Chicago, IL – May 4, 2022 – Zacks Equity Research shares Huntsman HUN as the Bull of the Day and Colgate-Palmolive CL as the Bear of the Day. In addition, Zacks Equity Research provides analysis on DraftKings DKNG, fuboTV FUBO and SeaWorld Entertainment SEAS.
Here is a synopsis of all five stocks:
Huntsman is a Zacks Rank #1 (Strong Buy) that is a leading manufacturer of differentiated and commodity chemical products. Its products include MDI, polyols, propylene oxide, amines, surfactants, maleic anhydride, epoxy-based polymer formulations, textile chemicals and dyes.
The stock has been slumping over the last few months along with the overall market. However, a recent earnings beat has helped analyst estimates higher. Additionally, the stock is holding technical support. so investors should be watching current levels closely.
The company was founded in 1970 and is headquartered in The Woodlands, Texas. Huntsman employs over 9,000 and has a market cap of $7 billion.
The stock has a Forward PE of 8, making it a value play. HUN has Zacks Style Scores of "A" in Value and Momentum, but "C" in Growth. The stock also pays a dividend of 2.5%.
Huntsman operates through four segments: Polyurethanes, Performance Products, Advanced Materials, and Textile Effects. Their products are used in a number of applications including aerospace, automotive, construction products, adhesives, personal care and hygiene, durable and nondurable consumer products, digital inks, electronics, medical, packaging, coatings and construction, power generation, refining and textile chemicals.
HUN reported earnings last week, seeing a 19% EPS surprise to the upside. The company saw revenues come in above expectations and sees a strong Q2. On earnings slides the company showed Q2 EBITDA at $380-420 million and EBITDA margins at 16-17%. Huntsman affirmed FY22 guidance and guided FY22 capex at $300 million.
Management commented on the call that the balance sheet strength and cash flow flexibility allows them to invest for the future, as well as return cash to shareholders. For that reason, they increased the dividend 13% in the first quarter, which has been increased 70% from 2018.
Huntsman Corporation price-eps-surprise | Huntsman Corporation Quote
The strong quarter has given analysts reason to lift estimates. Over the last 7 days, estimates have ticked 7% higher for the current quarter, going from $0.99 to $1.06. For the current year, estimates have gone up 5% over that same time frame.
Valuation is being cited as a reason for being long the stock and after earnings, we saw a couple reiterations to buy the stock.
One of the biggest bulls is Stifel, who has a Buy rating and a $67 price target. Jefferies has the stock at a Buy with a $49 target. Wells Fargo kept HUN with an Overweight rating, but dropped their price target to $42 from $50.
HUN broke out late last year, moving from $28 to $41 in just a couple months. The stock has pulled back over 20% since that 2022 high and has fallen to technical support.
Over the last few weeks, the stock has been dancing with the 200-day moving average at $32. After the stock gapped higher on earnings, it was sold back down to that level and buyers stepped in.
In addition to the 200-day, the 61.8% retracement from the 2021 lows to 2022 highs is the $30.70 area. As long as the bulls hold these levels, they are still in control of the stock. Areas of resistance to the upside are $35 and $37, which is the 50-day moving average.
Huntsman is in a good position to weather the market storm that has hit equities in 2022. While the stock is off 20% from highs, current levels are attractive based on valuation levels. Additionally, the stock is holding technical support and due for an oversold bounce.
Traders looking for a trade to highs can lean against that support and look for the 50-day MA. For investors, its time to start nibbling here longer-term and look at the stock as a long-term value play.
Colgate-Palmolive is a Zacks Rank #5 (Strong Sell) that manufactures and sells consumer products on a global scale. The company operates in two segments, with one focusing on oral and home care, while the other is in pet nutrition.
The stock saw success during the pandemic when the stay-at-home trend gained steam. However, since the start of 2021, the stock has gone sideways.
After a recent earnings report, analyst estimates are starting to drop. With the stock trading at the bottom of its 2021 range, the bulls are in danger of capitulation with the market atmosphere being so weak.
Colgate-Palmolive is headquartered in New York, NY. The company employs over 33,000 people and was founded way back in 1806.
CL makes a lot of the products you use at home. Some of its products include toothpaste, toothbrushes, mouthwash, soap, shampoo, deodorants, household cleaners and many more.
Some popular brands include Colgate, Tom's of Maine, Irish Spring, Palmolive, Softsoap, Speed Stick, Ajax, Soupline, and Cuddly.
CL is valued at $63 billion and has a Forward PE of 24. The company holds a Zacks Style Score of "D" in Value and "A" in Growth. The stock pays out a dividend with 2.5% yield.
Colgate reported late last week, with earnings coming in as expected. Revenues missed, coming in at $4.40B v the $4.42B expected.
The company raised its mid-point FY22 organic revenue to +4-6% from the 3-5% long-term range. However, the company cut its non-GAAP gross margins. Additionally, the company revised its FY22 EPS outlook lower due to cost pressures.
Colgate commented that raw materials and logistics will cost an additional $650M for the company. The biggest cost impact has been fats and oil, including palm and soybean oils.
While revenues are increasing, costs will be cutting into that bottom line. For that reason, analysts are lowering estimates as they see the short-term cost pressures weighing into the stocks multiple.
ColgatePalmolive Company price-consensus-chart | ColgatePalmolive Company Quote
Over the last month, estimates are trending lower for all timeframes.
For the current quarter, estimates have dropped from $0.79 to $0.73, or 7%. For the current year, estimates fell to $3.14 from $3.31, or 5%.
In addition to estimates going lower, analysts are dropping price targets as well.
Morgan Stanley took their target down to $82 from $91. While Atlantic Equities dropped their rating to Neutral and cut their target to $80 from $92.
CL has been stuck in a large trading range from July of 2021. This range is seeing buyers at $75 and selling at $85. The bottom of this range has been tested about six times and after the recent earnings report, it is being tested again.
The stock is below all its moving averages, with the 200-day at $78.75.
If the stock breaks its recent low, investors should look for the $69 area as support. This is the 61.8% retracement from COVID lows to 2020 highs. If this spot were to fail, look for those COVID lows around $60 to be tested.
Colgate is a household name and the stock is pretty steady when you zoom out on the chart. However, the cost pressures the company is seeing will bring short-term pressure as margins are pressured.
DraftKings is set to report first-quarter 2022 results on May 6.
The Zacks Consensus Estimate for revenues is pegged at $404.2 million, indicating an increase of 29.43% from the year-ago quarter's levels.
The consensus mark for loss has moved south by 2 cents in the past 30 days and is currently pegged at $1.24 per share.
Let's see how things have shaped prior to this announcement.
Increasing global demand for online gambling and sports betting is expected to have positively impacted DraftKings' first-quarter performance.
In the fourth quarter of 2021, DraftKings reported revenues of $473 million, up 47% year over year. During the same period, with mobile betting launching in several states, the company had an average of 1.5 million monthly unique paying customers engaged on its platform.
The robust demand for iGaming, such as Roulette and Blackjack, benefits from a spike in user activity. The trend is expected to have continued in the to-be-reported quarter.
To further expand its reach in the addressable market and strengthen user base, the company has been continuously working on adding depth to its mobile sports betting and iGaming products.
Presently, DraftKings is live with mobile sports betting in 18 states that collectively represent 36% of the U.S. population. It is live with iGaming in five states, representing approximately 11% of the U.S. population.
In the to-be-reported quarter, DraftKings is expected to witness strong growth in its B2C business, driven by payer acquisition and retention as well as player engagement and monetization. In the fourth quarter of 2021, the company's monthly unique payers (MUPs) for the B2C segment increased 32% year over year. On average, 2 million monthly unique paying customers are engaged with DraftKings during each month of the fourth quarter.
DraftKings Inc. price-eps-surprise | DraftKings Inc. Quote
In January, DraftKings announced that it would become the official sportsbook provider for the government-run Oregon Lottery. Per the agreement, DraftKings Sportsbook replaced the current Scoreboard app, starting Jan 18.
DraftKings strategically launched its mobile sports betting in New York just ahead of the NFL Playoffs in the first quarter, one of the busiest periods for betting activity in a year. The company is set to become one of the first operators to launch in the Empire State.
In the to-be-reported quarter, DraftKings and the Tribes of Washington announced an exclusive market access partnership to bring DraftKings retail sportsbook experience to Washington. Once operational, Washington will mark the 19th state in which DraftKings is live with its Sportsbook product.
DraftKings also expanded its relationship with Golden Nugget Casino Lake Charles by launching its mobile sports betting for eligible customers in Louisiana.
These advancements have strengthened the company's position in online sports wagering and are likely to have aided the company's first-quarter top line.
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
DraftKings has an Earnings ESP of +5.53% and carries a Zacks Rank #3, currently. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Here are some companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat in their upcoming releases:
fuboTV has an Earnings ESP of +37.55% and a Zacks Rank #2. The company is all set to announce its first-quarter 2022 results on May 5. You can see the complete list of today's Zacks #1 Rank stocks here.
FUBO is up 41.3% in the past year against the Zacks Broadcast Radio and Television industry's decline of 4.2% and the Consumer Discretionary sector's fall of 23.1%.
SeaWorld Entertainment has an Earnings ESP of +38.64% and a Zacks Rank #2. The company is set to announce first-quarter 2022 results on May 5.
SEAS is up 42.7% in the past year against the Zacks Leisure and Recreation Services industry's decline of 10.7% and the Consumer Discretionary sector's fall of 23.1%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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ColgatePalmolive Company (CL) : Free Stock Analysis Report
Huntsman Corporation (HUN) : Free Stock Analysis Report
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DraftKings Inc. (DKNG) : Free Stock Analysis Report
fuboTV Inc. (FUBO) : Free Stock Analysis Report
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