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Twilio and Floor & Decor Holdings have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 9, 2024 – Zacks Equity Research shares Twilio (TWLO - Free Report) as the Bull of the Day and Floor & Décor Holdings, Inc. (FND) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Eli Lilly (LLY - Free Report) , Novo Nordisk (NVO - Free Report) and Hims and Hers Health (HIMS - Free Report) .
Twilio shares have been beaten down the last few years but it's still growing its business. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 31% this year.
Twilio operates a Customer Engagement Platform (CEP) that allows companies to build direct, personalized relationships with their customers worldwide. It covers sales to marketing to growth.
It operates across 180 countries and territories and, as of June 30, 2024, had 316,000 active customer accounts.
Another Beat by Twilio in the Second Quarter
On Aug 1, 2024, Twilio reported its second quarter results and beat on the Zacks Consensus by $0.16. Earnings were $0.87 versus the consensus of $0.71.
It was yet another earnings beat in an otherwise stellar earnings surprise track record. Twilio hasn't missed in 5 years and has put together large beats the last few years.
Twilio saw a record quarter of revenue, up 4% year-over-year to $1.08 billion, with organic revenue growth of 7%. Communications revenue, the largest business unit, was up 4% to $1.01 billion, while Segment revenue was up 3% year-over-year to $75.2 million.
Free cash flow was $197.6 million, up from $71.9 million a year ago.
Twilio Raised Full Year Guidance
In response to the strong quarter, Twilio raised its non-GAAP income from operations range for the year to $650 - $675 million, up from $585 - $635 million previously.
It expects free cash flow to be in line with its full year 2024 non-GAAP income from operations. But it did narrow its full year 2024 organic revenue growth guidance to a range of 6% to 7% from is prior guidance of 5% to 10%.
As a result of the bullishness, analysts also raised their 2024 earnings estimates. 4 were higher after the earnings report, which pushed the Zacks Consensus up to $3.22 from $3.12.
That is earnings growth of 31.4% as Twilio only made $2.45 last year.
Analysts also expect another 12.2% earnings growth in 2025.
Is Twilio a Value Stock Now?
Twilio shares have gone nowhere the last 5 years. They're down over 50% during that time frame.
Even in 2024, shares remain weak, down 20.1%.
Twilio has also gotten cheap. It trades with a forward price-to-earnings ratio (P/E) of just 18.3.
And as earnings rise, it now has an attractive PEG ratio, which measures the P/E ratio over the growth rate. The PEG ratio is just 0.6. A PEG ratio under 1.0 indicates a stock has both growth and value.
What is it doing with all that free cash flow?
Twilio has a big share buyback program. Originally a $1 billion program authorized in Feb 2023, the board authorized an additional $2 billion in Mar 2024.
Twilio has completed over $2.2 billion of the repurchases and expects to complete the remaining $0.8 billion left on the $3 billion authorization before the end of 2024.
For those looking for cheap growth, Twilio should be on your short list.
Floor & Décor Holdings, Inc. recently cut full year guidance due to soft demand. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline by the double digits this year.
Floor & Décor is a specialty retailer and commercial flooring distributor with 230 stores and 5 design studios in 36 states. It offers an assortment of in-stock hard-surface flooring, including tile, wood, laminate, vinyl and natural store as well as decorative accessories and wall tile and installation materials.
Another Beat for Floor & Décor in Q2
On Aug 1, 2024, Floor & Décor reported second quarter results and beat the Zacks Consensus by $0.02. Earnings were $0.52 versus the consensus of $0.50.
It was the fifth beat in a row for Floor & Décor. It has an excellent earnings surprise track record, even within the pandemic years. It has only missed twice in the last 5 years, once in 2022 and once in 2023. That’s impressive.
Sales fell 0.2% to $1,133 billion from $1.135 billion a year ago.
The all-important comparable store sales also fell 9%. It did manage to open five new warehouse stores, however.
The company said the Fed’s monetary policy is continuing to impact its business and that of the housing and home remodeling industries. Consumers are holding back on large ticket purchases.
Floor & Décor Slashed Full-Year 2024 Guidance
As a result of the slowing, Floor & Décor slashed its full year earnings and comparable sales guidance.
It now sees earnings in the range of $1.55 to $1.75, down from the range it gave in May when it reported its first quarter results of $1.75 to $2.05.
Comparable store sales have also sunk to a range of (8.5%) to (6.5%) from the May 2024 range of (5.5%) to (2.0%).
No surprise that analysts have cut their 2024 earnings estimates as well. 11 estimates were lowered for fiscal 2024 in the last week. The Zacks Consensus has sunk to $1.67 from $1.81 the week prior.
That’s an earnings decline of 27%.
Is Floor & Décor a Cheap Stock?
Shares of Floor & Décor are down 6.3% over the last year while Home Depot shares are up 5.8% during that same time.
But with the earnings cut, the stock isn’t exactly cheap. Floor & Décor trades with a forward price-to-earnings ratio (P/E) of 58.
A true value stock would have a forward P/E under 20.
Floor & Décor has a long-term plan to operate 500 warehouse-format stores in the United States. It is nearly half-way there.
But given the pullback by consumers, investors might want to wait for a turnaround in comparable sales and earnings before jumping in.
Additional content:
Eli Lilly: The Next $1 Trillion Market Cap Stock?
Eli Lilly reported strong quarterly results on Thursaday morning, with revenue increasing 36%, driven primarily by the success of Mounjaro, Zepbound, and Verzenio. The company also saw a significant increase in earnings per share (EPS), up 68% year-on-year and eclipsing analysts’ estimates by 42%.
Eli Lilly raised its full-year revenue guidance by $3 billion and increased its EPS guidance. Additionally, the company highlighted major progress in its pipeline, including the approval of Kisunla for Alzheimer's disease in the U.S., the approval of Jaypirca in Japan for mantle cell lymphoma, and positive results from several clinical trials, notably for tirzepatide in treating heart failure and obesity.
Eli Lilly along with fellow GLP-1 drugmaker Novo Nordisk and recent industry entrant Hims and Hers Health, have seen their stocks charge higher over the last year. The adoption of weight loss drugs has been an incredible boon for these companies and has the potential to solve a decades long health crisis. Can Eli Lilly propel itself to the $1 trillion market cap club on the back of this innovation?
The Path to a $1 Trillion Market Cap Stock
Today, Eli Lilly has a market cap of $535 billion, meaning if the stock price can double, LLY would be a trillion-dollar company. What would it take to make the stock double again?
First of all, the GLP-1 market is expected to grow at a rate of over 20% annually, reaching $133 billion worldwide by 2030 and LLY enjoys a dominant position in that market with its blockbuster Mounjaro drug.
Second, it has a rich pipeline of drugs and is making significant advancements in areas such as Alzheimer’s disease, oncology, and autoimmune disorders. Notably, the recent FDA approval of Kisunla for Alzheimer's and positive trial results for other pipeline drugs indicate that Lilly may continue to develop truly impactful and revenue generating products.
Lastly, if we look at Eli Lilly’s sales growth and sales multiple, we can make a very rough estimate of when it may reach $1 trillion. Today, LLY is trading at 10x forward sales of $53 billion. Revenue is expected to grow 23% this year. If LLY can maintain the 20% growth rate it would take three to four years to reach the $100 billion mark.
Thus, if Eli Lilly can maintain its current sales multiple, it could be a $1 trillion stock in less than five years.
Eli Lilly has the Growth to Push the Stock Higher
Based on current analysts estimates, it wouldn’t be unreasonable for Eli Lilly to maintain such impressive growth. We can see sales growth is expected to be above 20% this year and next year and earnings are absolutely exploding higher.
Over the next three to five years EPS are forecast to grow 33.3% annually.
NVO and HIMS are Respectable Stock Alternatives
The GLP-1 trend is clearly massive and some of Eli Lilly’s competitors look appealing. Novo Nordisk and Hims and Hers Health are two stock selling GLP-1 products and have compelling businesses complimenting the trending weight loss segment. They both also reported earnings on Wednesday after the market closed.
Novo Nordisk reported a 24% increase in sales for the first half of 2024, driven by the continued success of its GLP-1 diabetes and obesity treatments. The company’s operating profit rose by 18%, reflecting the high demand for these therapies. With the GLP-1 market expected to expand rapidly in the coming years, Novo Nordisk is well positioned to capitalize on this growth with projected sales growth of 22-28% for 2024.
Hims & Hers Health continues to disrupt the health and wellness space with its accessible and affordable services. The company reported a 52% YoY increase in revenue for Q2 2024, driven by a 43% growth in subscribers. The company’s updated full-year revenue guidance, now projected to be between $1.37 billion and $1.40 billion, underscores its accelerating momentum.
GLP-1 drugs are a recent addition to HIMS product suite, so it may take some time to see the results in its earnings reports. However, HIMS business is thriving without it, so it should only add to these strong results. It should also be noted that HIMS has the best one-year stock performance, but also the richest relative valuation.
Should Investors Buy LLY Stock?
Eli Lilly stock has demonstrated impressive relative strength during recent market volatility, making it a standout stock among this group and the broad market. While its competitors, Novo Nordisk and Hims & Hers Health have not held up quite as well in this market, they are also worthy investment considerations.
For investors looking to increase their exposure to the exciting GLP-1 trend, Eli Lilly may be the next addition to their portfolio.
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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Twilio and Floor & Decor Holdings have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 9, 2024 – Zacks Equity Research shares Twilio (TWLO - Free Report) as the Bull of the Day and Floor & Décor Holdings, Inc. (FND) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Eli Lilly (LLY - Free Report) , Novo Nordisk (NVO - Free Report) and Hims and Hers Health (HIMS - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Twilio shares have been beaten down the last few years but it's still growing its business. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 31% this year.
Twilio operates a Customer Engagement Platform (CEP) that allows companies to build direct, personalized relationships with their customers worldwide. It covers sales to marketing to growth.
It operates across 180 countries and territories and, as of June 30, 2024, had 316,000 active customer accounts.
Another Beat by Twilio in the Second Quarter
On Aug 1, 2024, Twilio reported its second quarter results and beat on the Zacks Consensus by $0.16. Earnings were $0.87 versus the consensus of $0.71.
It was yet another earnings beat in an otherwise stellar earnings surprise track record. Twilio hasn't missed in 5 years and has put together large beats the last few years.
Twilio saw a record quarter of revenue, up 4% year-over-year to $1.08 billion, with organic revenue growth of 7%. Communications revenue, the largest business unit, was up 4% to $1.01 billion, while Segment revenue was up 3% year-over-year to $75.2 million.
Free cash flow was $197.6 million, up from $71.9 million a year ago.
Twilio Raised Full Year Guidance
In response to the strong quarter, Twilio raised its non-GAAP income from operations range for the year to $650 - $675 million, up from $585 - $635 million previously.
It expects free cash flow to be in line with its full year 2024 non-GAAP income from operations. But it did narrow its full year 2024 organic revenue growth guidance to a range of 6% to 7% from is prior guidance of 5% to 10%.
As a result of the bullishness, analysts also raised their 2024 earnings estimates. 4 were higher after the earnings report, which pushed the Zacks Consensus up to $3.22 from $3.12.
That is earnings growth of 31.4% as Twilio only made $2.45 last year.
Analysts also expect another 12.2% earnings growth in 2025.
Is Twilio a Value Stock Now?
Twilio shares have gone nowhere the last 5 years. They're down over 50% during that time frame.
Even in 2024, shares remain weak, down 20.1%.
Twilio has also gotten cheap. It trades with a forward price-to-earnings ratio (P/E) of just 18.3.
And as earnings rise, it now has an attractive PEG ratio, which measures the P/E ratio over the growth rate. The PEG ratio is just 0.6. A PEG ratio under 1.0 indicates a stock has both growth and value.
What is it doing with all that free cash flow?
Twilio has a big share buyback program. Originally a $1 billion program authorized in Feb 2023, the board authorized an additional $2 billion in Mar 2024.
Twilio has completed over $2.2 billion of the repurchases and expects to complete the remaining $0.8 billion left on the $3 billion authorization before the end of 2024.
For those looking for cheap growth, Twilio should be on your short list.
Bear of the Day:
Floor & Décor Holdings, Inc. recently cut full year guidance due to soft demand. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline by the double digits this year.
Floor & Décor is a specialty retailer and commercial flooring distributor with 230 stores and 5 design studios in 36 states. It offers an assortment of in-stock hard-surface flooring, including tile, wood, laminate, vinyl and natural store as well as decorative accessories and wall tile and installation materials.
Another Beat for Floor & Décor in Q2
On Aug 1, 2024, Floor & Décor reported second quarter results and beat the Zacks Consensus by $0.02. Earnings were $0.52 versus the consensus of $0.50.
It was the fifth beat in a row for Floor & Décor. It has an excellent earnings surprise track record, even within the pandemic years. It has only missed twice in the last 5 years, once in 2022 and once in 2023. That’s impressive.
Sales fell 0.2% to $1,133 billion from $1.135 billion a year ago.
The all-important comparable store sales also fell 9%. It did manage to open five new warehouse stores, however.
The company said the Fed’s monetary policy is continuing to impact its business and that of the housing and home remodeling industries. Consumers are holding back on large ticket purchases.
Floor & Décor Slashed Full-Year 2024 Guidance
As a result of the slowing, Floor & Décor slashed its full year earnings and comparable sales guidance.
It now sees earnings in the range of $1.55 to $1.75, down from the range it gave in May when it reported its first quarter results of $1.75 to $2.05.
Comparable store sales have also sunk to a range of (8.5%) to (6.5%) from the May 2024 range of (5.5%) to (2.0%).
No surprise that analysts have cut their 2024 earnings estimates as well. 11 estimates were lowered for fiscal 2024 in the last week. The Zacks Consensus has sunk to $1.67 from $1.81 the week prior.
That’s an earnings decline of 27%.
Is Floor & Décor a Cheap Stock?
Shares of Floor & Décor are down 6.3% over the last year while Home Depot shares are up 5.8% during that same time.
But with the earnings cut, the stock isn’t exactly cheap. Floor & Décor trades with a forward price-to-earnings ratio (P/E) of 58.
A true value stock would have a forward P/E under 20.
Floor & Décor has a long-term plan to operate 500 warehouse-format stores in the United States. It is nearly half-way there.
But given the pullback by consumers, investors might want to wait for a turnaround in comparable sales and earnings before jumping in.
Additional content:
Eli Lilly: The Next $1 Trillion Market Cap Stock?
Eli Lilly reported strong quarterly results on Thursaday morning, with revenue increasing 36%, driven primarily by the success of Mounjaro, Zepbound, and Verzenio. The company also saw a significant increase in earnings per share (EPS), up 68% year-on-year and eclipsing analysts’ estimates by 42%.
Eli Lilly raised its full-year revenue guidance by $3 billion and increased its EPS guidance. Additionally, the company highlighted major progress in its pipeline, including the approval of Kisunla for Alzheimer's disease in the U.S., the approval of Jaypirca in Japan for mantle cell lymphoma, and positive results from several clinical trials, notably for tirzepatide in treating heart failure and obesity.
Eli Lilly along with fellow GLP-1 drugmaker Novo Nordisk and recent industry entrant Hims and Hers Health, have seen their stocks charge higher over the last year. The adoption of weight loss drugs has been an incredible boon for these companies and has the potential to solve a decades long health crisis. Can Eli Lilly propel itself to the $1 trillion market cap club on the back of this innovation?
The Path to a $1 Trillion Market Cap Stock
Today, Eli Lilly has a market cap of $535 billion, meaning if the stock price can double, LLY would be a trillion-dollar company. What would it take to make the stock double again?
First of all, the GLP-1 market is expected to grow at a rate of over 20% annually, reaching $133 billion worldwide by 2030 and LLY enjoys a dominant position in that market with its blockbuster Mounjaro drug.
Second, it has a rich pipeline of drugs and is making significant advancements in areas such as Alzheimer’s disease, oncology, and autoimmune disorders. Notably, the recent FDA approval of Kisunla for Alzheimer's and positive trial results for other pipeline drugs indicate that Lilly may continue to develop truly impactful and revenue generating products.
Lastly, if we look at Eli Lilly’s sales growth and sales multiple, we can make a very rough estimate of when it may reach $1 trillion. Today, LLY is trading at 10x forward sales of $53 billion. Revenue is expected to grow 23% this year. If LLY can maintain the 20% growth rate it would take three to four years to reach the $100 billion mark.
Thus, if Eli Lilly can maintain its current sales multiple, it could be a $1 trillion stock in less than five years.
Eli Lilly has the Growth to Push the Stock Higher
Based on current analysts estimates, it wouldn’t be unreasonable for Eli Lilly to maintain such impressive growth. We can see sales growth is expected to be above 20% this year and next year and earnings are absolutely exploding higher.
Over the next three to five years EPS are forecast to grow 33.3% annually.
NVO and HIMS are Respectable Stock Alternatives
The GLP-1 trend is clearly massive and some of Eli Lilly’s competitors look appealing. Novo Nordisk and Hims and Hers Health are two stock selling GLP-1 products and have compelling businesses complimenting the trending weight loss segment. They both also reported earnings on Wednesday after the market closed.
Novo Nordisk reported a 24% increase in sales for the first half of 2024, driven by the continued success of its GLP-1 diabetes and obesity treatments. The company’s operating profit rose by 18%, reflecting the high demand for these therapies. With the GLP-1 market expected to expand rapidly in the coming years, Novo Nordisk is well positioned to capitalize on this growth with projected sales growth of 22-28% for 2024.
Hims & Hers Health continues to disrupt the health and wellness space with its accessible and affordable services. The company reported a 52% YoY increase in revenue for Q2 2024, driven by a 43% growth in subscribers. The company’s updated full-year revenue guidance, now projected to be between $1.37 billion and $1.40 billion, underscores its accelerating momentum.
GLP-1 drugs are a recent addition to HIMS product suite, so it may take some time to see the results in its earnings reports. However, HIMS business is thriving without it, so it should only add to these strong results. It should also be noted that HIMS has the best one-year stock performance, but also the richest relative valuation.
Should Investors Buy LLY Stock?
Eli Lilly stock has demonstrated impressive relative strength during recent market volatility, making it a standout stock among this group and the broad market. While its competitors, Novo Nordisk and Hims & Hers Health have not held up quite as well in this market, they are also worthy investment considerations.
For investors looking to increase their exposure to the exciting GLP-1 trend, Eli Lilly may be the next addition to their portfolio.
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 >>
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Zacks Investment Research
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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.