For Immediate Release
Chicago, IL – December 14, 2022 – Zacks Equity Research shares
H&E
Equipment Services
HEES
as the Bull of the Day and The Walt Disney Company
DIS
as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Pearson
PSO
and World Wrestling Entertainment
WWE
.
Here is a synopsis of all four stocks
.
Bull of the Day
:
The Zacks Machinery – Construction and Mining industry has been notably strong in 2022, up more than 13% and widely outperforming the S&P 500.
In addition, the industry is currently ranked in the top 6% (15 out of 248) of all Zacks Industries.
According to studies, 50% of a stock’s price movement can be attributed to its group, making it clear why it’s critical for investors to target stocks in a thriving industry.
A company residing in the industry,
H&E Equipment Services
, has seen its near-term earnings outlook turn visibly bright over the last several months, landing the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
H&E Equipment Services has established itself as one of the largest equipment rental companies in the United States, focusing on heavy construction and industrial equipment.
Let’s take a closer look at how the company currently stacks up.
Share Performance
Over the last three months, HEES shares have gone on a stellar run, tacking on more than 45% in value and leaving the S&P 500 in the dust.
And over the last month, HEES shares have continued on their market-beating trajectory, up nearly 10% vs. the S&P 500’s marginal 0.8% gain.
Clearly, buyers have been in control of this stock as of late.
Valuation
H&E Equipment Services’ valuation multiples aren’t stretched; the company’s shares currently trade at a 13.9X forward earnings multiple, nicely beneath the 16.6X five-year median and the Zacks industry average of 16.6X.
Further, the company’s forward price-to-sales ratio currently works out to be 1.4X, below its Zacks industry average.
HEES sports a Style Score of an “A” for Value.
Quarterly Performance
HEES has been on an impressive earnings streak, exceeding earnings and revenue estimates in four consecutive quarters.
Just in its latest release, the company penciled in a 22% bottom-line beat paired with a 7.3% sales surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.
Additionally, it’s worth noting that all four of the company’s latest EPS beats have been greater than 18%.
Dividends
And for the cherry on top, HEES rewards its shareholders handsomely; the company’s annual dividend currently yields a solid 2.4%, nicely above its Zacks industry average of roughly 2%.
The company’s payout ratio sits at a sustainable 39%.
Bottom Line
A stellar strategy that investors can implement to find expected winners is by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
Additionally, the top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
H&E Equipment Services 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 Consumer Discretionary sector has primarily struggled in 2022, down more than 30% and widely underperforming the S&P 500.
A titan in the realm that many are familiar with,
The Walt Disney Company
, has seen its near-term earnings outlook shift to the negative over the last several months, landing the stock into a Zacks Rank #5 (Strong Sell).
Disney has a broad portfolio of assets encompassing movies, television, publishing, and theme parks. The company’s premium streaming service, Disney+, has been a hit among consumers and has been a big growth driver.
Let’s take a closer look at how the company stacks up.
Share Performance & Valuation
DIS shares have struggled to find their footing over the last three months, down more than 15% compared to the S&P 500’s marginal 0.7% gain.
Currently, DIS shares trade at a 1.9X forward price-to-sales ratio, below its 3.1X five-year median and above its Zacks sector average of 1.6X.
Disney carries a Style Score of a “D” for Value.
Growth Outlook & Quarterly Performance
Although the company has witnessed negative earnings estimate revisions, DIS still carries a respectable growth profile; earnings are forecasted to climb 15.6% in its current fiscal year (FY23) and a further 32% in FY24.
The projected earnings growth comes on top of forecasted year-over-year revenue upticks of 9.9% in FY23 and 6.3% in FY24. Disney sports a Style Score of a “B” for Growth.
Additionally, Disney has primarily posted mixed earnings results across its last four releases, falling short of revenue and earnings estimates twice across this timeframe.
In its latest release, DIS fell short of bottom-line expectations by 40% and revenue estimates by 4.5%.
Bottom Line
Mixed earnings results and negative earnings estimate revisions from analysts paint a challenging picture for the company in the near-term.
The Walt Disney Company is a Zacks Rank #5 (Strong Sell), indicating that analysts have lowered their bottom-line outlook across the last 60 days.
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:
2 Media Stocks Up More Than 30% YTD with More Room to Run
The growing demand for high-speed Internet, including broadband and advancement in mobile, video, and wireless technologies, has aided media and entertainment players, including
Pearson
and
World Wrestling Entertainment
.
The emergence of digital capabilities is making consumer data easily available to companies. With the use of AI tools, production houses are gaining a better understanding of user preference. This is helping them produce content that strikes a chord with users.
Media companies have been witnessing rapid evolution in alternative distribution channels for broadcast and cable programming. The declining profitability of residential video services due to rising programming costs and retransmission fees has made survival difficult for traditional companies.
Additionally, the heightened need for on-demand content has led to the mushrooming of streaming service providers, making it tricky for traditional media television companies to maintain their viewer bases.
To adapt to the changes in the industry, companies have come up with varied content for over-the-top (OTT) services, be it subscription-based video on demand or advertising supported, in addition to linear TV.
Additionally, they have been adding OTT services to their content portfolios. The availability of streaming services on a wide range of platforms has been helping such services easily reach a global audience. Further, a strengthening broadband ecosystem in international markets, along with the proliferation of smart TVs, is anticipated to drive growth in the near term.
Media companies’ ability to generate ad revenues outside traditional TV platforms, such as websites and any digitally-consumed platform, provides increased scope for target-based advertising.
As monetization and revenues in terms of ad-spend continue to recover, profit protection and cash management with greater technology integration are likely to drive growth in 2023.
Our Top Picks
We have taken the help of the Zacks
Stocks Screener
to shortlist two media stocks that have gained more than 30% this year and are likely to continue their winning streak next year. These stocks carry and Zacks Rank #2 (Buy) and a VGM Score of A or B. Both Pearson and World Wrestling Entertainment have outperformed the Zacks
Consumer Discretionary
sector in the year-to-date period. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Year-to-Date Performance
World Wrestling Entertainment
is an integrated media and entertainment company engaged in the sports entertainment business in the United States and internationally. WWE gained from the return to a full live event schedule, a stellar consumer products business and monetization of content.
The company has raised its full-year OIBDA guidance. Management expects 2022 adjusted OIBDA to be at the upper end of the earlier projected range of $370-$385 million. WWE also announced a multi-year deal with its long-standing partner, the Foxtel Group, to expand content distribution in Australia. It also announced the creation of NXT Europe, slated to be launched next year, to expand the NXT brand internationally.
Markedly, WWE has been expanding its reach across platforms such as Peacock and Spotify and establishing new sponsors and product partners. WWE’s diversified distribution approach helps it in attaining solid viewership.
The company currently has a VGM Score of A. The Zacks Consensus Estimate for the company’s current financial year EPS and for 2023 suggests growth of 21.2% and 10.7% from the year-ago period to $2.57 and $2.85 per share, respectively. The company’s shares have returned 52.9% in the year-to-date period.
Pearson
is a global media conglomerate. It publishes books, periodicals, reports and screen-based services for professional communities worldwide under brand names, which include the Financial Times, Pitman Publishing and Churchill Livingstone.
In addition, the company delivers and installs off-the-shelf software and provides services to academic institutions, such as program development, student acquisition, education technology, and student support services, as well as undertakes contracts to process qualifying tests for individual professions and government departments under multi-year contractual arrangements.
Pearson is well-positioned for changing educational, training and assessment needs. From virtual learning to workforce skills, Pearson is involved in all sorts of areas, which should grow in importance in an increasingly digital, skill-based economy.
The company currently has a VGM Score of B. The Zacks Consensus Estimate for the company’s current financial year EPS and for 2023 suggests growth of 18.7% and 21.9% from the year-ago period to 57 cents and 69 cents per share, respectively. The company’s shares have returned 35.4% in the year-to-date period.
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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/performance
for information about the performance numbers displayed in this press release.
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