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ASML and Malibu Boats have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – July 11, 2024 – Zacks Equity Research shares ASML Holdings (ASML - Free Report) as the Bull of the Day and Malibu Boats (MBUU - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Gencor Industries, Inc. (GENC - Free Report) , The Monarch Cement Co. (MCEM - Free Report) and Smith-Midland Corp. (SMID - Free Report) .
ASML Holdings, a Dutch company, is the undisputed leader in photolithography machines, and a critical provider to the semiconductor industry.
Not only does ASML enjoy a competitive advantage in its industry, which has led to tremendous sales, earnings and stock price growth over the last decade, but it also currently boasts Zacks Rank #1 (Strong Buy) rating.
Furthermore, because of the continued expansion of technology and the digital world, as well as the boom in artificial intelligence, ASML Holdings makes for a very attractive stock to consider investing in today.
ASML Holdings Industry Dominance
ASML’s machines are the secret sauce behind the tiny transistors that power our modern electronics. Its technology is crucial because it allows chipmakers to etch ever-more intricate patterns onto silicon wafers, cramming more power into smaller and smaller chips. This relentless miniaturization drives the constant improvement of our phones, laptops, and all sorts of tech.
What makes ASML so important? They've cornered the market the highly advanced technology, extreme ultraviolet lithography (EUV). EUV allows for the creation of super tiny circuits, a must-have for next-generation technologies.
Developing EUV machines is incredibly expensive and complex, and ASML has a huge head start. They've poured years of research and billions of dollars into perfecting it, making them the only company that can produce these machines on a commercial scale.
This creates a nearly impenetrable barrier for any competitor hoping to challenge their dominance. Chipmakers rely so heavily on ASML's expertise that switching to a new supplier would be a risky and expensive gamble. This fosters strong, long-term partnerships, solidifying ASML's position as an essential player in the ever-evolving world of semiconductors.
Robust Growth Forecasts for ASML’s Sales and Earnings
Analysts have raised earnings estimates for ASML Holdings over the past two months, giving it a Zacks Rank #1 (Strong Buy) rating.
Although analysts expect sales and earnings to sputter for FY24, with sales expected to decline 1.25% YoY and earnings to fall 6.5%, next quarter’s sales and earnings and next year’s sales and earnings are projected to snap higher.
Next quarter sales are projected to jump 14.5% YoY and EPS are expected to climb 15.7%. Furthermore, FY25 sales are projected to increase 36.2% YoY and earnings are forecast to jump 55% higher.
ASML Stock Price Breakout
ASML stock has been showing bullish activity all year, and the current setup is no different. In the chart below, we can see that ASML has been building bullish technical patterns and breaking higher.
Just last week, the stock broke out again after coiling for nearly a month. This move higher has pushed the stock to new all-time highs, and it appears it wants to continue to rally.
Bottom Line
ASML Holdings presents a compelling investment opportunity at the intersection of technological innovation and strong financial performance.
Their dominance in photolithography positions them as a critical partner for the ever-expanding world of semiconductors. This, coupled with top Zacks Rank and robust growth forecasts, makes ASML a stock with significant potential for long-term investors.
Malibu Boats, a leading designer and manufacturer of sport boats, is bumping into some considerable slowdowns in top and bottom-line expectations, giving it a Zacks Rank #5 (Strong Sell) rating.
The bout of consumer exuberance which followed the Covid-19 lockdown pulled forward considerable buying of large-ticket items like boats. Because of this, sales at Malibu Boats jumped well above trend and while it was welcome at the time, is limiting sales estimates over the next year or two.
As buying a boat is not something that is done regularly, the company is likely to see a slowdown in growth moving forward and should be avoided for now.
Malibu Boats stock has put up a very poor performance thus far in 2024, and it looks like the stock may have further to fall before expectations improve.
Earnings Estimates Continue to Trend Lower for Malibu Boats
The dynamic troubling Malibu Boats has not been missed by analysts, as they have lowered earnings estimates for the company. The earnings revision trend has clearly been trending lower for the last few years, and in just the last week, analysts have again lowered estimates.
Next quarter earnings estimates have been revised lower by 24% and are expected to show a 58% YoY decline.
FY25 earnings estimates have fallen by 8.6% in the last week but are expected to rebound 61% higher by that time.
Current year sales are forecast to fall 40% YoY to $827 million, while current year earnings are projected to crater 77.7%.
MBUU Valuation Still within Historical Averages
Currently, Malibu Boats is trading at a one year forward earnings multiple of 9x. We can see the earnings multiple plummeted recently from a high of 21x. However, even at this depressed level the stock is still trading around its five-year median of 9.9x.
While Malibu Boats trades at its historical average valuation, the ongoing decline in fundamentals outweighs any potential value proposition. Boat manufacturers typically don't command premium valuations, making MBUU unattractive at this time.
Perhaps at a further discount in the valuation, or a reversal in the earnings revision trend would make this stock appealing again.
Malibu Boats Stock Price Makes New Lows
We can see that MBUU has been trading in a clear downtrend since its 2021 highs. The price has followed this bearish channel lower over the last three and a half years.
Just this week, Malibu Boats stock flushed to another new low of the year, and four-year low. I would not be surprised to see the price test the lower bound of the channel around $28.
Bottom Line
Malibu Boats faces continued headwinds due to a post-pandemic slowdown in demand for its high-ticket boats. This, coupled with declining earnings estimates and a weak stock price performance, makes MBUU a clear avoid for investors at this time.
While the valuation has compressed to historical averages, the ongoing deterioration in fundamentals outweighs any potential value proposition. Investors should consider waiting for a turnaround in the earnings revision trend or a more attractive entry point before considering MBUU.
Additional content:
3 Microcaps to Benefit from Federal Highway Spending
As one whisks by the seemingly endless rows of orange barrels on US highways and bridges this summer, it is quite apparent that infrastructure spending is alive and well.
Recall that the IIJA (Infrastructure Investment and Jobs Act) was passed at the end of 2021 with a price tag of $1.2 trillion over a 5-year period. Of this amount, $300B was specifically earmarked for roads and bridges.
The White House website, which chronicles the progress of the spending, reports that $454B has been awarded and is in route to local governments representing over 57,000 projects. Projects on bridges total 13,000 thus far, with improvements also slated for 257,000 miles of roads. We previously commented on infrastructure spending as a macro theme for microcaps here.
We believe the following three microcaps under coverage by Zacks should benefit from this continued infrastructure spending:
Gencor Industries, Inc. manufactures asphalt plant equipment sold into the highway construction industry. The company recently reported a 35% increase in backlog YOY for the March quarter, as well as a balance sheet containing $117.1 m of cash and marketable securities with $0 debt. The greatest risk factor for Gencor Industries and the other mentioned companies is the timing of backlog conversion to sales, which could result in lumpy revenue streams.
The Monarch Cement Co. is a manufacturer of portland cement and sells primarily in the Midwest to concrete mixer plants, building material dealers, and government agencies. The company is debt-free with $45.8 m in cash ($12.38/share) and owns raw material reserves of 50+ years. The Monarch Cement Co. provides other products including masonry cement, ready-mixed concrete, concrete, and building materials. In the March quarter, sales increased 8% with a 40% increase in operating income.
Smith-Midland Corp. manufactures and installs precast concrete products and systems in the United States. Some products include sound walls, highway barriers, vaults for utility applications, and precast buildings. Backlog increased 26% YOY to $64.6 m and the company plans to double the capacity of its North Carolina plant. We are presently maintaining a Neutral rating for Smith-Midland Corp. based on valuation.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% 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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ASML and Malibu Boats have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 11, 2024 – Zacks Equity Research shares ASML Holdings (ASML - Free Report) as the Bull of the Day and Malibu Boats (MBUU - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Gencor Industries, Inc. (GENC - Free Report) , The Monarch Cement Co. (MCEM - Free Report) and Smith-Midland Corp. (SMID - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
ASML Holdings, a Dutch company, is the undisputed leader in photolithography machines, and a critical provider to the semiconductor industry.
Not only does ASML enjoy a competitive advantage in its industry, which has led to tremendous sales, earnings and stock price growth over the last decade, but it also currently boasts Zacks Rank #1 (Strong Buy) rating.
Furthermore, because of the continued expansion of technology and the digital world, as well as the boom in artificial intelligence, ASML Holdings makes for a very attractive stock to consider investing in today.
ASML Holdings Industry Dominance
ASML’s machines are the secret sauce behind the tiny transistors that power our modern electronics. Its technology is crucial because it allows chipmakers to etch ever-more intricate patterns onto silicon wafers, cramming more power into smaller and smaller chips. This relentless miniaturization drives the constant improvement of our phones, laptops, and all sorts of tech.
What makes ASML so important? They've cornered the market the highly advanced technology, extreme ultraviolet lithography (EUV). EUV allows for the creation of super tiny circuits, a must-have for next-generation technologies.
Developing EUV machines is incredibly expensive and complex, and ASML has a huge head start. They've poured years of research and billions of dollars into perfecting it, making them the only company that can produce these machines on a commercial scale.
This creates a nearly impenetrable barrier for any competitor hoping to challenge their dominance. Chipmakers rely so heavily on ASML's expertise that switching to a new supplier would be a risky and expensive gamble. This fosters strong, long-term partnerships, solidifying ASML's position as an essential player in the ever-evolving world of semiconductors.
Robust Growth Forecasts for ASML’s Sales and Earnings
Analysts have raised earnings estimates for ASML Holdings over the past two months, giving it a Zacks Rank #1 (Strong Buy) rating.
Although analysts expect sales and earnings to sputter for FY24, with sales expected to decline 1.25% YoY and earnings to fall 6.5%, next quarter’s sales and earnings and next year’s sales and earnings are projected to snap higher.
Next quarter sales are projected to jump 14.5% YoY and EPS are expected to climb 15.7%. Furthermore, FY25 sales are projected to increase 36.2% YoY and earnings are forecast to jump 55% higher.
ASML Stock Price Breakout
ASML stock has been showing bullish activity all year, and the current setup is no different. In the chart below, we can see that ASML has been building bullish technical patterns and breaking higher.
Just last week, the stock broke out again after coiling for nearly a month. This move higher has pushed the stock to new all-time highs, and it appears it wants to continue to rally.
Bottom Line
ASML Holdings presents a compelling investment opportunity at the intersection of technological innovation and strong financial performance.
Their dominance in photolithography positions them as a critical partner for the ever-expanding world of semiconductors. This, coupled with top Zacks Rank and robust growth forecasts, makes ASML a stock with significant potential for long-term investors.
Bear of the Day:
Malibu Boats, a leading designer and manufacturer of sport boats, is bumping into some considerable slowdowns in top and bottom-line expectations, giving it a Zacks Rank #5 (Strong Sell) rating.
The bout of consumer exuberance which followed the Covid-19 lockdown pulled forward considerable buying of large-ticket items like boats. Because of this, sales at Malibu Boats jumped well above trend and while it was welcome at the time, is limiting sales estimates over the next year or two.
As buying a boat is not something that is done regularly, the company is likely to see a slowdown in growth moving forward and should be avoided for now.
Malibu Boats stock has put up a very poor performance thus far in 2024, and it looks like the stock may have further to fall before expectations improve.
Earnings Estimates Continue to Trend Lower for Malibu Boats
The dynamic troubling Malibu Boats has not been missed by analysts, as they have lowered earnings estimates for the company. The earnings revision trend has clearly been trending lower for the last few years, and in just the last week, analysts have again lowered estimates.
Next quarter earnings estimates have been revised lower by 24% and are expected to show a 58% YoY decline.
FY25 earnings estimates have fallen by 8.6% in the last week but are expected to rebound 61% higher by that time.
Current year sales are forecast to fall 40% YoY to $827 million, while current year earnings are projected to crater 77.7%.
MBUU Valuation Still within Historical Averages
Currently, Malibu Boats is trading at a one year forward earnings multiple of 9x. We can see the earnings multiple plummeted recently from a high of 21x. However, even at this depressed level the stock is still trading around its five-year median of 9.9x.
While Malibu Boats trades at its historical average valuation, the ongoing decline in fundamentals outweighs any potential value proposition. Boat manufacturers typically don't command premium valuations, making MBUU unattractive at this time.
Perhaps at a further discount in the valuation, or a reversal in the earnings revision trend would make this stock appealing again.
Malibu Boats Stock Price Makes New Lows
We can see that MBUU has been trading in a clear downtrend since its 2021 highs. The price has followed this bearish channel lower over the last three and a half years.
Just this week, Malibu Boats stock flushed to another new low of the year, and four-year low. I would not be surprised to see the price test the lower bound of the channel around $28.
Bottom Line
Malibu Boats faces continued headwinds due to a post-pandemic slowdown in demand for its high-ticket boats. This, coupled with declining earnings estimates and a weak stock price performance, makes MBUU a clear avoid for investors at this time.
While the valuation has compressed to historical averages, the ongoing deterioration in fundamentals outweighs any potential value proposition. Investors should consider waiting for a turnaround in the earnings revision trend or a more attractive entry point before considering MBUU.
Additional content:
3 Microcaps to Benefit from Federal Highway Spending
As one whisks by the seemingly endless rows of orange barrels on US highways and bridges this summer, it is quite apparent that infrastructure spending is alive and well.
Recall that the IIJA (Infrastructure Investment and Jobs Act) was passed at the end of 2021 with a price tag of $1.2 trillion over a 5-year period. Of this amount, $300B was specifically earmarked for roads and bridges.
The White House website, which chronicles the progress of the spending, reports that $454B has been awarded and is in route to local governments representing over 57,000 projects. Projects on bridges total 13,000 thus far, with improvements also slated for 257,000 miles of roads. We previously commented on infrastructure spending as a macro theme for microcaps here.
We believe the following three microcaps under coverage by Zacks should benefit from this continued infrastructure spending:
Gencor Industries, Inc. manufactures asphalt plant equipment sold into the highway construction industry. The company recently reported a 35% increase in backlog YOY for the March quarter, as well as a balance sheet containing $117.1 m of cash and marketable securities with $0 debt. The greatest risk factor for Gencor Industries and the other mentioned companies is the timing of backlog conversion to sales, which could result in lumpy revenue streams.
The Monarch Cement Co. is a manufacturer of portland cement and sells primarily in the Midwest to concrete mixer plants, building material dealers, and government agencies. The company is debt-free with $45.8 m in cash ($12.38/share) and owns raw material reserves of 50+ years. The Monarch Cement Co. provides other products including masonry cement, ready-mixed concrete, concrete, and building materials. In the March quarter, sales increased 8% with a 40% increase in operating income.
Smith-Midland Corp. manufactures and installs precast concrete products and systems in the United States. Some products include sound walls, highway barriers, vaults for utility applications, and precast buildings. Backlog increased 26% YOY to $64.6 m and the company plans to double the capacity of its North Carolina plant. We are presently maintaining a Neutral rating for Smith-Midland Corp. based on valuation.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
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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.