. After a decade of struggle, GE is now valued at $110 billion. It has a Forward PE of 27, which gives it a Zacks Style Score of “D” in Value. While there are valuation questions, the stock has a Zacks Style Score of “A” in Growth.
Q4 Earnings
General Electric saw a Q4 earnings beat of 10% in late January. However, revenues came in below expectations and the company guided FY22 lower. FY22 is now expected to come in at $2.80-3.50 v the $4.05 expected.
While the guide was pretty bad, there were some positives. The company sees FY22 organic revenue at “high single digits growth” and guides FY23 FCF on a path to greater than $7 Billion.
Management commented on opportunities for sustainable profit growth and sees the dramatic debt reduction as a way to “play offense.”
While the quarter gave some reasons for the bulls to buy the stock, analysts have lowered estimates since the earnings report.
Estimates
Over the last month, estimates have dropped across all time frames. For the current quarter, we see a drop from $0.61 to $0.41, or 32%. For the current year, we see a drop of 12%, from $4.05 to $3.54.
Technical Take
The stock saw a reverse stock split over the summer. This took the stock to the $100-105 area, where it traded until it spiked to $116 in early November. From there, it went straight down to $90 on a market sell off.
Since then, the stock has traded under the 200-day Moving average, hitting new 2021 lows after Q4 earnings.
However, the stock has bounced nicely since then and is back to that $100 area. Investors should be cautious at current levels as the stock approaches the 200-day MA once again. If GE can get over $106, the bulls could be in the clear. If the 200-day holds again, watch out for a move back to that $90 area.
In Summary
General Electric is a household name, but the stock performance over the last decade has helped people forget what it used to be.
Additional content:
Buy Roku (ROKU - Free Report) Before Earnings for Huge Growth Upside?
Roku, Inc. is set to release its fourth quarter fiscal 2021 financial results after the closing bell on Thursday, February 17. The pure-play streaming TV stock has been crushed for months alongside many other growth names and technology companies.
Despite the near-term market uncertainties and rising interest rates, some investors might want to consider buying Roku at its current levels.
Streaming & Digital Ads
Roku has come a long way from a tiny firm that made small streaming TV players into an industry standout with a $20 billion market cap. Roku and its array of devices and smart TV OS help make it one of the largest players in the somewhat crowded world of streaming devices that includes Amazon, Google, and Apple.
Roku’s streaming TV devices that allow people to watch their favorite services has come under pressure in the past year amid supply chain setbacks. These near-term setbacks will subside eventually. More importantly, Roku’s much larger advertising-heavy platform segment, which has driven growth in the past few years, continues to gain steam as companies of all shapes and sizes clamor to find consumers in the changing media landscape.
Roku allows marketers and advertisers to buy targeted ads, promote their streaming movies, shows, platforms, and whatever else they are selling. Roku has gone all-in on improving its appeal to advertisers. This includes buying Nielsen’s Advanced Video Advertising business, landing deals with Shopify, spending on its own content, and more.
Digital advertising is now bigger than legacy media spending. And streaming is one of the most important ad markets out there, especially as established social media companies compete for attention against upstarts. Plus, app-focused advertising is being disrupted by Apple’s privacy policies. And Roku will thrive even if a clear winner emerges in the wars between Netflix, Disney, HBO and others.
Recent Performance and Outlook
Roku’s ad-focused platform revenue accounted for 85% of total Q3 sales and 71% in 2020. The unit jumped 82% last quarter, while its player segment fell 26% YoY amid supply chain disruptions and slowing TV sales.
Roku’s active accounts climbed 23% to 56.4 million and its average revenue per user surged 49% to $40.10. Plus, Roku’s investment in its streaming TV content via The Roku Channel has paid off, with it coming in as a “top 5 channel on the platform by active account reach.”
Looking ahead, Zacks estimates call for Roku’s FY21 revenue to surge 58% from $1.78 billion to $2.80 billion. The streaming TV firm’s sales are then set to climb another 38% or $1 billion higher in 2022. Wall Street has talked about “slowing growth,” yet these estimates would compare favorably against FY20’s 58% sales expansion, FY19’s 52%, and FY18’s 45%.
Roku is also projected to swing from an adjusted loss of -$0.14 a share to +$1.55 in FY21 and then pop slightly higher in FY22. Roku’s history of big bottom-line beats is extensive, including a 700% beat in Q3 ($0.48 vs. $0.06 projection). Despite its downturn and near-term setback fears, Roku’s FY21 and FY22 consensus earnings estimates are largely unchanged since its last report.
Bottom Line
Taking into account its recent fall, Roku has soared 575% since its 2017 debut and 200% in the last three years. The stock started to show signs of cracking in February of 2021, alongside other pandemic winners and Cathie Wood stars. Roku, which currently lands a Zacks Rank #3 (Hold), did manage to make a brief comeback before it started to really tumble in July.
The stock closed regular trading Monday 66% below its records ($490 a share) at $159.02 per share. Roku has climbed out of oversold RSI territory since the end of January but it’s still far below neutral. And its current Zacks consensus price target represents 130% upside to Monday’s close.
Roku’s fall reset its valuation, with it trading at its lowest levels since the initial covid selloff and back where it was in the early part of 2019 at 5.5X forward 12-month sales—not too far above Netflix’s 5.1X. However, Roku is still trading at really high forward earnings multiples (92X). This alone could stop some investors in their tracks.
The firm’s earnings are being weighed down by its device business that’s suffering a substantial margin crunch amid ongoing supply chain disruptions. And Wall Street is still somewhat high on Roku stock, with 17 of the 23 brokerage recommendations Zacks has at “Strong Buys,” and only three below “Holds.”
Some investors might decide now is not the best time to take a chance on a pure growth stock, especially ahead of earnings. Others who can handle further downside potential might want to consider buying Roku as a long-term streaming TV play because Roku is prepared to thrive no matter who wins the streaming wars.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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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/performance for information about the performance numbers displayed in this press release.