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ServiceNow and Lamb Weston have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 2, 2024 – Zacks Equity Research shares ServiceNow (NOW - Free Report) as the Bull of the Day and Lamb Weston (LW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Twilio Inc.'s (TWLO - Free Report) , Shopify Inc. (SHOP - Free Report) and Take-Two Interactive Software Inc.'s (TTWO - Free Report) .
ServiceNow, a current Zacks Rank #1 (Strong Buy), provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. Its solutions address the needs of many departments within an enterprise, including IT, HR, facilities, field service, marketing, customer service, security, legal, and finance.
Analysts have raised their earnings expectations across the board.
In addition to favorable earnings estimate revisions, the stock resides in the Zacks Computers – IT Services industry, currently ranked in the top 38% of all Zacks industries. Let's take a closer look at how the company currently stacks up.
ServiceNow Raises Outlook
ServiceNow recently delivered its latest set of quarterly results, with the company posting its seventh consecutive double-beat. Growth was rock-solid, with earnings and revenue growing 80% and 22%, respectively.
Impressively, the company exceeded all its Q2 sales and profitability metrics, leading it to upgrade its FY24 subscription sales and operating margin guidance. NOW's margins have been expanding nicely for some time now, as we can see illustrated below.
Please note that the below chart is on a trailing twelve-month basis.
The stock remains a prime selection for those seeking exposure to AI. Following the release, CEO Bill McDermott stated, "Our relevance as the AI platform for business transformation remains stronger than ever as CEOs are looking for new vectors of growth, simplification, and digitization. ServiceNow intends to reinvent every workflow, in every company, in every industry with GenAI at the core."
The company's sales growth has been remarkable, posting double-digit percentage year-over-year growth rates in ten consecutive releases. Sales growth is forecasted to remain strong, with expectations for its current fiscal year suggesting a 22% climb.
The stock carries a Style Score of 'B' for Growth.
Valuation multiples remain elevated, reflective of investors' high growth expectations. The current forward 12-month price-to-sales ratio stands at 13.8X, beneath five-year highs of 21.3X and nearly in line with the five-year median.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
ServiceNow would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Lamb Weston, a current Zacks Rank #5 (Strong Sell). is a leading global manufacturer, marketer, and distributor of value-added frozen potato products.
Analysts have taken a bearish stance on the company's earnings outlook, landing it into a Zacks Rank #5 (Strong Sell).
In addition, the company is in the Zacks Food – Miscellaneous industry, which is currently ranked in the bottom 21% of all Zacks industries.
Let's take a closer look at the company.
Lamb Weston Posts Weak Results
The company's latest set of quarterly results caused shares to plunge, with LW falling short of the Zacks Consensus EPS estimate by 37% and reporting sales 5% below expectations. The results reflected its second consecutive period of falling short of both earnings and revenue expectations.
Shares are now trading at their lowest level since early 2022.
The company delivered a spooky message following the print, with CEO Tom Werner stating, 'We expect fiscal 2025 to be another challenging year. The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic. This has resulted in an increase in available capacity in North America and Europe.'
To put it simply, consumers have had their wallets pinched, and the results fully reflect the demand pullback that's followed.
Bottom Line
Negative earnings estimate revisions, resulting from soft quarterly results, paint a challenging picture for the company's shares in the near term.
Lamb Weston is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content:
Buy These 3 Stocks with Strong Upside Left Ahead of Earnings
We are in the middle of the second-quarter 2024 earnings period. So far, results exceeded expectations. As of Jul 31, 285 companies of the S&P 500 Index — popularly known as Wall Street's broad-market index — reported their quarterly financial numbers.
Total earnings for these index members increased 9.8% from the same period last year on 4.8% higher revenues, with 80.7% beating EPS estimates and 59.6% beating revenue estimates. At present, total earnings of the S&P 500 Index in the second quarter are expected to be up 9% on 5.3% higher revenues. If this expectation materializes, it will be the highest earnings growth pace since the 10% earnings growth in the first quarter of 2022.
This week, market participants are busy analyzing the earnings results of big techs. Aside from these big techs or the "magnificent 7" companies, several companies with a favorable Zacks Rank will report this week and the next. Some of these companies with possible earnings beat represent strong price appreciation.
Our Top Picks
We have narrowed our search to five such stocks that are poised to beat on earnings results with solid upside left. Each of these stocks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today's Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Twilio Inc.'s second-quarter results are likely to reflect gains from sustained digital transformation efforts as enterprises continue to reconfigure their setup for a hybrid operational environment. TWLO's initiatives in expanding the network with independent software vendors and its global partners are likely to have favored the second-quarter performance.
The enhancement of Twilio's Segment and Flex platforms with new products like Agent Colpilot, Linked Audiences and the Segment Data Graph is likely to have attracted more customers in the quarter.
Solutions like Twilio Conversations, SendGrid Ads and SendGrid's Email Validation application programming interface are also likely to have contributed to the company's performance. Moreover, Twilio's integration of artificial intelligence in several communication and segment products is also likely to act in favor.
Another key driver is expected to have been TWLO's growing scope among global enterprises. Moreover, TWLO's bottom line is likely to benefit from its cost-saving initiatives, which include workforce reduction and the closure of several offices.
Twilio has an expected revenue and earnings growth rate of 4.6% and 27.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 59%.
Zacks Rank #1 Twilio will report on Aug 1, after the closing bell. For second-quarter 2024, TWLO has an Earnings ESP of +2.34%. The average price target of brokerage firms represents an increase of 18.6% from the last closing price of $59.13. The brokerage target price is currently in the range of $55-$110.
Shopify Inc. is benefiting from strong growth in its merchant base. New merchant-friendly tools like Bill Pay, Tax Platform, Collective and the Marketplace Connect app are helping it to win new merchants. The strong adoption of these solutions holds promise for SHOP's prospects.
Integration of Shop Pay Installments into the point-of-sale terminal and general availability of Pro makes SHOP easier for merchants to discover and engage their customers. The expansion of back-office merchant solutions to more countries is also strengthening SHOP's international footprint. An expanding partner base that includes TikTok, Snap, Pinterest, Criteo, IBM, Cognizant, Amazon and Adyen is expected to expand its merchant base further.
Shopify has an expected revenue and earnings growth rate of 20.7% and 33.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 12.5% over the last 90 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 57%.
Zacks Rank #2 Shopify will report on Aug 7, before the opening bell. For second-quarter 2024, SHOP has an Earnings ESP of +7.78%. The average price target of brokerage firms represents an increase of 30% from the last closing price of $61.20. The brokerage target price is currently in the range of $63-$100.
Take-Two Interactive Software Inc.'s top line is likely to benefit from strong digital revenues, driven by the solid demand for well-known game franchises like GTA, Red Dead Redemption and NBA. TTWO expects this trend to continue in the future.
The acquisition of Zynga has established Take-Two Interactive Software as one of the largest publishers of mobile games. The deal unified TTWO's top-class portfolio of PC and console games and Zynga's leading mobile franchises. TTWO continues to invest heavily in product development, which is likely to boost its long-term prospects.
The company has an expected revenue and earnings growth rate of 5.5% and 1.2%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last seven days. The company reported positive earnings surprises in two out of the last four reported quarters with an average beat of 89.8%.
Zacks Rank #1 Take-Two Interactive Software will report on Aug 8, after the closing bell. For first-quarter fiscal 2025, TTWO has an Earnings ESP of +118.18%. The average price target of brokerage firmsrepresents an increase of 18.7% from the last closing price of $150.53. The brokerage target price is currently in the range of $120-$200.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It's a little-known chemical company that's up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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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ServiceNow and Lamb Weston have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 2, 2024 – Zacks Equity Research shares ServiceNow (NOW - Free Report) as the Bull of the Day and Lamb Weston (LW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Twilio Inc.'s (TWLO - Free Report) , Shopify Inc. (SHOP - Free Report) and Take-Two Interactive Software Inc.'s (TTWO - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
ServiceNow, a current Zacks Rank #1 (Strong Buy), provides cloud computing services that automate digital workflows to accelerate enterprise IT operations. Its solutions address the needs of many departments within an enterprise, including IT, HR, facilities, field service, marketing, customer service, security, legal, and finance.
Analysts have raised their earnings expectations across the board.
In addition to favorable earnings estimate revisions, the stock resides in the Zacks Computers – IT Services industry, currently ranked in the top 38% of all Zacks industries. Let's take a closer look at how the company currently stacks up.
ServiceNow Raises Outlook
ServiceNow recently delivered its latest set of quarterly results, with the company posting its seventh consecutive double-beat. Growth was rock-solid, with earnings and revenue growing 80% and 22%, respectively.
Impressively, the company exceeded all its Q2 sales and profitability metrics, leading it to upgrade its FY24 subscription sales and operating margin guidance. NOW's margins have been expanding nicely for some time now, as we can see illustrated below.
Please note that the below chart is on a trailing twelve-month basis.
The stock remains a prime selection for those seeking exposure to AI. Following the release, CEO Bill McDermott stated, "Our relevance as the AI platform for business transformation remains stronger than ever as CEOs are looking for new vectors of growth, simplification, and digitization. ServiceNow intends to reinvent every workflow, in every company, in every industry with GenAI at the core."
The company's sales growth has been remarkable, posting double-digit percentage year-over-year growth rates in ten consecutive releases. Sales growth is forecasted to remain strong, with expectations for its current fiscal year suggesting a 22% climb.
The stock carries a Style Score of 'B' for Growth.
Valuation multiples remain elevated, reflective of investors' high growth expectations. The current forward 12-month price-to-sales ratio stands at 13.8X, beneath five-year highs of 21.3X and nearly in line with the five-year median.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
ServiceNow would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
Lamb Weston, a current Zacks Rank #5 (Strong Sell). is a leading global manufacturer, marketer, and distributor of value-added frozen potato products.
Analysts have taken a bearish stance on the company's earnings outlook, landing it into a Zacks Rank #5 (Strong Sell).
In addition, the company is in the Zacks Food – Miscellaneous industry, which is currently ranked in the bottom 21% of all Zacks industries.
Let's take a closer look at the company.
Lamb Weston Posts Weak Results
The company's latest set of quarterly results caused shares to plunge, with LW falling short of the Zacks Consensus EPS estimate by 37% and reporting sales 5% below expectations. The results reflected its second consecutive period of falling short of both earnings and revenue expectations.
Shares are now trading at their lowest level since early 2022.
The company delivered a spooky message following the print, with CEO Tom Werner stating, 'We expect fiscal 2025 to be another challenging year. The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic. This has resulted in an increase in available capacity in North America and Europe.'
To put it simply, consumers have had their wallets pinched, and the results fully reflect the demand pullback that's followed.
Bottom Line
Negative earnings estimate revisions, resulting from soft quarterly results, paint a challenging picture for the company's shares in the near term.
Lamb Weston is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content:
Buy These 3 Stocks with Strong Upside Left Ahead of Earnings
We are in the middle of the second-quarter 2024 earnings period. So far, results exceeded expectations. As of Jul 31, 285 companies of the S&P 500 Index — popularly known as Wall Street's broad-market index — reported their quarterly financial numbers.
Total earnings for these index members increased 9.8% from the same period last year on 4.8% higher revenues, with 80.7% beating EPS estimates and 59.6% beating revenue estimates. At present, total earnings of the S&P 500 Index in the second quarter are expected to be up 9% on 5.3% higher revenues. If this expectation materializes, it will be the highest earnings growth pace since the 10% earnings growth in the first quarter of 2022.
This week, market participants are busy analyzing the earnings results of big techs. Aside from these big techs or the "magnificent 7" companies, several companies with a favorable Zacks Rank will report this week and the next. Some of these companies with possible earnings beat represent strong price appreciation.
Our Top Picks
We have narrowed our search to five such stocks that are poised to beat on earnings results with solid upside left. Each of these stocks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today's Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Twilio Inc.'s second-quarter results are likely to reflect gains from sustained digital transformation efforts as enterprises continue to reconfigure their setup for a hybrid operational environment. TWLO's initiatives in expanding the network with independent software vendors and its global partners are likely to have favored the second-quarter performance.
The enhancement of Twilio's Segment and Flex platforms with new products like Agent Colpilot, Linked Audiences and the Segment Data Graph is likely to have attracted more customers in the quarter.
Solutions like Twilio Conversations, SendGrid Ads and SendGrid's Email Validation application programming interface are also likely to have contributed to the company's performance. Moreover, Twilio's integration of artificial intelligence in several communication and segment products is also likely to act in favor.
Another key driver is expected to have been TWLO's growing scope among global enterprises. Moreover, TWLO's bottom line is likely to benefit from its cost-saving initiatives, which include workforce reduction and the closure of several offices.
Twilio has an expected revenue and earnings growth rate of 4.6% and 27.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 59%.
Zacks Rank #1 Twilio will report on Aug 1, after the closing bell. For second-quarter 2024, TWLO has an Earnings ESP of +2.34%. The average price target of brokerage firms represents an increase of 18.6% from the last closing price of $59.13. The brokerage target price is currently in the range of $55-$110.
Shopify Inc. is benefiting from strong growth in its merchant base. New merchant-friendly tools like Bill Pay, Tax Platform, Collective and the Marketplace Connect app are helping it to win new merchants. The strong adoption of these solutions holds promise for SHOP's prospects.
Integration of Shop Pay Installments into the point-of-sale terminal and general availability of Pro makes SHOP easier for merchants to discover and engage their customers. The expansion of back-office merchant solutions to more countries is also strengthening SHOP's international footprint. An expanding partner base that includes TikTok, Snap, Pinterest, Criteo, IBM, Cognizant, Amazon and Adyen is expected to expand its merchant base further.
Shopify has an expected revenue and earnings growth rate of 20.7% and 33.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 12.5% over the last 90 days. The company reported positive earnings surprises in the last four reported quarters with an average beat of 57%.
Zacks Rank #2 Shopify will report on Aug 7, before the opening bell. For second-quarter 2024, SHOP has an Earnings ESP of +7.78%. The average price target of brokerage firms represents an increase of 30% from the last closing price of $61.20. The brokerage target price is currently in the range of $63-$100.
Take-Two Interactive Software Inc.'s top line is likely to benefit from strong digital revenues, driven by the solid demand for well-known game franchises like GTA, Red Dead Redemption and NBA. TTWO expects this trend to continue in the future.
The acquisition of Zynga has established Take-Two Interactive Software as one of the largest publishers of mobile games. The deal unified TTWO's top-class portfolio of PC and console games and Zynga's leading mobile franchises. TTWO continues to invest heavily in product development, which is likely to boost its long-term prospects.
The company has an expected revenue and earnings growth rate of 5.5% and 1.2%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last seven days. The company reported positive earnings surprises in two out of the last four reported quarters with an average beat of 89.8%.
Zacks Rank #1 Take-Two Interactive Software will report on Aug 8, after the closing bell. For first-quarter fiscal 2025, TTWO has an Earnings ESP of +118.18%. The average price target of brokerage firmsrepresents an increase of 18.7% from the last closing price of $150.53. The brokerage target price is currently in the range of $120-$200.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It's a little-known chemical company that's up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Media Contact
Zacks Investment Research
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https://www.zacks.com
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.