Chicago, IL – December 18, 2024 – Zacks Equity Research shares Powell Industries POWL as the Bull of the Day and Oxford Industries OXM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Goldman Sachs Group, Inc. GS, JPMorgan JPM and Morgan Stanley MS.
Here is a synopsis of all five stocks.
POWL has been one of the hottest stocks in 2024, moving from just under $100 to an all-time high of $364 in November. However, the stock has seen some selling over the last month, bringing the POWL 30% off those recent highs.
With the stock coming into support levels, investors should be eyeing this name for a rally early in 2025.
Powell Industries was founded in 1947 and is headquartered in Houston, Texas. The company’s primary focus is on serving the energy, utilities, transportation, and industrial markets.
The company's core offerings include switchgear and switchboards for safely distributing and controlling electrical power, motor control centers (MCCs) that regulate the operation of electric motors, and custom-built power control rooms that house distribution and control equipment.
The stock has Zacks Style Scores of “C” in both Growth and Value, but “F” in momentum. Powell has a market cap of $3 billion and a Forward PE of 18. The stock also pays a small dividend of 0.4%.
Powell posted quarterly earnings of $3.77 per share, surpassing estimates by 8%. This marks a 93.33% increase from the $1.95 per share reported in the same quarter last year. Quarterly sales came in at $275.06 million, falling short of the consensus estimate of $286.49 million by 3.99%. However, this represents a 31.84% increase compared to sales of $208.64 million during the same period last year.
Powell Industries, Inc. price-eps-surprise | Powell Industries, Inc. Quote
Commenting on the company’s outlook, Michael Metcalf, Powell's Chief Financial Officer, stated, "As we look ahead to fiscal 2025, we expect continued strength across most of our end markets spanning across all of the geographies that we compete in. We are pleased with our fiscal 2024 results and remain focused on carrying forward the strong operational execution and commercial momentum that we have experienced this year, into fiscal 2025.
"Notwithstanding our seasonally slower fiscal first quarter, considering the healthy backdrop, robust backlog, strong liquidity, and a solid balance sheet, we anticipate that fiscal 2025 will be another successful year for Powell."
Since earnings, both the stock and analyst estimates have been volatile.
For the current quarter, estimates went from $2.70 to $3.03, but back down to $2.83. This was a jump of 12%, but over the last 30 days we have only a 4% rise since EPS.
Estimates for all timeframes see a similar pattern, with a move higher, then lower, but overall, we see numbers headed higher in an impressive manner.
For the current year, estimates have been taken 10% higher since EPS, going from $12.44 to $13.70.
Looking at next year, numbers have been taken from $13.23 to $14.81, or 12% higher.
The stock surged shortly after the Q3 earnings, going from $150 to $364. The pullback over the last month has brought the stock into Fibonacci support levels.
The 61.8% retracement drawn from the September breakout to all-time highs is $227, while the halfway back is $252. With the stock trading between these levels, it provides investors a great long-term area to accumulate shares.
Looking at moving averages, the 200-Day MA is at $191, while the 50-day is at $278.
Powell Industries is an under-the-radar small-cap stock that appears to be just getting started. The company is firing on all cylinders fundamentally, and the technical setup looks to provide a buying opportunity into next year.
Oxford Industries is a Zacks Rank #5 (Strong Sell) that is a clothing and lifestyle company specializing in premium and upscale apparel. The company designs, sources, and markets a variety of products through a portfolio of well-known brands, including Tommy Bahama, Lilly Pulitzer, and Johnny Was.
The stock fell last week after reporting earnings but has since rallied 15%. Investors look to be getting ahead of themselves as analyst estimates are falling since the report.
Oxford Industries was founded in 1942 and is headquartered in Atlanta, GA. The company employs about 6,000 employees and stock has a market cap of $1.4 billion.
Oxford operates a mix of direct-to-consumer channels, such as retail stores, e-commerce platforms, and wholesale distribution to specialty and department stores, allowing for a diversified revenue stream.
The stock holds Zacks Style Scores of “B” in Value, but “F” in Momentum.
December 11th, Oxford reported a Q4 EPS miss of 200%. The company posting a loss of $(0.11) per share, which represents a sharp decline of 110.89% compared to earnings of $1.01 per share in the same quarter last year. Quarterly sales came in at $308.02 million, falling short of the $316.83 million consensus estimate and marking a 5.70% year-over-year decrease.
Looking ahead, the company revised its fiscal 2024 guidance downward, now projecting full-year sales in the range of $1.50 billion to $1.52 billion, compared to $1.57 billion in fiscal 2023. Adjusted EPS for fiscal 2024 is expected to range between $6.50 and $6.70, well below last year's adjusted EPS of $10.15.
The company anticipates higher capital expenditures of approximately $150 million for fiscal 2024, driven largely by investments in a new distribution center, store expansions, and technology upgrades, including e-commerce, AI-driven automation, and omnichannel capabilities.
Estimates have seen a downtick since earnings were reported last week. For the current quarter, the estimates have fallen from $1.63 to $1.46, or 10%.
The next quarter has fallen only slightly, but looking long-term we see numbers falling as well.
The current year has seen a revision down from $7.16 to $6.90, or 4%. Looking at next year, analysts have dropped estimates by 5%, falling from $7.98 to $7.61.
Oxford Industries, Inc. price-consensus-chart | Oxford Industries, Inc. Quote
Following the weak Q3 results and lower-than-expected guidance, shares of Oxford Industries declined, and UBS adjusted its price target from $81 to $80.
While the stock initially fell, it is currently trading above pre-EPS levels. Investors might have expected a worse quarter as the stock has slumped over 20% since July.
Despite the rally, the bulls still have challenges. The 200-day resistance will be at $93 and the Fibonacci retracement level is at $95. The stock would likely need help from an already overbought market to surpass those levels. Or the fundamentals would have to turn positive.
If the bulls give up the recent gains a move under the $78 level would break the 50-day MA. This would signal that the lows of the year, at $71.50 might have to be tested once more.
Oxford Industries faces significant headwinds despite its recent rebound. The company’s downward revisions in guidance and declining analyst estimates suggest that the current rally may be premature, especially given the ongoing fundamental challenges.
While the stock has reclaimed some ground, technical resistance levels over $90 could prove difficult to overcome without improved performance or broader market support.
The Goldman Sachs Group, Inc. stock looks attractive from its valuation perspective. The stock is trading at forward price/earnings (P/E) of 13.75X, a 3.1% discount compared with the industry average of 14.19X.
GS is also trading at a discount compared with its peer JPMorgan’s P/E multiple of 14.26X and Morgan Stanley’s P/E multiple of 16.41X.
The Goldman stock is trading above its 50-day moving average, indicating a bullish sentiment among investors.
GS’s lower valuation and bullish trends should lure investors seeking value. But is the time right to buy the shares based on the company’s attractive valuation? Let us delve deeper.
The investment banking (IB) industry flourished in 2024 following a rebound in corporate debt, equity issuances and deal-making activities, which increased IB fees.
The macroeconomic environment is steadying driven by the interest rate-cut cycle globally and growing optimism for a soft landing of the U.S. economy. With this, underwriting, and merger and acquisition (M&A) activities are on the path to a sustained recovery in the coming days.
The Donald Trump administration is likely to be friendlier toward corporate mergers as the easing of some rules for big banks and more leniency in approving merger deals are expected. This will likely support Goldman’s IB performance. The IB business had been witnessing lackluster performance since 2022 and revived this year on the back of clarity on several macroeconomic factors.
In 2022 and 2023, GS’s IB revenues declined 47.9% and 15.5% year over year, respectively. However, a substantial improvement in the industry-wide deal value and volume in the first nine months of 2024 drove the global M&As. Hence, the company’s IB revenues jumped nearly 24% from the first nine months of 2023.
Goldman maintains its long-standing rank #1 in announced and completed M&As. With rising M&A deals and underwriting pipelines, the company’s decent IB backlog and leadership position lent it an edge over peers.
GS is moving away from consumer business and is refocusing on its core strengths of IB and trading operations.
Per the Wall Street Journal report, in November 2024, Apple proposed to Goldman to cease former credit card and savings account arrangements within the next 12-15 months. In October 2024, Goldman finalized a deal to transfer its GM credit card business to Barclays, which will obtain the card program’s receivables from the company next year.
Earlier this year, Goldman completed the sale of GreenSky, its home-improvement lending platform, to a consortium of investors. Last year, the company sold its Personal Financial Management unit to Creative Planning.
These moves align with GS's decision to shift its focus on and grow core businesses wherein it has showcased encouraging results, given its strong leadership position, wide scale of operations and exceptional talent.
The company rewards its shareholders handsomely. In July 2024, it increased its common stock dividend by 9.1% to $3 per share. In the past five years, GS hiked dividends four times, with an annualized growth rate of 24.80%. Currently, its payout ratio sits at 35% of earnings.
The company enjoys a strong liquidity position. As of Sept. 30, 2024, cash and cash equivalents were $155 billion. As of the same date, $75 billion were near-term borrowings.
GS also has a share repurchase plan in place. In February 2023, it announced a share repurchase program, authorizing repurchases of up to $30 billion worth of common stock with no expiration date. As of Sept. 30, 2024, the company had the remaining $18 billion worth of shares available under authorization.
Given its decent liquidity position, the company’s capital distribution activities seem sustainable. This is likely to stoke investor confidence in the stock.
Goldman plans to ramp up its lending services to private equity and asset managers, and aims to expand internationally.
The private equity market has a strong growth potential as private equity deals are expected to rise, driven by record-high fundraising. These loans are classified as short-term, typically secured by the assets of borrowing firms. These have a lesser risk attached to them. Goldman’s focus on the private equity market is a strategic fit.
Goldman Asset Management — a unit of GS — intends to expand its private credit portfolio to $300 billion in five years. As of Sept. 30, 2024, the company has a private credit portfolio of more than $199 billion. Once the company strengthens its operations in the United States, it plans to expand its lending business in Europe, the U.K. and Asia. The company hopes private equity-led deals will bounce back at the end of this year and in 2025.
The company is expected to deliver strong results in 2024 and 2025.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Shares of Goldman have appreciated 57% in the past year compared with the industry’s rally of 47.2% and S&P 500 index rise of 31%. The stock has also outperformed its peers, JPM and MS, in the same time frame.
The company’s efforts to refocus on the IB and trading business provide a solid base for growth. GS's leadership position in announced and completed M&As gives it an edge over its peers.
The company’s strong liquidity and expansion in the private equity credit line positions it well for growth.
Given its favorable long-term prospects and lower valuation, investors might consider investing in Goldman’s stock now. Those who already have the stock in their portfolio can consider holding on to it for robust returns.
GS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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