Chicago, IL – December 17, 2024 – Zacks Equity Research shares DAVE INC. DAVE as the Bull of the Day and Academy Sports and Outdoors ASO as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sterling Infrastructure, Inc. STRL, EMCOR Group, Inc. EME and GE Vernova Inc. GEV.
Here is a synopsis of all five stocks.
The standout feature of DAVE INC’s platform is its cash advance service, which provides short-term payday loans without interest, origination fees, or other traditional charges. Instead, the company generates revenue through expedited service fees, a monthly subscription, and an optional tipping model, giving users a flexible and transparent alternative to traditional financial services.
DAVE stock has been on an incredible tear this year, up more than 10x since the start of 2024. However, it appears that even after such strong price appreciation, there may still be plenty of upside and limited downside. The company is growing extremely fast, has a very reasonable valuation and currently boasts a Zacks Rank #1 (Strong Buy) rating, reflecting upward trending earnings revisions.
Part of the reason why DAVE INC stock is up so much this year is that it has been absolutely blowing analysts’ earnings estimates out of the water. During the last two quarterly earnings reports DAVE beat earnings estimates by 208% and 742% respectively. Furthermore, the Zacks Earnings ESP is forecasting further upside earnings surprises, with next quarter projected to beat expectations by 43%.
This isn’t to say that analysts are sandbagging their earnings estimates, because they continue to raise forecasts. Current quarter earnings estimates have risen by 46% in the last 60 days, while FY24 estimates have climbed by 26.6% over the same period. Over the next year earnings are expected to grow more than 30% YoY and sales projected for 31.6% growth.
Because of this tremendous increase in company profits and even with the huge price appreciation, DAVE INC is still trading at a fair valuation, and possibly even a discount based on its growth projections. Today, DAVE is trading at just 22.5x next year’s earnings.
Although it may be hard to imagine a stock up so much YTD could continue to rally, the developments in DAVE’s profit and sales growth demonstrate just how undervalued the stock was at the beginning of the year. It is also worth noting that the stock price is still considerably below its all-time high of $490, which it made back in 2022.
DAVE stock has again been coiling over the last month, and on Monday showed considerable buying pressure. If DAVE shares can hold above the $100 level, it is only a matter of time before the stock goes on another big run.
While growth and momentum stocks can experience massive rallies, they are also prone to equally sharp corrections due to their typically high valuations. However, given the reasonable forward earnings multiple we highlighted, the risk of a significant pullback appears much lower.
DAVE Inc. is an exciting and rapidly growing newcomer to the fintech industry. While its stock has experienced significant volatility, the company's future appears exceptionally promising.
Earnings have surged into positive territory in recent months, exceeding expectations and signaling strong growth momentum. Coupled with consistent, substantial earnings and standout stock performance this year, DAVE INC presents a compelling investment opportunity, offering an attractive balance of fair valuation and robust growth potential.
Identifying a stock to avoid is often easier than pinpointing one to invest in, especially when clear warning signs are present. Declining sales, falling earnings, and underperformance during a strong market year are key indicators that suggest a stock is worth steering clear of.
Unfortunately, Academy Sports and Outdoors checks all these boxes, contributing to a bleak near-term outlook. Not only has the stock underperformed the broader market, but it is also lagging behind its peers in the retail sector. Retail is a notoriously competitive industry, and when pitted against giants like Amazon and Walmart, the odds are heavily stacked against smaller players like ASO.
The Zacks Rank further underscores this weak setup. Falling earnings estimates remain one of the most reliable indicators of poor profit potential, and in the case of Academy Sports and Outdoors, this trend reinforces the case for caution.
As mentioned, Academy Sports and Outdoors has been experiencing downward revisions in earnings estimates, resulting in a Zacks Rank #5 (Strong Sell) rating. Analysts have unanimously lowered their earnings forecasts across timeframes, with earnings this year and next year falling by more than 4%.
With trailing sales and earnings both falling it is no surprise that analysts have had to downgrade the outlook, and they have been spot on with their downward expectations. Over the last four quarterly earnings meetings, ASO has missed estimates three times and the last report it missed by 23.4%.
The stock chart for Academy Sports and Outdoors provides valuable insights into the company's potential trajectory. Over the past two years, the stock has traded within a broad and volatile range, which has recently started to narrow.
If the stock approaches the upper resistance level and reverses lower, it may continue trading within this range for an extended period or even trend toward the lower bound. However, a breakout above the upper resistance could signal a positive shift for the company. For this to be meaningful, though, it should coincide with notable improvements in the company's fundamentals.
Academy Sports and Outdoors is a company that clearly shows stagnation and the stock performance reflects that reality. Based on the multitude of factors shared here, it is clear that investors should avoid the stock at current levels.
However, this does not mean that ASO will forever be a poor stock. If the company can reignite sales growth and analysts begin to raise earnings estimates, maybe this stock can stage a comeback. But until that happens, investors should be hesitant to get involved and may want to seek opportunities elsewhere in the market.
Infrastructure is the backbone of any growing economy, and for the United States, the sector is poised for significant expansion heading into 2025. Major legislative initiatives, including the $1.2 trillion bipartisan infrastructure bill, are setting the stage for a wave of modernization projects. This historic investment promises to transform America's roads, bridges, railways, energy networks, and digital infrastructure, while creating 1.5 million jobs annually over the next seven years.
The Federal Reserve’s recent rate cuts add more momentum to the sector. With interest rates expected to decline further in 2025, borrowing costs for both public and private projects will drop, enabling an acceleration of construction activity. Additionally, declining mortgage rates could reinvigorate residential construction, further boosting the demand for materials and machinery.
Government-backed initiatives like the Infrastructure Investment and Jobs Act and the Inflation Reduction Act are bolstering renewable energy, data centers, and advanced manufacturing-related projects, while falling mortgage rates could revive residential construction. These dynamics make infrastructure stocks a compelling opportunity for long-term investors.
The United States is entering a transformative period of infrastructure development, driven by bipartisan legislation, renewable energy initiatives, and declining interest rates. For investors, the potential in infrastructure stocks is immense.
Companies like Sterling Infrastructure, Inc., EMCOR Group, Inc. and GE Vernova Inc. are uniquely positioned to thrive in this environment, with diverse portfolios that align with the nation’s modernization goals. As projects accelerate, these stocks could see robust revenue and earnings growth well into the next decade.
Using the Zacks Stock Screener, we have identified three stocks that carry a Zacks Rank #1 (Strong Buy) or 3 (Hold) and are well positioned for success in 2025.
Sterling: This is a premier U.S. service provider specializing in transportation, civil construction, and e-infrastructure solutions. With its focus on transportation and water infrastructure, Sterling is a direct beneficiary of increased government spending. The company’s strategic investments in data center and renewable energy construction also provide growth avenues as these sectors expand rapidly. The E-Infrastructure Solutions segment of STRL, focused on data centers and advanced manufacturing projects, has become the company's primary revenue generator, significantly boosting operating margins (read more: Sterling Stock Still a Buy for Investors?).
STRL, currently flaunting a Zacks Rank #1, has gained 129.4% in the past year. The 2025 earnings per share (EPS) estimate has increased to $6.45 from $6.02 over the past 60 days. Earnings for 2025 are expected to grow 8.1%. It currently carries a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
EMCOR: EMCOR provides electrical and mechanical construction services, making it integral to large-scale energy and manufacturing projects. With the Inflation Reduction Act driving renewable energy investments, EMCOR is well-positioned to benefit from the growing need for advanced electrical systems and maintenance services.
The company’s domestic construction segments experienced strong project growth in the trailing three years, with total Remaining Performance Obligations or RPOs increasing 18.6%, 33.2% and 22% year over year in 2023, 2022 and 2021, respectively. As of the third-quarter end, the company witnessed record RPOs of $9.8 billion, reflecting growth of 13.3% year over year. EME is benefiting from innovation and high-demand projects, particularly in data centers, semiconductor plants and institutional sectors.
EME, currently sporting a Zacks Rank #1, has gained 121.1% in the past year. The 2025 EPS estimate has increased to $22.24 from $21.50 over the past 60 days. Earnings for 2025 are expected to grow 7.2%. It currently carries a Growth Score of B.
GE Vernova: Headquartered in Cambridge, MA, this energy-focused division of General Electric is set to capitalize on the rapid expansion of renewable energy infrastructure. With its focus on wind power and grid solutions, GEV is aligned with the goals of the Inflation Reduction Act. The company’s advanced technology and deep expertise in power generation make it a standout in the transition to cleaner energy systems.
Recently, the company has raised its multiyear financial outlook, targeting approximately $45 billion in revenues and a 14% adjusted EBITDA margin by 2028. The company's Power segment is expected to reach a 16% EBITDA margin by 2028, while the Wind segment is targeting profitability with a 10% EBITDA margin by the same year. In Electrification, high-teens revenue growth is projected, with a goal of a 16% segment EBITDA margin by 2028. Also, it plans to generate at least $14 billion in cumulative free cash flow between 2025 and 2028, reflecting a robust financial trajectory supported by strong demand and operational improvements.
GEV — currently carrying a Zacks Rank #3 — has gained 137.1% since its inception on April 2, 2024. The 2025 EPS estimate has increased to $6.65 from $6.13 over the past 30 days. Earnings for 2025 are expected to grow 194.3%.
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EMCOR Group, Inc. (EME) : Free Stock Analysis Report
Dave Inc. (DAVE) : Free Stock Analysis Report
Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report
Academy Sports and Outdoors, Inc. (ASO) : Free Stock Analysis Report
GE Vernova Inc. (GEV) : Free Stock Analysis Report
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