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JD.com and Civitas Resources have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – September 27, 2024 – Zacks Equity Research shares JD.com, Inc. JD as the Bull of the Day and Civitas Resources, Inc. (CIVI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA - Free Report) , Bank of America Corp.'s (BAC - Free Report) and Advanced Micro Devices, Inc.'s (AMD - Free Report) .
JD.com, Inc., the Chinese online retail and supply chain giant, is dirt cheap. This Zacks Rank #1 (Strong Buy) has plunged to 5-year lows but earnings are expected to rise by the double digits this year.
JD.com is a Chinese supply chain-based technology and service provider. It seeks to enable consumers to buy whatever they want, whenever and wherever they want it.
$5 Billion Share Repurchase Plan Announced
How cheap are JD.com shares? So cheap that on Aug 27, 2024, JD.com announced a new share repurchase program effective as of Sep 2024.
The company can repurchase up to $5 billion in shares over the next 36 months, or through the end of Aug 2027.
Another Earnings Beat for JD.com in the Second Quarter
On Aug 15, 2024, JD.com reported its second quarter earnings results and beat on the Zacks Consensus by $0.43. Earnings were $1.29 versus the consensus of $0.86.
It has an impressive earnings surprise track record, having beaten every quarter for 5 years. That includes the difficult quarters during the pandemic when global economies were shut.
Revenues were up just 1.2% to $40.1 billion year-over-year, however, as electronics and home appliances cooled from a year ago but the general merchandise category, especially supermarket, remained strong.
Gross margin rose 137 bps to 15.8%.
Analysts Still Bullish on JD.com
Investors may be bearish on the company, but the analysts are not.
2 earnings estimates were revised higher for 2024 in the last 60 days which pushed the Zacks Consensus Estimate up to $3.97 from $3.40. JD.com made just $3.12 in 2023, so that is earnings growth of 27.2%.
Similarly, 2 estimates were also revised higher for 2025 in the last 2 months. The Zacks Consensus jumped to $4.15 from $3.64, which is further earnings growth of 4.5%.
JD.com is Dirt Cheap
Shares of JD.com have been falling the past few years and hit a 5-year low earlier in 2024. They have since spiked higher after the Chinese central bank, the PBOC, cut interest rates and injected more liquidity into both the stock market and the economy to provide a boost to the sluggish economy.
Shares are still underperforming the S&P 500 over the last 5-years.
The stock remains dirt cheap, even with the recent spike in the shares. It has all the hallmarks of a classic value stock including a price-to-earnings (P/E) ratio under 10 at just 8.4.
It has a PEG ratio of just 0.5. A PEG ratio under 1.0 indicates a company has both growth and value.
JD.com also has a cheap price-to-sales (P/S) ratio of just 0.3. A P/S ratio under 1.0 means an investor is buying the sales at a discount. In this case, a JD.com shareholder is getting $1.00 of sales for just $0.30.
In addition to the share repurchase program, JD.com also pays a dividend, yielding 2.2%.
For investors looking to invest in the hoped-for Chinese economic rebound in 2025, e-commerce industry leader, JD.com, should be on your short list.
Civitas Resources, Inc. is facing falling WTI crude prices heading into 2025. This Zacks Rank #5 (Strong Sell) may struggle to grow earnings if crude prices continue to decline.
Civitas Resources is an independent oil and natural gas producer in the Denver-Julesburg and Permian basins in the United States. It has a market cap of $4.86 billion.
Another Miss for Civitas in the Second Quarter of 2024
On Aug 1, 2024, Civitas Resources reported its second quarter 2024 results and missed on the Zacks Consensus for the second quarter in a row. Earnings were $2.06 versus the consensus of $2.93.
Civitas is an "oily" producer, meaning it focuses on oil and not natural gas. Crude oil accounted for 87% of total revenue in the quarter.
Sales of crude oil, natural gas, and natural gas liquids ("NGL") were $1.3 billion which was consistent with that of the first quarter.
Permian Basin sales volumes rose about 12% from the first quarter, driven by strong production from recent Delaware and Midland Basin wells.
Adjusted free cash flow in the quarter was $235.4 million.
Civitas is Shareholder Focused with a Buyback and Dividend Plan
The company is shareholder focused. It returned capital to shareholders in the quarter of $274 million including dividends of $1.50 per share and share repurchases of $125 million. It pays a strong base dividend and a variable dividend of at least 50% of its free cash flow.
Beginning in the third quarter, the variable return of capital will be allocated through a combination of common stock repurchases and dividends, with the quarterly allocation between the two determined by management and the Board.
The quarterly base dividend remains at $0.50 per share. That's currently a yield of 3.9%.
Earnings Estimates Get Cut
With WTI crude back trading under $70, it's not surprising that the analysts have been cutting their earnings estimates on Civitas.
For 2024, 1 estimate was cut in the last 30 days but 4 were cut prior to that, in the last 60 days. The full year earnings estimate has fallen to $10.05 from $12.13.
However, it is still earnings growth of 11.4% over last year, when Civitas made $9.02.
Estimates have also been cut for 2025 in the last 60 days. 6 earnings estimates were cut during that time, pushing the Zacks Consensus Estimate down to $10.69 from $13.06 just 60 days prior. That's still earnings growth of 6.4%.
However, it doesn't look good on the chart. If WTI crude prices fall further, look for earnings to continue to fall.
Is Civitas a Value Trap?
Shares of Civitas have fallen sharply over the last year but earnings are still expected to grow this year and next (for now).
Civitas now has a forward P/E of just 5.1. But a price-to-earnings ratio that is extremely low can indicate that a stock is a value trap.
With the Saudis signaling they are going to increase production starting in Dec 2024, there is a lot of uncertainty about crude prices.
Investors might want to stay on the sidelines and wait for clarification on crude prices before diving into an oil and natural gas producer like Civitas.
Additional content:
NVIDIA Stock Post 3-Month Split: Buy, Hold, or Sell?
NVIDIA Corp. was the top performer on the S&P 500 in 2023 and continued its upward movement this year due to its sheer dominance in the artificial intelligence (AI) chip market.
However, NVIDIA stock breezed past $1,000 in early 2024, making it inaccessible for many investors. So, a stock split was initiated in early June. Let's examine NVIDIA's performance following the split to determine its present investment potential.
NVIDIA Stock Performance – Positive After Stock Split
In May, NVIDIA declared its intention to split its stock in a 10-for-1 ratio. Immediately after the announcement, the stock climbed from around $900 to more than $1,000. Between the announcement and the split date (Friday, June 7), NVIDIA stock soared about 30%. Post-split, it opened on June 10 at about $120, now trading at around $123, marking a more than 2% increase.
NVIDIA stock, historically, has gained two out of three times in the three months following a stock split. A Statista report using Bank of America Corp.'s data found that companies that split their stocks had an average return of more than 25% in the 12 months post-split, double the S&P 500's average return in the same period.
Fed Rate Cuts Boost NVIDIA Stock
After the split, NVIDIA stock got a boost from the Federal Reserve's interest rate cuts. The Fed trimmed interest rates by 50 basis points to support economic growth. The Fed eased its monetary policy for the first time in four years.
Lower interest rates are expected to reduce NVIDIA's borrowing costs and boost profit margins. Lower interest rates also don't affect NVIDIA's cash flows necessary for growth initiatives.
Going back to the 1990s, the NVIDIA stock gained, on average, 20.7% in the 12 months following an interest rate cut, while the S&P 500 jumped only 2.9%, according to Dow Jones Market Data.
Key Tailwinds for NVIDIA Stock
Dominance in the graphic processing unit (GPU) market, shipment of the most sought-after Blackwell chips by year-end and significant growth in the AI market also boosted NVIDIA stock.
The widespread use of NVIDIA's CUDA software platform over Advanced Micro Devices, Inc.'s ROCm software platform has given it the bulk share in the GPU market, which is projected to reach $1,414.39 billion by 2034 from $75.77 billion in 2024, according to Precedence Research.
CEO Jensen Huang, meanwhile, assured that the high-end Blackwell chips will be available soon to cater to high demand. This is because the Blackwell chips have more AI throughput than the current Hopper chips.
A recent report by Bain Technology showed that the AI hardware and software market is estimated to grow to $990 billion by 2027 from around $185 billion in the current year, crushing any concerns that the big cloud companies are contemplating spending big on AI.
NVIDIA benefits from the AI boom as a key hardware and technology provider for AI applications. It expects revenues of $10 billion for 2024 from the government's sovereign AI investments, a significant increase from zero last year, per the Bain Technology report.
Strong Fundamentals to Drive NVIDIA Stock
NVIDIA's ability to generate profits proficiently and manage costs efficiently is likely to drive up its future share price based on its return on equity (ROE) and net profit margin.
NVIDIA's ROE is 120%, surpassing the Semiconductor - General industry's 73.2%. Any reading above 100% indicates the company's net income is exceeding its equity.
NVIDIA's shares rose post-split due to macro trends and continue to be a Wall Street darling based on strong fundamentals.
Prominent brokers have also increased the average short-term price target of NVDA by 23.7% from the stock's last closing price of $120.87, while the highest price target is $200, a massive upside of 65.5%.
Moreover, the NVIDIA stock is currently trading above the 50-day moving average (DMA) and the 200-DMA, indicating a near-term bullish trend.
NVIDIA stakeholders, therefore, should retain their market share due to the strong price upside, making selling unlikely. However, NVIDIA stock's meteoric rise in the past few years due to the advent of AI has made the stock expensive.
New buyers, thus, should wait for an opportune moment to invest in NVIDIA. After all, per the price/earnings, the stock is trading at 43.8X, above the peer group's 18.2X forward earnings multiple.
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/performancefor information about the performance numbers displayed in this press release.
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JD.com and Civitas Resources have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 27, 2024 – Zacks Equity Research shares JD.com, Inc. JD as the Bull of the Day and Civitas Resources, Inc. (CIVI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corp. (NVDA - Free Report) , Bank of America Corp.'s (BAC - Free Report) and Advanced Micro Devices, Inc.'s (AMD - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
JD.com, Inc., the Chinese online retail and supply chain giant, is dirt cheap. This Zacks Rank #1 (Strong Buy) has plunged to 5-year lows but earnings are expected to rise by the double digits this year.
JD.com is a Chinese supply chain-based technology and service provider. It seeks to enable consumers to buy whatever they want, whenever and wherever they want it.
$5 Billion Share Repurchase Plan Announced
How cheap are JD.com shares? So cheap that on Aug 27, 2024, JD.com announced a new share repurchase program effective as of Sep 2024.
The company can repurchase up to $5 billion in shares over the next 36 months, or through the end of Aug 2027.
Another Earnings Beat for JD.com in the Second Quarter
On Aug 15, 2024, JD.com reported its second quarter earnings results and beat on the Zacks Consensus by $0.43. Earnings were $1.29 versus the consensus of $0.86.
It has an impressive earnings surprise track record, having beaten every quarter for 5 years. That includes the difficult quarters during the pandemic when global economies were shut.
Revenues were up just 1.2% to $40.1 billion year-over-year, however, as electronics and home appliances cooled from a year ago but the general merchandise category, especially supermarket, remained strong.
Gross margin rose 137 bps to 15.8%.
Analysts Still Bullish on JD.com
Investors may be bearish on the company, but the analysts are not.
2 earnings estimates were revised higher for 2024 in the last 60 days which pushed the Zacks Consensus Estimate up to $3.97 from $3.40. JD.com made just $3.12 in 2023, so that is earnings growth of 27.2%.
Similarly, 2 estimates were also revised higher for 2025 in the last 2 months. The Zacks Consensus jumped to $4.15 from $3.64, which is further earnings growth of 4.5%.
JD.com is Dirt Cheap
Shares of JD.com have been falling the past few years and hit a 5-year low earlier in 2024. They have since spiked higher after the Chinese central bank, the PBOC, cut interest rates and injected more liquidity into both the stock market and the economy to provide a boost to the sluggish economy.
Shares are still underperforming the S&P 500 over the last 5-years.
The stock remains dirt cheap, even with the recent spike in the shares. It has all the hallmarks of a classic value stock including a price-to-earnings (P/E) ratio under 10 at just 8.4.
It has a PEG ratio of just 0.5. A PEG ratio under 1.0 indicates a company has both growth and value.
JD.com also has a cheap price-to-sales (P/S) ratio of just 0.3. A P/S ratio under 1.0 means an investor is buying the sales at a discount. In this case, a JD.com shareholder is getting $1.00 of sales for just $0.30.
In addition to the share repurchase program, JD.com also pays a dividend, yielding 2.2%.
For investors looking to invest in the hoped-for Chinese economic rebound in 2025, e-commerce industry leader, JD.com, should be on your short list.
Bear of the Day:
Civitas Resources, Inc. is facing falling WTI crude prices heading into 2025. This Zacks Rank #5 (Strong Sell) may struggle to grow earnings if crude prices continue to decline.
Civitas Resources is an independent oil and natural gas producer in the Denver-Julesburg and Permian basins in the United States. It has a market cap of $4.86 billion.
Another Miss for Civitas in the Second Quarter of 2024
On Aug 1, 2024, Civitas Resources reported its second quarter 2024 results and missed on the Zacks Consensus for the second quarter in a row. Earnings were $2.06 versus the consensus of $2.93.
Civitas is an "oily" producer, meaning it focuses on oil and not natural gas. Crude oil accounted for 87% of total revenue in the quarter.
Sales of crude oil, natural gas, and natural gas liquids ("NGL") were $1.3 billion which was consistent with that of the first quarter.
Permian Basin sales volumes rose about 12% from the first quarter, driven by strong production from recent Delaware and Midland Basin wells.
Adjusted free cash flow in the quarter was $235.4 million.
Civitas is Shareholder Focused with a Buyback and Dividend Plan
The company is shareholder focused. It returned capital to shareholders in the quarter of $274 million including dividends of $1.50 per share and share repurchases of $125 million. It pays a strong base dividend and a variable dividend of at least 50% of its free cash flow.
Beginning in the third quarter, the variable return of capital will be allocated through a combination of common stock repurchases and dividends, with the quarterly allocation between the two determined by management and the Board.
The quarterly base dividend remains at $0.50 per share. That's currently a yield of 3.9%.
Earnings Estimates Get Cut
With WTI crude back trading under $70, it's not surprising that the analysts have been cutting their earnings estimates on Civitas.
For 2024, 1 estimate was cut in the last 30 days but 4 were cut prior to that, in the last 60 days. The full year earnings estimate has fallen to $10.05 from $12.13.
However, it is still earnings growth of 11.4% over last year, when Civitas made $9.02.
Estimates have also been cut for 2025 in the last 60 days. 6 earnings estimates were cut during that time, pushing the Zacks Consensus Estimate down to $10.69 from $13.06 just 60 days prior. That's still earnings growth of 6.4%.
However, it doesn't look good on the chart. If WTI crude prices fall further, look for earnings to continue to fall.
Is Civitas a Value Trap?
Shares of Civitas have fallen sharply over the last year but earnings are still expected to grow this year and next (for now).
Civitas now has a forward P/E of just 5.1. But a price-to-earnings ratio that is extremely low can indicate that a stock is a value trap.
With the Saudis signaling they are going to increase production starting in Dec 2024, there is a lot of uncertainty about crude prices.
Investors might want to stay on the sidelines and wait for clarification on crude prices before diving into an oil and natural gas producer like Civitas.
Additional content:
NVIDIA Stock Post 3-Month Split: Buy, Hold, or Sell?
NVIDIA Corp. was the top performer on the S&P 500 in 2023 and continued its upward movement this year due to its sheer dominance in the artificial intelligence (AI) chip market.
However, NVIDIA stock breezed past $1,000 in early 2024, making it inaccessible for many investors. So, a stock split was initiated in early June. Let's examine NVIDIA's performance following the split to determine its present investment potential.
NVIDIA Stock Performance – Positive After Stock Split
In May, NVIDIA declared its intention to split its stock in a 10-for-1 ratio. Immediately after the announcement, the stock climbed from around $900 to more than $1,000. Between the announcement and the split date (Friday, June 7), NVIDIA stock soared about 30%. Post-split, it opened on June 10 at about $120, now trading at around $123, marking a more than 2% increase.
NVIDIA stock, historically, has gained two out of three times in the three months following a stock split. A Statista report using Bank of America Corp.'s data found that companies that split their stocks had an average return of more than 25% in the 12 months post-split, double the S&P 500's average return in the same period.
Fed Rate Cuts Boost NVIDIA Stock
After the split, NVIDIA stock got a boost from the Federal Reserve's interest rate cuts. The Fed trimmed interest rates by 50 basis points to support economic growth. The Fed eased its monetary policy for the first time in four years.
Lower interest rates are expected to reduce NVIDIA's borrowing costs and boost profit margins. Lower interest rates also don't affect NVIDIA's cash flows necessary for growth initiatives.
Going back to the 1990s, the NVIDIA stock gained, on average, 20.7% in the 12 months following an interest rate cut, while the S&P 500 jumped only 2.9%, according to Dow Jones Market Data.
Key Tailwinds for NVIDIA Stock
Dominance in the graphic processing unit (GPU) market, shipment of the most sought-after Blackwell chips by year-end and significant growth in the AI market also boosted NVIDIA stock.
The widespread use of NVIDIA's CUDA software platform over Advanced Micro Devices, Inc.'s ROCm software platform has given it the bulk share in the GPU market, which is projected to reach $1,414.39 billion by 2034 from $75.77 billion in 2024, according to Precedence Research.
CEO Jensen Huang, meanwhile, assured that the high-end Blackwell chips will be available soon to cater to high demand. This is because the Blackwell chips have more AI throughput than the current Hopper chips.
A recent report by Bain Technology showed that the AI hardware and software market is estimated to grow to $990 billion by 2027 from around $185 billion in the current year, crushing any concerns that the big cloud companies are contemplating spending big on AI.
NVIDIA benefits from the AI boom as a key hardware and technology provider for AI applications. It expects revenues of $10 billion for 2024 from the government's sovereign AI investments, a significant increase from zero last year, per the Bain Technology report.
Strong Fundamentals to Drive NVIDIA Stock
NVIDIA's ability to generate profits proficiently and manage costs efficiently is likely to drive up its future share price based on its return on equity (ROE) and net profit margin.
NVIDIA's ROE is 120%, surpassing the Semiconductor - General industry's 73.2%. Any reading above 100% indicates the company's net income is exceeding its equity.
NVIDIA's net profit margin is 55%, more than the industry's 47.6%. Any reading above the 20% threshold indicates a high margin (read more: NVIDIA & 2 Other S&P 500 Stocks Show Strong Earnings Growth).
Here's How to Trade NVIDIA Stock
NVIDIA's shares rose post-split due to macro trends and continue to be a Wall Street darling based on strong fundamentals.
Prominent brokers have also increased the average short-term price target of NVDA by 23.7% from the stock's last closing price of $120.87, while the highest price target is $200, a massive upside of 65.5%.
Moreover, the NVIDIA stock is currently trading above the 50-day moving average (DMA) and the 200-DMA, indicating a near-term bullish trend.
NVIDIA stakeholders, therefore, should retain their market share due to the strong price upside, making selling unlikely. However, NVIDIA stock's meteoric rise in the past few years due to the advent of AI has made the stock expensive.
New buyers, thus, should wait for an opportune moment to invest in NVIDIA. After all, per the price/earnings, the stock is trading at 43.8X, above the peer group's 18.2X forward earnings multiple.
For now, NVIDIA stock has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here.
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.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.