Digital TurbineAPPS reported third-quarter fiscal 2022 non-GAAP earnings of 49 cents per share that surpassed the Zacks Consensus Estimate of 43 cents. Revenues of $375.5 million beat the consensus mark by 6.34%. The top line improved a whopping 323.8% year over year.
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Quarter Details
For the application business, revenues from On Device-Media surged 43% year over year to $133.6 million. For the content business, revenues from In-App Media increased 39.6% year over year to $251.7 million, driven by improved performance on a fully-deployed content platform and increasing advertising demand and yields. In-App Media segments, Fyber and AdColony contributed $157.4 million and $94.3 million to revenues in the quarter under review, reflecting year-over-year growth of 48% and 27.6%, respectively.
Operating Details
In third-quarter fiscal 2022, product development expenses soared 240.6% to $17.7 million. Sales & marketing (S&M) expenses increased 203.8% to $15.9 million. General & administrative (G&A) expenses surged a whopping 490.5% to $39.9 million. Operating expenses, as a percentage of revenues, were 92.2% compared with year-ago quarter’s 25.1%. Operating income on a GAAP basis was $29.1 million, up 42% year over year in the reported quarter.
Balance Sheet & Cash Flow
The company’s cash balance was $115.4 million as of Dec 31, 2021, compared with $96.2 million as of Sep 30, 2020. Cash provided by operating activities totaled $35.7 million in the reported quarter compared with $36.7 million in the previous quarter. Free cash flow was $36.6 million in the reported quarter compared with $39.9 million in the prior quarter.
Guidance
For fiscal 2022, Digital Turbine expects revenues between $1.225 billion and $1.240 billion. Non-GAAP adjusted EBITDA is expected between $195 million and $197 million. Adjusted earnings are expected between $1.66 per share and $1.68 per share.
Zacks Rank & Stocks to Consider
Currently, Digital Turbine carries a Zacks Rank #3 (Hold). Digital Turbine’s shares have tumbled 50% against the Zacks Computer and Technology sector’s return of 1.1% in the past year. Some better-ranked stocks in the same sector are Analog DevicesADI, PhotronicsPLAB and Vocera CommunicationsVCRA. While Photronics and Vocera sport Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Photronic’s shares have rallied 47.3% in the past year. PLAB is slated to report first-quarter fiscal 2022 results on Feb 23. Vocera Communications’ shares have returned 63.9% in the past year. VCRA is scheduled to report fourth-quarter 2021 results on Feb 10. Analog shares have returned 6.8% compared with the Zacks Computer and Technology sector’s growth in the past year. ADI is expected to report first-quarter 2021 results on Feb 16.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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2 Top-Rated Lumber Stocks Trading Near 52-Week Highs
Along with solid housing demand with the economy’s reopening, President Biden’s infrastructure spending should drive the growth of lumber companies in the United States. So, we believe it could be wise to bet on fundamentally sound lumber stocks West Fraser (WFG) and Boise Cascade (BCC), which are currently trading near their 52-week highs. Let’s discuss these names.
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Despite severe supply chain disruptions, the renovation and remodeling trend to make existing homes more comfortable and practical for living and working has driven a rising demand for lumber over the past year. Because hybrid working arrangements are expected to continue for the foreseeable future, the demand for lumber products is expected to remain steady. Furthermore, investors’ interest in the lumber stocks is evident in the iShares Global Timber & Forestry ETF’s (WOOD) 4.6% returns over the past three months compared to the SPDR S&P 500 Trust ETF’s (SPY) 4.5% loss.
Rising mortgage rates are expected to cool the U.S. housing market, which could lessen demand for lumber and result in lower prices. However, with the economy’s continuing recovery, the need for lumber is rising. Moreover, a shortage of new homes for sale and President Biden’s infrastructure bill could boost demand for lumber in the coming months.
So, we think it could be wise to bet on quality lumber stocks West Fraser Timber Co. Ltd. (WFG) and Boise Cascade Company (BCC), which are currently trading near their 52-week highs and have solid upside potential.
Vancouver-based WFG is a diversified wood products company that sells lumber, panels, pulp, and papers in western Canada and the southern United States. It offers spruce-pine-fir, Douglas Fir-Larch, Hem-Fir tree, and southern yellow pine lumber. The company also exports lumber to Asia, the Caribbean, Europe, the Middle East, and South America.
On Dec. 6, 2021, WFG acquired the oriented strand board mill near Allendale, South Carolina. The mill’s additional OSB capacity will give the company flexibility to better meet customer demand, particularly from large, growing end-markets in the southeastern U.S.
WFG’s sales increased 86% year-over-year to $2.36 billion for its fiscal third quarter, ended Sept. 30, 2021. The company’s adjusted EBITDA grew 88% year-over-year to $786 million, while its earnings came in at $460 million, representing a 75.6% year-over-year increase. Also, its EPS came in at $4.20, up 9.9% year-over-year.
For the quarter ending March 31, 2022, analysts expect WFG’s revenue to increase 7.5% year-over-year to $2.53 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 36.6% in price to close yesterday’s trading session at $95.22. It is currently trading 6.5% below its 52-week high of $101.83, which it hit on January 13, 2022.
WFG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has a B grade for Sentiment, Momentum, and Quality.
We have also graded WFG for Growth, Value, and Stability. Click here to access all WFG’s ratings. WFG is ranked #3 out of 6 stocks in the A-rated Industrial – Wood industry.
BCC manufactures wood products and distributes building materials. The Boise, Idaho, company operates in two segments: Wood Products and Building Materials Distribution. The Wood Products segment manufactures laminated veneer lumber and laminated beams used in headers and beams. In contrast, the Building Materials Distribution segment distributes building materials, including oriented strand boards, plywood, and lumber.
On Jan. 4, 2022, BCC announced the expansion of its Building Materials Distribution operations in Minnesota and Northern Kentucky. Jeff Strom, BMD executive vice president of BCC, said, “These recent investments, as well as several others over the past four years, strongly align with our stated strategy of growth in existing markets, underserved markets, and across our entire national footprint.”
BCC’s sales increased 18% year-over-year to $1.88 billion for the fiscal third quarter, ended Sept. 30, 2021. The company’s wood products sales grew 37% year-over-year to $497.32 million, while its wood products EBITDA came in at $135.97 million, representing a 70% year-over-year increase. Also, its wood products income was $122.06 million, up 85% year-over-year.
Analysts expect BCC’s revenue to increase 7.7% year-over-year to $1.81 billion for the quarter ending March 31, 2022. It surpassed the consensus EPS estimates in three of the trailing four quarters. The stock rallied 44.6% in price over the past six months to close yesterday’s trading session at $77.20. It is currently trading 7.4% below its 52-week high of $83.37, which it hit on February 2, 2022.
BCC’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. It has an A grade for Value and a B grade for Growth, Quality, and Momentum.
Click here to see the additional POWR Ratings for BCC (Stability and Sentiment). It is ranked #1 in theindustrial – Wood industry.
WFG shares were trading at $96.84 per share on Tuesday morning, up $1.62 (+1.70%). Year-to-date, WFG has gained 1.55%, versus a -6.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal’s fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
Harley-Davidson, Inc.HOG reported fourth-quarter 2021 adjusted earnings of 14 cents per share against the Zacks Consensus Estimate of a loss of 41 cents. Higher-than-anticipated revenues from both Motorcycles & Related Products and Financial Services segments resulted in this outperformance. The bottom line also compares favorably with the loss of 63 cents per share reported in the year-ago quarter. The iconic motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $1,016 million, up 40% from the year-earlier quarter.
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Segmental Highlights
Motorcycles and Related Products: Total revenues from the Motorcycle and Related products segment, which constitute the bulk of the firm’s overall revenues, jumped 54% on a year-over-year basis to $816 million. The top line also surpassed the consensus mark of $645 million. This upside primarily resulted from an increase in wholesale shipments, favorable motorcycle unit mix and pricing. The segment’s operating loss narrowed from $196 million to $102 million in the quarter under review. The loss was also narrower than the Zacks Consensus Estimate of a loss of $163 million. In the December quarter, revenues from the sale of motorcycles came in at $546 million, increasing 71% year over year. The company shipped 29,100 motorcycles worldwide, up 39%. During the reported quarter, Harley-Davidson retailed 34,000 motorcycle units globally, up 2% year over year. Its retail motorcycle units sold in North America grew 8% to 19,600. Meanwhile, sales in the EMEA (Europe, Middle East and Africa), Asia Pacific and Latin America declined 7%, 2% and 16%, respectively, from the year-ago period. Revenues for Parts & Accessories were up 13% from the prior year to $165 million and topped the consensus mark of $161 million. Revenues for General Merchandise — including Motor Clothes apparel and accessories — went up 46% from the prior-year quarter’s figure to $73 million and topped the consensus mark of $48.73 million. Financial Services: Revenues for Harley-Davidson Financial Services totaled $200.4 million, up 3.2% year over year and beat the consensus mark of $199 million. Operating income jumped to $95.1 million from the $76.7 million, thanks to lower interest expense. The metric also topped the consensus mark of $76 million.
Financial Position
In the fourth quarter of 2021, selling, general and administrative expenses came down to $259.4 million from $276.4 million witnessed in fourth-quarter 2020. The firm generated $976 million of cash from operating activities in 2021. The company paid dividends of 6 cents per share on a full-year basis in 2021. Harley-Davidson had cash and cash equivalents of $1,874.7 million as of Dec 31, 2021, significantly down from the $3,257.2 million recorded at the end of 2020. The long-term debt decreased to $4,595.6 million from $5,932.9 million recorded as of Dec 31, 2020.
2022 Guidance
For 2022, considering that supply chain challenges will improve in the second half of the year, Harley-Davidson now forecasts a decline of 20-25% in its operating income for Financial Services. Capital expenditure for the full year is projected within $190-$220 million. The company expects revenues from the motorcycles segment to grow in the band of 5-10% in the current year. Harley-Davidson has also kept the operating income margin expectation for the segment intact at 11-12%.
Zacks Rank & Other Key Picks
Currently, Harley Davidson has a Zacks Rank #2 (Buy). Other top players in the auto space include Goodyear TireGT and Tesla TSLA, each sporting a Zacks Rank #1(Strong Buy), and Genuine PartsGPC, carrying a Zacks Rank #2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here. Goodyear has an expected earnings growth rate of 51.7% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 1.1% upward over the past 60 days. Goodyear’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GT pulled off a trailing four-quarter earnings surprise of 228.5%, on average. The stock has also rallied 64.1% over a year. Tesla has an expected earnings growth rate of 35.21% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 5% upward over the past 60 days. Tesla’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 25.38%, on average. The stock has also rallied 5.1% over a year. Genuine Parts has an expected earnings growth rate of 10.03% for the current year. The Zacks Consensus Estimate for earnings for the current year has been revised around 2.2% upward over the past 60 days. Genuine Parts’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of around 16%, on average. The stock has also rallied 23.8% over a year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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3 Energy Storage Stocks That Will Skyrocket, According to Wall Street
The energy storage industry has a bullish outlook for 2022, supported by the clean energy transition, decarbonization revolution, increased investments in renewable energy, innovation in energy storage technologies, and growing demand. Thus, Wall Street analysts are betting on energy storage stocks Stem Inc. (STEM), Fluence Energy (FLNC), and Eos Energy (EOSE) to rally in the near term. Read on.
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Most developed countries are focusing on decarbonization and are shifting to energy storage technologies to reduce their carbon footprints. Investments in renewable energy are expected to grow by 25% in the United States through 2022 because the private and public sectors are committed to addressing climate change concerns. Also, the Democratic party is urging President Biden to move ahead with the climate change part of his proposed Build Back Better bill, which includes $555 billion in climate change investments. The bill has been stalled in the Senate for more than a month.
The surge in growth in the energy storage market is driven by increased demand for peak load management, grid balancing, and innovation in energy storage technologies owing to the recent and ongoing digital transformation. According to a report from Acumen Research and Consulting, the Energy Storage as a Service Market is projected to reach more than $2.62 billion by 2028, with a 9.8% CAGR.
Given these factors, Wall Street analysts expect energy storage stocks Stem, Inc. (STEM), Fluence Energy, Inc. (FLNC), and Eos Energy Enterprises, Inc. (EOSE) to gain momentum in the coming months.
San Francisco-based STEM provides smart battery storage solutions. The company’s energy software, Athena, is an AI-powered analytics platform that uses artificial intelligence and machine learning to optimize energy use by automatically switching between battery power, onsite generation, and grid power. STEM’s solutions include energy storage, wholesale energy markets, microgrids, utility bill optimization, and commercial electric vehicle charging.
Last week, STEM acquired Also Energy Holdings, Inc. With the acquisition, the company added 32.85 gigawatts (GW) of solar assets under management in more than 50 countries. The acquisition is expected to boost STEM’s growth, enhance its margins, and accelerate its expansion as a global provider of clean energy intelligence and optimization solutions.
Also in January, STEM entered a co-marketing agreement with ENGIE North America to enable broad adoption of eMobility solutions for schools, transit agencies, and commercial fleets throughout the U.S. through the integration of Athena software with ENGIE’s electric vehicle (EV) charging solution. This integrated offering might open growth opportunities for the company and boost its revenue streams.
STEM’s revenue increased 334.3% year-over-year to $39.83 million in its fiscal third quarter, ended Sept. 30, 2021. The company’s gross margin grew 580% year-over-year to $5.80 million in the to-be-reported quarter. STEM’s net income grew 715.4% year-over-year to $115.61 million. And the company’s net income per share attributable to common shareholders increased 280.9% year-over-year to $0.85.
The $360.87 million consensus revenue estimate for the fiscal year 2022 represents 144.7% year-over-year growth. Analysts expect the company’s EPS to rise 79.1% year-over-year in its fiscal year 2022.
Over the past five days, the stock has increased 0.5% in price to close yesterday’s trading session at $11.38.
Each of the two Wall Street analysts that rated STEM rated it Buy. The 12-month median price target of $40.50 indicates a 255.9% potential upside. The price targets range from a low of $35.00 to a high of $46.00.
FLNC is a leading provider of energy storage products and services, and artificial intelligence-enabled digital applications for renewables and storage applications in the U.S. and worldwide. The Arlington, Va., company’s offerings include energy storage products and services, recurring operational services, and digital solutions for energy storage and power assets. The company’s offerings serve utilities, developers, commercial and industrial customers.
Earlier this month, FLNC partnered with Pexapark, a software and advisory services provider for renewable energy sales and risk management, to make Pexapark’s suite of analytical tools and services available to customers through Fluence IQ digital ecosystem. With this partnership, FLNC is expected to increase its revenue potential by providing advanced energy storage solutions.
Last month, FLNC collaborated with QuantumScape to incorporate the latter’s solid-state lithium-metal battery technology into Fluence stationary energy storage applications. FLNC might enhance its market growth and boost revenues with this significant technological advancement.
In its fiscal year 2021 fourth quarter, ended September 30, FLNC’s total current assets increased 102% over nine months ended Sept. 30, 2021, to come in at $661.52 million. Its total assets grew 97.1% over nine months to $717.68 million.
The $1.21 billion consensus revenue estimate for its fiscal year 2022, ending Sept.30, 2022, represents 77.7% year-over-year growth.
The stock has declined 56.5% in price year-to-date. However, FLNC’s 12-month median price target of $44.45 indicates a 187.3% potential upside from yesterday’s closing price of $15.47. The price targets range from a low of $34.00 to a high of $52.00. Among the 13 Wall Street analysts that rated FLNC, 10 rated it Buy, while three rated it Hold.
Edison, N.J.-based EOSE designs, manufactures, and markets battery storage solutions for the electric utility industry in the U.S. The company’s flagship product is the Eos DC battery system, with both front-of-the-meter and behind-the-meter applications. It is designed to meet a range of requirements in the battery storage industry, including large grid-scale energy storage projects, storage projects, commercial and industrial projects.
Last December, EOSE signed a strategic term sheet with Tetra Technologies, Inc. to support the manufacturing of Eos’ innovative Znyth aqueous zinc battery and batter’s improved performance. EOSE is projected to expand its manufacturing capacity to 800 MWh in 2022. This strategic collaboration is expected to enable supply chain continuity and optimize sourcing the growing stationary storage market. This might boost EOSE’s revenue streams.
EOSE’s total revenue increased 1951.4% year-over-year to $0.72 million in its fiscal third quarter 2021 ended Sept. 30, 2021. The company’s cash and cash equivalents increased 18.3% over nine months ended Sept. 30, 2021, to come in at $144.19 million. EOSE’s total assets grew 37.5% over nine months to $190.08 million.
Analysts expect EOSE’s revenue for its fiscal fourth quarter, ended December 31, 2021, to come in at $3.35 million, representing a 1665.4% rise year-over-year.
EOSE declined 54.9% year-to-date. However, FLNC’s 12-month median price target of $20.50 indicates a 504.7% potential upside from yesterday’s closing price of $3.39. Analysts’ price targets range from a low of $20.00 to a high of $21.00. Of the three Wall Street analysts that rated EOSE, two rated it Buy, while one rated it Hold.
STEM shares were trading at $11.67 per share on Monday morning, up $0.29 (+2.55%). Year-to-date, STEM has declined -38.48%, versus a -5.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
Should You Buy the Dip in C.H. Robinson Worldwide?
The stock of global logistics and freight transportation services provider C.H. Robinson Worldwide (CHRW) has slumped in price so far this year due to concerns surrounding rising shipping costs. So, as global supply chain bottlenecks continue, will CHRW be able to regain momentum in the near term? Read more to learn our view.
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C.H. Robinson Worldwide, Inc. (CHRW) in Eden Prairie, Minn., provides logistics solutions and freight transportation services globally. It is one of the largest logistics companies in the world, with more than $28 billion in freight under management and more than 20 million shipments annually. The company operates in two segments: North American Surface Transportation; and Global Forwarding. However, CHRW has an ISS Governance QualityScore of 9, indicating high governance risk.
The stock has declined 17.6% in price year-to-date and 14.8% over the past five days to close yesterday’s trading session at $88.73.
The bearish investor sentiment can be attributed to the global supply chain disruption, which has increased shipping costs considerably, thereby shrinking CHRW’s profit margins.
Here is what could shape CHRW’s performance in the near term:
Mixed Growth Prospects
Analysts expect CHRW’s revenues to increase 24.4% in its fiscal 2022 first quarter (ending March 2022), 10.6% in the next quarter, and 5.7% in fiscal 2022. The company’s EPS is expected to improve 20.6% in the current quarter, 11.7% in fiscal 2022 second quarter (ending June 2022), and marginally in the current year.
However, the Street expects CHRW’s revenues and EPS to slump 6.9% and 8.5%, respectively, next year.
Low Valuation
In terms of forward non-GAAP P/E, CHRW is currently trading at 14.06x, which is 25.7% lower than the 18.93 industry average. Its 1.32 forward non-GAAP PEG multiple is 9.5% lower than the 1.46 industry average, while its 11.25 forward EV/EBITDA ratio is 5.1% lower than the 11.85 industry average.
In addition, CHRW’s forward Price/Sales and Price/Cash Flow multiples of 0.47 and 12.57, respectively, compare with the 1.48 and 14.88 industry averages.
Consensus Rating and Price Target Indicate Potential Upside
Of 16 Wall Street analysts that rated CHRW, seven rated it Buy while eight rated it Hold and one rated it Sell. The 12-month median price target of $107.93 indicates a 21.6% potential upside from yesterday’s closing price of $88.73. The price targets range from a low of $65.00 to a high of $180.00.
POWR Ratings Reflect Uncertainty
CHRW has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
CHRW has a C grade for Momentum and Quality. It is currently trading above its 50-day and 200-day moving averages of $102.90 and $95.94, respectively, indicating a downtrend, and in sync with the Momentum grade. In addition, CHRW’s 3.65% net income margin is 43.4% higher than the 6.46% industry average, justifying the Quality grade.
Among 22 stocks in the Trucking Freight industry, CHRW is currently ranked #18.
Beyond what I have stated above, view CHRW ratings for Growth, Sentiment, Stability, and Value here.
Bottom Line
CHRW’s total revenues and EPS increased 42.9% and 61.1%, respectively, year-over-year to $6.50 billion and $1.74 in its fiscal fourth quarter, ended Dec. 31, 2021. However, the company missed the $1.86 consensus EPS estimate by 6.4% due to an increase in operating expenses.
As global supply chain disruptions continue, CHRW’s profit margins are expected to take a hit in the coming months. Thus, we think investors should wait until CHRW’s profit margins stabilize before investing in the stock.
How Does C.H. Robinson Worldwide, Inc. (CHRW) Stack Up Against its Peers?
While CHRW has a C rating in our proprietary rating system, one might want to consider looking at its industry peers, Schneider National, Inc. (SNDR), USA Truck, Inc. (USAK), and ArcBest Corporation (ARCB), which have a B (Buy) rating.
Note that SNDR is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio.Learn more here.
Note that USAK is one of the few stocks handpicked by our Chief Value Strategist, Steve Reitmeister, currently in the POWR Value portfolio.Learn more here.
CHRW shares were trading at $87.80 per share on Monday morning, down $0.93 (-1.05%). Year-to-date, CHRW has declined -18.42%, versus a -5.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
Better Buy for 2022: DraftKings vs. Penn National Gaming
Investors looking to gain exposure to the gaming sector can look to buy shares of DraftKings (DKNG) and Penn National Gaming (PENN). While Penn is an established casino operator, DraftKings is a high-growth company that’s rapidly gaining traction across gaming verticals.
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Gaming companies remain a top bet for long-term investors, given they are part of an expanding addressable market. In fact, gaming is considered an alternate entertainment option, making companies such as DraftKings (DKNG) and Penn National Gaming (PENN) interesting potential investments at current prices.
DraftKings is a company valued at a market cap of $17.5 billion. It operates as a digital sports entertainment and gaming company in the U.S. Comparatively, Penn National Gaming is valued at a market cap of $7.6 billion and owns gaming and racing properties as well as video gaming terminals.
Shares of DraftKings and Penn National Gaming are both down close to 70% from all-time highs. Let’s see which is a better contrarian buy right now.
DraftKings
DraftKings began with the launch of its fantasy sports games where users will choose players in their fictional squads and gain points based on the performance of these players. As online betting and casino gaming restrictions were relaxed in several U.S. states, DraftKings entered these verticals and gained significant market share.
The company’s sales rose over 40% year over year to $614 million in 2020. Analysts expect sales to more than double to $1.3 billion in 2021 and grow by 50% to $1.9 billion in 2022.
The online sports betting market in the U.S. is forecast to touch $37 billion in 2025, up from $18 billion in 2020 giving DraftKings enough opportunities to expand its top-line.
DraftKings enjoys a 33% share in the 13 markets where it is operational in the online sports betting vertical. In the iGaming market, it has a 17% share in four states.
Analysts expect the stock to gain 134% in the next 12-months looking at consensus price target estimates.
Penn National Gaming
A casino operator that has expanded into verticals such as online gaming and sports betting, Penn Gaming recently reported its Q4 results. It reported revenue of $1.57 billion and adjusted earnings of $0.26 per share in Q4 of 2021. The company forecast net revenue between $60.7 billion and $6.39 billion in 2022 with adjusted EBITDA was projected between $1.85 billion and $1.95 billion.
Penn Gaming acquired Canada-based theScore last year which should drive revenue higher in the upcoming quarters. Wall Street is also optimistic about Penn’s interactive segment including the social gaming business.
Analysts expect sales to grow by 5.4% to $6.22 billion in 2022 and by 6.1% to $6.6 billion in 2023. Its adjusted earnings might expand from $2.48 in 2021 to $2.69 in 2022. Wall Street also forecasts PENN stock to gain close to 50% in the next 12-months.
The verdict
We can see that both the stocks are well poised to outpace the broader markets in the next year. DraftKings is valued at a forward price to 2022 sales multiple of 4.7x, compared to Penn National Gaming which is valued much lower at less than 1.5x. However, I believe DraftKings is currently a better investment because it is growing at a far higher pace.
DKNG shares were trading at $22.66 per share on Monday morning, up $0.77 (+3.52%). Year-to-date, DKNG has declined -17.51%, versus a -5.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist.
Paramount Gold (PZG) came out with a quarterly loss of $0.07 per share versus the Zacks Consensus Estimate of a loss of $0.04. This compares to loss of $0.05 per share a year ago. These figures are adjusted for non-recurring items.
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This quarterly report represents an earnings surprise of -75%. A quarter ago, it was expected that this miner would post a loss of $0.04 per share when it actually produced a loss of $0.05, delivering a surprise of -25%.
Over the last four quarters, the company has not been able to surpass consensus EPS estimates.
Paramount Gold, which belongs to the Zacks Mining – Non Ferrous industry, posted zero revenues for the quarter ended December 2021, missing the Zacks Consensus Estimate by 100%. This compares to year-ago revenues of $0.19 million. The company has not been able to beat consensus revenue estimates over the last four quarters.
The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.
Paramount Gold shares have lost about 3.5% since the beginning of the year versus the S&P 500’s decline of -6.1%.
What’s Next for Paramount Gold?
While Paramount Gold has outperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Paramount Gold: unfavorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.03 on $0.2 million in revenues for the coming quarter and -$0.14 on $0.6 million in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Mining – Non Ferrous is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
One other stock from the same industry, Amerigo Resources (ARREF), is yet to report results for the quarter ended December 2021. The results are expected to be released on February 24.
This copper and molybdenum mining company is expected to post quarterly earnings of $0.06 per share in its upcoming report, which represents a year-over-year change of +20%. The consensus EPS estimate for the quarter has been revised 25% higher over the last 30 days to the current level.
Amerigo Resources’ revenues are expected to be $52.9 million, up 12.1% from the year-ago quarter.
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In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create “the world’s first trillionaires.” Zacks’ urgent special report reveals 3 AI picks investors need to know about today.
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In the latest trading session, Gap (GPS) closed at $17.01, marking a -0.58% move from the previous day. This move lagged the S&P 500’s daily gain of 0.52%. At the same time, the Dow lost 0.06%, and the tech-heavy Nasdaq gained 0.11%.
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Prior to today’s trading, shares of the clothing chain had lost 7.81% over the past month. This has was narrower than the Retail-Wholesale sector’s loss of 11.17% and lagged the S&P 500’s loss of 6.51% in that time.
Investors will be hoping for strength from Gap as it approaches its next earnings release. In that report, analysts expect Gap to post earnings of -$0.12 per share. This would mark a year-over-year decline of 142.86%. Meanwhile, our latest consensus estimate is calling for revenue of $4.53 billion, up 2.46% from the prior-year quarter.
Any recent changes to analyst estimates for Gap should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 10.32% lower. Gap is currently sporting a Zacks Rank of #5 (Strong Sell).
Looking at its valuation, Gap is holding a Forward P/E ratio of 9.32. This valuation marks a discount compared to its industry’s average Forward P/E of 10.38.
Also, we should mention that GPS has a PEG ratio of 0.78. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. GPS’s industry had an average PEG ratio of 0.74 as of yesterday’s close.
The Retail – Apparel and Shoes industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 186, which puts it in the bottom 28% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
Zacks’ Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create “the world’s first trillionaires.” Zacks’ urgent special report reveals 3 AI picks investors need to know about today.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Beyond Meat (BYND) closed at $58.68 in the latest trading session, marking a +1.15% move from the prior day. The stock outpaced the S&P 500’s daily gain of 0.52%. Meanwhile, the Dow lost 0.06%, and the Nasdaq, a tech-heavy index, added 0.11%.
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Coming into today, shares of the plant-based meat company had lost 13.5% in the past month. In that same time, the Consumer Staples sector lost 1.35%, while the S&P 500 lost 6.51%.
Wall Street will be looking for positivity from Beyond Meat as it approaches its next earnings report date. The company is expected to report EPS of -$0.73, down 114.71% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $103.98 million, up 2% from the year-ago period.
It is also important to note the recent changes to analyst estimates for Beyond Meat. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.16% higher within the past month. Beyond Meat is currently sporting a Zacks Rank of #3 (Hold).
The Food – Meat Products industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 27, which puts it in the top 11% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
Zacks’ Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create “the world’s first trillionaires.” Zacks’ urgent special report reveals 3 AI picks investors need to know about today.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
In the latest trading session, Keysight (KEYS) closed at $166.21, marking a +0.2% move from the previous day. This move lagged the S&P 500’s daily gain of 0.52%. At the same time, the Dow lost 0.06%, and the tech-heavy Nasdaq gained 0.11%.
– Zacks
Prior to today’s trading, shares of the electronic measurement technology company had lost 13.87% over the past month. This has lagged the Computer and Technology sector’s loss of 10.84% and the S&P 500’s loss of 6.51% in that time.
Investors will be hoping for strength from Keysight as it approaches its next earnings release, which is expected to be February 17, 2022. In that report, analysts expect Keysight to post earnings of $1.56 per share. This would mark year-over-year growth of 9.09%. Meanwhile, our latest consensus estimate is calling for revenue of $1.24 billion, up 5.34% from the prior-year quarter.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.92 per share and revenue of $5.27 billion. These totals would mark changes of +11.08% and +6.67%, respectively, from last year.
Investors might also notice recent changes to analyst estimates for Keysight. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.31% higher. Keysight currently has a Zacks Rank of #2 (Buy).
Valuation is also important, so investors should note that Keysight has a Forward P/E ratio of 23.99 right now. Its industry sports an average Forward P/E of 21.27, so we one might conclude that Keysight is trading at a premium comparatively.
It is also worth noting that KEYS currently has a PEG ratio of 2.81. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The Electronics – Measuring Instruments industry currently had an average PEG ratio of 0.89 as of yesterday’s close.
The Electronics – Measuring Instruments industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 95, putting it in the top 38% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.
Zacks’ Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create “the world’s first trillionaires.” Zacks’ urgent special report reveals 3 AI picks investors need to know about today.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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