For Immediate Release
Chicago, IL – June 17, 2022 – Zacks Equity Research shares Oxford Industries, Inc.
OXM
as the Bull of the Day and Flagstar Bancorp
FBC
as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Pfizer
PFE
, BioNTech
BNTX
and Moderna
MRNA
.
Here is a synopsis of all five stocks:
Bull of the Day
:
Oxford Industries, Inc.
is one of the rare retailers that recently beat on earnings and raised full year guidance. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 23.6% in fiscal 2022.
Oxford Industries operates several retail and lifestyle brands including Tommy Bahama, Lilly Pulitzer, Southern Tide, The Beaufort Bonnet Company and Duck Head. It owns retail stores, sells wholesale and on its own e-commerce sites and operates Tommy Bahama restaurants.
A Record First Quarter for Earnings
On June 3, Oxford Industries reported its fiscal first quarter 2022 results and blew by the Zacks Consensus Estimate by 26%. Earnings were a record $3.50 which easily beat the Zacks Consensus Estimate of $2.78.
It was the fifth earnings surprise in a row.
Sales were up 33% to $353 million from $266 million a year ago. All of its brands saw growth, led by the largest brand, Tommy Bahama.
Tommy Bahama sales were up 46% to $228.1 million from $156.7 million last year. Lilly Pulitzer sales jumped 25% to $92 million from $73.6 million in the prior year.
Oxford Industries has lumped its smaller brands into the “Emerging Brands” category. This includes Southern Tide, The Beaufort Bonnet Company and Duck Head. Emerging Brands sales were up 42% to $31.8 million from $22.4 million a year ago.
“As more and more people are returning to social events, leisure travel and even the more casually-attired post-pandemic physical workplace, consumers are increasingly attracted to our happy, upbeat brands and the beautiful products we provide which are both true to our brands’ unique DNA and relevant to today’s consumer and marketplace,” said Thomas C. Chubb III, CEO.
Brick and Mortar Returns
Shoppers returned to the stores, as retail sales jumped 49% to $136 million, with growth in all parts of the country.
They also returned to restaurants, as Tommy Bahama restaurant sales grew 23% to $31 million year-over-year as the economy continued to reopen and there were fewer COVID restrictions in the company’s 21 food and beverage locations.
But they were also still buying online, with full price e-commerce sales up 20% to $89 million year-over-year, with growth in all brands.
Wholesale sales also had a strong quarter, up 42% to $89 million year-over-year.
Gross margin rose to 64.2% from 62.7% in the first quarter of fiscal 2021 but Oxford was not immune from the pressures of rising freight prices in the quarter.
Raised Full Year Earnings Guidance
In addition to a record first quarter, the company said they saw “momentum” in the second quarter and felt comfortable raising full year earnings guidance to a range of $9.60 to $10.00.
As a result of the bullish guidance, the analysts have raised full year earnings estimates which has pushed up the Zacks Consensus Estimate to $9.88 from $9.32 just 7 days ago.
That’s earnings growth of 23.6% as the company made $7.99 last year, which was a record year.
Shares are Cheap
Oxford Industries has been weak like most stocks in 2022. Shares are down 17.6% year-to-date but haven’t completely broken down like some other stocks.
Shares are cheap, with a forward P/E of just 9.2.
It also is shareholder friendly, as it pays a dividend yielding 2.4%. It has paid a dividend every quarter since it became publicly owned in 1960.
If you’re going to buy a retailer in 2022, with all the economic uncertainty, buy the best. Oxford Industries has two of the top brands in the apparel industry in Tommy Bahama and Lilly Pulitzer.
Even as the Street is skeptical of retail stocks this year as it fears a recession, investors might want to keep Oxford, and its rising earnings estimates, on their short list.
Bear of the Day
:
Flagstar Bancorp
rode the housing boom wave during the pandemic as it has one of the largest mortgage businesses in the country. But this Zacks Rank #5 (Strong Sell) is expected to see its earnings fall by 53% in 2022 as the mortgage market dries up.
Flagstar is a community bank headquartered in Troy, Michigan which provides commercial, small business and consumer banking services through 158 branches in Michigan, Indiana, California, Wisconsin and Ohio. In addition, it also provides home loans in all 50 states through a network of brokers and correspondents as well as from 84 retail locations in 28 states.
It handles payments and record keeping for $272 billion of loans representing over 1.2 million borrowers.
Flagstar and New York Community Bancorp to Merge
On Apr 26, 2021, New York Community Bancorp and Flagstar announced they would merge and create a regional powerhouse.
It was an all-stock deal.
But that was well over a year ago and the merger hasn’t happened yet. Meanwhile both stocks are down double-digits this year.
Flagstar has fallen 30% year-to-date and New York Community Bancorp has slid 28.7%. New York Community Bancorp is also at 52-week lows.
Both banks are Zacks #5 (Strong Sells).
Will this deal still close? Both banks are expected to report second quarter earnings at the end of July, 2022.
Two Misses in a Row
On Apr 27, Flagstar reported its 2022 first quarter results and missed the Zacks Consensus Estimate by $0.32. Earnings were $1.02 versus the Consensus of $1.34.
It was the second miss in a row.
Mortgage revenue declined more than expected due to the unprecedented increase in mortgage rates, but its net interest margin and MSR returns improved significantly.
The net interest margin for the first quarter was 3.12%, the highest adjusted net interest margin Flagstar had ever reported.
Earnings Expected to Plunge
Given the continued slowing in the mortgage market, it’s not surprising that the analysts are bearish.
2 estimates have been cut in the last 60 days which has pushed the Zacks Consensus Estimate down to $4.89 from $5.55.
That is an earnings decline of 53.9% as Flagstar made $10.60 last year.
Cheap But Uncertainty
Both Flagstar and New York Community Bancorp are cheap. Flagstar trades with a forward P/E of 7.2. It also pays a dividend, currently yielding 0.7%.
New York Community Bancorp trades with a forward P/E of just 6.9. It, too, pays a dividend which is currently yielding 7.5%.
The stocks have moved in tandem over the last year as investors await the merger.
But for investors looking for a bank right now, it may make sense to look elsewhere instead of at either of these two Zacks #5 (Strong Sell) stocks while there is so much uncertainty.
Additional content:
FDA Panel Recommends Pfizer and Moderna Covid Jabs for Young Kids
The FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) voted on Wednesday to recommend the approval of
Pfizer
/
BioNTech
and
Moderna
‘s vaccine for young children.
While Pfizer and BioNTech are seeking approval for their mRNA-based COVID-19 vaccine for children six months to under five years of age as a three-dose vaccine, Moderna filed for the emergency approval of two 25-µg doses of its vaccine in children six months to under six years of age.
The committee members voted unanimously (21-0) for both Pfizer/BioNTech and Moderna’s vaccine saying the benefits of the vaccines outweigh the risks.
Kids under five years of age are not yet authorized to get any COVID-19 vaccine in the United States.
While Pfizer’s stock was up 1.2% on Tuesday, Moderna rose 5.7% and BioNTech 2.4%.
The FDA will now give its decision on whether to grant emergency use authorization to the vaccines. If the FDA approves both or either of Pfizer/BioNTech or Moderna’s vaccines and the Centers for Disease Control and Prevention recommends them, President Biden expects vaccinations to begin in kids under the age of 5 next week.
Pfizer and BioNTech’s vaccine elicited a strong immune response, high efficacy and a favorable safety profile when given as a three-dose vaccine to children six months to under five years of age in clinical studies. However, some committee members raised concerns that Pfizer and BioNTech’s COVID-19 vaccine did not show similar protection levels as a two-dose regimen.
Last year in December, a pre-specified immunogenicity analysis of data from the phase II/III study in children aged six months to five years showed that the COVID-19 vaccine, as a two-dose regimen, failed to demonstrate non-inferior immunogenicity levels in the two to five years age group compared to 16 to 25 years aged individuals.
Another concern was that Pfizer and BioNTech’s dose for the under-five age group is too low. Pfizer’s formulation of a booster dose for these youngest children is 3-µg, which is one-tenth of the dose strength for adults.
Moderna’s two-dose vaccine was 37%-51% effective in this age group in an analysis when the Omicron variant was circulating.
Both Pfizer/BioNTech and Moderna’s vaccines were said to be safe and effective, according to the FDA briefing documents prepared for the advisory panel.
Pfizer/BioNTech’s vaccine is already authorized for use in kids aged 5 and older, while that of Moderna is authorized for adults 18 years and older.
On Tuesday, the VRBPAC committee also recommended approving Moderna’s application to authorize its vaccine for kids aged 6 to 17.
A challenge in the rollout of the vaccines for the under 5 age group will be to convince parents to get their kids inoculated.
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