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Palo Alto Networks and Hormel Foods have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – October 12, 2023 – Zacks Equity Research shares Palo Alto Networks (PANW - Free Report) as the Bull of the Day and Hormel Foods (HRL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walmart Inc. (WMT - Free Report) , The Home Depot, Inc. (HD - Free Report) and Costco Wholesale Corp. (COST - Free Report) .
Palo Alto Networks is a global cybersecurity company specializing in advanced firewalls and cloud-based offerings to protect enterprises from cyber threats. In addition to strong price momentum propelling the stock, PANW also enjoys a Zacks Rank #1 (Strong Buy) rating, reflecting earnings estimates that have been trending higher all year.
Industry Leading Products and Growth
Palo Alto Networks continues to gain traction from consistent contract acquisitions and the growing preference for its advanced security platforms, driven by the emergence of hybrid work settings and the mission-critical demand for robust cyber security.
The company's consecutive impressive quarterly results underscore its ongoing commitment to product advancement, a transition to a subscription-centric business approach, seamless platform integration, and steady investment in sales and marketing.
The company has grown sales at an incredible pace over the last 10 years and is expected to maintain strong continued growth. Analysts expect Palo Alto Network's revenues to expand at a CAGR of 17.5% from fiscal 2024 to 2026.
Not surprisingly, earnings are forecast to grow at a very high rate as well. Over the next 3-5 years EPS are expected to climb 28% annually. As PANW has long been a hardware focused cyber security company, the shift to cloud-based products and a subscription model has further improved the fundamentals of the business.
Gross margins for the subscription segment are estimated to be around 80% and are expected to grow even faster than the rest of the business, with a 20% CAGR through 2026.
Technical Breakout
Palo Alto Networks stock has compounded at an extremely impressive 33% annually over the last ten years and has been one of the strongest stocks in the market this year, up 85% YTD.
While some traders may scoff at the idea of buying a stock that is already up so much in such a short time, momentum traders know the leading stocks often continue to be the leading stocks. And with Q4 shown to be the most bullish of the year, focusing on a leader like PANW might be a fantastic way to finish out the year.
Over the last three and a half months, PANW stock has been carving out an inverse head and shoulders chart pattern. Just this week it broke out above the key $250 level and has been moving higher since. Investors interested in the stock can look for pullbacks to get involved.
Bottom Line
Not only is Palo Alto Networks growing rapidly in an industry with strong secular tailwinds, but a new catalyst this year just made it even more compelling. The explosion of Generative Artificial Intelligence is going to only increase the demands of cyber security but will also improve the company's ability to detect threats.
Hormel Foods is underperforming in an industry that is already underperforming the broad market. Additionally, stiff competition in the food industry, and complications in the supply chain have put stress on both sales and earnings growth, giving the stock a Zacks Rank #5 (Strong Sell) rating.
Falling Earnings Estimates
Hormel Foods is a multinational food products company headquartered in Austin, Minnesota. Well known for its meat and food brands, Hormel's product portfolio includes brands like SPAM, Skippy, and Jennie-O.
The most recent earnings report from HRL was rather disappointing. Both the top and bottom line missed analysts estimates, and although EPS were unchanged YoY, sales fell 2.3% YoY.
Continued supply chain issues have created an environment of increased complexity and higher costs. Analysts expect FY23 sales to be down -4% YoY and with higher costs cutting into margins, earnings are projected to fall nearly -10% YoY.
Analysts have unanimously downgraded earnings estimates, with the current quarter being lowered by -11.7%, FY23 by 5.2%, and FY24 decreased by -5.4%.
Valuation
Hormel Foods is trading at a one year forward earnings multiple of 22.4x, which is above the market average. Additionally, although it is below its 10-year median of 23.3x, the valuation still seems a bit too rich for a company with so many headwinds.
Bottom Line
With rapidly shifting food preferences from consumers, and stiff competition Hormel Foods is dealing with a challenging road ahead. Both issues are likely to cause further margin compression as they will have to compete either on price, or promotional outreach.
By no means do I think Hormel Foods is going to go the way of the dodo bird, but at this point it is definitely a stock I think investors should avoid. Until it reaches deep value territory or earnings estimates begin to trend higher, look for opportunities elsewhere.
Additional content:
3 Blue-Chip Retail Stocks Poised to Captivate Your Portfolio
In the unpredictable world of the stock market, the pursuit of stability and growth is a constant challenge for investors. While the allure of high-risk, high-reward stocks continues to captivate, savvy investors recognize the role played by stable, long-term investments in crafting a resilient portfolio. This balance between risk and reward forms the very cornerstone of successful investing.
For investors seeking a secure and prosperous investment roadmap, blue-chip companies present a compelling opportunity. Their stability, adaptability and commitment to shareholder value make them the essential elements of a well-diversified investment strategy. These market titans, boasting immense market capitalization, robust fundamentals and a proven track record, demonstrate their ability to weather economic downturns.
Blue-chip companies tend to be less susceptible to sudden fluctuations in stock prices, rendering them a dependable choice for both seasoned and novice investors. Furthermore, for income-oriented investors, blue-chip companies reward shareholders with regular dividend payouts, further enhancing stability.
These blue-chip companies possess a winning combination of established market positions, strong brand recognition, loyal customer bases and extensive market penetration. Such traits provide these companies with a distinct competitive edge and help unlock new opportunities, thus making them investor favorites.
By investing in blue-chip stocks, investors can build a well-diversified portfolio. Here, we have identified three stocks from the Retail - Wholesale sector — Walmart Inc., The Home Depot, Inc. and Costco Wholesale Corp. Thanks to successful business operations, these bellwethers have withstood multiple market gyrations and delivered returns to investors. These blue-chip stocks have balance sheet strength to tackle any untoward market volatility.
3 Prominent Picks
Walmart: The omnichannel retail giant, Walmart, has been diligently working to further strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems.
Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, where the company is enhancing capacity and introducing cutting-edge solutions. Additionally, Walmart has ventured into new business realms with initiatives like Walmart GoLocal and Walmart+, showcasing its dedication to remaining at the forefront of retail innovation.
The Zacks Consensus Estimate for Walmart's current financial-year sales and earnings suggests growth of 5% and 2.2%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of 57 cents ($2.28 annualized) per share, giving a 1.5% yield at the current stock price. WMT's payout ratio is 35, with a five-year dividend growth rate of 1.9%. (Check WMT's dividend history here)
Home Depot: Headquartered in Atlanta, GA, this company stands as another distinguished blue-chip stock, dominating the home improvement retail sector. Its consistent expansion in both Professional and Do-It-Yourself segments, fortified by an extensive product lineup and digital innovations, underpins its remarkable success. The company's interconnected retail strategy and robust technological infrastructure have amplified web traffic, leading to growth in digital sales.
Home Depot has a market cap of $299.2 billion. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 2.2%, on average. The company pays out a quarterly dividend of $2.09 ($8.36 annualized) per share, giving a 2.8% yield at the current stock price. HD's payout ratio is 52, with a five-year dividend growth rate of 13.8%.
Costco: A consumer defensive stock, Costco has been surviving the market turmoil pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been the discount retailer's primary strengths. Costco's distinctive membership business model and pricing power set it apart from traditional players. Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots.
Costco has a market cap of $248.9 billion. This Zacks Rank #3 (Hold) stock has a trailing four-quarter earnings surprise of 2.1%, on average.
The Zacks Consensus Estimate for Costco's current financial-year sales and EPS suggests growth of 4.6% and 7.1%, respectively, from the year-ago period. The company pays out a quarterly dividend of $1.02 ($4.08 annualized) per share, giving a 0.7% yield at the current stock price. COST's payout ratio is 28, with a five-year dividend growth rate of 12.3%.
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/performancefor information about the performance numbers displayed in this press release.
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Palo Alto Networks and Hormel Foods have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 12, 2023 – Zacks Equity Research shares Palo Alto Networks (PANW - Free Report) as the Bull of the Day and Hormel Foods (HRL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walmart Inc. (WMT - Free Report) , The Home Depot, Inc. (HD - Free Report) and Costco Wholesale Corp. (COST - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Palo Alto Networks is a global cybersecurity company specializing in advanced firewalls and cloud-based offerings to protect enterprises from cyber threats. In addition to strong price momentum propelling the stock, PANW also enjoys a Zacks Rank #1 (Strong Buy) rating, reflecting earnings estimates that have been trending higher all year.
Industry Leading Products and Growth
Palo Alto Networks continues to gain traction from consistent contract acquisitions and the growing preference for its advanced security platforms, driven by the emergence of hybrid work settings and the mission-critical demand for robust cyber security.
The company's consecutive impressive quarterly results underscore its ongoing commitment to product advancement, a transition to a subscription-centric business approach, seamless platform integration, and steady investment in sales and marketing.
The company has grown sales at an incredible pace over the last 10 years and is expected to maintain strong continued growth. Analysts expect Palo Alto Network's revenues to expand at a CAGR of 17.5% from fiscal 2024 to 2026.
Not surprisingly, earnings are forecast to grow at a very high rate as well. Over the next 3-5 years EPS are expected to climb 28% annually. As PANW has long been a hardware focused cyber security company, the shift to cloud-based products and a subscription model has further improved the fundamentals of the business.
Gross margins for the subscription segment are estimated to be around 80% and are expected to grow even faster than the rest of the business, with a 20% CAGR through 2026.
Technical Breakout
Palo Alto Networks stock has compounded at an extremely impressive 33% annually over the last ten years and has been one of the strongest stocks in the market this year, up 85% YTD.
While some traders may scoff at the idea of buying a stock that is already up so much in such a short time, momentum traders know the leading stocks often continue to be the leading stocks. And with Q4 shown to be the most bullish of the year, focusing on a leader like PANW might be a fantastic way to finish out the year.
Over the last three and a half months, PANW stock has been carving out an inverse head and shoulders chart pattern. Just this week it broke out above the key $250 level and has been moving higher since. Investors interested in the stock can look for pullbacks to get involved.
Bottom Line
Not only is Palo Alto Networks growing rapidly in an industry with strong secular tailwinds, but a new catalyst this year just made it even more compelling. The explosion of Generative Artificial Intelligence is going to only increase the demands of cyber security but will also improve the company's ability to detect threats.
Bear of the Day:
Hormel Foods is underperforming in an industry that is already underperforming the broad market. Additionally, stiff competition in the food industry, and complications in the supply chain have put stress on both sales and earnings growth, giving the stock a Zacks Rank #5 (Strong Sell) rating.
Falling Earnings Estimates
Hormel Foods is a multinational food products company headquartered in Austin, Minnesota. Well known for its meat and food brands, Hormel's product portfolio includes brands like SPAM, Skippy, and Jennie-O.
The most recent earnings report from HRL was rather disappointing. Both the top and bottom line missed analysts estimates, and although EPS were unchanged YoY, sales fell 2.3% YoY.
Continued supply chain issues have created an environment of increased complexity and higher costs. Analysts expect FY23 sales to be down -4% YoY and with higher costs cutting into margins, earnings are projected to fall nearly -10% YoY.
Analysts have unanimously downgraded earnings estimates, with the current quarter being lowered by -11.7%, FY23 by 5.2%, and FY24 decreased by -5.4%.
Valuation
Hormel Foods is trading at a one year forward earnings multiple of 22.4x, which is above the market average. Additionally, although it is below its 10-year median of 23.3x, the valuation still seems a bit too rich for a company with so many headwinds.
Bottom Line
With rapidly shifting food preferences from consumers, and stiff competition Hormel Foods is dealing with a challenging road ahead. Both issues are likely to cause further margin compression as they will have to compete either on price, or promotional outreach.
By no means do I think Hormel Foods is going to go the way of the dodo bird, but at this point it is definitely a stock I think investors should avoid. Until it reaches deep value territory or earnings estimates begin to trend higher, look for opportunities elsewhere.
Additional content:
3 Blue-Chip Retail Stocks Poised to Captivate Your Portfolio
In the unpredictable world of the stock market, the pursuit of stability and growth is a constant challenge for investors. While the allure of high-risk, high-reward stocks continues to captivate, savvy investors recognize the role played by stable, long-term investments in crafting a resilient portfolio. This balance between risk and reward forms the very cornerstone of successful investing.
For investors seeking a secure and prosperous investment roadmap, blue-chip companies present a compelling opportunity. Their stability, adaptability and commitment to shareholder value make them the essential elements of a well-diversified investment strategy. These market titans, boasting immense market capitalization, robust fundamentals and a proven track record, demonstrate their ability to weather economic downturns.
Blue-chip companies tend to be less susceptible to sudden fluctuations in stock prices, rendering them a dependable choice for both seasoned and novice investors. Furthermore, for income-oriented investors, blue-chip companies reward shareholders with regular dividend payouts, further enhancing stability.
These blue-chip companies possess a winning combination of established market positions, strong brand recognition, loyal customer bases and extensive market penetration. Such traits provide these companies with a distinct competitive edge and help unlock new opportunities, thus making them investor favorites.
By investing in blue-chip stocks, investors can build a well-diversified portfolio. Here, we have identified three stocks from the Retail - Wholesale sector — Walmart Inc., The Home Depot, Inc. and Costco Wholesale Corp. Thanks to successful business operations, these bellwethers have withstood multiple market gyrations and delivered returns to investors. These blue-chip stocks have balance sheet strength to tackle any untoward market volatility.
3 Prominent Picks
Walmart: The omnichannel retail giant, Walmart, has been diligently working to further strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems.
Simultaneously, Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, where the company is enhancing capacity and introducing cutting-edge solutions. Additionally, Walmart has ventured into new business realms with initiatives like Walmart GoLocal and Walmart+, showcasing its dedication to remaining at the forefront of retail innovation.
Walmart has a market cap of $424.2 billion as of Oct 10, 2023. This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 11.6%, on average. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Walmart's current financial-year sales and earnings suggests growth of 5% and 2.2%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of 57 cents ($2.28 annualized) per share, giving a 1.5% yield at the current stock price. WMT's payout ratio is 35, with a five-year dividend growth rate of 1.9%. (Check WMT's dividend history here)
Home Depot: Headquartered in Atlanta, GA, this company stands as another distinguished blue-chip stock, dominating the home improvement retail sector. Its consistent expansion in both Professional and Do-It-Yourself segments, fortified by an extensive product lineup and digital innovations, underpins its remarkable success. The company's interconnected retail strategy and robust technological infrastructure have amplified web traffic, leading to growth in digital sales.
Home Depot has a market cap of $299.2 billion. This Zacks Rank #2 stock has a trailing four-quarter earnings surprise of 2.2%, on average. The company pays out a quarterly dividend of $2.09 ($8.36 annualized) per share, giving a 2.8% yield at the current stock price. HD's payout ratio is 52, with a five-year dividend growth rate of 13.8%.
Costco: A consumer defensive stock, Costco has been surviving the market turmoil pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been the discount retailer's primary strengths. Costco's distinctive membership business model and pricing power set it apart from traditional players. Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots.
Costco has a market cap of $248.9 billion. This Zacks Rank #3 (Hold) stock has a trailing four-quarter earnings surprise of 2.1%, on average.
The Zacks Consensus Estimate for Costco's current financial-year sales and EPS suggests growth of 4.6% and 7.1%, respectively, from the year-ago period. The company pays out a quarterly dividend of $1.02 ($4.08 annualized) per share, giving a 0.7% yield at the current stock price. COST's payout ratio is 28, with a five-year dividend growth rate of 12.3%.
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/performancefor information about the performance numbers displayed in this press release.