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International Paper and Keysight Technologies have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – January 18, 2024 – Zacks Equity Research shares International Paper (IP - Free Report) as the Bull of the Day and Keysight Technologies (KEYS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil Corp. (XOM - Free Report) , EOG Resources (EOG - Free Report) and Enbridge Inc. (ENB - Free Report) .
International Paper is a Zacks Rank #1 (Strong Buy), the global leader in the paper and packaging industry. The company produces a wide range of paper products, including packaging materials, pulp, and paper.
The stock has started the year in the green, even after gaining almost 20% in Q4 of 2023.
A strong dividend, positive earnings, and some positive industry headlines have investors interested in the name again.
About the Company
International Paper was founded in 1898 and is headquartered in Memphis, Tennessee. The company has 39,000 full-time employees and has a market cap of $13 billion.
International Paper produces corrugated packaging products that protect and promote goods, which aid in worldwide commerce. It also provides pulp for diapers, tissue, and other personal care products that promote health and wellness.
The stock has a Zacks Style Score of “B” in Value and “C” in Momentum. It also posts a Style Score of “F” in Growth, but four straight earnings beats have investors interested in the stock again.
Q3 Earnings Beat and Job Cuts
In late October, IP reported Q3 EPS at $0.64 v $0.59 expected. Industrial packaging operating profit came in at $325M v the 304M last quarter and FCF was $240M v the $197M last year.
Management said they are seeing a continuing demand recovery across the portfolio. They added that they exceeded their full-year target and are focused on controlling costs.
This was the fourth straight earnings beat after a rough straight in 2021 and 2022.
The stock rallied after the earnings report but then chopped in a sideways manner until news hit that competitor Packaging Corp would be raising prices.
Packaging Corp Headlines
In late November, stocks across the sector started to surge higher. The reasoning was Packaging Corp announcing to customers that they would be raising the linerboard and semi-chemical medium prices.
This move allows the whole industry to be more competitive or simply follow suit, which will help margins and the bottom line.
Analyst Estimates
Since earnings, estimates have been mixed when looking at all time frames.
For the current quarter and year, estimates have been flat over the last 60 days, at $0.34 and $2.10 respectively.
However longer-term estimates are headed higher over that same time frame. For next year, estimates have moved from $1.88 to $2.01, or a jump of 7%.
As the industry hikes prices, investors should watch for these estimates to continue higher. As of now, the market thinks that this will be very positive for the stock as it is trading close to 52-week highs.
Additionally, investors can collect a 5% dividend while they wait for that earnings growth to return.
The Technicals
The stock is well off its 2021 high of $65. After bottoming out this summer under the $30 mark, IP is now trading at $37. This is above all moving averages and just below the $38 level which is 2024 highs.
For those looking for an entry, the 50-day moving average is $35.75 and the 200-day MA is $34.10. If the bulls can push the price above the $38 level, they can target a move toward $40.
Bottom Line
International Paper is a steady company with a low beta and a strong dividend. The recent price hikes in the industry secure this dividend and provide an opportunity for earnings growth.
Keysight Technologies is a Zacks Rank #5 (Strong Sell) that is a provider of electronic design and test instrumentation systems. The company caters to the communications, networking, aerospace, defense, and government, automotive, energy, semiconductor, electronic, and education industries.
The company reported earnings last November and since then the stock has rallied 30%. Investors might be getting ahead of themselves as earnings estimates tick lower.
About the Company
Keysight Technologies was founded in 1939 and is headquartered in Santa Rosa, CA. The company employs about 15,000 people and sells its products through direct sales force, distributors, resellers, and manufacturer's representatives.
KEYS is valued at $26 billion and has a Forward PE of 21. The stock holds Zacks Style Scores of “C” in both Momentum and Growth, but “D” in Value.
Q4 Earnings
Keysight reported a 6% EPS beat and beat on revenues back in November. The company's Q1 revenues were in line and took Q1 EPS to a range of $1.53-1.59 versus the $1.69 expected.
Based on the price action and the reaction to earnings in the previous quarter, investors were nervous about the Q4 earnings report. When the numbers came in above the expected, a relief rally started and the gap lower from August was filled.
However, investors should be taking profits as numbers are starting to head lower ahead of Keysight’s earnings in late February.
Earnings Estimates
Over the last 90 days, earnings estimates for the current quarter have fallen from $1.72 to $1.58, or 8%. For the next quarter, estimates have dropped 12%, going from $1.87 to $1.64 over that same time frame.
For the current year, estimates have been taken from $7.74 to $7.06, or lower by 9% over the last 90 days.
Looking at next year, estimates have the same trend lower. Over the last 90 days, numbers have fallen to $7.94 from $8.67, a move of 8%.
While the company did post an earnings beat, the rally back to prior levels seems overdone when you take into consideration the pullback in estimates.
Technical Take
The move higher after earnings cleared all moving averages, but recently the stock has broken the 21-day MA. KEYS looks like it will test the 200-day MA at $147 and if that breaks has the possibility of falling to the 50-day MA at $144.
Investors might want to take some profits and reconsider the name around the $135 area. This is the 61.8% Fibonacci retracement drawn from 2023 lows to recent highs.
In Summary
Keysight spooked investors back in 2023 when an earnings report took the stock to multi-year lows. After the recent earnings brought relief, the stock went right back to where it traded for the first half of 2023.
With earnings estimates on a clear downward trend, investors should be cautious with the stock and look to sell any rally.
Additional content:
Oil Sector's Quarterly Earnings to Rise: 3 Stocks in Focus
The 2024 crude pricing outlook appears conducive to exploration and production activities. According to the U.S. Energy Information Administration (“EIA”), the anticipated average spot price for West Texas Intermediate crude this year is expected to be $77.99 per barrel, slightly surpassing last year's $77.58. Ongoing production constraints by OPEC+ are bolstering commodity prices.
The EIA predicts that OPEC+ will produce an average of 36.4 million barrels per day of crude oil in 2024, indicating a decline from the pre-pandemic five-year average of 40.2 million barrels per day.
Energy Sector's Earnings to Improve in 2024
Thus, handsome crude price and improving well efficiency will continue to aid growth in production volumes of the commodity, albeit slowing production growth. Higher production will, in turn, increase demand for crude transportation and storage assets.
Following the backdrop, earnings in each of the quarters of 2024 may continue to improve. Per the latest Zacks Earnings Trends, the oil energy sector’s earnings in the first quarter of this year are likely to be $36.5 billion, higher than the forecasted $35.1 billion for the fourth quarter of 2023. For the second and third quarters of this year, the respective earnings are projected at $38 billion and $39.7 billion.
3 Stocks to Watch
Employing our proprietary stock screener, we have selected three stocks – Exxon Mobil Corp., EOG Resources and Enbridge Inc. – that may witness earnings growth in 2024. While Enbridgesports a Zacks Rank #1 (Strong Buy), ExxonMobil and EOG Resources carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
ExxonMobil is a leading integrated energy player. In the Permian Basin – the most prolific oil and gas resource in the United States – and offshore Guyana, the company has a solid pipeline of profitable projects. To further strengthen its presence in the Permian, ExxonMobil has entered into a staggering $59.5 billion all-stock deal to buy Pioneer Natural Resources. This is because Pioneer Natural is one of the foremost oil producers operating in the Permian Basin. With the deal closure expected in the first half of 2024, Permian production of the integrated energy major will more than double to 1.3 million barrels of oil equivalent per day.
This year, ExxonMobil will likely see earnings growth of 2.1%.
EOG Resources is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, aiding its bottom line.
In 2024, EOG is likely to see earnings growth of 6.8%.
Enbridge is a leading midstream firm with a secured business model. With the majority of its earnings backed by long-term contracts, the company generates stable fee-based revenues and predictable cash flows. In 2024, Enbridge is likely to witness earnings growth of almost 4%.
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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International Paper and Keysight Technologies have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – January 18, 2024 – Zacks Equity Research shares International Paper (IP - Free Report) as the Bull of the Day and Keysight Technologies (KEYS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil Corp. (XOM - Free Report) , EOG Resources (EOG - Free Report) and Enbridge Inc. (ENB - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
International Paper is a Zacks Rank #1 (Strong Buy), the global leader in the paper and packaging industry. The company produces a wide range of paper products, including packaging materials, pulp, and paper.
The stock has started the year in the green, even after gaining almost 20% in Q4 of 2023.
A strong dividend, positive earnings, and some positive industry headlines have investors interested in the name again.
About the Company
International Paper was founded in 1898 and is headquartered in Memphis, Tennessee. The company has 39,000 full-time employees and has a market cap of $13 billion.
International Paper produces corrugated packaging products that protect and promote goods, which aid in worldwide commerce. It also provides pulp for diapers, tissue, and other personal care products that promote health and wellness.
The stock has a Zacks Style Score of “B” in Value and “C” in Momentum. It also posts a Style Score of “F” in Growth, but four straight earnings beats have investors interested in the stock again.
Q3 Earnings Beat and Job Cuts
In late October, IP reported Q3 EPS at $0.64 v $0.59 expected. Industrial packaging operating profit came in at $325M v the 304M last quarter and FCF was $240M v the $197M last year.
Management said they are seeing a continuing demand recovery across the portfolio. They added that they exceeded their full-year target and are focused on controlling costs.
This was the fourth straight earnings beat after a rough straight in 2021 and 2022.
The stock rallied after the earnings report but then chopped in a sideways manner until news hit that competitor Packaging Corp would be raising prices.
Packaging Corp Headlines
In late November, stocks across the sector started to surge higher. The reasoning was Packaging Corp announcing to customers that they would be raising the linerboard and semi-chemical medium prices.
This move allows the whole industry to be more competitive or simply follow suit, which will help margins and the bottom line.
Analyst Estimates
Since earnings, estimates have been mixed when looking at all time frames.
For the current quarter and year, estimates have been flat over the last 60 days, at $0.34 and $2.10 respectively.
However longer-term estimates are headed higher over that same time frame. For next year, estimates have moved from $1.88 to $2.01, or a jump of 7%.
As the industry hikes prices, investors should watch for these estimates to continue higher. As of now, the market thinks that this will be very positive for the stock as it is trading close to 52-week highs.
Additionally, investors can collect a 5% dividend while they wait for that earnings growth to return.
The Technicals
The stock is well off its 2021 high of $65. After bottoming out this summer under the $30 mark, IP is now trading at $37. This is above all moving averages and just below the $38 level which is 2024 highs.
For those looking for an entry, the 50-day moving average is $35.75 and the 200-day MA is $34.10. If the bulls can push the price above the $38 level, they can target a move toward $40.
Bottom Line
International Paper is a steady company with a low beta and a strong dividend. The recent price hikes in the industry secure this dividend and provide an opportunity for earnings growth.
Bear of the Day:
Keysight Technologies is a Zacks Rank #5 (Strong Sell) that is a provider of electronic design and test instrumentation systems. The company caters to the communications, networking, aerospace, defense, and government, automotive, energy, semiconductor, electronic, and education industries.
The company reported earnings last November and since then the stock has rallied 30%. Investors might be getting ahead of themselves as earnings estimates tick lower.
About the Company
Keysight Technologies was founded in 1939 and is headquartered in Santa Rosa, CA. The company employs about 15,000 people and sells its products through direct sales force, distributors, resellers, and manufacturer's representatives.
KEYS is valued at $26 billion and has a Forward PE of 21. The stock holds Zacks Style Scores of “C” in both Momentum and Growth, but “D” in Value.
Q4 Earnings
Keysight reported a 6% EPS beat and beat on revenues back in November. The company's Q1 revenues were in line and took Q1 EPS to a range of $1.53-1.59 versus the $1.69 expected.
Based on the price action and the reaction to earnings in the previous quarter, investors were nervous about the Q4 earnings report. When the numbers came in above the expected, a relief rally started and the gap lower from August was filled.
However, investors should be taking profits as numbers are starting to head lower ahead of Keysight’s earnings in late February.
Earnings Estimates
Over the last 90 days, earnings estimates for the current quarter have fallen from $1.72 to $1.58, or 8%. For the next quarter, estimates have dropped 12%, going from $1.87 to $1.64 over that same time frame.
For the current year, estimates have been taken from $7.74 to $7.06, or lower by 9% over the last 90 days.
Looking at next year, estimates have the same trend lower. Over the last 90 days, numbers have fallen to $7.94 from $8.67, a move of 8%.
While the company did post an earnings beat, the rally back to prior levels seems overdone when you take into consideration the pullback in estimates.
Technical Take
The move higher after earnings cleared all moving averages, but recently the stock has broken the 21-day MA. KEYS looks like it will test the 200-day MA at $147 and if that breaks has the possibility of falling to the 50-day MA at $144.
Investors might want to take some profits and reconsider the name around the $135 area. This is the 61.8% Fibonacci retracement drawn from 2023 lows to recent highs.
In Summary
Keysight spooked investors back in 2023 when an earnings report took the stock to multi-year lows. After the recent earnings brought relief, the stock went right back to where it traded for the first half of 2023.
With earnings estimates on a clear downward trend, investors should be cautious with the stock and look to sell any rally.
Additional content:
Oil Sector's Quarterly Earnings to Rise: 3 Stocks in Focus
The 2024 crude pricing outlook appears conducive to exploration and production activities. According to the U.S. Energy Information Administration (“EIA”), the anticipated average spot price for West Texas Intermediate crude this year is expected to be $77.99 per barrel, slightly surpassing last year's $77.58. Ongoing production constraints by OPEC+ are bolstering commodity prices.
The EIA predicts that OPEC+ will produce an average of 36.4 million barrels per day of crude oil in 2024, indicating a decline from the pre-pandemic five-year average of 40.2 million barrels per day.
Energy Sector's Earnings to Improve in 2024
Thus, handsome crude price and improving well efficiency will continue to aid growth in production volumes of the commodity, albeit slowing production growth. Higher production will, in turn, increase demand for crude transportation and storage assets.
Following the backdrop, earnings in each of the quarters of 2024 may continue to improve. Per the latest Zacks Earnings Trends, the oil energy sector’s earnings in the first quarter of this year are likely to be $36.5 billion, higher than the forecasted $35.1 billion for the fourth quarter of 2023. For the second and third quarters of this year, the respective earnings are projected at $38 billion and $39.7 billion.
3 Stocks to Watch
Employing our proprietary stock screener, we have selected three stocks – Exxon Mobil Corp., EOG Resources and Enbridge Inc. – that may witness earnings growth in 2024. While Enbridgesports a Zacks Rank #1 (Strong Buy), ExxonMobil and EOG Resources carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
ExxonMobil is a leading integrated energy player. In the Permian Basin – the most prolific oil and gas resource in the United States – and offshore Guyana, the company has a solid pipeline of profitable projects. To further strengthen its presence in the Permian, ExxonMobil has entered into a staggering $59.5 billion all-stock deal to buy Pioneer Natural Resources. This is because Pioneer Natural is one of the foremost oil producers operating in the Permian Basin. With the deal closure expected in the first half of 2024, Permian production of the integrated energy major will more than double to 1.3 million barrels of oil equivalent per day.
This year, ExxonMobil will likely see earnings growth of 2.1%.
EOG Resources is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, aiding its bottom line.
In 2024, EOG is likely to see earnings growth of 6.8%.
Enbridge is a leading midstream firm with a secured business model. With the majority of its earnings backed by long-term contracts, the company generates stable fee-based revenues and predictable cash flows. In 2024, Enbridge is likely to witness earnings growth of almost 4%.
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.