For Immediate Release

Chicago, IL –September 19, 2024 – Zacks Equity Research shares Willdan Group, Inc.’s (WLDN Quick QuoteWLDN - Free Report) , as the Bull of the Day and Xerox (XRX Quick QuoteXRX - Free Report) , as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft Corp. (MSFT Quick QuoteMSFT - Free Report) , Apple Inc. (AAPL Quick QuoteAAPL - Free Report) and Amazon.com, Inc. (AMZN Quick QuoteAMZN - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

Willdan Group, Inc.’s  pitch to clients across utilities, government agencies, and private industry is more compelling than ever, and Wall Street is catching on.

Willdan helps “transition communities to clean energy and a sustainable future,” with offerings spanning electric grid solutions, energy efficiency, and beyond.

Willdan is ready to ride the multi-decade, multi-trillion-dollar energy transition. The small-cap consulting firm has landed deals with state governments and tech giants such as Meta.

Willdan stock has soared 90% during the last 12 months alongside WLDN’s surging earnings estimates. On top of that, Willdan shares are trading 30% below their 2021 peaks.

The Basic Bull Case for Willdan Stock

Willdan is a small-cap consulting firm that’s been in business for 60 years. Willdan provides professional, technical, and consulting services centered around grid solutions, energy efficiency and sustainability, engineering, financial and economic planning, research and development, and more.

Willdan works with companies and entities throughout utilities, government agencies, healthcare, hospitality, data centers, industrials, education, multifamily housing, and beyond. WLDN helps its clients in key areas such as grid optimization, energy efficiency, microgrids, smart cities, and other growth areas.

Willdan is ready to thrive as every pocket of the economy spends heavily to thrive as the U.S. undergoes a large-scale energy transition. The U.S. is attempting to cut back its reliance on fossil fuels and become more sustainable, while also growing the economy as energy demand soars in the AI-age.

The energy transition is part of a wide-scale infrastructure boom that’s underway. The infrastructure megatrend spans everything from AI data centers and next-generation nuclear reactors to revamped and expanded electricity grids, water systems, and other more traditional infrastructure projects.

“The electric load growth macrotrend strengthened over the quarter, fueled by growth in electricity demand at data centers from artificial intelligence,” Willdan CEO Mike Bieber said in prepared Q2 remarks.

“Given the results for the first half of 2024 and the current momentum, we are raising our full year targets for fiscal 2024.”

Willdan’s diverse client list includes The City College of New York, the state of Virginia, and technology superpower Meta. WLDN landed its deal with the parent company of Facebook and Instagram during the first half of 2024.

Willdan is helping Meta META “study emissions related to voluntary clean energy procurement.” Meanwhile, Willdan is exploring how increased energy demand is impacting the grid across Virginia.

Willdan most recently earned a contract to deliver energy savings for the fifth-largest school district in the U.S. Clark County School District in Neveda selected Willdan for a “$102 million contract to deliver energy-saving projects across 204 schools.”

Willdan's Recent Growth and Strong Outlook

Willdan grew its revenue by 19% in 2023 and 21% in 2022, expanding its sales from $350 million in 2021 to $510 million last year. Willdan also nearly doubled its adjusted earnings last year, soaring from $0.88 to $1.75 a share.

WLDN has crushed our bottom-line estimate by an average of 110% in the past three quarters, including a 90% second quarter beat.

Willdan’s earnings outlook has also climbed steadily over the last year and the past several months. WLDN’s FY25 consensus estimate has climbed 18% since its Q2 release, with its third quarter 2024 estimates 28% higher. Willdan’s improving EPS estimates help it capture a Zacks Rank #1 (Strong Buy).

Willdan is projected to expand its adjusted EPS by 20% in 2024 and another 12% next year to $2.35 a share. Willdan is expected to grow its revenue by 10% this year and 6% in 2025 to reach nearly $600 million.

Breaking Down Willdan’s Performance, Technical Levels, and Valuation

WLDN stock has nearly tripled the S&P 500 over the past 15 years, climbing 1,226% vs. 447%. The stock has been more volatile than the benchmark over that stretch, with it currently neck-and-neck with the S&P 500 during the trailing 10 years, having jumped 190%.

Willdan shares have soared 90% in the last 12 months to blow away its Zacks sector’s 24% run and the S&P 500’s 26%. WLDN’s recent strength is highlighted by a 30% surge over the past three months.

Despite Willdan soaring well over 200% off its 2022 lows, WLDN stock trades 30% below its 2021 peaks. Willdan stock climbed back above its 50-month moving average at the end of the first quarter.

WLDN recently found support near its 21-day moving average. Willdan is also far from overheated, trading just above neutral RSI levels.

Valuation-wise, Willdan trades near its 10-year median (19.1X) at 20.4X forward 12-month earnings and at an 18% discount to its Zacks sector despite its long-term and near-term outperformance.

Bear of the Day:

Zacks Rank #5 (Strong Sell) Xerox is a Fortune 500 company recognized for its groundbreaking contributions to the printing, scanning, and photocopy technology industry. Beyond its digital printing machines, Xerox also provides document management solutions, workflow automation and IT support to help companies optimize their operations.

Xerox Suffers from a Digital World

Xerox was once so dominant in the photocopy and scanning business that the company’s name became a verb. Instead of saying that they would fax something, people began to say they would “Xerox” it over. Though Xerox is still a leader in the traditional print, copy, and scanning business, it has consistently shrunk in recent years due to technological advances. The world has gone digital, and technology has advanced precipitously over the past twenty years.

Gone are the days of needing a bulky machine to scan documents. Today, anyone can quickly scan a document within seconds using their iPhone or Android devices. Meanwhile, software serviceswhich allows companies and individuals to manage electronic agreements, have cropped up and continue to eat into Xerox’s business. Finally, digitization has only increased as more employees work from home following the fallout of the COVID-19 pandemic. As a result, the company’s sales have been stagnant for several years.

Xerox’s Business has Been Commoditized

Several companies, such as HP, Canon and Lexmark, have entered the printing business and are proving formidable competition for XRX. Investors can recognize the impact of competition by viewing a chart of Xerox’s gross margins, which have steadily decreased over the past few years.

Xerox Continues to Fall Short of Wall Street Expectations

Xerox is suffering from “caretaker management,” which occurs when an older (and often successful) company is run by a management team that is content with the status quo and is risk averse. The lack of innovation coupled and the slowdown in Xerox’s one-dimensional business is evident in the company’s earnings surprise history.

XRX has fallen short of Zacks Consensus Estimates for three out of the past four quarters, with an average surprise of -25.39%. In other words, expectations are low, yet the company continues to fall short of them.

Relative Weakness & Opportunity Cost of Holding XRX

If you purchased XRX 25 years ago, you would be down more than 80% (the S&P is up nearly 800% over this period). With 25 years of lackluster price action, relative weakness, and a lack of bullish catalysts, there is little to be excited about.

Bottom Line

Xerox suffering from new technology, increased competition, falling sales, and shrinking margins. To make matters worse, management is doing little to innovate and the company continues to fall short of Wall Street Expectations.

Additional content:

Microsoft Unveils $60 Billion Stock Buyback: Time to Buy MSFT Stock?

One of the magnificent 7 stocks, Microsoft Corp. , is part of the $3 trillion club as its shares have seen an impressive run over the past few years. However, after hitting a record high on July 5, the MSFT stock has underperformed the S&P 500 this year (+15.9% vs. +18.1%).

But will Microsoft’s recent share repurchase program boost its stock price and provide an ideal entry point for potential buyers? Let’s see –

Microsoft Stock – Share Repurchase Plan

Microsoft recently approved a stock-buyback program, a shareholder-friendly initiative. Microsoft’s new $60 billion share repurchase program is the third largest this year after stock buyback authorizations of $100 billion and $70 billion by Apple Inc.  and Amazon.com, Inc., respectively. Microsoft’s new stock repurchase program matched its largest-ever buyback program (read more: NVIDIA Approves $50 Billion Stock Buyback: Time to Buy?).

Stock Buyback – A Good Sign for Microsoft

Microsoft’s share repurchases indicate that the company’s board of directors is hopeful about its future business scenarios.

The repurchase program is aimed at Microsoft acquiring its outstanding shares and reducing the numbers available in the open market. This, in turn, would increase the value of the remaining shares, a boon for Microsoft’s shareholders.

Microsoft is opting for a buyback to boost earnings per share (EPS) vis-à-vis the stock price. Microsoft stock, currently, is trading above the 200-day moving average (DMA), indicating a long-term uptrend.

Key MSFT Tailwinds: Azure Growth, Strong ROE, Dividend Hike

Microsoft’s coveted Azure and cloud services business has generated a revenue growth of 29% year over year in the fiscal fourth quarter of 2024. Azure’s growth strengthened Microsoft’s position in the highly competitive cloud-computing market, mostly dominated by Amazon Web Services (AWS).

Microsoft has already spent $55.7 billion in fiscal 2024 on its cloud business and plans to increase its capital expenditures as Azure has picked up steam. The Azure cloud infrastructure unit is growing faster than AWS and if the trend persists, Azure could be the industry leader soon. In 2019, Azure was half the size of AWS, but now it’s three-quarters! As a result, the $13.04 Zacks Consensus Estimate for MSFT’s EPS is up 5% yearly.

Microsoft is generating profits competently and has used the capital optimally invested by shareholders. After all, Microsoft’s return on equity (ROE) is 36%, almost neck and neck with the Computer - Software industry’s 36.1%. Any reading above 20% is likely considered to be very strong.

Microsoft has a strong cash balance of $75.54 billion (as of June 30, 2024), which would help it pay off its dues and boost shareholders’ wealth through dividends. Microsoft recently announced a quarterly dividend of 83 cents a share to be paid on Dec. 12, 2024, up 10% from the previous quarter’s payout. Microsoft’s dividend payout has increased by almost 10.3% in the past five years, indicating a sound business model.

Buy, Hold, or Sell MSFT Stock?

Introducing a share repurchase plan, the possibility of Azure taking the lead from AWS, and generating a guaranteed income through dividends should allure anyone to buy MSFT shares.

However, the MSFT stock is expensive. Its price/earnings ratio is 33.3X forward earnings, while the broader S&P 500’s forward earnings multiple is 23.8X.

Hence, it’s prudent for astute investors to wait for the opportune moment to buy MSFT stock and not burn a hole in one’s pocket. For those invested in MSFT stock, hold on to it, since Microsoft is a blue-chip company having a long track record of profitability. Currently, Microsoft has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

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/performance for information about the performance numbers displayed in this press release.