For Immediate Release
Chicago, IL – December 9, 2022 – Zacks Equity Research shares Qualys
QLYS
as the Bull of the Day and International Flavor and Fragrances
IFF
as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Occidental Petroleum
OXY
, Hess Corp.
HES
and Marathon Petroleum
MPC
.
Here is a synopsis of all five stocks.
Bull of the Day
:
Qualys
is a Zacks Rank #1 (Strong Buy) and it sports a F for Value and a B for Growth. I love to see that sort of growth divergence where we have a weak value score and a strong growth score. As a growth investor, that tells me right away that I am on the right path. This security company posted a beat in early November. Let’s explore more about this company in this Bull of The Day article.
Description
Qualys, Inc. is a provider of cloud security and compliance solutions that enable organizations to identify security risks to their information technology infrastructures and help protect their IT systems and applications from cyber-attacks. The company’s solutions are provided through its QualysGuard Cloud Platform. It offers products for vulnerability management, policy compliance, web application scanning, malware detection, and associated security products. Qualys, Inc. is headquartered in Redwood City, California.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see. For QLYS, I see four straight beats of the Zacks Consensus Estimate. That is great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).
The average positive earnings surprise over the course of the last year works out to be 8.5%.
Earnings Estimates Revisions
The Zacks Rank tells us which stocks are seeing earnings estimates move higher.
Over the last 60 days, earning estimates have moved up for QLYS. This quarter has moved up from $0.90 to $0.91. Next quarter has increased from $0.94 to $0.95. The full fiscal year 2022 has increased from $3.54 to $3.62. Next fiscal year has seen the estimate move from $3.88 to $4.01. Positive movement in earnings stock is a Zacks Rank #1 (Strong Buy).
Valuation
The valuation for this name isn’t low, but there is solid growth. I see a forward PE of 31x which is very high, but the company is coming off a quarter that saw topline growth of more than 19%. The price to book multiple is 12x. A software name like this is an asset slim business so number is bound to be a little high. Price to sales comes in a 9x and that is a big number, but the growth is there to support it.
Bear of the Day
:
International Flavor and Fragrances
is a Zacks Rank #5 (Strong Sell) and recently beat earnings. Following the recent earnings beat, the stock has continued higher. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
International Flavors & Fragrances Inc. manufactures and sells cosmetic active and natural health ingredients for use in various consumer products. It operates through Nourish, Scent, Health & Biosciences, and Pharma Solutions segments. The Nourish segment offers natural and plant-based specialty food ingredients. The Scent segment provides fragrance compounds. The Health & Biosciences segment develops and produces enzymes, food cultures, probiotics, and specialty ingredients. The Pharma Solutions segment produces and sells cellulosics and seaweed-based pharma excipients. International Flavors & Fragrances Inc. was founded in 1833 and is headquartered in New York, New York.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of IFF, I four straight beats of the Zacks Consensus Estimate. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For IFF I see annual estimates moving higher of late.
The current fiscal year consensus number moved lower from $5.38 to $5.60 over the last 60 days. There was a period of time that saw the estimate move lower to $5.30, but this stock will probably soon increase from a Zacks Rank #5 (Strong Sell).
The next year has moved from $5.97 to $5.82. That move lower is probably the biggest deciding factor for this stock to be a Zacks Rank #5 (Strong Sell).
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
Additional content:
U.S. Oil Prices Drop on Rising Gasoline Distillate Supply
U.S. oil prices moved down on Dec 7 after government data showed large weekly builds in gasoline and distillate supplies. On the New York Mercantile Exchange, WTI crude futures fell $2.24 (or 3%) to settle at $72.01 a barrel yesterday.
Despite this, the market has been kind to oil in 2022, with commodity trading considerably higher year to date and hitting $130 for the first time since 2008. Crude-related stocks like
Occidental Petroleum
,
Hess Corp.
and
Marathon Petroleum
.
Before going into the overall macro environment for oil, let’s dig deep into the Energy Information Administration’s (“EIA”) Weekly Petroleum Status Report for the holiday-shortened week ending Nov 25.
Analyzing the Latest EIA Report
Crude Oil:
The federal government’s EIA report revealed that crude inventories fell 5.2 million barrels compared to expectations of a 2.6 million-barrel decrease per the analysts surveyed by S&P Global Commodity Insights. The combination of lower imports and continued strength in refinery demand accounted for the bigger-than-expected stockpile draw with the world’s biggest oil consumer even as domestic production climbed to the highest since August.
Total domestic stocks now stand at 413.9 million barrels — 4.4% less than the year-ago figure and 9% lower than the five-year average.
The latest report also showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) fell 373,000 barrels to 23.9 million barrels.
Meanwhile, the crude supply cover decreased from 25.7 days in the previous week to 25.2 days. In the year-ago period, the supply cover was 27.7 days.
Let’s turn to the products now.
Gasoline:
Gasoline supplies increased for the fourth time in as many weeks. The 5.3 million-barrel rise was primarily attributable to lower exports. Analysts had forecast that gasoline inventories would rise 2.9 million barrels. At 219.1 million barrels, the current stock of the most widely used petroleum product is essentially in line with the year-earlier level, while it is 3% below the five-year average range.
Distillate:
Distillate fuel supplies (including diesel and heating oil) also increased for the fourth week in succession. The 6.2 million-barrel gain reflected higher production and a fall in demand. Meanwhile, the market looked for a supply build of some 1.9 million barrels. Despite last week’s addition, current inventories — at 118.8 million barrels — are 6.2% below the year-ago level and 9% lower than the five-year average.
Refinery Rates:
Refinery utilization, at a more than three-year high of 95.5%, rose 0.3% from the prior week.
Final Word
Even as fears revolving around high inflation and slowing growth somewhat cloud the outlook for
Oil/Energy
, it has remained the best S&P 500 sector this year. The space has generated a total return of more than 53% in 2022 against the S&P 500’s loss of around 17.5%. Apart from a positive fundamental picture, the sector is enjoying support from geopolitical uncertainty amid Russia’s military operations in Ukraine. In March, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world’s largest producers of the commodity.
While oil has pulled back from those lofty levels, with the conflict showing no signs of a quick resolution, the risk of dwindling inventory and the influential oil exporters’ group OPEC sticking to a conservative production profile means that the commodity has got enough reasons to stay elevated in the near-to-medium term.
Consequently, three of the top four gainers of the S&P 500 this year are all energy-related names: Occidental Petroleum, Hess Corporation and Marathon Petroleum.
Occidental Petroleum:
OXY is the top-performing S&P 500 stock in 2022, with a gain of 120.6%. Occidental Petroleum beat the Zacks Consensus Estimate for earnings in three of the last four quarters. It has a trailing four-quarter earnings surprise of 12.7%, on average.
OXY has a projected earnings growth rate of 282% for this year. Occidental Petroleum is valued at around $58.3 billion.
Hess Corp.:
Hess shares have appreciated 82.1% so far in 2022. HES has a projected earnings growth rate of 229.7% for this year.
Hess, with a market capitalization of $41.8 billion, enjoys a Growth Score of A. HES beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 8.1%.
Marathon Petroleum:
This stock is among the best performers on the S&P 500 Index, with shares having appreciated 70.3% in 2022. MPC, carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 940.8% for this year.
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Marathon Petroleum beat the Zacks Consensus Estimate for earnings in each of the last four quarters. MPC has a trailing four-quarter earnings surprise of 60.1%, on average.
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