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I tend to pick on individual companies for extended periods of time. Frankly, I can be a bit of a bully. However, I don’t hold a grudge. If a company starts to turn things around, then I am fully capable of changing my mind about it. That’s exactly what’s happening here with today’s Bull of the Day. It’s a stock I made fun of for a long time. It was an easy target though, with estimates falling as quickly as the stock price. But I think it’s beginning to turn the corner here for the better.
Today’s Bull of the Day is retail store operator Buckle. The Buckle, Inc. operates as a retailer of casual apparel, footwear, and accessories for young men and women in the United States. The company markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear. It operates stores under the Buckle and The Buckle names. The company also sells its products through its Website, buckle.com. As of January 18, 2016, it operated 467 retail stores in 44 states.
I’ve said it a thousand times before, the single most important chart investors can use to analyze their stocks is the Price, Consensus and Surprise chart on Zacks. While price trends can shift on a dime, earnings trends take much longer to develop. As such, they take time to turnaround as well. The good news is, once the ship has been turned back around in the right direction, it tends to stay in that direction.
Looking at that chart on Buckle you can see why I hated on the stock for so long. Estimates continued to plummet and there was little chance of success. Even as these estimates plummeted, I didn’t feel the company was coming to grips with the grim situation. However, note the turnaround in estimates for not only this year but next year’s consensus numbers. This tells me that the bounce the stock has taken off the lows was justified. It wasn’t just a dead cat.
The question will certainly become whether or not the turnaround can continue. Over the last month, our Zacks Consensus Estimate for the current quarter has gone from 65 cents to 72 cents. That move is helping to push up the current year number from $1.60 to $1.70. There’s still contraction on the table for next year as analysts are only looking for $1.40. However, it’s important to note that they were looking for $1.22 a month ago. The bullish uptick in these numbers tells me that there could be a bullish end it sight. It’s going to take a little bit of patience but investors may be rewarded.
Years of pent up demand led to the best auto sales ever. Low interest rates and new innovations help get car buyers off the sidelines and into new vehicles. But there’s a problem. This carousel is about to end, especially on the luxury side of things. As part of that new wave of car buying, a great deal of vehicles were being leased. That’s great when you’re reporting your numbers but not so great when it’s time to turn those leases in.
What’s happening right now is a glut of supply in used cars. This supply glut is putting pressure on used car prices. That, in turn, really hurts the new car sales because it’s making leasing more expensive. When you lease a car essentially what you are doing is financing the expected depreciation of the new vehicle. In order to calculate the depreciation, finance companies use what’s known as a residual value. This is the agreed upon value which the customer and the dealer say the car will be worth at the end of the lease. As used cars flood the market they drop the prices of used cars and send residual values tumbling. That then makes new cars harder to lease because the customer has to pay for more depreciation. This is occurring as new car prices are rising and interest rates are on the move. That sets up a tough scenario for new cars.
Enter today’s Bear of the Day Nissan. Obviously Nissan owns its namesake but it also owns the luxury car brand Infiniti. It’s the Infiniti side of the business that’s likely to come under pressure this year. While luxury crossover SUVs have been hot selling items, the sedan segment is likely to struggle. For luxury car makers, this could lead to more lean times.
Analysts agree as they’ve come out and dropped their earnings estimates for Nissan. We’ve seen our Zacks Consensus Estimates drop for the current quarter, next quarter, current year and next year. The most dramatic shift has been seen in our number for next year where consensus has gone from $2.71 to $2.48. That now represents only a 1 penny gain over the current year now calling for $2.74 after being as high as $2.64.
Additional content:
Here’s Why Big Banks Climbed Wednesday
Shares of the country’s largest banks—including Bank of America, Citigroup and JPMorgan Chase — gained on Wednesday, helping lift indexes that were otherwise battered by an industry-wide slump in tech stocks.
Banks are starting to pick up momentum on the back of two key forces in Washington D.C. First, the entire financial sector—which witnessed huge gains after the election of Donald Trump’s surprise election victory last year—has surged as Republicans continue to make progress on their tax reform bill.
After a luncheon with President Trump on Tuesday helped convince two previously on-the-fence budget committee members to approve the bill, GOP leaders now expect the reform package to see a final vote on the Senate floor as soon as later this week.
The bill would slash the corporate tax rate from 35% to 20%, which should help the bottom lines of large businesses like the aforementioned banking behemoths.
Maybe more importantly, investors were pleased with the testimony of Fed chair nominee Jerome Powell this week.
Powell—President Trump’s pick to succeed Janet Yellen as the head of the Federal Reserve—all but confirmed that the central bank is on track to raise interest rates at its next policy meeting in December. The nominee also suggested that deregulation might be necessary in today’s banking industry (also read: 5 Bank Stocks to Buy on Jerome H. Powell Testimony).
Finally, rising yields and Brexit related news could be playing into today’s banking rally. The U.S. 10-year Treasury yield was up more than 2.3% on Wednesday, alleviating some worry about a weaker economic outlook and lifting financials that hold credit balances. Meanwhile, the U.K. and E.U. appear close to agreeing to a Brexit deal, which could ease concerns about U.S. banks with large footholds in London.
Shares of JPMorgan, Bank of America and Citigroup were all up slightly more than 2% in early afternoon trading hours Wednesday. JPMorgan’s gains helped lift the Dow into the green, while the entire banking rally protected the S&P 500 index from the tech selloff.
The tech-heavy Nasdaq Composite Index was down nearly 1.3%, providing evidence to the theory that investors may finally be cashing out of the red-hot sector. Tech has dominated Wall Street throughout 2017, but after a relatively strong Q3 earnings season for the industry giants, it could very well be profit taking time.
It is also worth noting that large funds are beginning their rebalancing process as we approach the end of the month, so we could be seeing the effects of some serious money moving around. What’s more, several geopolitical sagas—most notably the North Korean regime’s latest missile test—could be inspiring investors to move to more “tried-and-true” sectors.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now. Click here to see them >>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Buckle, Nissan, Bank of America, Citigroup and JPMorgan as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 30, 2017 – Zacks Equity Research highlights Buckle (BKE - Free Report) as the Bull of the Day and Nissan (NSANY - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America (BAC - Free Report) , Citigroup (C - Free Report) and JPMorgan Chase (JPM - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
I tend to pick on individual companies for extended periods of time. Frankly, I can be a bit of a bully. However, I don’t hold a grudge. If a company starts to turn things around, then I am fully capable of changing my mind about it. That’s exactly what’s happening here with today’s Bull of the Day. It’s a stock I made fun of for a long time. It was an easy target though, with estimates falling as quickly as the stock price. But I think it’s beginning to turn the corner here for the better.
Today’s Bull of the Day is retail store operator Buckle. The Buckle, Inc. operates as a retailer of casual apparel, footwear, and accessories for young men and women in the United States. The company markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear. It operates stores under the Buckle and The Buckle names. The company also sells its products through its Website, buckle.com. As of January 18, 2016, it operated 467 retail stores in 44 states.
I’ve said it a thousand times before, the single most important chart investors can use to analyze their stocks is the Price, Consensus and Surprise chart on Zacks. While price trends can shift on a dime, earnings trends take much longer to develop. As such, they take time to turnaround as well. The good news is, once the ship has been turned back around in the right direction, it tends to stay in that direction.
Looking at that chart on Buckle you can see why I hated on the stock for so long. Estimates continued to plummet and there was little chance of success. Even as these estimates plummeted, I didn’t feel the company was coming to grips with the grim situation. However, note the turnaround in estimates for not only this year but next year’s consensus numbers. This tells me that the bounce the stock has taken off the lows was justified. It wasn’t just a dead cat.
The question will certainly become whether or not the turnaround can continue. Over the last month, our Zacks Consensus Estimate for the current quarter has gone from 65 cents to 72 cents. That move is helping to push up the current year number from $1.60 to $1.70. There’s still contraction on the table for next year as analysts are only looking for $1.40. However, it’s important to note that they were looking for $1.22 a month ago. The bullish uptick in these numbers tells me that there could be a bullish end it sight. It’s going to take a little bit of patience but investors may be rewarded.
Bear of the Day:
Years of pent up demand led to the best auto sales ever. Low interest rates and new innovations help get car buyers off the sidelines and into new vehicles. But there’s a problem. This carousel is about to end, especially on the luxury side of things. As part of that new wave of car buying, a great deal of vehicles were being leased. That’s great when you’re reporting your numbers but not so great when it’s time to turn those leases in.
What’s happening right now is a glut of supply in used cars. This supply glut is putting pressure on used car prices. That, in turn, really hurts the new car sales because it’s making leasing more expensive. When you lease a car essentially what you are doing is financing the expected depreciation of the new vehicle. In order to calculate the depreciation, finance companies use what’s known as a residual value. This is the agreed upon value which the customer and the dealer say the car will be worth at the end of the lease. As used cars flood the market they drop the prices of used cars and send residual values tumbling. That then makes new cars harder to lease because the customer has to pay for more depreciation. This is occurring as new car prices are rising and interest rates are on the move. That sets up a tough scenario for new cars.
Enter today’s Bear of the Day Nissan. Obviously Nissan owns its namesake but it also owns the luxury car brand Infiniti. It’s the Infiniti side of the business that’s likely to come under pressure this year. While luxury crossover SUVs have been hot selling items, the sedan segment is likely to struggle. For luxury car makers, this could lead to more lean times.
Analysts agree as they’ve come out and dropped their earnings estimates for Nissan. We’ve seen our Zacks Consensus Estimates drop for the current quarter, next quarter, current year and next year. The most dramatic shift has been seen in our number for next year where consensus has gone from $2.71 to $2.48. That now represents only a 1 penny gain over the current year now calling for $2.74 after being as high as $2.64.
Additional content:
Here’s Why Big Banks Climbed Wednesday
Shares of the country’s largest banks—including Bank of America, Citigroup and JPMorgan Chase — gained on Wednesday, helping lift indexes that were otherwise battered by an industry-wide slump in tech stocks.
Banks are starting to pick up momentum on the back of two key forces in Washington D.C. First, the entire financial sector—which witnessed huge gains after the election of Donald Trump’s surprise election victory last year—has surged as Republicans continue to make progress on their tax reform bill.
After a luncheon with President Trump on Tuesday helped convince two previously on-the-fence budget committee members to approve the bill, GOP leaders now expect the reform package to see a final vote on the Senate floor as soon as later this week.
The bill would slash the corporate tax rate from 35% to 20%, which should help the bottom lines of large businesses like the aforementioned banking behemoths.
Maybe more importantly, investors were pleased with the testimony of Fed chair nominee Jerome Powell this week.
Powell—President Trump’s pick to succeed Janet Yellen as the head of the Federal Reserve—all but confirmed that the central bank is on track to raise interest rates at its next policy meeting in December. The nominee also suggested that deregulation might be necessary in today’s banking industry (also read: 5 Bank Stocks to Buy on Jerome H. Powell Testimony).
Finally, rising yields and Brexit related news could be playing into today’s banking rally. The U.S. 10-year Treasury yield was up more than 2.3% on Wednesday, alleviating some worry about a weaker economic outlook and lifting financials that hold credit balances. Meanwhile, the U.K. and E.U. appear close to agreeing to a Brexit deal, which could ease concerns about U.S. banks with large footholds in London.
Shares of JPMorgan, Bank of America and Citigroup were all up slightly more than 2% in early afternoon trading hours Wednesday. JPMorgan’s gains helped lift the Dow into the green, while the entire banking rally protected the S&P 500 index from the tech selloff.
The tech-heavy Nasdaq Composite Index was down nearly 1.3%, providing evidence to the theory that investors may finally be cashing out of the red-hot sector. Tech has dominated Wall Street throughout 2017, but after a relatively strong Q3 earnings season for the industry giants, it could very well be profit taking time.
It is also worth noting that large funds are beginning their rebalancing process as we approach the end of the month, so we could be seeing the effects of some serious money moving around. What’s more, several geopolitical sagas—most notably the North Korean regime’s latest missile test—could be inspiring investors to move to more “tried-and-true” sectors.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now. Click here to see them >>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.