For Immediate Release
Chicago, IL – March 31, 2021 – Zacks Equity Research Shares of Lennar Corporation
LEN
as the Bull of the Day, Ringcentral, Inc.
RNG
as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc.
AAPL
, Amazon.com, Inc.
AMZN
and Alphabet Inc.
GOOGL
.
Here is a synopsis of all five stocks:
Bull of the Day
:
Lennar Corp.
is a Zacks Rank #1 (Strong Buy) and it is the Bull of the Day today. Let’s take a look at why this stock made it the highest Zacks Rank and if it is a stock that you should be adding to your portfolio.
Description
Lennar Corp., together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. It operates through Homebuilding East, Homebuilding Central, Homebuilding Texas, Homebuilding West, Financial Services, Multifamily, and Lennar Other segments.
The company’s homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land. It primarily sells single-family attached and detached homes in communities targeted to first-time, move-up, active adult, and luxury homebuyers.
The company also offers residential mortgage financing, title insurance, and closing services for home buyers and others. In addition, it is involved in the fund investment activity; and originates and sells into securitizations commercial mortgage loans.
Further, the company develops, constructs, and manages multifamily rental properties. Lennar Corporation was founded in 1954 and is based in Miami, Florida.
Moving South?
I have heard a lot of crazy stories from the real estate market lately. Just the other day there was the home in Washington DC that had 76 all cash offers (88 total) and sold for 70% above the asking price. That was more of a case of supply and demand.
There is also the idea of 1000 people a day moving to Florida. That means there are a lot of people that will want to have a new home of their own and LEN is one of the many that stand to benefit from that trend.
It doesn’t hurt that LEN is based in Miami FL!
Earnings History
I see a great earnings history with the company beating the Zacks Consensus in each of the last four quarters.
Over that time period I see the average positive earnings surprise coming in at a robust 24%. That is really good considering the pandemic has really put a kink in the supply chain for builders.
Estimate Revisions
This is the real reason the stock is now a Zacks Rank #1 (Strong Buy). Estimates are moving higher.
This quarter, next quarter, this year and next year are all moving in the right direction.
This year has moved from $9.04 to $10.98 and that is something else!
Next fiscal year has seen an increase from $10.38 to $10.99 which is just what an investor wants to see.
Valuation
What a great valuation on LEN. I see only 9x forward earnings and that comes after posting 18% topline growth in the most recent quarter. I see a 1.6x price to book multiple and 1.3x price to sales multiple. Margins are looking good and that means this stock is one that you should be looking at for your portfolio.
Bear of the Day
:
Ringcentral
is now a Zacks Rank #5 (Strong Sell) and I already know you are thinking “now you tell me it’s a sell!” The idea of a stock moving to a Strong Sell is one that is based on the movement of earnings estimates. This tells me that the analysts are moving numbers lower for RNG and that is why this stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day today.
Description
RingCentral provides software-as-a-service solutions that enable businesses to communicate, collaborate, and connect in North America. Its products include RingCentral Office that provides communication and collaboration across various modes. The company’s products also comprise RingCentral Engage Voice, a cloud-based outbound/blended customer engagement platform for midsize and enterprise companies; RingCentral Glip, a team messaging and collaboration solution that allows a range of teams to stay connected through various modes of communication.
It sells its products through a network of direct sales representatives, as well as sales agents, resellers, and channel partners. RingCentral, Inc. has strategic partnerships with Alcatel-Lucent Enterprise; and Vodafone Business. The company was incorporated in 1999 and is headquartered in Belmont, California.
When Is a #5 (Strong Sell) a Good Thing?
So now that analysts are lowering numbers, is this the time to take a deeper look at a name like RNG?
The clear answer to this question is yes. Were the analysts right all along on this stock, if so, then why did they wait so long to lower numbers? I mean this is one of those times where going against the herd might be the move.
All that said, let’s take a look at the important numbers.
Earnings History
All looks good on the earnings history front. I see 4 straight beats of the Zacks Consensus Estimate.
Estimates Revisions
So this is where the rubber meets the road.
Normally I see big revisions lower for a #5, but that is not the case for RNG.
This quarter has held still over the last 60 days.
Next quarter has seen a decrease of one penny.
The full year has moved up from $1.16 to $1.23
Next year has moved from $1.51 to $1.55.
So I don’t see a lot of downward pressure on estimates. This could mean that most of the other stocks in the coverage universe are seeing more powerful revisions. That or there is a ghost in the machine.
Valuation
The valuation doesn’t impact the Zacks Rank… but I always look at these numbers because I am a fundamental investor that favors growth. I see a forward PE of 231x, which is more than sky high. I see 32% top line growth, but does that justify that sort of forward multiple?
82x book and 21x sales tells me that this stock has a valuation that is super stretched. I see operating margins moving the wrong way… so that means I would avoid this stock.
Seems this deeper look was worth it.
Additional content:
3 Stocks to Watch Amid Rising Demand for Smart Speakers
Smart speakers have been gaining in popularity over the past few years owing to the rising penetration of the Internet as well as smart devices across the globe. Notably, the utility of smart speakers has been rising steadily too, thanks also to the rising adoption of the Internet of Things.
Toward that end, smart speakers can not only play the user’s favorite tunes and answer questions but also control other smart devices at home. However, the COVID-19 pandemic did lead to an increased dependence on smart speakers for listening to news, and music and entertainment, especially in the United States.
Notably, a survey conducted in the United States by NPR and Edison Research during early 2020 showed that since the outbreak of the pandemic, 35% of smart speaker owners reported using their devices to listen to news and information, as mentioned in a
TechCrunch article
. The article mentioned that 36% of the respondents stated they increased their consumption of music and entertainment. In fact, 2020 turned out to be a record year in terms of smart speaker sales, despite the challenges posed by the pandemic.
Notably, a report by Strategy Analytics stated that the global sales of smart speakers crossed 150 million last year, as mentioned in a
Fast Mode article
. The article stated that the introduction of new models by major players during the holiday season led to a positive outcome for the smart speaker market in 2020.
Meanwhile, smart speakers are also proving to be beneficial for healthcare. Notably, smart speakers are capable of helping users plan their workout sessions. Moreover, they can help in relieving stress by playing relaxing tunes that help in calming down.
Reflective of these rising trends of smart speaker usage, a report by Research and Markets stated that the global smart speaker market is estimated to witness a CAGR of 34% from 2019 to 2024, as quoted in a
Business Wire article
. Notably, the article stated that factors like increasing smart homes, rising disposable income as well as the growing need for personalized experience are set to contribute to the expansion of the smart speaker market.
3 Stocks to Keep a Close Eye On
The popularity of smart speakers seems set to grow in the future thanks to the many conveniences they bring in terms of providing important news and information while catering to users’ entertainment and fitness regimes, among others. Hence, this makes it a good time to keep an eye on companies that can benefit from this trend going forward.
Notably, we have selected three such stocks that carry a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Apple
offers its smart speakers, namely the Apple HomePod and the HomePod Mini, that are powered by its voice assistant Siri. The Zacks Consensus Estimate for its current-year earnings increased 10.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 36.6%.
Amazon
offers its range of smart speakers under the brand name of Echo, that are powered by its voice assistant Alexa. The Zacks Consensus Estimate for its current-year earnings increased 10.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 18.2%.
Alphabet
’s Google provides a range of smart speakers under the Google Nest and Google Home brands and these speakers make use of Google’s own voice assistant. The Zacks Consensus Estimate for its current-year earnings increased 10.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 18%.
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