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Limbach and NIKE have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – October 21, 2024 – Zacks Equity Research shares Limbach Holdings, Inc. (LMB - Free Report) as the Bull of the Day and NIKE, Inc. (NKE - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple (AAPL - Free Report) .
Limbach Holdings, Inc. is a rare red-hot small cap company. This Zacks Rank #1 (Strong Buy) is up 85.9% year-to-date.
Limbach is a building systems solutions firm specializing in revitalizing mission-critical electrical, plumbing, and mechanical/HVAC infrastructure within existing buildings.
Headquartered in Pennsylvania, it works with building owners in six markets: healthcare, industrial and manufacturing, data centers, life science, higher education and cultural and entertainment.
Limbach has more than 1200 employees across 19 offices in the eastern United States to provide services essential to the operation of their clients’ business. It’s a small cap company with a market cap of $921.1 million.
Limbach Beat Big in the Second Quarter of 2024
On Aug 6, 2024, Limbach reported its second quarter results and beat on the Zacks Consensus Estimate by 35.1%. Earnings were $0.50 versus the consensus of $0.37.
This was the second big earnings beat in a row.
The company is executing on a strategy to increase its Owner Direct Relationships (“ODR”) business and to lessen its General Contractor Relationships (“GCR”) business.
The ODR business focuses on existing buildings and gets recurring revenue from service and contracts. It’s more stable and resilient against macroeconomic changes.
The GCR business is new construction. It’s more cyclical and can be volatile depending on changes in the economy.
ODR Business Versus the GCR Business
In 2023, the revenue from each business segment had been split 50-50. But the strategy for beyond 2024, is to grow the ODR business into 80% of the revenue versus 20% for the GCR.
Why focus on the ODR business?
The margins are much higher. In 2023, ODR quarterly gross margins ranged from 27.1% to 30.1% but the GCR gross margins only ranged from 15% to 19.3%.
As a result of the focus to growth the ODR business, Limbach saw record gross margins in the second quarter of 2024 of 27.4%.
ODR revenue rose 40.8%, to $82.8 million from $58.8 million a year ago while GCR fell to $39.5 million from $66.1 million the year before.
Total revenue, however, was down 2.1% to $122.2 million from $124.9 million, even as the mix changed.
Limbach believes that while revenue has been flat since 2019, it will improve as the ODR business grows.
The analysts believe that too. While revenue is expected to grow just 1.3% in 2024, the analysts see it jumping 12.8% in 2025.
Analysts are Bullish on Limbach’s Earnings for 2024 and 2025
While revenue is expected to be up only in the single digits, that’s not the case for the earnings.
The 2024 Zacks Consensus is calling for $2.43 versus just $1.76 last year. That’s earnings growth of 38.1%.
2025 is also looking bullish with the Zacks Consensus Estimate jumping to $2.81, which is another 15.6% earnings growth.
Shares of Limbach Soar in 2024
The Street has caught onto the turn towards the higher margin ODR business. The shares are up big this year, easily beating the performance of the NASDAQ.
Limbach isn’t cheap. It has a forward P/E of 33.6.
It will report third quarter earnings in Nov 2024.
If you’re an investor looking for a red-hot small cap growth stock, then Limbach is one to keep on your short list.
NIKE, Inc. is in a turnaround mode as revenue has fallen. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall, as well, by the double digits in fiscal 2025.
NIKE is a designer, marketer and distributor of athletic footwear, apparel, equipment and accessories for many sports and fitness activities. It also owns Converse, which also designs, markets and distributes athletic lifestyle footwear, apparel and accessories.
NIKE Revenue Falls 10% in Q1 of Fiscal 2025
On Oct 1, 2024, NIKE reported its fiscal 2025 first quarter results. It beat again on earnings reporting $0.70 versus the Zacks Consensus of $0.52. That makes it 5 earnings beats in a row
However, revenue fell 10% to $11.6 billion. Both direct revenues and wholesale were down. Direct revenue fell 13% to $4.7 billion while wholesale revenue declined 8% to $6.4 billion.
Converse fell as well, with revenue declining 15% on a reported basis to $501 million.
There was some good news in the report. Gross margin increased 120 basis points to 45.3%.
New CEO Starting in October 2024
On Sep 19, 2024, the NIKE Board of Directors appointed Elliott Hill as President and CEO. It was effective as of Oct 14, 2024.
Given the management changes, NIKE postponed its Investor Day.
NIKE’s Earnings Estimates Plunge
There’s a lot of uncertainty with NIKE due to management changes. The analysts, however, remain bearish.
For fiscal 2025, 13 estimates have been cut in the last 30 days, with one lowered in just the last week.
The fiscal 2025 Zacks Consensus Estimate has fallen to $2.78 from $3.04 in the last month. That is an earnings decline of 29.6% from fiscal 2024 where NIKE made $3.95.
The analysts do expect a rebound in fiscal 2026 with earnings of $3.17 but the analysts were still cutting for that year as well. 13 estimates were cut in the last 30 days with 1 in the last week.
Here’s what it looks like on the 5-year price-and-consensus chart.
Nike Shares Near Multi-Year Lows But Is It Cheap?
Over the past few years, shares of NIKE have plunged to new multi-year lows.
But the shares are still trading with a forward price-to-earnings (P/E) ratio of 29.9. A P/E ratio over 20 is considered a high P/E and not a value.
It also has a PEG ratio, which is the P/E divided by growth, of 2.0. A low PEG ratio is one that is 1.0 and under.
NIKE has a long tradition of being shareholder friendly. It has raised its dividend every year for the last 22 years.
It's currently yielding 1.8%.
Additionally, the company is in the middle of a 4-year $18 billion share repurchase program. As of Aug 31, 2024, $10.2 billion has been repurchased.
Interested in investing in NIKE?
Investors might want to wait to see how the management changes shake out and for earnings estimates to start rising again before buying in.
Additional content:
Apple Shares Hit All-Time High: Time to Buy?
Long-time cash-generating king Apple has been a staple in portfolios over the years, providing investors with outsized gains. And recently, the Mag 7 member hit fresh all-time highs, reflecting considerably bullish price action.
Stocks making new highs tend to make even higher highs, particularly when a company’s outlook remains positive.
Should investors tap into the momentum? Let’s take a closer look at how the tech titan stacks up.
Apple Shares Hit All-Time High
Firstly, investors should be aware the company is expected to report its next set of quarterly results on October 31st after the market’s close.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Expectations for the above-mentioned release are overall flat from the end of July, but the recent downward revisions that hit the tape near the beginning of October are certainly more notable given their recency.
Modest growth is forecasted, with the current $1.54 Zacks Consensus EPS estimate suggesting a 5% climb year-over-year. Top line revisions have been slightly more positive, with forecasted sales of $94.5 billion 5.6% higher than the year-ago figure.
A key item to keep an eye on during the upcoming release is the company’s Services results, which have provided a nice growth tailwind over recent years and have consistently exceeded consensus expectations in recent periods.
For the quarter to be reported, the Zacks Consensus Estimate for Services revenue stands at $25.8 billion, 15% higher than the year-ago mark and reflecting an all-time record. Investors should also expect commentary surrounding the iPhone 16 and its AI efforts as well.
The valuation picture here is a bit rich, likely reflective of investors’ consistent growth expectations. The current forward 12-month earnings multiple works out to 30.5X, well above the 26.3X five-year median but beneath five-year highs of 36.1X.
And the current PEG works out to 2.4X, again above the 2.2X five-year median. The stock sports a Style Score of ‘D’ for Value. While the valuation is undoubtedly a bit steep, the company’s consistent earnings growth over the years helps provide a more positive outlook.
The current forward 12-month earnings multiple reflects a 38% premium relative to the S&P 500.
And its strong cash-generating abilities have provided the flexibility to reward its shareholders nicely, currently sporting a 5% five-year annualized dividend growth rate. Shares reflect a nice opportunity for income-focused investors seeking technology exposure.
Should You Buy Apple Shares?
Apple recently saw its shares touch all-time highs, reflecting bullish momentum. Given its rock-solid fundamentals paired with consistent earnings power, the stock continues to deserve a spot in any investor’s portfolio.
The valuation picture is a bit elevated here, though it’s worth noting that the stock has historically traded at higher multiples given consistently high expectations that have largely been met.
And while the company isn’t posting the breakneck growth that it once enjoyed, Services results paired with optimism surrounding the new iPhone 16 model and AI capabilities should provide bullish tailwinds.
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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Limbach and NIKE have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 21, 2024 – Zacks Equity Research shares Limbach Holdings, Inc. (LMB - Free Report) as the Bull of the Day and NIKE, Inc. (NKE - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple (AAPL - Free Report) .
Here is a synopsis of all three stocks.
Bull of the Day:
Limbach Holdings, Inc. is a rare red-hot small cap company. This Zacks Rank #1 (Strong Buy) is up 85.9% year-to-date.
Limbach is a building systems solutions firm specializing in revitalizing mission-critical electrical, plumbing, and mechanical/HVAC infrastructure within existing buildings.
Headquartered in Pennsylvania, it works with building owners in six markets: healthcare, industrial and manufacturing, data centers, life science, higher education and cultural and entertainment.
Limbach has more than 1200 employees across 19 offices in the eastern United States to provide services essential to the operation of their clients’ business. It’s a small cap company with a market cap of $921.1 million.
Limbach Beat Big in the Second Quarter of 2024
On Aug 6, 2024, Limbach reported its second quarter results and beat on the Zacks Consensus Estimate by 35.1%. Earnings were $0.50 versus the consensus of $0.37.
This was the second big earnings beat in a row.
The company is executing on a strategy to increase its Owner Direct Relationships (“ODR”) business and to lessen its General Contractor Relationships (“GCR”) business.
The ODR business focuses on existing buildings and gets recurring revenue from service and contracts. It’s more stable and resilient against macroeconomic changes.
The GCR business is new construction. It’s more cyclical and can be volatile depending on changes in the economy.
ODR Business Versus the GCR Business
In 2023, the revenue from each business segment had been split 50-50. But the strategy for beyond 2024, is to grow the ODR business into 80% of the revenue versus 20% for the GCR.
Why focus on the ODR business?
The margins are much higher. In 2023, ODR quarterly gross margins ranged from 27.1% to 30.1% but the GCR gross margins only ranged from 15% to 19.3%.
As a result of the focus to growth the ODR business, Limbach saw record gross margins in the second quarter of 2024 of 27.4%.
ODR revenue rose 40.8%, to $82.8 million from $58.8 million a year ago while GCR fell to $39.5 million from $66.1 million the year before.
Total revenue, however, was down 2.1% to $122.2 million from $124.9 million, even as the mix changed.
Limbach believes that while revenue has been flat since 2019, it will improve as the ODR business grows.
The analysts believe that too. While revenue is expected to grow just 1.3% in 2024, the analysts see it jumping 12.8% in 2025.
Analysts are Bullish on Limbach’s Earnings for 2024 and 2025
While revenue is expected to be up only in the single digits, that’s not the case for the earnings.
The 2024 Zacks Consensus is calling for $2.43 versus just $1.76 last year. That’s earnings growth of 38.1%.
2025 is also looking bullish with the Zacks Consensus Estimate jumping to $2.81, which is another 15.6% earnings growth.
Shares of Limbach Soar in 2024
The Street has caught onto the turn towards the higher margin ODR business. The shares are up big this year, easily beating the performance of the NASDAQ.
Limbach isn’t cheap. It has a forward P/E of 33.6.
It will report third quarter earnings in Nov 2024.
If you’re an investor looking for a red-hot small cap growth stock, then Limbach is one to keep on your short list.
Bear of the Day:
NIKE, Inc. is in a turnaround mode as revenue has fallen. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall, as well, by the double digits in fiscal 2025.
NIKE is a designer, marketer and distributor of athletic footwear, apparel, equipment and accessories for many sports and fitness activities. It also owns Converse, which also designs, markets and distributes athletic lifestyle footwear, apparel and accessories.
NIKE Revenue Falls 10% in Q1 of Fiscal 2025
On Oct 1, 2024, NIKE reported its fiscal 2025 first quarter results. It beat again on earnings reporting $0.70 versus the Zacks Consensus of $0.52. That makes it 5 earnings beats in a row
However, revenue fell 10% to $11.6 billion. Both direct revenues and wholesale were down. Direct revenue fell 13% to $4.7 billion while wholesale revenue declined 8% to $6.4 billion.
Converse fell as well, with revenue declining 15% on a reported basis to $501 million.
There was some good news in the report. Gross margin increased 120 basis points to 45.3%.
New CEO Starting in October 2024
On Sep 19, 2024, the NIKE Board of Directors appointed Elliott Hill as President and CEO. It was effective as of Oct 14, 2024.
Given the management changes, NIKE postponed its Investor Day.
NIKE’s Earnings Estimates Plunge
There’s a lot of uncertainty with NIKE due to management changes. The analysts, however, remain bearish.
For fiscal 2025, 13 estimates have been cut in the last 30 days, with one lowered in just the last week.
The fiscal 2025 Zacks Consensus Estimate has fallen to $2.78 from $3.04 in the last month. That is an earnings decline of 29.6% from fiscal 2024 where NIKE made $3.95.
The analysts do expect a rebound in fiscal 2026 with earnings of $3.17 but the analysts were still cutting for that year as well. 13 estimates were cut in the last 30 days with 1 in the last week.
Here’s what it looks like on the 5-year price-and-consensus chart.
Nike Shares Near Multi-Year Lows But Is It Cheap?
Over the past few years, shares of NIKE have plunged to new multi-year lows.
But the shares are still trading with a forward price-to-earnings (P/E) ratio of 29.9. A P/E ratio over 20 is considered a high P/E and not a value.
It also has a PEG ratio, which is the P/E divided by growth, of 2.0. A low PEG ratio is one that is 1.0 and under.
NIKE has a long tradition of being shareholder friendly. It has raised its dividend every year for the last 22 years.
It's currently yielding 1.8%.
Additionally, the company is in the middle of a 4-year $18 billion share repurchase program. As of Aug 31, 2024, $10.2 billion has been repurchased.
Interested in investing in NIKE?
Investors might want to wait to see how the management changes shake out and for earnings estimates to start rising again before buying in.
Additional content:
Apple Shares Hit All-Time High: Time to Buy?
Long-time cash-generating king Apple has been a staple in portfolios over the years, providing investors with outsized gains. And recently, the Mag 7 member hit fresh all-time highs, reflecting considerably bullish price action.
Stocks making new highs tend to make even higher highs, particularly when a company’s outlook remains positive.
Should investors tap into the momentum? Let’s take a closer look at how the tech titan stacks up.
Apple Shares Hit All-Time High
Firstly, investors should be aware the company is expected to report its next set of quarterly results on October 31st after the market’s close.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Expectations for the above-mentioned release are overall flat from the end of July, but the recent downward revisions that hit the tape near the beginning of October are certainly more notable given their recency.
Modest growth is forecasted, with the current $1.54 Zacks Consensus EPS estimate suggesting a 5% climb year-over-year. Top line revisions have been slightly more positive, with forecasted sales of $94.5 billion 5.6% higher than the year-ago figure.
A key item to keep an eye on during the upcoming release is the company’s Services results, which have provided a nice growth tailwind over recent years and have consistently exceeded consensus expectations in recent periods.
For the quarter to be reported, the Zacks Consensus Estimate for Services revenue stands at $25.8 billion, 15% higher than the year-ago mark and reflecting an all-time record. Investors should also expect commentary surrounding the iPhone 16 and its AI efforts as well.
The valuation picture here is a bit rich, likely reflective of investors’ consistent growth expectations. The current forward 12-month earnings multiple works out to 30.5X, well above the 26.3X five-year median but beneath five-year highs of 36.1X.
And the current PEG works out to 2.4X, again above the 2.2X five-year median. The stock sports a Style Score of ‘D’ for Value. While the valuation is undoubtedly a bit steep, the company’s consistent earnings growth over the years helps provide a more positive outlook.
The current forward 12-month earnings multiple reflects a 38% premium relative to the S&P 500.
And its strong cash-generating abilities have provided the flexibility to reward its shareholders nicely, currently sporting a 5% five-year annualized dividend growth rate. Shares reflect a nice opportunity for income-focused investors seeking technology exposure.
Should You Buy Apple Shares?
Apple recently saw its shares touch all-time highs, reflecting bullish momentum. Given its rock-solid fundamentals paired with consistent earnings power, the stock continues to deserve a spot in any investor’s portfolio.
The valuation picture is a bit elevated here, though it’s worth noting that the stock has historically traded at higher multiples given consistently high expectations that have largely been met.
And while the company isn’t posting the breakneck growth that it once enjoyed, Services results paired with optimism surrounding the new iPhone 16 model and AI capabilities should provide bullish tailwinds.
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
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/performance for information about the performance numbers displayed in this press release.