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Palo Alto Networks and YETI have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – March 7, 2023 – Zacks Equity Research shares Palo Alto Networks (PANW - Free Report) as the Bull of the Day and YETI (YETI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American States Water Co. (AWR - Free Report) and Global Water Resources, Inc. (GWRS - Free Report) .
Palo Alto Networks is a Zacks Rank #1 (Strong Buy) that is a cybersecurity company offering network security solutions to enterprises, service providers and government entities worldwide.
PANW has been one of the best performers of 2023 and a recent earnings report has strengthened the bullish vision for the company. The stock is now just 10% off its all-time highs, something most tech companies can not claim.
The question for investors seems to be not if, but when those highs are taken out. Investor’s eyeing the stock should gobble up every dip and look for PANW to continue this momentum for the rest of the year.
More about Palo Alto
The company incorporated in 2005 and is headquartered in Santa Clara, California. It employs over 12,000 and has a market cap of $58 billion.
The company offers firewall appliances and software, subscription services for cyber threats, cloud security, professional services and more. Palo Alto sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries
The stock has a Zacks Style Score of “A” in Growth, but “F” in Value. The Forward PE is 48 and the stock pays no dividend.
Q2 Earnings
Palo Alto reported earnings in late February and blew away expectations. The 35% surprise beat was the company’s best performance on record. The company is used to beating earnings expectations, but this one was big in magnitude.
Palo reported Q2 at $1.05 v the $0.78 expected. The company guided Q3 at $0.90-0.94 v the $0.79 expected and raised total billings to $9.10-9.20B v the $8.95-9.05B prior. Year over year billions were $2.03B v the $1.61B expected.
Management cited the performance of their software-based and cloud-delivered portfolio as a reason for their ability to raise guidance.
Estimates Rising
The strong quarter has analysts raising estimates aggressively.
Over the last 30 days, the current quarters estimates have gone from $0.79 to $0.92, or 16% higher. Expectations for next quarter have been lifted as well, with estimates going up by 15%.
Looking down the road, estimates have been flying high since the earnings report. For the current year, we have seen estimates go from $3.42 to $3.96 over the last month, or 15%. For next year, estimates spiked to $4.62 from $4.01, or 15%.
Since Palo Alto reported earnings, almost every analyst on Wall Street has raised their price targets for the stock.
Citigroup has a Buy on the stock and raised their price target from $195 to $220.
Piper/Sandler has an Overweight on the name and raised their target to $240 from $220.
Morgan Stanley is one of the most bullish firms, reiterating their Overweight and $255 target, up from the previous target of $240.
The Technical Take
Like many names in tech, PANW had a rough 2021, down about 35% from the all-time highs. However, the buyers started to come in after the first few weeks of 2023. The stock rallied 20% into earnings and is now up 35% on the year.
Many investors would be happy with those returns and look to take profits in the current market atmosphere. But the chart looks very bullish and there is room to be greedy.
Looking at Fib extensions we have two targets above that seem achievable. The first target is found by drawing a Fibonacci retracement from November highs to 2023 lows. The 161.8% extension is $208.50. From there we could get a pullback as sellers come in just below all-time highs.
The bigger target can be found by drawing a Fibonacci retracement from the all-time highs to 2023 lows. The 161.8% retracement is $263, which lines up close to Morgan Stanleys bullish $255 target.
Most investors don’t want to chase a stock in this market, so below are some levels for those looking to buy the dip:
Gap fill: $178
21-day Moving Average (MA): $175
200-day MA: $165
50-day MA: 157
In Summary
Palo Alto is posting big numbers and seeing earnings growth in a tech sector that has been struggling. The company is best of breed in cybersecurity and investors should expect PANW to lead the way in 2023.
Buy the dippers should take advantage of any sell off and look for a move above all-time highs into the end of the year.
YETI is a Zacks Rank #5 (Strong Sell) that designs, markets, retails, and distributes products for the outdoor and recreation market under the YETI brand. The company offers hard and soft coolers, drinkware products,as well as cargo, bags, outdoor living, and associated accessories.
The stock thrived during the pandemic, but has fallen apart since late 2021. Now down over 60% from the all-time highs, the stock cannot seem to find any life. A recent earnings miss did not help and now estimates are falling, putting further pressure on the bulls.
About the Company
YETI is headquartered in Austin, TX. The company was founded in 2006 and employs about 1,000. YETI sells its products through independent retailers, including outdoor specialty, hardware, sporting goods, and farm and ranch supply stores, as well as through Website.
The company is valued at $3.5 billion and has a Forward PE of 18. YETI holds Zacks Style Scores of “A” in Growth, but D in Value and “F” in Momentum. The stock pays no dividend.
Q3 Earnings
The company reported EPS in late February in which it barely missed expectations. The bottom line came in at $0.78 v the $0.79 expected, but revenues came in at $448M v the $491M expected. The revenue miss was partly due to a voluntary recall of some products due to safety concerns. The company said that $38.4M in sales was impacted due to the recalls.
While direct to consumer sales increased 17%, gross margins fell from last year to 54.3% from 57.5%.
Management said profitability remained strong in 2022, despite the impact of lingering supply chain costs. They added that gross margins headwinds began to ease in the fourth quarter.
While there was some optimism, the company guided FY23 in a range of $2.13-2.23 v the $2.78 expected.
Estimates
The recalls and guide lower have forced analysts to lower estimates drastically.
Over the last 60 days, estimates for the current quarter have gone from $0.32 to $0.14, a drop of 56%. For next quarter they have fallen 30%, dropping from $0.73 to $0.51.
Looking ahead, analysts have dropped their numbers significantly over the last 60 days. For next year, numbers have dropped from $3.28 to $2.71, or 17%.
Technical Take
The stock has struggled since hitting the $108.82 highs in November of 2021. While it is trading up over 45% from last year’s lows, the stock has stalled.
YETI dropped over 10% after the earnings report and has significant resistance above current trading levels. Over the last few months, the stock has made several failed attempts to cross the 200-day moving average, but is currently trading under that level at $41.
If the bulls fail to get above the $42 area soon, you could see some bulls give up. Below the post-earnings lows at $35 we could see capitulation back to the 2022 lows.
Summary
The recalls are not the company’s only problem, but they certainly did not help. Unfortunately, the stock likely trades sideways or bleeds lower until the fundamental picture can improve.
Additional content:
Which Water Utility Stock Should You Invest In?
The Zacks Utility - Water Supply industry includes companies that are involved in providing drinking water and wastewater services to industrial, commercial and residential customer classes, along with numerous military bases across the country.
A continuous uninterrupted supply of clean potable water and reliable sewer services is essential for healthy and hygienic living. Water utilities across the United States are silently doing this important task day in and day out to meet the increasing demand of millions of Americans.
Utility operators own storage tanks, treatment plants and desalination plants to supply uninterrupted potable water across customer classes. Water utility operators also own more than 2 million miles of pipelines that are getting old.
The water and wastewater infrastructure is aging and gradually nearing the end of its effective service life. Per the U.S Environmental Protection Agency, an estimated $744 billion investment is necessary to maintain and expand the drinking water and wastewater services to meet demand over the next 20 years.
Given the current situation, investor-owned water utilities and the government are funding water and wastewater infrastructure projects to upgrade the necessary infrastructure.
In this article, we run a comparative analysis on two Utility – Water Supply companies — American States Water Co. and Global Water Resources, Inc. — to decide which stock is a better pick for your portfolio now.
The Zacks Consensus Estimate for American States Water’s 2023 earnings per share and revenues is pegged at $2.71 and $0.5 billion, respectively. The top and bottom lines reflect year-over-year growth of 17.32% and 7.22%, respectively.
The Zacks Consensus Estimate for Global Water Resources’ 2023 earnings per share and revenues is pegged at 23 cents and $0.04 billion, respectively. The top and bottom lines reflect year-over-year growth of 43.7% and 5.9%, respectively.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12 months for American States Water and Global Water Resources is 11.7% and 14.9%, respectively. Both companies have outperformed the industry’s ROE of 10.3%.
Dividend Yield
Utility companies generally distribute dividends. Currently, the dividend yield of American States Water is 1.82%, while the same for Global Water Resources is 2.36%. The average dividend yield of the industry is 1.87%.
Price Performance
In the year-to-date period, American States Water shares have lost 5.7% compared with the industry's decline of 8.1%. Shares of Global Water Resources have lost 5.1% in the same time frame.
Debt to Capital
Debt to capital is a good indicator of a company’s financial position. The indicator shows how much debt is used to run the business. American States Water and Global Water Resources have a debt to capital of 39.77% and 71.4%, respectively, compared with the industry’s 46.2%.
Outcome
Both companies efficiently provide water and wastewater services to their customers. They are evenly matched and are good picks for your portfolio. But our choice at this moment is Global Water Resources, given its better earnings estimate revision, better return on equity level and higher dividend yield in comparison to American States Water.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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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Palo Alto Networks and YETI have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 7, 2023 – Zacks Equity Research shares Palo Alto Networks (PANW - Free Report) as the Bull of the Day and YETI (YETI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American States Water Co. (AWR - Free Report) and Global Water Resources, Inc. (GWRS - Free Report) .
Here is a synopsis of all four stocks.
Bull of the Day:
Palo Alto Networks is a Zacks Rank #1 (Strong Buy) that is a cybersecurity company offering network security solutions to enterprises, service providers and government entities worldwide.
PANW has been one of the best performers of 2023 and a recent earnings report has strengthened the bullish vision for the company. The stock is now just 10% off its all-time highs, something most tech companies can not claim.
The question for investors seems to be not if, but when those highs are taken out. Investor’s eyeing the stock should gobble up every dip and look for PANW to continue this momentum for the rest of the year.
More about Palo Alto
The company incorporated in 2005 and is headquartered in Santa Clara, California. It employs over 12,000 and has a market cap of $58 billion.
The company offers firewall appliances and software, subscription services for cyber threats, cloud security, professional services and more. Palo Alto sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries
The stock has a Zacks Style Score of “A” in Growth, but “F” in Value. The Forward PE is 48 and the stock pays no dividend.
Q2 Earnings
Palo Alto reported earnings in late February and blew away expectations. The 35% surprise beat was the company’s best performance on record. The company is used to beating earnings expectations, but this one was big in magnitude.
Palo reported Q2 at $1.05 v the $0.78 expected. The company guided Q3 at $0.90-0.94 v the $0.79 expected and raised total billings to $9.10-9.20B v the $8.95-9.05B prior. Year over year billions were $2.03B v the $1.61B expected.
Management cited the performance of their software-based and cloud-delivered portfolio as a reason for their ability to raise guidance.
Estimates Rising
The strong quarter has analysts raising estimates aggressively.
Over the last 30 days, the current quarters estimates have gone from $0.79 to $0.92, or 16% higher. Expectations for next quarter have been lifted as well, with estimates going up by 15%.
Looking down the road, estimates have been flying high since the earnings report. For the current year, we have seen estimates go from $3.42 to $3.96 over the last month, or 15%. For next year, estimates spiked to $4.62 from $4.01, or 15%.
Since Palo Alto reported earnings, almost every analyst on Wall Street has raised their price targets for the stock.
Citigroup has a Buy on the stock and raised their price target from $195 to $220.
Piper/Sandler has an Overweight on the name and raised their target to $240 from $220.
Morgan Stanley is one of the most bullish firms, reiterating their Overweight and $255 target, up from the previous target of $240.
The Technical Take
Like many names in tech, PANW had a rough 2021, down about 35% from the all-time highs. However, the buyers started to come in after the first few weeks of 2023. The stock rallied 20% into earnings and is now up 35% on the year.
Many investors would be happy with those returns and look to take profits in the current market atmosphere. But the chart looks very bullish and there is room to be greedy.
Looking at Fib extensions we have two targets above that seem achievable. The first target is found by drawing a Fibonacci retracement from November highs to 2023 lows. The 161.8% extension is $208.50. From there we could get a pullback as sellers come in just below all-time highs.
The bigger target can be found by drawing a Fibonacci retracement from the all-time highs to 2023 lows. The 161.8% retracement is $263, which lines up close to Morgan Stanleys bullish $255 target.
Most investors don’t want to chase a stock in this market, so below are some levels for those looking to buy the dip:
Gap fill: $178
21-day Moving Average (MA): $175
200-day MA: $165
50-day MA: 157
In Summary
Palo Alto is posting big numbers and seeing earnings growth in a tech sector that has been struggling. The company is best of breed in cybersecurity and investors should expect PANW to lead the way in 2023.
Buy the dippers should take advantage of any sell off and look for a move above all-time highs into the end of the year.
Bear of the Day:
YETI is a Zacks Rank #5 (Strong Sell) that designs, markets, retails, and distributes products for the outdoor and recreation market under the YETI brand. The company offers hard and soft coolers, drinkware products,as well as cargo, bags, outdoor living, and associated accessories.
The stock thrived during the pandemic, but has fallen apart since late 2021. Now down over 60% from the all-time highs, the stock cannot seem to find any life. A recent earnings miss did not help and now estimates are falling, putting further pressure on the bulls.
About the Company
YETI is headquartered in Austin, TX. The company was founded in 2006 and employs about 1,000. YETI sells its products through independent retailers, including outdoor specialty, hardware, sporting goods, and farm and ranch supply stores, as well as through Website.
The company is valued at $3.5 billion and has a Forward PE of 18. YETI holds Zacks Style Scores of “A” in Growth, but D in Value and “F” in Momentum. The stock pays no dividend.
Q3 Earnings
The company reported EPS in late February in which it barely missed expectations. The bottom line came in at $0.78 v the $0.79 expected, but revenues came in at $448M v the $491M expected. The revenue miss was partly due to a voluntary recall of some products due to safety concerns. The company said that $38.4M in sales was impacted due to the recalls.
While direct to consumer sales increased 17%, gross margins fell from last year to 54.3% from 57.5%.
Management said profitability remained strong in 2022, despite the impact of lingering supply chain costs. They added that gross margins headwinds began to ease in the fourth quarter.
While there was some optimism, the company guided FY23 in a range of $2.13-2.23 v the $2.78 expected.
Estimates
The recalls and guide lower have forced analysts to lower estimates drastically.
Over the last 60 days, estimates for the current quarter have gone from $0.32 to $0.14, a drop of 56%. For next quarter they have fallen 30%, dropping from $0.73 to $0.51.
Looking ahead, analysts have dropped their numbers significantly over the last 60 days. For next year, numbers have dropped from $3.28 to $2.71, or 17%.
Technical Take
The stock has struggled since hitting the $108.82 highs in November of 2021. While it is trading up over 45% from last year’s lows, the stock has stalled.
YETI dropped over 10% after the earnings report and has significant resistance above current trading levels. Over the last few months, the stock has made several failed attempts to cross the 200-day moving average, but is currently trading under that level at $41.
If the bulls fail to get above the $42 area soon, you could see some bulls give up. Below the post-earnings lows at $35 we could see capitulation back to the 2022 lows.
Summary
The recalls are not the company’s only problem, but they certainly did not help. Unfortunately, the stock likely trades sideways or bleeds lower until the fundamental picture can improve.
Additional content:
Which Water Utility Stock Should You Invest In?
The Zacks Utility - Water Supply industry includes companies that are involved in providing drinking water and wastewater services to industrial, commercial and residential customer classes, along with numerous military bases across the country.
A continuous uninterrupted supply of clean potable water and reliable sewer services is essential for healthy and hygienic living. Water utilities across the United States are silently doing this important task day in and day out to meet the increasing demand of millions of Americans.
Utility operators own storage tanks, treatment plants and desalination plants to supply uninterrupted potable water across customer classes. Water utility operators also own more than 2 million miles of pipelines that are getting old.
The water and wastewater infrastructure is aging and gradually nearing the end of its effective service life. Per the U.S Environmental Protection Agency, an estimated $744 billion investment is necessary to maintain and expand the drinking water and wastewater services to meet demand over the next 20 years.
Given the current situation, investor-owned water utilities and the government are funding water and wastewater infrastructure projects to upgrade the necessary infrastructure.
In this article, we run a comparative analysis on two Utility – Water Supply companies — American States Water Co. and Global Water Resources, Inc. — to decide which stock is a better pick for your portfolio now.
Each of the stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projections
The Zacks Consensus Estimate for American States Water’s 2023 earnings per share and revenues is pegged at $2.71 and $0.5 billion, respectively. The top and bottom lines reflect year-over-year growth of 17.32% and 7.22%, respectively.
The Zacks Consensus Estimate for Global Water Resources’ 2023 earnings per share and revenues is pegged at 23 cents and $0.04 billion, respectively. The top and bottom lines reflect year-over-year growth of 43.7% and 5.9%, respectively.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12 months for American States Water and Global Water Resources is 11.7% and 14.9%, respectively. Both companies have outperformed the industry’s ROE of 10.3%.
Dividend Yield
Utility companies generally distribute dividends. Currently, the dividend yield of American States Water is 1.82%, while the same for Global Water Resources is 2.36%. The average dividend yield of the industry is 1.87%.
Price Performance
In the year-to-date period, American States Water shares have lost 5.7% compared with the industry's decline of 8.1%. Shares of Global Water Resources have lost 5.1% in the same time frame.
Debt to Capital
Debt to capital is a good indicator of a company’s financial position. The indicator shows how much debt is used to run the business. American States Water and Global Water Resources have a debt to capital of 39.77% and 71.4%, respectively, compared with the industry’s 46.2%.
Outcome
Both companies efficiently provide water and wastewater services to their customers. They are evenly matched and are good picks for your portfolio. But our choice at this moment is Global Water Resources, given its better earnings estimate revision, better return on equity level and higher dividend yield in comparison to American States Water.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research
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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.