|By PR Newswire||
|August 14, 2014 09:30 AM EDT||
CHICAGO, Aug. 14, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Cisco Systems (Nasdaq:CSCO-Free Report), IBM (NYSE:IBM-Free Report), Lithia Motors Inc. (NYSE:LAD-Free Report), Constellation Brands Inc. (NYSE:STZ-Free Report) and Barrett Business Services Inc. (Nasdaq:BBSI-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
Cisco Beats Again on Top and Bottom Lines
Cisco Systems (Nasdaq:CSCO-Free Report) has reported its fiscal Q4 2014 earnings after the bell Wednesday, with typically positive results: the tech giant posted earnings per share (EPS) of 50 cents per share (actual, GAAP) on total sales in the quarter of $12.36 billion. This topped the Zacks consensus estimates of 48 cents per share on $12.12 billion in revenues, respectively.
It would seem at first blush that Cisco's foray a few years back diving into cloud-based solutions is showing signs of paying off, especially with beating expectations on the revenue side (an earnings beat for Cisco is a no-brainer by this point; the company hasn't posted a negative earnings surprise since 2008). Cisco's products (consisting of mostly routers and switchers, where they are still a first-tier producer) brought in $9.5 billion in the quarter, while services garnered $2.8 billion.
It will likely take the conference call coming a bit later to really dig into the substance of these numbers, especially regarding guidance for fiscal year 2015, but the year-over-year growth is likely a good sign that the move toward the "Intercloud" is now bearing some fruit. Gross margins seem to be a bit under pressure, which has been the case with Cisco -- as well as plenty other big names in tech trying to make the jump into the high-growth end, like IBM (NYSE:IBM-Free Report) -- for a while now.
Cisco also bought back 1.5 billion in CSCO shares for the quarter, another thing investors have come to expect. The company's 4% positive earnings surprise is about exactly the average for the past four quarters, as well. What's nice to see for Cisco that's not so typical is the back-to-back beats on the top line.
Analysts typically have made no adjustments to earnings expectations for Cisco Systems in the quarter; once guidance is established and certain aspects are discussed on the call -- among them enterprise IT spending trends, growth in China and Cisco's 9% revenue exposure in Russia -- investors will have a better idea how to play the Zacks Rank #3 stock going forward. Year to date, Cisco shares are up 12%, but year over year they're down about 4%.
3 Stocks to Brave a Volatile Market
While the naysayers warn of a crash every time the market hiccups, it is evident that we are currently in one of the most powerful and resilient bull markets we've seen in a long time. Five years of cheap money, pumped-up stock prices and gradually rebuilding investor confidence have powered the market to reach some uncharted territories.
But how long can it last? Amid the melee between the bulls and the bears, a layman investor might get lost. Choosing stocks that promise earnings growth may not be enough to ensure returns if the much-dreaded crash finally hits. And even if one manages to find some stocks that have enough potential to hold ground, investing in most them might not be that lucrative as most of them no longer hold reasonable valuations.
Let's find some stocks using traditional indicators of stability and growth.
What Drives the Bottom Line?
Sales drive earnings, earnings drive the stock price. This time-honored adage still holds true as an investment idea reviewed in bare essentials.
Since the most recent recession hit six years ago, many companies have slashed costs and restructured operations to become leaner and more efficient. This has translated into improved profit margins, leading to earnings growth despite sedated sales growth.
But earnings advancements based on margin expansion can outpace sales growth for only so long. Over the long term, earnings growth typically trails along the lines of revenue growth.
Companies have been aggressively chasing growth in recent times, as evidenced by the spurt in mergers and acquisitions. Granted, the companies had huge amounts of cash reserves, and the credit markets were practically encouraging them to lever up. But the primary reason remained the relentless pursuit of top-line growth that has become harder and harder to come across in these tricky economic conditions.
Such behavior by the companies only serves to underline the importance of robust revenue growth as a key metric to select stocks.
What Drives Revenues?
Consumer spending is a direct determinant of business sales. With the GDP growing at an impressive rate of 4% in the second quarter, the economy seems to be gaining momentum after shrinking 2.1% in the previous quarter. The unemployment rate is steadily declining. And as hiring picks up, consumer demand will follow suit. Acceleration in wage growth could also boost consumer spending.
In fact, the country trade deficit for June shrank 7%, which could imply a modest upward revision to the already strong second-quarter GDP estimates. Most importantly, it prompts gutsy third-quarter GDP expectations.
As U.S. consumer spending accounts for over two-thirds of the economic output, GDP expansion augurs well for organic growth of the business community.
The Power of Industry Rank
Research indicates that about half the price performance of a stock can be attributed to the industry group that it belongs to. Using a sorting metric called Zacks Industry Rank, one can screen for stocks that belong to the top-performing industries. A top Zacks Industry Rank signifies that more stocks within that group are likely to have upward earnings estimate revisions, implying bullish outlook for the industry.
Historically too, we have found that the top 50% of Zacks-Ranked Industries outperform the bottom 50% by a factor of more than 2 to 1. So it's a good idea to leverage the Zacks Industry Rank to shortlist stocks.
Growth & Valuation Metrics
Apart from a strong track record of sales growth and a robust industry rank, one should look for companies with strong long–term growth expectations. This should help select companies with strong earnings potential driven by revenue growth.
We have shortlisted three stocks based on the above metrics and incorporating valuation multiples. All these stocks are trading at a discount to their respective peer group average forward P/E and P/S ratios.
Lithia Motors is a leading automobile retailer and automotive franchisee in the U.S., serving both urban and rural markets. With the auto market continuing to enjoy robust momentum, Lithia Motors is displaying healthy growth across its segments.
The auto dealer has been on an acquisition spree lately, acquiring/opening eight stores so far this year. The acquisitions of Vic Alfonso Cadillac, Braley & Graham Buick GMC and Access Ford Lincoln are expected to add $165 million annually to its revenues. The company is also set to acquire DCH Auto Group Inc., which will augment revenues by $2.3 billion approximately per annum.
The Retail/Wholesale Auto/Truck industry currently holds a Zacks Industry Rank of 34 out of 265 industries, placing it in the top 15% bracket.
Sales Growth in Previous Year = 20.8%
Long-Term Growth Consensus Estimate = 25%
P/E Ratio: 18.1; Peer Group P/E Ratio: 24.2
P/S Ratio: 0.5; Peer Group P/S Ratio: 1.0
Zacks Rank #1 (Strong Buy)
Constellation Brands is a leading international producer and marketer of beverage alcohol brands, boasting a formidable portfolio of popular labels across the wine, spirits and imported beer categories. The company is the largest multi-category alcohol supplier in the U.S. and the largest wine company in the world.
The company's top-line has benefited from the consolidation of the Crown Import business as well as robust demand for beer. Last year, the company acquired Grupo Modelo's U.S. beer business for a sum of $4.75 billion, boosting its sales by $2 billion in fiscal 2014.
Constellation's beer segment now represents about half of its total sales; and it grew a strong 10% last year, on the back of new product offerings, new points of distribution and effective marketing and advertising strategies.
The Alcoholic Beverages industry currently holds a Zacks Industry Rank of 34 out of 265 industries, placing it in the top 13% bracket.
Sales Growth in Previous Year = 72.6%
Long-Term Growth Consensus Estimate = 17.3%
P/E Ratio: 19.9; Peer Group P/E Ratio: 20.3
P/S Ratio: 3.0; Peer Group P/S Ratio: 13.7
Zacks Rank #2 (Buy)
Barrett Business Services, an outsourcing firm, provides business management solutions, combining human resource outsourcing and professional management consulting. With the company's brand gaining more recognition, its client penetration is reaching deeper, ranging from industries such as telecommunications and transportation & shipping to manufacturing and food processing.
The company's commendable sales growth in recent times was attributable to organic growth arising from existing client base as well as strong referral channels. Also, the company's client retention rate of over 90% indicates sustained revenue growth acceleration, going forward.
The outsourcing industry currently holds a Zacks Industry Rank of 96 out of 265 industries, placing it in the top 36% bracket.
Sales Growth in Previous Year = 32.3%
Long-Term Growth Consensus Estimate = 22.5%
P/E Ratio: 18.8; Peer Group P/E Ratio: 20.1
P/S Ratio: 0.7; Peer Group P/S Ratio: 2.8
Zacks Rank #1
The crux remains that the top-line drives the bottom-line. A trend of bottom-line growth consistently outpacing top-line growth in most quarters has been a matter of concern throughout the recovery. Companies have jacked up earnings for years by slashing costs. However, going forward, it is clear that only companies with strong revenue growth prospects can retain their earnings momentum and augment shareholder wealth.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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 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.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
SOURCE Zacks Investment Research, Inc.
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Sep. 2, 2015 12:15 PM EDT Reads: 408
Akana has announced the availability of the new Akana Healthcare Solution. The API-driven solution helps healthcare organizations accelerate their transition to being secure, digitally interoperable businesses. It leverages the Health Level Seven International Fast Healthcare Interoperability Resources (HL7 FHIR) standard to enable broader business use of medical data. Akana developed the Healthcare Solution in response to healthcare businesses that want to increase electronic, multi-device access to health records while reducing operating costs and complying with government regulations.
Sep. 2, 2015 12:00 PM EDT Reads: 266
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.
Sep. 2, 2015 12:00 PM EDT Reads: 1,560
WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, will introduce the technologies required for implementing these ideas and some early experiments performed in the Kurento open source software community in areas ...
Sep. 2, 2015 11:45 AM EDT
The 3rd International WebRTC Summit, to be held Nov. 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 15th International Cloud Expo, 6th International Big Data Expo, 3rd International DevOps Summit and 2nd Internet of @ThingsExpo. WebRTC (Web-based Real-Time Communication) is an open source project supported by Google, Mozilla and Opera that aims to enable bro...
Sep. 2, 2015 11:45 AM EDT Reads: 1,545
SYS-CON Events announced today the Containers & Microservices Bootcamp, being held November 3-4, 2015, in conjunction with 17th Cloud Expo, @ThingsExpo, and @DevOpsSummit at the Santa Clara Convention Center in Santa Clara, CA. This is your chance to get started with the latest technology in the industry. Combined with real-world scenarios and use cases, the Containers and Microservices Bootcamp, led by Janakiram MSV, a Microsoft Regional Director, will include presentations as well as hands-on demos and comprehensive walkthroughs.
Sep. 2, 2015 11:30 AM EDT Reads: 379
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal today!
Sep. 2, 2015 11:30 AM EDT Reads: 1,627
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...
Sep. 2, 2015 11:30 AM EDT Reads: 1,995
With the proliferation of connected devices underpinning new Internet of Things systems, Brandon Schulz, Director of Luxoft IoT – Retail, will be looking at the transformation of the retail customer experience in brick and mortar stores in his session at @ThingsExpo. Questions he will address include: Will beacons drop to the wayside like QR codes, or be a proximity-based profit driver? How will the customer experience change in stores of all types when everything can be instrumented and analyzed? As an area of investment, how might a retail company move towards an innovation methodolo...
Sep. 2, 2015 11:15 AM EDT Reads: 493
As more intelligent IoT applications shift into gear, they’re merging into the ever-increasing traffic flow of the Internet. It won’t be long before we experience bottlenecks, as IoT traffic peaks during rush hours. Organizations that are unprepared will find themselves by the side of the road unable to cross back into the fast lane. As billions of new devices begin to communicate and exchange data – will your infrastructure be scalable enough to handle this new interconnected world?
Sep. 2, 2015 11:15 AM EDT Reads: 184
The Internet of Things is in the early stages of mainstream deployment but it promises to unlock value and rapidly transform how organizations manage, operationalize, and monetize their assets. IoT is a complex structure of hardware, sensors, applications, analytics and devices that need to be able to communicate geographically and across all functions. Once the data is collected from numerous endpoints, the challenge then becomes converting it into actionable insight.
Sep. 2, 2015 09:00 AM EDT
Contrary to mainstream media attention, the multiple possibilities of how consumer IoT will transform our everyday lives aren’t the only angle of this headline-gaining trend. There’s a huge opportunity for “industrial IoT” and “Smart Cities” to impact the world in the same capacity – especially during critical situations. For example, a community water dam that needs to release water can leverage embedded critical communications logic to alert the appropriate individuals, on the right device, as soon as they are needed to take action.
Sep. 2, 2015 08:45 AM EDT
As more and more data is generated from a variety of connected devices, the need to get insights from this data and predict future behavior and trends is increasingly essential for businesses. Real-time stream processing is needed in a variety of different industries such as Manufacturing, Oil and Gas, Automobile, Finance, Online Retail, Smart Grids, and Healthcare. Azure Stream Analytics is a fully managed distributed stream computation service that provides low latency, scalable processing of streaming data in the cloud with an enterprise grade SLA. It features built-in integration with Azur...
Sep. 2, 2015 08:30 AM EDT Reads: 308
SYS-CON Events announced today that the "Second Containers & Microservices Expo" will take place November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities.
Sep. 2, 2015 07:30 AM EDT Reads: 614
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies leverage disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevOps to advance innovation and increase agility. Specializing in designing, imple...
Sep. 2, 2015 06:45 AM EDT Reads: 340
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
Sep. 2, 2015 04:00 AM EDT Reads: 482
Through WebRTC, audio and video communications are being embedded more easily than ever into applications, helping carriers, enterprises and independent software vendors deliver greater functionality to their end users. With today’s business world increasingly focused on outcomes, users’ growing calls for ease of use, and businesses craving smarter, tighter integration, what’s the next step in delivering a richer, more immersive experience? That richer, more fully integrated experience comes about through a Communications Platform as a Service which allows for messaging, screen sharing, video...
Sep. 2, 2015 02:00 AM EDT Reads: 708
SYS-CON Events announced today that IceWarp will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. IceWarp, the leader of cloud and on-premise messaging, delivers secured email, chat, documents, conferencing and collaboration to today's mobile workforce, all in one unified interface
Sep. 1, 2015 03:00 PM EDT Reads: 450
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Sep. 1, 2015 12:30 PM EDT Reads: 930
Consumer IoT applications provide data about the user that just doesn’t exist in traditional PC or mobile web applications. This rich data, or “context,” enables the highly personalized consumer experiences that characterize many consumer IoT apps. This same data is also providing brands with unprecedented insight into how their connected products are being used, while, at the same time, powering highly targeted engagement and marketing opportunities. In his session at @ThingsExpo, Nathan Treloar, President and COO of Bebaio, will explore examples of brands transforming their businesses by t...
Sep. 1, 2015 12:15 PM EDT Reads: 256