Chicago, IL – January 14, 2025 – Zacks Equity Research shares Fox Corporation FOXA as the Bull of the Day and Advanced Drainage Systems WMS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple AAPL, Microsoft MSFT and Alphabet GOOGL.
Here is a synopsis of all five stocks.
Investors looking for a viable option in the portfolio in regards to growth and value may want to consider Fox Corporation's stock which lands a Zacks Rank #1 (Strong Buy) and the Bull of the Day.
As one of the premier media companies, now appears to be an ideal time to invest in Fox’s presence as a news, sports, and entertainment content provider.
To that point, the rally in Fox’s stock looks likely to continue with FOXA soaring over +50% in the last year.
Notably, this has impressively topped the broader indexes and has crushed the performances of many of its closest competitors such as Disney, the owner of ABC, and Comcast, which owns NBC.
Fox has reportedly sold all of its advertising slots as the primary broadcaster of the upcoming Super Bowl LIX in February. More intriguing, some brands are whispered to be paying up to a record $7 million for a 30-second advertising commercial.
The last time Fox had Super Bowl rights was in 2023 when the company generated $600 million in advertising revenue. Considering the massive boost in viewership that a Super Bowl can bring to a network, Fox’s total sales are expected to spike 12% in fiscal 2025 to what would be a record $15.63 billion versus $13.98 billion last year.
Although FY26 sales are projected to dip -2%, projections of $15.3 billion would still refect 18% growth in the last five years and be above Fox's previous record of $14.9 billion in total sales in 2023 (Super Bowl Year).
Most Importantly, in regards to profitability, Fox’s annual earnings are now expected to climb 19% in FY25 to a record $4.08 per share compared to EPS of $3.43 in 2024. Reassuringly, FY25 EPS estimates have risen over 3% in the last 30 days.
Furthermore, while FY26 EPS is projected to dip to $3.83, it’s noteworthy that estimates are up 2% in the last month.
Making the positive EPS revisions more appealing is that at just under $50 a share, FOXA still trades at a very reasonable 11.8X forward earnings multiple.
Trading at a sharp discount to the benchmark S&P 500’s forward P/E valuation and its Zacks Broadcast Radio and Television Industry average, FOXA also trades beneath Disney’s 20X and is near Comcast’s 8.2X.
As the delegated network for the upcoming Super Bowl, Fox’s stock is hard to overlook at the moment and in addition to its strong buy rating has an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.
Amid recent market volatility, one stock investors may want to be cautious of is Advanced Drainage Systems, which lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Although Advanced Drainage Systems is one of the leading providers of innovative water management and drainage solutions, there could be more downside ahead for WMS shares based on a trend of declining earnings estimate revisions.
Attributed to softer demand and higher operating costs, Advanced Drainage Systems most recently missed top and bottom line expectations for its fiscal second quarter in November.
Earnings of $1.70 per share were slightly down from the prior-year quarter and noticeably missed Q2 EPS expectations of $1.93 by nearly -12%. This came on Q2 sales of $782.61 million which was up from $780.22 million a year ago but fell 4% short of estimates of $818 million.
Citing weaker demand in the non-residential construction market and significant storm events (Hurricane Milton and Helene), Advanced Drainage Systems lowered its full-year revenue guidance to $2.9 billion-$2.975 billion from $2.925 billion-$3.025 billion.
Correlating with Advanced Drainage Systems lower revenue guidance, fiscal 2025 and FY26 EPS estimates have continued to trend lower over the last quarter and have fallen over 5% in the last 60 days respectively.
Trading around $114 a share, Advanced Drainage Systems stock is at an 18.4X forward earnings multiple. While this is a discount to the S&P 500, WMS trades above its Zacks Building Products-Miscellaneous Industry average of 16X forward earnings.
With some of the other notable names in the space being United Rentals, Arcosa and CRH, it’s also noteworthy that WMS is above the industry average of 2.1X sales.
It may be too soon to say Advanced Drainage Systems stock is a value trap, but investors are certainly cautious of companies they are paying more than $100 a share for and have downside risks on the horizon.
Appleshares had a terrific trailing 12 months, driven by its improving prospects, courtesy of the launch of Apple Intelligence. Since Jun. 10, 2024, when the iPhone maker announced Apple Intelligence in its annual developers’ event named the Worldwide Developers Conference, its shares have jumped 29.6%.
However, Apple lost some momentum in early 2025 due to growing woes in China, with the iPhone losing market share to China-based competitors like Xiaomi and Vivo, per the latest data from Counterpoint Research, as cited by Bloomberg.
Globally, Apple’s 2024 iPhone shipment declined 2% from that reported in 2023 and trailed Samsung, which saw shipment growth of 1%. Xiaomi gained the most, with its 2024 shipments jumping 12% from 2023. Overall, global smartphone sales grew 4% year over year in 2024.
Stiff competition from the likes of Huawei and Xiaomi in China compelled Apple to offer rare discounts for its latest iPhone model between Jan. 4 and Jan. 7. However, the lack of Apple Intelligence in Mainland China is expected to hurt despite the discounts on high-end iPhones.
AAPL’s Services business is expected to drive top-line growth. It now has more than 1 billion paid subscribers across its Services portfolio, more than double what it had four years ago. The expanding content portfolio of Apple TV+, Apple Music and Apple Arcade, as well as the growing user base of Apple Pay, has helped drive subscriber growth.
Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as the company’s strong growth driver. In the fiscal fourth quarter, Services revenues grew 12% year over year to $24.97 billion and accounted for 26.3% of sales.
The Services business benefits from the growing demand for Apple TV+ content and the adoption of Apple Pay. It recently expanded Tap to Pay on iPhone to more markets, including the U.A.E., Chile, Japan, Canada, Italy and Germany. Apple Pay is now available in countries like Egypt and Uruguay. The expanding content portfolio of Apple TV+ is noteworthy.
The addition of Apple Intelligence is expected to boost user engagement, as it is designed to enhance user experience and productivity while prioritizing privacy across iPhone, iPad and Mac platforms. Apple Intelligence is now available for iPhone 16, iPhone 16 Plus, iPhone 16 Pro, iPhone 16 Pro Max, iPhone 15 Pro, iPhone 15 Pro Max, and iPad and Mac with M1 and later, with device and Siri language set to U.S. English.
Apple expects the December-end quarter’s (first-quarter fiscal 2025) revenues to grow in the low to mid-single digits on a year-over-year basis. For the Services segment, the company expects a double-digit growth rate similar to that reported in fiscal 2024.
The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2025 revenues is pegged at $95.96 billion, suggesting growth of 5.74% from the year-ago quarter’s reported figure.
The consensus mark for earnings has been unchanged at $1.68 per share over the past 30 days, indicating 9.8% growth from the figure reported in the year-ago quarter.
Apple’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average earnings surprise being 5.05%.
Apple Inc. price-consensus-chart | Apple Inc. Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The AAPL stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
Apple is trading at a premium with a forward 12-month P/E of 30.76X compared with the sector’s 26.62X and higher than the median of 29.64X, reflecting a stretched valuation.
AAPL shares are now trading below the 50-day moving average, indicating a bearish trend.
Apple’s AI push with Apple Intelligence is noteworthy. However, it is still playing catch up with the likes of Microsoft and Alphabet.
Although the Services business has emerged as AAPL’s new cash cow, with an expanding content portfolio for Apple TV+ and Apple Arcade, we believe that the delay in Apple Intelligence’s launch in countries like China and India will hurt shares.
Hence, we believe that Apple’s near-term growth prospects do not justify a premium valuation.
AAPL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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