For Immediate Release
Chicago, IL – October 12, 2017 – Zacks Equity Research Kemet Corp (NYSE: KEM – Free Report) as the Bull of the Day, Flowserve Corp (NYSE: FLS – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tableau Software (NYSE: DATA – Free Report), Adobe Systems (Nasdaq: ADBE – Free Report) and Progress Software Corporation (Nasdaq: PRGS – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Kemet Corp (NYSE: KEM – Free Report) was the Bull of the Day back on July 25 and at that time I noted the stock traded at a 18x forward multiple yet had some great growth potential. At the time the stock was priced at just under $17, today I see shares trading over $25 and I believe they are headed higher still.
You can access the last Bull of the Day at this link ( https://www.zacks.com/commentary/122696/bull-of-the-day-kemet-corp-kem)
Description
Kemet Corporation, together with its subsidiaries, manufactures and sells passive electronic components under the Kemet brand worldwide. The company operates through two segments, Solid Capacitors, and Film and Electrolytic. Its products include tantalum, multilayer ceramic, film, electrolytic, paper, and solid aluminum capacitors, as well as EMI filters. The company offers its capacitors for use in the automotive, communications, computer-related, industrial, consumer, military/aerospace and alternative energy industries. Kemet Corporation sells its products to original equipment manufacturers, electronics manufacturing services providers and electronics distributors. The company was founded in 1919 and is headquartered in Simpsonville, South Carolina.
Earnings History
Since the previous Bull of the Day article ran, KEM posted another solid quarter. The company beat the Zacks Consensus Estimate of $0.18 by $0.14 for a 77% positive earnings surprise. This was the fourth consecutive beat of the Zacks Consensus Estimate.
The stock traded lower following the report and that could have been due to the top-line miss. The company reported $274M in revenues when $281M were expected.
The next earnings report has more lofty expectations, with analysts looking for $299M on top and a $0.43 on the bottom line.
Earnings Estimates
Back in July, the Zacks Consensus Estimate was calling for $0.54 in EPS for 2017. The next month that number nearly tripled to $1.50. In the first few days of October, the estimate has again inched higher to $1.52. This is an impressive move higher.
The 2018 number also saw a big move. The Zacks Consensus Estimate was at $0.76 in July and then jolted higher to $1.57 in August and has moved to $1.61 here in October.
Bear of the Day:
Flowserve Corp (NYSE: FLS – Free Report) recently posted a big miss on the top and on bottom. The company reported $0.22 when the Zacks Consensus Estimate was looking for $0.44, and that translates into a negative earnings surprise of 50%. The company also missed on the top line as well, with revenues of $877M when $923M were expected. The company also lowered guidance and that has sent earnings estimates lower, and for that reason it is a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Description
Flowserve Corporation is one of the world's leading providers of industrial flow management services. Operating in 25 countries, with more than 7,000 employees, the company produces highly engineered and modular pumps, precision mechanical seals, smart, specialty, and quarter-turn valves and valve actuators, and a range of related flow management services.
Earnings Estimates
Before the company posted the miss and lowered guidance, the Zacks Consensus Estimate was looking for $1.78 in EPS. After the release, the Zacks Consensus Estimate slipped to $1.41 and has fallen another three cents since then.
The Zacks Consensus Estimate for 2018 has also moved lower. The number stood at $2.27 in June and fell to $2.04 in August and is now at $2.01.
Valuation
FLS has a mixed valuation. The Zacks Research System (ZRS) shows the stock trading at a 31.6x forward earnings multiple and that is a premium valuation to the industry average of 29.5x. The price to book for FLS is 3.3x and that is well below the industry average of 12.8x. Finally, the price to sales multiple of 1.5x is just a fraction below the 1.7x industry average..
For 2017, analysts are expecting revenues to contract 9% while earnings are expected to come in 37% below last year’s level.
Additional content:
3 Cloud Stocks to Buy Right Now
In the matter of just a few years, “the Cloud” has evolved from the new feature that your grandmother just can’t quite seem to understand to one of the main factors driving growth in the technology sector. Cloud computing is now an essential focus for software-related companies, and cloud stocks have piqued the interest of many tech-focused investors.
New technologies and changing consumer behavior have changed the shape of the technology landscape, and an industry that was once centered on the personal computer has adapted to survive in the world of mobile computing and the Cloud. The markets have been paying attention, and some of the best tech stocks have been those that are either primarily cloud-based companies, or those that have shown growth in their cloud operations.
With this in mind, we’ve highlighted three stocks that are not only showing strong cloud-related activity, but also strong fundamental metrics. Check out these three cloud stocks to buy right now:
1. Tableau Software (NYSE: DATA – Free Report)
Tableau specializes in visualization products focused on business intelligence. Its software solutions have the ability to create compelling graphs and graphics from complex sets of data at an impressive speed, and the company offers both a fully-managed SaaS product and an installed version that is compatible with all major cloud environments. DATA is currently a Zacks Rank #2 (Buy).
In its most recent quarter, Tableau saw revenues of $212.9 million, topping our consensus estimate of $211 million and cementing the company’s decision to focus on its subscription model. In fact, annual recurring subscription revenue climbed 175% year-over-year to $103.5 million. Looking ahead, this business will be integral to Tableau’s growth, and demand should continue to rise as adoption of cloud computing and big data analytics become the industry standard.
2. Adobe Systems (Nasdaq: ADBE – Free Report)
Adobe Systems is a provider of graphic design, publishing, and imaging software for Web and print production. The company’s main offering is its “Creative Cloud,” which is a software-as-a-service (SaaS) product that allows users to access all of Adobe’s tools at one monthly price. The stock currently has a Zacks Rank #2 (Buy).
ADBE shares are up over 47% year-to-date and could be poised to break even higher soon. We’ve seen 11 positive estimate revisions for the company’s upcoming earnings report over the past 60 days, and Adobe has already proven itself to be a consistent earnings over-performer. On top of this, our current consensus estimate is calling for sales to grow 21% this quarter—a rate that should have investors giddy.
3. Progress Software Corporation (Nasdaq: PRGS – Free Report)
Progress develops software and cloud-based products that assist clients with application deployment, application management, data connectivity, web content management, and predictive analytics. The company has shifted its focus to cloud computing and is looking to expand its cloud subscription offerings. Currently, PRGS is a Zacks Rank #1 (Strong Buy).
Progress has surpassed the Zacks Consensus Estimate for earnings in four consecutive quarters, and the stock is now up over 25% this year. In the past 30 days, we’ve seen two positive estimate revisions for the company’s current-year and next-year earnings. Progress has recorded a RoE of 20.3%, which outpaces its industry average of 8.9%. Also, the company is generating $2.08 per share in cash, smashing the industry average of $0.68. Progress also offers a respectable 1.24% dividend.
Bottom Line
Cloud-based companies have been some of the best performing stocks in the tech sector this year, and these cloud stocks also boast strong fundamental metrics. If you’re looking to add tech stocks to your portfolio right now, this list is probably a good place to start.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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Tableau Software, Inc. (DATA) : Free Stock Analysis Report
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
Progress Software Corporation (PRGS) : Free Stock Analysis Report
Kemet Corporation (KEM) : Free Stock Analysis Report
Flowserve Corporation (FLS) : Free Stock Analysis Report
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