Chicago, IL – November 15, 2023 – Zacks Equity Research shares Carrols Restaurant Group TAST as the Bull of the Day and Helen of Troy HELE as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American Eagle Outfitters AEO, Abercrombie & Fitch ANF and Runway Growth Finance Corp. RWAY.
Here is a synopsis of all five stocks:
Carrols Restaurant Group is a Zacks Rank #1 (Strong Buy) that has an A for Value and an A for Growth. Carrols Restaurant Group is the largest Burger King franchisee and has some Popeye's stores in the mix. The company just posted a good beat and shares are on the move higher. Let's explore more about this company in this Bull of The Day article.
Carrols Restaurant Group, Inc. engages in the operation of restaurants under the Burger King and Popeyes brands. It serves flame-broiled whopper sandwich, hamburgers, chicken and other specialty sandwiches, fries, salads, breakfast items, smoothies, frappes, and other snacks. The company was founded in 1960 and is headquartered in Syracuse, NY.
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 Carrols Restaurant Group, I see four beats of the Zacks Consensus Estimate. These are all big beats topping the estimate by an average of about 16 cents.
Earnings estimates revisions is what the Zacks Rank is all about.
For TAST, estimates are moving higher.
This quarter has moved from $0.03 to $0.04.
There is no estimate for the first quarter of next year at this time.
The full year 2023 has seen estimates move from $0.37 to $0.42 over the last 7 days.
Next fiscal year has seen a move higher from $0.39 to $0.45 over the same period.
The valuation is pretty reasonable given the higher estimates and the tendency to crush the quarter. The forward PE is 17.8x, but if we stretch the time horizon out to next year, we see the a little lower than that. The price to sales comes in a 0.22x and the company has seen operating margins move from -1.05% to 1.53%. If margins keep improving at this rate, the stock should move a lot higher.
Helen of Troy is a Zacks Rank #5 (Strong Sell) has seen earnings estimates slide lower recently despite a good history of beating Zacks Consensus Estimate. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Helen of Troy engages in the manufacture and distribution of personal care and household products. It operates through the Home and Outdoor, and Beauty and Wellness segments. The Home and Outdoor segment offers food preparation tools, containers, electronics, baby care, and cleaning products. The Beauty and Wellness segment develops and provides products including mass and prestige market beauty appliances, prestige market liquid-based hair and personal care products, and wellness devices including thermometers, water and air filtration systems, humidifiers, and fans. The company was founded by Gerald J. Rubin and Stanlee N. Rubin in 1968 and is headquartered in Hamilton, Bermuda.
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 HELE, I see 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.
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For DIS I see annual estimates moving lower of late.
The current fiscal year consensus number moved lower from $8.86 to $8.77 over the last 60 days.
The next year moved from $10.05 to $9.80 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a lot 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).
Traditionally, the stock market in the United States tends to remain volatile during the late summer months due to a dearth of economic reports and earnings to spur a rally.
This year, the stock market, after peaking in July, failed to maintain the momentum. Major bourses, in reality, recorded three consecutive monthly losses in October, the longest such declining streak since March 2020.
Relatively high Treasury yields, along with tensions in the Middle East, resulted in choppier trading sessions, especially last month when the major indexes gave up most of their gains notched earlier this year.
However, the month of November has been historically strong for stocks since 1950, per LPL Financial. The broader S&P 500 has only declined once in November in the past 11 years, while the 30-stock Dow has advanced more than 1% on average in November for the last 100 years, according to Bespoke Investment Group.
Additionally, Ryan Detrick of the Carson Group found out that the S&P 500 always tends to gain in November after declining in the prior three-month period. Lest we forget that investors do tend to sell in May only to come back in October to take advantage of the year-end upward wave.
And things this year already seem to look encouraging for the stock market heading into mid-November. Last week, U.S. stocks ended on a positive note, and major indexes remain in the green month to date as Treasury yields stabilized. The Treasury yield continues to trade below the 5% mark it had breached last month.
U.S. stocks are also gaining this month as the Federal Reserve recently hinted that it is done with hiking interest rates since such aggressive monetary policy has been able to put downward pressure on inflation.
Most of the market participants now expect the Fed the keep rates unchanged in December as they did in their latest policy meeting. Needless to say, a pause in the benchmark lending rate will boost consumer spending, won't increase the cost of borrowing, and help the economy grow.
Talking about the economy, the third quarter GDP has expanded at the fastest annual rate in almost two years, banking on an uptick in consumer outlays. And with things looking promising for the economy vis-à-vis the stock market this November, it's wise for investors to buy stocks that can make the most of the upward rally.
Such stocks are American Eagle Outfitters, Abercrombie & Fitch and Runway Growth Finance Corp., which carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space. You can see the complete list of today's Zacks Rank #1 stocks here.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories, and footwear for men and women. American Eagle Outfitters, currently, has a Zacks Rank #1 and a Growth Score of A.
The Zacks Consensus Estimate for its current-year earnings has moved up 7.3% over the past 60 days. AEO's expected earnings growth rate for the current year is 36.1%.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. Abercrombie & Fitch, currently, has a Zacks Rank #2 and a Growth Score of A.
The Zacks Consensus Estimate for its current-year earnings has moved up 1.6% over the past 60 days. ANF's expected earnings growth rate for the current year is 1,672%.
Runway Growth Finance is an externally managed business development company. Runway Growth Finance, currently, has a Zacks Rank #2 and a Growth Score of A.
The Zacks Consensus Estimate for its current-year earnings has moved up 4.2% over the past 60 days. RWAY's expected earnings growth rate for the current year is 34.9%.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Helen of Troy Limited (HELE) : Free Stock Analysis Report
Carrols Restaurant Group, Inc. (TAST) : Free Stock Analysis Report
Runway Growth Finance Corp. (RWAY) : Free Stock Analysis Report
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