PNC Financial, Papa Murphy's Holdings, Ceragon Networks, AK Steel and MiX Telematics highlighted as Zacks Bull and Bear of the Day
Zacks Equity Research
Updated
For Immediate Release
Chicago, IL – January 23, 2017 –Zacks Equity Research highlights PNC Financial (NYSE: PNC - Free Report ) as the Bull of the Day and Papa Murphy’s Holdings (NASDAQ: FRSH - Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ceragon Networks (NASDAQ: CRNT - Free Report ), AK Steel (NYSE: AKS - Free Report ) and MiX Telematics (NYSE: MIXT - Free Report ).
Here is a synopsis of all the five stocks:
Bull of the Day:
Thanks to rising rates, financial stocks have been in focus this earnings season. Many investors are looking for this segment to benefit from the rate situation, as well as the economic climate which looks to help the industry across the board.
However, to kick things off, the sector has witnessed a lackluster reaction to earnings, despite some nice beats. Take PNC Financial (NYSE: PNC - Free Report ) for example. The company beat earnings estimates by about 6% in the most recent quarter and it looks to have a solid year, but investors haven’t really reacted as of yet.
While this is a bit disappointing, it actually gives investors a great opportunity to get in at what could turn out to be undervalued levels. This is especially apparent when investors look to the company’s recent earnings estimate revisions, as analysts appear to be believers in PNC’s story, even if the broader market hasn’t quite caught on yet.
PNC Estimates
Recent earnings estimates for PNC stock have almost universally been to the upside. In just the past week, we have seen three estimates go higher for the current quarter (compared to one lower) and seven estimates move higher for the full year (compared to zero lower).
The impact of these estimate changes can be seen if we look to the consensus estimate trend over the past few weeks. 60 days ago, the consensus estimate for the full year was $7.50/share and the current estimate comes in at $7.83/share, a jump of 4.4% that puts PNC on track for 7.3% EPS growth this year.
But really, the story isn’t over for PNC, as the most recent estimates have been even higher. The most accurate estimate actually puts the consensus estimate at $7.89/share, suggesting that the consensus could continue to creep higher in the weeks ahead, pushing the expected growth closer to 8% for the year.
And with a fantastic history in earnings season, there is plenty of reason to believe that this stock can keep its growth trend alive, and power through this sluggish run. That is why this stock has a Zacks Rank #1 (Strong Buy), and why we are looking for investors to embrace this positive story in the near term.
Bear of the Day :
It has been a pretty rough stretch for the restaurant sector. The space has largely underperformed the market over the past few months, and this is despite extremely high levels of consumer confidence.
The main problem appears to be concern over a restaurant bubble bursting, as well as intense competition in the space. The number of new players grows by the day, and there just isn’t room for all of these companies, particularly with changing consumer tastes.
One great example of this trend is Papa Murphy’s Holdings (NASDAQ: FRSH - Free Report ). This company operates in the pizza market, but focuses on the ‘take & bake’ segment.
While this may have been a phenomenal idea years ago, it is a business that consumers are increasingly rejecting in favor of healthier and quicker options. As an example of this shift, consider FRSH’s stock price performance over the past two years which includes a loss of over two-thirds of the value.
But while things obviously haven’t been great for Papa Murphy’s, there is actually reason to fear more pain in the months ahead too. This is clear if we look to recent earnings estimate revisions which have been decidedly to the downside for this stock.
Recent Estimates
The consensus estimate has been falling like a stone for FRSH over the past few months, as ninety days ago the current year estimate called for EPS of 27 cents, and now it is down to nine cents per share. Meanwhile, the current quarter has fallen from a consensus estimate of 12 cents per share to just three cents per share today over the same time period.
Obviously, this is bad news for FRSH, but it really doesn’t stop there. That is because the most recent estimates for the current quarter have been even lower, as the most accurate estimate for FRSH stock is now at just one cent per share, a huge decline over the past 90 days.
And while some investors might think that such low expectations would make things easy for a company to crush estimates, that hasn’t been the case for Papa Murphy’s over the past year. FRSH has actually missed estimates in two of the last three reports, and has posted enormous misses that have produced a four quarter average of a 50% miss. No wonder the stock has a Zacks Rank #5 (Strong Sell) and why we are looking for some more pain ahead for this company’s shares in the near term.
Additional content:
3 Growth Stocks Under $10 to Buy Now
Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive,” and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks. When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have.
We also know that “growth” stocks—those that are displaying strong sales and EPS growth trends—are some of the most exciting picks in the market, as these high-flyers can captivate investors’ attention and produce big gains as well.
With all of this in mind, check out these three growth stocks that are currently trading for under $10 per share. All of these companies currently hold a Zacks Rank #1 (Strong Buy) and an “A” grade for Growth in our Style Scores system.
1. Ceragon Networks (NASDAQ: CRNT - Free Report )
Prior Close: $3.29
Ceragon Networks is a leading provider of high-capacity wireless backhaul solutions for cellular and fixed wireless operators, enterprises and government organizations. Our current consensus estimates for the quarter ending in December would reflect EPS growth of 125% and sales growth of 6.17%. Next quarter we expect the company to post sales growth of over 21%. In fact, Ceragon recently announced that it received over $60 million in orders from a mobile operator in India. Now feels like a good time to get in on CRNT before it totally takes off.
2. AK Steel (NYSE: AKS - Free Report )
Prior Close: $9.52
AK Steel produces steel products for automotive, appliance, construction and manufacturing markets. While the company faces tough year-over-year comparisons for the quarter ending in December, we do expect to see it post EPS growth of over 360% next quarter. Our consensus estimates also show this triple-digit EPS growth continuing into next year. On top of this, AK Steel’s ROE of 8.96% smashed the industry average of 3.07%. It’s also worth noting that the company also holds “A” grades for Value, Momentum, and VGM.
3. MiX Telematics (NYSE: MIXT - Free Report )
Prior Close: $6.73
MiX Telematics provides fleet and mobile asset management solutions. It offers vehicle tracking services for the consumer and commercial vehicle market worldwide. For the quarter ending in December, our consensus estimates call for EPS growth of over 115% and sales growth of about 12%. MiX also has a net margin of 8.30%, which significantly outperforms the industry average of -20.20%. The company is also another one that’s sweeping the board with “A” grades for every category in our style scores system.
Bottom Line
A stock’s market price is not a clear indicator of whether it is a good investment. Solid growth metrics are not the only thing investors are interested in. No smart investor is buying stocks simply based on one facet of the company. However, when strong fundamentals meet strong Zacks Ranks and low share prices, almost everyone should be interested.
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