For Immediate Release
Chicago, IL – January 19, 2023 – Zacks Equity Research shares Conagra Brands CAG as the Bull of the Day and Advance Auto Parts AAP as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Casey’s General Stores, Inc. CASY, Arhaus, Inc. ARHS and Capri Holdings Ltd. CPRI.
Here is a synopsis of all five stocks:
Bull of the Day:
With the calendar flipped to a new year and some investors looking for new portfolio adds, it’s beneficial to remember the importance of targeting sectors witnessing positive earnings estimate revisions.
That’s precisely what the Zacks Consumer Staples sector has seen, currently ranked #3 out of all 16 Zacks sectors.
And as we’re all highly aware, 50{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} of a stock’s price movement can be attributed to the group it’s in, further stating the importance of targeting areas that analysts have recently become bullish on.
One company residing in the sector, Conagra Brands, has seen its earnings outlook drift higher across all timeframes over the last several months.
Conagra Brands is one of North America’s leading branded food companies, offering premium edible products with a refined focus on innovation.
Let’s take a closer look at the company.
Share Performance
CAG shares have been visibly strong over the last year, up a double-digit 12{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} and widely outperforming the S&P 500’s performance.
And over the last three months, Conagra shares have continued on their market-beating trajectory, up 11{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} compared to the S&P500’s nearly 8{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} gain.
The relatively strong share performance indicates that buyers have been in control, something we can’t say for many stocks over the last year.
Valuation
The company’s valuation multiples aren’t stretched; CAG shares trade at a 15X forward earnings multiple, just a tick above the 14.3X five-year median and below its Zacks sector average.
Conagra’s forward price-to-sales currently works out to be 1.6X, again marginally above the five-year median but below its Zacks sector average.
Dividends
Who doesn’t enjoy getting paid?
Fortunately for those seeking income, CAG has that covered; the company’s annual dividend yield stands tall at 3.3{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, well above that of its Zacks sector average.
Impressively, the company has grown its payout by more than 12{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} over the last five years.
Quarterly Performance
For the cherry on top, CAG has had little issues exceeding quarterly estimates, surpassing the Zacks Consensus EPS Estimate in four consecutive quarters.
In its latest release, the company reported EPS more than 20{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} above expectations and penciled in a 1.4{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} revenue surprise.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
Additionally, the top 5{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Conagra would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
The Zacks Retail and Wholesale sector has modestly underperformed relative to the S&P 500 over the last year, down roughly 15{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}.
One company residing in the sector, Advance Auto Parts, has seen its earnings outlook shift negative over the last several months, pushing the stock into a Zacks Rank #5 (Strong Sell).
Advance Auto Parts primarily sells replacement parts (excluding tires), accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy-duty trucks.
Let’s take a deeper dive into how the company shapes up.
Share Performance
Over the last year, AAP shares have widely lagged behind the S&P 500, down more than 30{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}.
And over the last three months, sellers have remained in control, with shares down 13{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} and again lagging behind the general market.
Quarterly Results
Advance Auto has struggled to find consistency within its quarterly results, falling short of the Zacks Consensus EPS Estimate in back-to-back quarters. Top-line results have also left some to be desired, with AAP missing revenue expectations in three consecutive quarters.
Just in its latest release, the company fell short of earnings expectations by roughly 15{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} and reported sales marginally below estimates.
Growth Outlook
Despite its earnings outlook coming under pressure, AAP still carries a respectable growth profile, with earnings forecasted to climb 5{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in its current fiscal year (FY22) and a further 5.4{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in FY23.
The projected earnings growth comes on top of forecasted Y/Y revenue upticks of 1{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in FY22 and 2.6{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in FY23.
Bottom Line
Inconsistent quarterly results and negative earnings estimate revisions from analysts paint a challenging picture for the company in the near term.
Advance Auto Parts is a Zacks Rank #5 (Strong Sell), indicating that analysts have lowered their bottom-line outlook across the last several months.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content:
3 Stocks to Buy on Surging e-Commerce Sales
The holiday season began just at a time when inflation started showing signs of easing. As prices cooled, more people shopped freely, giving holiday sales the much-required boost. E-commerce once again played a key role in driving sales.
According to the latest data released by Adobe Analytics, e-commerce sales hit a record high this holiday season. E-commerce has been playing a key role in driving retail sales for quite some time now and is poised to play a major role in the future too. Given this scenario, stocks with a strong online presence, Casey’s General Stores, Inc., Arhaus, Inc. and Capri Holdings Ltd. are expected to benefit in the near term.
E-Commerce Holiday Sales Grow
According to data from Adobe Analytics, consumers spent a staggering $211.7 billion on online purchases between Nov 1 and Dec 31, up 3.5{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} on a year-over-year basis. This is also a new record for e-commerce sales.
Cyber week, which comprises the five days between Thanksgiving and Cyber Monday, recorded $35.3 billion in online sales, up 4{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} year over year. Although these five days generated maximum online sales, consumers made purchases almost throughout the holiday period, with e-commerce sales surpassing $3 billion daily for 38 days, the same as in 2021. In 2020, online sales had crossed $3 billion daily for 25 days.
Demand for toys was high this holiday season, which saw sales surging 206{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} from the pre-season levels in October 2022. Video game sales soared 115{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, while clothing and accessories sales jumped 94{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}.
Sales of watches were up 108{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, baby toys grew 101{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, while gift cards and cosmetics increased by 98{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} and 90{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, respectively. Smart home items also climbed 67{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, among the other subcategories.
One of the major reasons behind the robust sales was the impressive deals during this holiday season compared to 2021. There were huge discounts on toys, electronics, computers, apparel, appliances and televisions.
Given that rising prices have been a concern, many retailers came up with lucrative offers like buy-now-pay-later schemes. Orders rose 4{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in this category. Also, of total online sales, mobiles accounted for 47{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}. Christmas day set a new record, with 61{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} of total online sales coming from mobiles, up from 58{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in 2021.
Easing Inflation to Boost Sales
The reports came as data showed that inflation eased in November and December. This has been lifting consumer confidence and sentiment as they believe inflation has peaked and is finally slowing down, which has encouraged them to spend more freely.
The consumer price index (CPI) in December dropped to 6.5{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} from 7.1{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in November 2022 on a year-over-year basis, according to data released last week by the Labor Department.
This has been the smallest rise in more than a year. Inflation decreased 0.1{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} month over month in December after increasing 0.1{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in November.
Core CPI, which does not include volatile energy and food costs, increased by 5.7{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in December, after jumping 6{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in November. On a month-over-month, core CPI climbed by 0.3{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in December after rising by 0.2{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} in November.
After four consecutive interest rate hikes of 75 basis points, the Fed finally slowed its pace of interest rate hikes with an increase of 50 basis points in December. A smaller increase in interest rates indicates that inflation has finally begun to slow down.
Since the beginning of the pandemic, e-commerce has been significantly boosting retail sales. People were forced to shop online during the pandemic in order to maintain social distancing. Since then, the trend has persisted as more people have come to appreciate the convenience and comfort of online shopping.
Our Choices
Given this scenario, it would be wise to invest in these four stocks with a strong online presence. Each of the stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Casey’s General Stores, Inc. operates convenience stores under the Casey’s and Casey’s General Store names in 16 Midwestern states, mainly Iowa, Missouri and Illinois. CASY also operates two stores under the name “Tobacco City,” primarily selling tobacco and nicotine products, one liquor store, and one grocery store.
Casey’s General Stores’ expected earnings growth rate for the current year is 18.4{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}. The Zacks Consensus Estimate for current-year earnings has improved 7.5{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} over the past 60 days. CASY currently has a Zacks Rank #2.
Arhaus, Inc. is a lifestyle brand and omni-channel retailer of premium home furnishings. ARHS offers an assortment of heirloom quality products. Arhaus Inc. is based in Boston Heights, OH.
Arhaus Inc.’s expected earnings growth rate for the current year is 24.6{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}. The Zacks Consensus Estimate for current-year earnings has improved 2.4{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} over the past 60 days. ARHS presently sports a Zacks Rank #1.
Capri Holdings Limited provides women’s and men’s accessories, footwear and ready-to-wear, as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. CPRI operates in the global personal luxury goods industry, which has been severely impacted by the outbreak of coronavirus.
Capri Holdings Limited’sexpected earnings growth rate for the current year is 10.6{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}. The Zacks Consensus Estimate for current-year earnings has improved 0.3{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} over the past 60 days. CPRI presently carries a Zacks Rank #2.
Why Haven’t You Looked at Zacks’ Top Stocks?
Our 5 best-performing strategies have blown away the S&P’s impressive +28.8{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} gain in 2021. Amazingly, they soared +40.3{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, +48.2{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, +67.6{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, +94.4{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}, and +95.3{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377}. Today you can access their live picks without cost or obligation.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
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.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.8{da793fdcd3fe679df000853cab620e3a76d4f41f7c86540cc967171bbb315377} per year. So be sure to give these hand-picked 7 your immediate attention.
Conagra Brands (CAG) : Free Stock Analysis Report
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
Casey’s General Stores, Inc. (CASY) : Free Stock Analysis Report
Capri Holdings Limited (CPRI) : Free Stock Analysis Report
Arhaus, Inc. (ARHS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
