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Livent and Conagra have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – July 25, 2023 – Zacks Equity Research shares Livent Corp. as the Bull of the Day and Conagra Brands, Inc. (CAG - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the SPDR Dow Jones Industrial Average ETF (DIA - Free Report) and JPMorgan Chase (JPM - Free Report) .
Livent Corp. is on the lithium train and it's picking up steam. This Zacks Rank #1 (Strong Buy) is expected to merge with Argentinian-based miner Allkem in Nov 2023, creating the third largest lithium producer in the world.
Livent is headquartered in Philadelphia. The company has been in business for 80 years but it was only spun off from FMC Corp. in 2018. It manufactures lithium in the US, England, India, China and Argentina.
Merger of Equals
On May 10, 2023, Livent announced it was entering into an all stock "merger of equals" with Argentina's Allkem which would value the new company at $10.6 billion.
The combined company would have revenue of $1.9 billion annually and would see operating cost synergies of $125 million per annum.
The new company will have its primary stock listing on the New York Stock Exchange (NYSE) and its corporate headquarters in North America.
After the close of the deal, Allkem shareholders will own 56% of the new company and Livent shareholders will own 44%. The deal is expected to close in Nov 2023.
Analysts Still Raising Earnings Estimates
Regardless of the upcoming merger, the analysts continue to evaluate Livent as if it's not going to happen. Deals fall apart all the time. They continue to adjust their earnings estimates until the merger actually closes.
And those adjustments are to the upside.
2 estimates have been revised higher for both 2023 and 2024 within the last month. That has pushed up the 2023 Zacks Consensus to $2.11 from $2.05 just 30 days ago. That's earnings growth of 50.7% as the company made $1.40 last year.
They're also bullish on 2024 with the Zacks Consensus rising to $2.63 from $2.55, up another 24.6%.
The company is expected to report second quarter 2023 results on Aug 3, 2023.
Shares on a Roller Coaster
It's been a wild ride in the lithium industry over the last year. Lithium prices tripled in 2022 due to demand from the EV industry but the producers added capacity and prices plunged. But lithium prices started rebounding again in April of this year, which again set off a rally in the lithium producer stocks.
Over the last year, the result has been that Livent has underperformed the S&P 500, gaining 8.3% versus the SPDR ETF (SPY) at 14.8%.
Livent is cheap. This Zacks Rank #1 (Strong Buy) is trading at just 12.6x forward earnings. It has a PEG ratio of only 0.4. A PEG ratio under 1.0 usually indicates a company has both value and growth. That's a rare combination.
Lithium is called "white gold" due to strong demand, the lack of supply and it's importance as a component in EV batteries.
Investors interested in a way to get in on the changeover to EVs, should keep Livent on their short list, merger or not.
Conagra Brands, Inc. has been fighting inflation over the last year. This Zacks Rank #5 (Strong Sell) recently guided below the Zacks Consensus for fiscal 2024.
Conagra is a food company with many iconic brands including Birds Eye, Duncan Hines, Healthy Choice, Marie Callender's, Reddi-wip, Slim Jim, as well as emerging brands Angie's Boomchickapop, Duke's, Earth Balance and Frontera.
A Beat in Fiscal Fourth Quarter 2024
On July 13, 2023, Conagra reported its fiscal fourth quarter and full year 2023 earnings and beat on the Zacks Consensus by $0.02. It reported $0.62 versus the Consensus of $0.60. It was the sixth earnings beat in a row.
Organic net sale rose 2.2% while adjusted operating margin decreased 39 basis points to 14.6%.
Conagra was able to institute inflation-driven pricing action in most of its segments even as volumes declined.
For the full fiscal year 2023, adjusted EPS increased 17.4% to $2.77, driven by an increase in adjusted operating profit. Free cash flow was also $633 million for the year.
Guided Full Year 2024 Below Consensus
Conagra provided fiscal 2024 guidance and it was below the Zacks Consensus. It gave a an earnings forecast of $2.70 to $2.75.
7 estimates were cut for 2024 as a result. The Zacks Consensus Estimate fell to $2.72 from $2.83 over the last 30 days to get within the guidance range.
This is an earnings decline of 1.8% year-over-year as it made $2.77 in fiscal 2023.
On inflation, Conagra expects the cost of goods sold to continue into fiscal 2024. The company's guidance anticipates net inflation (input cost inflation including the impacts of hedging and other sourcing benefits) to be roughly 3%.
Shares Sink in 2023
While the stock market rallies in 2023, Conagra shares have gone the opposite way, sinking 14.1% year-to-date.
Conagra is cheap. It's trading at 12.2x forward earnings.
It's also shareholder friendly and is spending some of that free cash flow on dividends. It recently increased the annual dividend by 6% rate beginning on the payout on Aug 31, 2023. The dividend will jump to $1.40 from $1.32. That's a yield of 4.2%.
For those interested in food companies, you might want to keep Conagra on the watch list for positive revisions to those earnings estimates.
Additional content:
Market Rally Broadens: Banking Giant Hits 52-Week High
“I never try to predict the market.” – Warren Buffett
Recession fears continue to swirl around Wall Street, as concerns have grown that the Fed raised interest rates too far and too quickly. Despite an impressive start to the year for stocks, Wall Street strategists are more bearish regarding their second-half outlooks than at any point in history, as the average forecast calls for a negative final six months of 2023.
Most strategists have been predicting a recession since January, even though evidence continues to mount that we will avoid a bearish outcome this year. They got it wrong from the start, and now they’re doubling down on their conviction.
But the stock market doesn’t reward blind faith. It’s much better to admit when you’re wrong and move on quickly, keeping losses small and listening to the market. It’s smarter than any one of us.
The truth is the economy remains on solid footing, supported by a resilient consumer and strong labor market. The unemployment rate remains near historic lows. Inflation has shown repeated signs of deceleration. And the Fed, which is set to raise rates again on Wednesday, is likely very close to the end of this hiking cycle.
This stock market rally is the real deal. The market is telling us to expect good things in the future, as the economy chugs along and the forward earnings picture evolves to support bullish outcomes.
Market Rally Expansion: Breadth Improves
We’ve heard all year how the rally was being driven solely by big tech, but the naysayers have it wrong once again.
The S&P 500 Advance/Decline line (shown below) is a breadth indicator used to illustrate how many stocks are participating in a stock market rally or decline. When major indexes are rallying, a rising A/D line confirms the uptrend, showing strong participation. The A/D line has been a leading indicator as breadth tends to lead price. And what did it do most recently? Back in June, the line hit a new high as the rally broadened out.
The Dow Jones Industrial Average, which outperformed during last year’s bear market but had lagged to start this year, has now joined the rally. We can see the Dow depicted below by the SPDR Dow Jones Industrial Average ETF. Note how the Dow first broke through a downward-sloping trendline. Secondly, it went on to retest that trendline, making a higher low in the process. And finally, the Dow ultimately broke out and made a higher high as sectors like industrials and financials begin to show strength.
Megabank Hits Fresh 52-Week High
Banks were hit hard earlier in the year, as a regional banking crisis led to the failure of three U.S. banks. But concerns surrounding the fiasco have mostly faded, as recent stress tests have shown that the financial system remains healthy and the megabanks would be able to weather a severe economic downturn.
This has led to the beginning of a resurgence in banking stocks, which are undervalued and also provide income in the form of dividends. JPMorgan Chase, a Zacks Rank #1 (Strong Buy), is a cornerstone of the banking industry. One of the largest financial services firms in the world, JPM boasts assets valued at nearly $4 trillion.
The banking behemoth beat on both the top and bottom lines in the second quarter, as earnings of $4.37/share on revenues of $41.31 billion easily topped estimates. JPM has surpassed earnings estimates in each of the last four quarters, averaging a 15.29% positive earnings surprise over this timeframe.
The stock is breaking out and hitting a series of 52-week highs on increasing volume. Analysts are in agreement in terms of earnings revisions and have bumped up estimates across the board. For the full year, estimates have been raised by 7.72% in the past 60 days. The Zacks Consensus Estimate for fiscal 2023 now stands at $15.21/share, reflecting potential growth of 25.81% relative to last year.
The company took advantage of the regional banking crisis earlier this year, gobbling up assets and personnel from Silicon Valley Bank and First Republic Bank at a substantial discount. JPMorgan Chase has been consistently raising its dividend since the financial crisis, and recently announced a 5% dividend hike to $4.20/share which will start in the third quarter.
Keep an eye on the sector rotation into areas like financials and industrials as this rally broadens out.
Disclosure: JPM is a current holding in the Zacks Income Investor portfolio.
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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Livent and Conagra have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 25, 2023 – Zacks Equity Research shares Livent Corp. as the Bull of the Day and Conagra Brands, Inc. (CAG - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the SPDR Dow Jones Industrial Average ETF (DIA - Free Report) and JPMorgan Chase (JPM - Free Report) .
Here is a synopsis of all four stocks.
Bull of the Day:
Livent Corp. is on the lithium train and it's picking up steam. This Zacks Rank #1 (Strong Buy) is expected to merge with Argentinian-based miner Allkem in Nov 2023, creating the third largest lithium producer in the world.
Livent is headquartered in Philadelphia. The company has been in business for 80 years but it was only spun off from FMC Corp. in 2018. It manufactures lithium in the US, England, India, China and Argentina.
Merger of Equals
On May 10, 2023, Livent announced it was entering into an all stock "merger of equals" with Argentina's Allkem which would value the new company at $10.6 billion.
The combined company would have revenue of $1.9 billion annually and would see operating cost synergies of $125 million per annum.
The new company will have its primary stock listing on the New York Stock Exchange (NYSE) and its corporate headquarters in North America.
After the close of the deal, Allkem shareholders will own 56% of the new company and Livent shareholders will own 44%. The deal is expected to close in Nov 2023.
Analysts Still Raising Earnings Estimates
Regardless of the upcoming merger, the analysts continue to evaluate Livent as if it's not going to happen. Deals fall apart all the time. They continue to adjust their earnings estimates until the merger actually closes.
And those adjustments are to the upside.
2 estimates have been revised higher for both 2023 and 2024 within the last month. That has pushed up the 2023 Zacks Consensus to $2.11 from $2.05 just 30 days ago. That's earnings growth of 50.7% as the company made $1.40 last year.
They're also bullish on 2024 with the Zacks Consensus rising to $2.63 from $2.55, up another 24.6%.
The company is expected to report second quarter 2023 results on Aug 3, 2023.
Shares on a Roller Coaster
It's been a wild ride in the lithium industry over the last year. Lithium prices tripled in 2022 due to demand from the EV industry but the producers added capacity and prices plunged. But lithium prices started rebounding again in April of this year, which again set off a rally in the lithium producer stocks.
Over the last year, the result has been that Livent has underperformed the S&P 500, gaining 8.3% versus the SPDR ETF (SPY) at 14.8%.
Livent is cheap. This Zacks Rank #1 (Strong Buy) is trading at just 12.6x forward earnings. It has a PEG ratio of only 0.4. A PEG ratio under 1.0 usually indicates a company has both value and growth. That's a rare combination.
Lithium is called "white gold" due to strong demand, the lack of supply and it's importance as a component in EV batteries.
Investors interested in a way to get in on the changeover to EVs, should keep Livent on their short list, merger or not.
Bear of the Day:
Conagra Brands, Inc. has been fighting inflation over the last year. This Zacks Rank #5 (Strong Sell) recently guided below the Zacks Consensus for fiscal 2024.
Conagra is a food company with many iconic brands including Birds Eye, Duncan Hines, Healthy Choice, Marie Callender's, Reddi-wip, Slim Jim, as well as emerging brands Angie's Boomchickapop, Duke's, Earth Balance and Frontera.
A Beat in Fiscal Fourth Quarter 2024
On July 13, 2023, Conagra reported its fiscal fourth quarter and full year 2023 earnings and beat on the Zacks Consensus by $0.02. It reported $0.62 versus the Consensus of $0.60. It was the sixth earnings beat in a row.
Organic net sale rose 2.2% while adjusted operating margin decreased 39 basis points to 14.6%.
Conagra was able to institute inflation-driven pricing action in most of its segments even as volumes declined.
For the full fiscal year 2023, adjusted EPS increased 17.4% to $2.77, driven by an increase in adjusted operating profit. Free cash flow was also $633 million for the year.
Guided Full Year 2024 Below Consensus
Conagra provided fiscal 2024 guidance and it was below the Zacks Consensus. It gave a an earnings forecast of $2.70 to $2.75.
7 estimates were cut for 2024 as a result. The Zacks Consensus Estimate fell to $2.72 from $2.83 over the last 30 days to get within the guidance range.
This is an earnings decline of 1.8% year-over-year as it made $2.77 in fiscal 2023.
On inflation, Conagra expects the cost of goods sold to continue into fiscal 2024. The company's guidance anticipates net inflation (input cost inflation including the impacts of hedging and other sourcing benefits) to be roughly 3%.
Shares Sink in 2023
While the stock market rallies in 2023, Conagra shares have gone the opposite way, sinking 14.1% year-to-date.
Conagra is cheap. It's trading at 12.2x forward earnings.
It's also shareholder friendly and is spending some of that free cash flow on dividends. It recently increased the annual dividend by 6% rate beginning on the payout on Aug 31, 2023. The dividend will jump to $1.40 from $1.32. That's a yield of 4.2%.
For those interested in food companies, you might want to keep Conagra on the watch list for positive revisions to those earnings estimates.
Additional content:
Market Rally Broadens: Banking Giant Hits 52-Week High
“I never try to predict the market.” – Warren Buffett
Recession fears continue to swirl around Wall Street, as concerns have grown that the Fed raised interest rates too far and too quickly. Despite an impressive start to the year for stocks, Wall Street strategists are more bearish regarding their second-half outlooks than at any point in history, as the average forecast calls for a negative final six months of 2023.
Most strategists have been predicting a recession since January, even though evidence continues to mount that we will avoid a bearish outcome this year. They got it wrong from the start, and now they’re doubling down on their conviction.
But the stock market doesn’t reward blind faith. It’s much better to admit when you’re wrong and move on quickly, keeping losses small and listening to the market. It’s smarter than any one of us.
The truth is the economy remains on solid footing, supported by a resilient consumer and strong labor market. The unemployment rate remains near historic lows. Inflation has shown repeated signs of deceleration. And the Fed, which is set to raise rates again on Wednesday, is likely very close to the end of this hiking cycle.
This stock market rally is the real deal. The market is telling us to expect good things in the future, as the economy chugs along and the forward earnings picture evolves to support bullish outcomes.
Market Rally Expansion: Breadth Improves
We’ve heard all year how the rally was being driven solely by big tech, but the naysayers have it wrong once again.
The S&P 500 Advance/Decline line (shown below) is a breadth indicator used to illustrate how many stocks are participating in a stock market rally or decline. When major indexes are rallying, a rising A/D line confirms the uptrend, showing strong participation. The A/D line has been a leading indicator as breadth tends to lead price. And what did it do most recently? Back in June, the line hit a new high as the rally broadened out.
The Dow Jones Industrial Average, which outperformed during last year’s bear market but had lagged to start this year, has now joined the rally. We can see the Dow depicted below by the SPDR Dow Jones Industrial Average ETF. Note how the Dow first broke through a downward-sloping trendline. Secondly, it went on to retest that trendline, making a higher low in the process. And finally, the Dow ultimately broke out and made a higher high as sectors like industrials and financials begin to show strength.
Megabank Hits Fresh 52-Week High
Banks were hit hard earlier in the year, as a regional banking crisis led to the failure of three U.S. banks. But concerns surrounding the fiasco have mostly faded, as recent stress tests have shown that the financial system remains healthy and the megabanks would be able to weather a severe economic downturn.
This has led to the beginning of a resurgence in banking stocks, which are undervalued and also provide income in the form of dividends. JPMorgan Chase, a Zacks Rank #1 (Strong Buy), is a cornerstone of the banking industry. One of the largest financial services firms in the world, JPM boasts assets valued at nearly $4 trillion.
The banking behemoth beat on both the top and bottom lines in the second quarter, as earnings of $4.37/share on revenues of $41.31 billion easily topped estimates. JPM has surpassed earnings estimates in each of the last four quarters, averaging a 15.29% positive earnings surprise over this timeframe.
The stock is breaking out and hitting a series of 52-week highs on increasing volume. Analysts are in agreement in terms of earnings revisions and have bumped up estimates across the board. For the full year, estimates have been raised by 7.72% in the past 60 days. The Zacks Consensus Estimate for fiscal 2023 now stands at $15.21/share, reflecting potential growth of 25.81% relative to last year.
The company took advantage of the regional banking crisis earlier this year, gobbling up assets and personnel from Silicon Valley Bank and First Republic Bank at a substantial discount. JPMorgan Chase has been consistently raising its dividend since the financial crisis, and recently announced a 5% dividend hike to $4.20/share which will start in the third quarter.
Keep an eye on the sector rotation into areas like financials and industrials as this rally broadens out.
Disclosure: JPM is a current holding in the Zacks Income Investor portfolio.
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.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.