For Immediate Release
Chicago, IL – December 30, 2016 – Zacks Equity Research highlights Newfield Exploration (NYSE:NFX – Free Report) as the Bull of the Day and Caterpillar (NYSE:CAT – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Columbia Sportswear Company (NASDAQ:COLM –Free Report),Differential Brands Group Inc. (NASDAQ:DFBG –Free Report) and Vince Holding Corp. (NYSE:VNCE – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Thanks to the recent OPEC deal and a better economic outlook, investors are once again returning to the energy sector. Estimates have also been on the rise for this market too, and the energy segment now has a top 20% sector rank heading into 2017.
But with such strength, how do you find the best positioned names? Well, looking at some of the promising industries in the oil sector which look to benefit from recent trends is an excellent idea. In particular, companies in the exploration market look to perform quite well, while a U.S-focus isn’t going to hurt matters either.
In terms of these companies, one that just received an upgrade and could be worth a closer look is Newfield Exploration (NYSE:NFX –Free Report). Not only has this company just received a bump in its rank, but the stock has seen rising earnings estimates and is down a bit from its 2016 highs, making it a perfect candidate for a bounce in 2017.
Recent Estimates
Analysts have been nearly universally raising their estimates for NFX stock, as the company has seen 13 estimates go higher in the past two months compared to zero lower, while we have seen twelve estimates go higher for the following year compared to zero lower.
While this is certainly impressive, the magnitude of the estimate increases is arguably even more astounding, as the company has seen the consensus estimate surge by about 37% for the full year and 43% for the next year time frame. Add in the fact that the most recent estimates for NFX have been even more positive than the consensus—5.6% higher to be more exact—and you can see why a bullish story is developing, even if the stock price hasn’t gone in the right direction as of late.
Bear of the Day :
Industrial companies have been on a tear for the past two months, largely thanks to the election of Donald Trump. Hopes are high that this segment will be a prime beneficiary from a surge in America-focused spending, particularly in the infrastructure world.
This has pushed companies like Caterpillar (NYSE:CAT – Free Report) sharply higher, as CAT stock has gained more than 11% since the election, roughly doubling the S&P 500’s return in the same time period. But, while people might be bullish on the stock thanks to this political shift, analysts haven’t jumped on the bandwagon at all.
That is why investors might want to take a closer look at the earnings estimate picture for companies in this sector, and consider only focusing on the top tier instead of ones, like CAT, which might not have the best positioning right now.
Earnings Estimates
Despite the market optimism, we haven’t seen any estimates go higher for CAT stock in the past two months for either the current year or next year time frame. We have, however, seen nine estimates go lower in the past month for the next year time frame, pushing the company’s expected growth rates for the next two years to -30% and -6.6%.
And it doesn’t help that earnings estimates have really taken a beating over the past few months, as the magnitude of the analyst cuts has been pretty severe. The consensus estimate for the coming quarter has declined by about 8% in the past two months, while the next year estimate has fallen by about 9.8%. And with declines in sales projected for all time periods we have discussed thus far (when compared to year ago numbers) it isn’t a great picture for CAT stock right now.
So really, analysts appear to be in a wait-and-see mode regarding the earnings potential for CAT in this new environment, believing that the company still needs to get its act together before its earnings potential rises once more. No wonder the stock has a Zacks Rank #5 (Strong Sell) and why we are looking for underperformance from this name to start the new year.
Additional content:
Why You Should Avoid These 3 Apparel Stocks in 2017
The apparel industry continues to grapple with issues like competition from online sales and declining footfall. These companies are under pressure to strike the right chord with the fashion-conscious consumers as “change is the only constant” for this industry.
The year 2016 has not been very favorable for apparel retailers. With more and more consumers resorting to online shopping, the brick and mortar stores are witnessing a decline in footfall. This has dealt a major blow to apparel retailers who are dependent on mall traffic to drive growth. Amazon.com clinched most of the market share. According to data from NPD Group Consumer Tracking Service, U.S. apparel retail sales increased only 3%, while online sales jumped 12%, both on a year-over-year basis. Moreover, factors like the shift in the preference of millennials from clothes to technology and home improvement, unusually warm weather conditions and the strengthening of the U.S. dollar have added to the woes of these companies. Moreover, macroeconomic uncertainties like Brexit, the unexpected outcome of the U.S. Presidential elections, and persistent decline in gasoline prices which were the main concerns in 2016 have also hurt the sector.
It might be prudent to fine tune your portfolio and dispose of stocks that may hurt your returns before you ring in the new year.
Here we have zeroed in on three textile apparel stocks that have a VGM score of ‘F’, carry a Zacks Rank #4 (Sell) or 5 (Strong Sell) and have witnessed price decline over the last one month. Further these stocks have underperformed the Zacks categorized Consumer Discretionary sector in the last three months.
Columbia Sportswear Company (NASDAQ:COLM – Free Report), a manufacturer of active outdoor apparel and footwear, carries a Zacks Rank #4 and a VGM Score of ‘F’. The stock has declined 1% in the last one month and has gained only 1% over the last three months, underperforming the Zacks categorized Consumer Discretionary sector that gained 5%. The estimates for 2016 and 2017 have declined 1.9% and 2%, respectively, over the past 90 days. Currency headwinds, soft sales in the U.S. and Canada along with a lackluster performance of the Columbia brand are plaguing the company at the moment.
Differential Brands Group Inc. (NASDAQ:DFBG – Free Report) is a U.S.-based casual apparel retailer. It has a VGM Score of ‘F’ and carries a Zacks Rank #4. The company posted a negative surprise of 20% in the third quarter of 2016. Estimates for 2016 widened from a loss of 5 cents to a loss of 30 cents and that for 2017 plunged 66.7% over the past 60 days. The stock declined 15% over the past one month and 54.5% over the last three months, underperforming the Zacks categorized Consumer Discretionary sector that gained 5%.
Vince Holding Corp. (NYSE:VNCE – Free Report) , which offers a broad range of women's and men's ready-to-wear garments, carries a Zacks Rank #5 and a VGM Score of ‘F’. Earnings estimates for 2016 are expected to decline over 100% year over year. The stock has slipped approximately 6% in the last one month and has plunged 25.5% over the last three months, underperforming the Zacks categorized Consumer Discretionary sector.
Bottom Line
Stocks that yield low returns and depreciate in value can be detrimental to your portfolio, especially in a volatile market. Hence, we advise investors to switch over to Consumer Discretionary stocks with better fundamentals and prospects and a favorable Zacks Rank
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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NEWFIELD EXPL (NFX): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis Report
COLUMBIA SPORTS (COLM): Free Stock Analysis Report
DIFFERENTIAL BG (DFBG): Free Stock Analysis Report
VINCE HOLDNG CP (VNCE): Free Stock Analysis Report
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