Perficient, Colgate-Palmolive, Boeing, Columbia Sportswear and Foot Locker highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 12, 2019 – Zacks Equity Research Perficient PRFT as the Bull of the Day, Colgate-Palmolive CL asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Boeing BA, Columbia Sportswear COLM and Foot Locker FL.
Here is a synopsis of all five stocks:
Bull of the Day:
Perficient is a Zacks Rank #1 (Strong Buy) and has a solid growth style score of B. You know that puts it on my radar screen as I am always looking for growth stocks. Let’s take a look at why this stock is the Bull of the Day.
Description
Perficient is the leading digital transformation consulting firm with unparalleled information technology, management consulting, and creative capabilities, Perficient and its Perficient Digital agency deliver vision, execution, and value with outstanding digital experience, business optimization, and industry solutions. Their work enables clients to improve productivity and competitiveness; grow and strengthen relationships with customers, suppliers, and partners; and reduce costs. Its solutions include big data and analytics, technology platform implementations, commerce, enterprise content management, portals and collaboration, management consulting, custom applications, business integration, business process management, and customer relationship management, among others.
Earnings History
I see a solid earnings history and that is important to any investment thesis. You want to own stocks that are consistently beating expectations. The reason for this is that management is good enough to understand their business and still able to communicate where Wall Street’s expectations should lie. That way, they can always beat the number.
The most recent earnings on 2/26 was a solid beat of 7 cents in reporting EPS of $0.47 on $131.7M in sales compared to the $128.3M expectation.
Estimate Revisions
Following this beat, the Zacks Consensus Estimate moved higher. Higher for this quarter, next quarter, the full year and next fiscal year. I have to tell you, that is what investors like to see after a beat, strong estimate revisions that continue on a year out.
The current quarter raised up from $0.39 to $0.40 while the full year moved from $1.67 to $1.69. Next year has limited visibility at this point, but that didn’t stop analysts from moving their numbers up and that pushed the consensus to $1.88 from $1.86.
Valuation
The value style score for this stock is a C, but it looks like it should be a lot higher to me. I see a forward PE of 16x which is very reasonable and much better than the 22x trailing PE. The price to book of 2.6x is below the 3x level that many value investors use are a cut off. Finally I see the price to sales at 1.8x and that is comfortably above the 1x level that I like to see. With margins inching higher, this stock looks like an excellent value here.
Bear of the Day:
Colgate-Palmolive is a Zacks Rank #5 (Strong Sell) and is the Bear of the Day. Let's take a look at why this stock has the lowest of all the Zacks Ranks and if there are any silver linings to this playbook.
Description
Colgate-Palmolive is a leading global consumer products company, tightly focused on Oral Care, Personal Care, Home Care and Pet Nutrition. Colgate sells its products in over 200 countries and territories around the world under such internationally recognized brand names as Colgate, Palmolive, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, elmex, Tom's of Maine, Sanex, Ajax, Axion, Soupline, and Suavitel, as well as Hill's Science Diet, Hill's Prescription Diet and Hill's Ideal Balance. As a leading consumer products company, they are also deeply committed to advancing technology that can address changing consumer needs throughout the world. In fact, their goal is to use technology to create products that will continue to improve the quality of life for consumers where they live.
Earnings History
When I think of a Bear of the Day, I normally see a stock that has missed a few times in the last year. That is not the case for CL, as the company has met or beat the Zacks Consensus Estimate in each of the last four quarters.
Estimate Revisions
A quick glance at the estimate revisions tells me immediately why this is a Zacks Rank #5 (Strong Sell). I see the current quarter estimate has moved from $0.72 to $0.66. That is not what we want to see. The next quarter has also seen a move lower by another nickel.
The full year 2019 number has slid from $3.03 to $2.83 over the last 60 days. The 2020 number has also moved lower by 17 cents over the same time horizon to $3.01.
The big move lower in earnings estimates is the primary reason for the lower Zacks Rank.
Additional content:
The Ides of March: Global Week Ahead
A Series of Three Brexit Votes This Week
Three votes in three days!
The Brexit saga returns with a vengeance on March 12 when Prime Minister Theresa May risks another crushing defeat of the deal she’s negotiated with the EU. Another defeat for May — who as of Monday had no new concessions from Brussels to present to Parliament — could just reignite fears about an eventual no-deal outcome. It will also deal a blow to the pound that’s rallied in recent weeks as this risk was priced out.
If May loses the vote, lawmakers will get to vote on March 13 and 14 to rule out a no-deal Brexit and on delaying Britain’s departure. Depending on whom you ask, agreement to delay will either settle nerves or prolong the unknown.
A Reuters poll of economists predicted Brexit would be delayed by a few months, with a free-trade deal eventually agreed. But uncertainty is showing up in currency derivatives markets, with one-month implied volatility — capturing the March 29 Brexit date — at its highest since mid-January. The pound too has come off recent highs.
Sluggish China Growth in Focus
The message that rang loud and clear from China’s annual parliament meeting was: stability is paramount.
Which is why the authorities kept growth targets within a broad 6.0-6.5 percent range, cut taxes but kept fiscal easing well short of 2015 levels. And they emphasized yuan stability as a priority. Yet, reading between the lines, one might conclude that to keep growth above 6 percent, China needs to be flexible about credit growth and deficit targets.
But after February’s 20 percent-plus exports contraction and the sharp imports slowdown, it seems a matter of when, not if, benchmark interest rates will be cut.
Upcoming data on industrial output, retail sales, housing and credit will also come against the backdrop of speculation about what deal U.S. President Donald Trump and his Chinese counterpart Xi Jinping will eventually reach on those all-important trade tariffs.
Another Emerging Market Currency Crisis?
The Argentine peso in recent days has led emerging currencies in a race to the bottom, plumbing record lows. Others such as the Turkish lira and South African rand have followed closely.
One culprit is the strong dollar, which has surged to its highest level since June 2017. But domestic factors are also to blame. Aside from problematic politics and high inflation, Turkey, Argentina and South Africa rely heavily on external financing. Slowing world growth will weigh on such markets’ prospects. Turkey and Argentina were also clobbered with economic forecast downgrades by the OECD, while South Africa’s economy too has slowed.
There are signs investment into emerging equities and bonds is starting to slow. It all stirs memories from 2018 when a buoyant first quarter dissolved into selling, with Turkey and Argentina getting walloped by currency crises. Both countries have since taken steps to recover. Investors will be wondering whether those are sufficient to stop history repeating.
Top Zacks #1 Rank (STRONG BUY) Stocks—
Boeing:The grounding of 737s by China and India won’t be kind to this pick. It has a Value Score of D too. Can the DJIA stand up if this stock heads south? I doubt it. A $422 share price and lofty second place in market cap in our rankings, at $239B are scary.
Columbia Sportswear: This $6.9B market cap apparel maker sports a $100 a share price. The Zacks VGM score is A too. Not all apparel makers are struggling, obviously.
Foot Locker: This is a $6.8B market cap retailer of shoes and apparel with a $60 share price. It is a Zacks VGM score of B too.
With all the focus on retail sales this week, these retail and apparel stocks will be in focus.
Global Macro—
Keep your eyes on retail sales data, from the U.S., Mexico, and Brazil.
On Tuesday, U.K. GDP comes out. The -0.4 m/m rate is sluggish. A host of other U.K. indicators like industrial production, construction output, and an index of services also come out.
South Korea’s unemployment rate should get to 4.2% from 4.4% in a prior reading. That sounds like a solid performance.
The U.S. CPI comes out.
On Wednesday, U.S Durable Goods orders come out. Ex-transportation, they could be +0.2% m/m.
The U.S. PPI also comes out. +0.2% m/m is the consensus there.
On Thursday, the HICP in Germany comes out. That +1.7% y/y consumer inflation reading will be closely watched, given the recent slowdown in GDP data there.
Broad retail sales in Brazil should climb to +2.7% y/y from +1.8% y/y.
On Friday, the Bank of Japan updates us on its target rate (now -0.1%) and its 10-year yield target (now 0.0%). Don’t expect any change.
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