Chicago, IL – December 19, 2024 – Zacks Equity Research shares IonQ IONQ as the Bull of the Day and Insperity NSP as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Gap Inc. GAP, Abercrombie & Fitch ANF and Deckers Outdoor DECK.
Here is a synopsis of all five stocks.
Citron Research has been rather vocal in the space, urging investors to sell shares of RGTI on December 5 when the stock closed at $3.18 and then again on December 11 when the stock closed at $7.38. Yesterday the research outfit posted on X.com that RGTI, QUBT and IONQ were all overvalued due to their R&D spending. Yesterday RGTI closed at $10.69, up 233% from when a sale was recommended. That track record more than speaks for itself in the short term.
IonQ, Inc. develops and manufactures quantum computers. The firm specializes in quantum computing and quantum information processing. The company was founded by Christopher Monroe and Jung Sang Kim in 2015 and is headquartered in College Park, MD.
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.
The lone miss in the last four quarters was the most recent earnings print that saw the company post a loss of 24 cents when a loss of 23 cents was expected.
Earnings estimate revisions is what the Zacks Rank is all about.
Estimates are moving higher for IONQ.
Following the recent miss, the estimates for this quarter have increased.
The consensus has moved from a loss of $0.25 to a loss of $0.23 over the last 7 days.
Next quarter has seen a two cent increase moving from a loss of $0.26 to a loss of $0.24
The full year 2024 estimate is up from a loss of $0.86 to a loss of $0.83.
Next year increased from a loss of $1.15 to a loss of $1.06.
All of the estimate moves have come in the last week.
This year the company is looking from $40.5M in sales which is good for 83.7% growth.
Next year analysts are expecting $80M in sales which represents growth of 97.5%.
That is a significant acceleration in growth.
This is where the rubber meets the road. In a mature business you can expect to see earnings and multiples that are within a standard deviation or two (or three) of an industry average. That is not the case for IONQ or many of the other quantum computing stocks. Right now, investors are looking out to what could be… more than what is there right now, but that is the reason that all investors buy stocks, because they believe that the outlook will improve.
With no earnings there is no PE to lean on. Instead we see a price to book of 21.7x which is very high. The price to sales multiple of 253x is also sky high, but recall that the company is looking forward to topline growth of nearly 100% next year.
Insperity is a Zacks Rank #5 (Strong Sell) after the company beat the Zacks Consensus Estimate when the last reported on October 31. The company makes a comprehensive suite of scalable HR solutions. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Insperity, Inc. engages in the provision of human resources and business solutions designed to help improve business performance. The firm also offers payroll and employment administration, employee benefits, workers' compensation, government compliance, performance management, and training and development services along with cloud-based human capital management platform. The company was founded by Paul J. Sarvadi in April 1986 and is headquartered in Kingwood, TX.
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 Insperity (NSP), I see four consecutive beats of the Zacks Consensus Estimate over the last year. The most recent quarter was a beat with the company posting $0.39 when the consensus was calling for $0.32. 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 HII I see annual estimates moving lower of late.
The current fiscal year consensus number moved lower from $3.57 to $3.54 over the last 60 days.
The next year has moved from $4.01 to $3.80 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).
The Gap Inc. has demonstrated a notable stock performance in the past month, reflecting positive financial results and growth initiatives. The company’s strong earnings and sales performances in third-quarter fiscal 2024 were followed by a raised fiscal 2024 sales growth forecast. GAP’s optimistic outlook reflects its confidence in its ongoing turnaround strategy, which includes brand revitalization and operational improvements.
In the past month, the company’s shares have rallied as much as 18.5%, surpassing the industry peers and the broader S&P 500 index’s rise of 14.1% and 3%, respectively. The company also outperformed the broader Zacks Retail-Wholesale sector's growth of 7.3% in the same period.
At the current price of $24.88, the stock trades at an 18.7% discount to its 52-week high of $30.59. The stock also trades at a significant premium of 35.7% to its 52-week low of $18.34.
Gap’s strong performance in 2024 is supported by positive technical indicators. GAP trades above its 50 and 200-day moving averages, indicating robust upward momentum and price stability. The moving average is an important indicator for gauging market trends and momentum. This technical strength indicates positive market sentiment and confidence in the company's financial health and prospects.
Gap is currently experiencing a strong stock performance, driven by several strategic initiatives designed to revitalize its brand and enhance operational efficiency. A central focus of the company has been on product innovation, with efforts to modernize its merchandise offerings. It has carved out a niche with its four distinct brands — Gap, Old Navy, Banana Republic and Athleta — each catering to unique market segments, thus providing diverse revenue streams and reducing overall risk.
Gap's strategic focus extends beyond product innovation to include cost management and operational excellence. The company's leadership is prioritizing four key areas — improving financial and operational discipline, revitalizing its brands, strengthening its operational platform, and fostering a dynamic company culture.
By aligning its product lines with evolving consumer preferences, especially in sustainability and casual wear, Gap has been able to strengthen its market position. The brand has also made substantial investments in its e-commerce platform, enabling it to engage a wider, tech-savvy customer base, thus driving significant growth in online sales.
The company is also capitalizing on growth opportunities within its brands. Old Navy remains a dominant force, contributing more than half of Gap's total sales, thanks to its focus on value-driven fashion. Athleta continues to capture a larger share of the activewear market, positioning itself as a go-to brand for women's athletic wear. Gap's ongoing efforts to reposition Banana Republic in the premium lifestyle segment are showing promising results, while the successful revitalization of the Gap brand is enhancing its appeal across generations.
Gap has also been optimizing its supply chain, improving inventory management and streamlining its store network, leading to reduced costs and improved margins. These operational advancements, coupled with a revitalized in-store experience, have contributed to overall sales growth and positioned the company well for continued success in the evolving retail landscape.
The company's stock momentum is bolstered by its raised fiscal 2024 outlook, driven by optimism surrounding its holiday collection. In fourth-quarter fiscal 2024, Gap is enhancing the shopping experience by refreshing its website and remodeling 15% of its stores. Strong performances in the third quarter and the early fourth quarter have strengthened Gap’s confidence, leading to an upgraded forecast for sales, gross margin and operating income growth.
Gap anticipates sales growth of 1.5-2% for fiscal 2024, with a fourth-quarter sales rise expectation of 1-2%. The company forecasts a 220-basis-point (bps) improvement in the gross margin, thanks to favorable commodity costs and better inventory management. The fiscal fourth-quarter gross margin is expected to be similar to that reported last year. Operating income for fiscal 2024 is projected to rise 60-65% year over year, marking significant progress toward profit levels.
The Zacks Consensus Estimate for Gap’s fiscal 2024 and 2025 earnings per share rose 7.4% and 6.9%, respectively, in the last 30 days. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
For fiscal 2024, the Zacks Consensus Estimate for GPS’s sales and EPS implies 0.8% and 41.3% year-over-year growth, respectively. The consensus mark for fiscal 2025 sales and earnings indicates 2.1% and 6.6% year-over-year growth, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The company is currently trading at a discount to its industry on a forward 12-month P/E basis, making the stock an attractive pick for investors. Gap is currently trading at a forward 12-month P/E ratio of 11.62X, below the industry average of 20.68X and the S&P 500’s average of 22.75X.
The stock also trades at a discount to its peers, including Abercrombie & Fitch and Deckers Outdoor, which are trading at forward 12-month P/E multiples of 13.74X and 35.05X, respectively.
Gap has solidified its position in the retail apparel industry through a combination of brand strength, digital transformation, sustainability and global expansion. By focusing on product innovation, operational efficiency and a consumer-centric approach, the company is well-equipped to navigate the evolving retail landscape and emerge even more competitive.
With strong financial health and operational discipline, Gap’s fundamentals remain robust. The recent uptick in its share price, paired with a valuation lower than many of its peers, presents an attractive opportunity for investors seeking a profitable apparel retailer. For existing shareholders, holding the stock offers promising long-term potential as the company continues executing its growth initiatives.
Gap currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
The Gap, Inc. (GAP) : Free Stock Analysis Report
Insperity, Inc. (NSP) : Free Stock Analysis Report
IonQ, Inc. (IONQ) : Free Stock Analysis Report
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