Yahoo Finance Block and Alliance Resource Partners have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL –July 5, 2024 – Zacks Equity Research shares Block SQ, as the Bull of the Day and Alliance Resource Partners ARLP, as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Constellation Energy CEG and Vistra VST.
Here is a synopsis of all four stocks:
Bull of the Day:
With the Q2 earnings season set to ramp up following the fourth of July holiday, Block is a tech stock that looks poised for a rebound leading up to its quarterly results in early August.
The innovative provider of point of sales solutions (POS) appears to be overlooked as SQ has now fallen -26% from its 52-week high of $87 a share in March.
Still, the expansive growth Block was able to display in Q1 is thought to have continued and strong financial results can of course lead to upward momentum for stocks.
Keeping this scenario in mind, Block’s stock currently sports a Zacks Rank #1 (Strong Buy) and is the Bull of the Day.
Q2 Sneak Preview
Investors are always looking for stocks that are expected to post robust quarterly growth and improved financial fundamentals and Block is on this radar.
Another quarter of double-digit top and bottom-line growth appears to be in the cards with Q2 sales projected to rise 13% to $6.29 billion and EPS projections of $0.75 would reflect a 92% increase from $0.29 a share in the comparative quarter.
Block is becoming a staple of the new American economy
Notably, Cash app's popularity has been the primarily catalyst to Block’s expansion along with hardware POS offerings such as its patented Square Reader machines with the company having a comprehensive commerce suite that fuels entrepreneurship by helping sellers grow their businesses.
CEO Jack Dorsey has also strived for other routes to keep up Block’s relevance and expansion from acquiring hip-hop mogul Jay-Z’s tidal music platform in 2021 to offering crypto-related services. In addition to develping a full bitcoin mining system Block provides a Bitcoin Hardware Wallet which offers storage for bitcoin holders.
Loosely speaking, Block may be a more affordable option for investors seeking exposure to bitcoin than Coinbase COIN while being a safter choice in regards to other crypto miners such as Marathon Digital MARA or Riot Platforms RIOT. That notion is only magnified when considering Block’s diverse business operations along with the fact that the price of Bitcoin has soared in the last year and currently sits over $60,000.
Growth Trajectory
Overall, Blocks total sales are projected to increase 15% in fiscal 2024 and are slated to expand another 12% in FY25 to $28.22 billion. More impressive, annual earnings are now expected to soar 73% this year to $3.11 per share versus $1.80 a share in 2023. Plus, FY25 EPS is projected to climb another 30% to $4.04.
Better still, Block’s stock is trading at 20.7X forward earnings and at 1.7X sales which are much more reasonable valuations than the stretched premiums it has commanded in the past.
Bottom Line
Block is once again becoming one of the most appealing business services companies to invest in at the moment. While it may be too soon to call Block’s stock an absolute steal at current levels, a sharp rebound looks justified considering the company’s attractive growth trajectory and innovative business offerings.
Bear of the Day:
Ahead of its Q2 results later in the month, investors may want to be cautious of Alliance Resource Partners.
With Alliance Resource Partners being a diversified producer and marketer of coal in the U.S., its noteworthy that coal-futures have continued to fall over the last two months due to weaker demand. Currently at around $132 per tonne, the broader backdrop in coal prices has been attributed to large consumers such as China and India reducing their imports amid the reshaping of global energy consumption which is reflected in the alternative energy movement to reduce carbon footprints.
Correlating with such, the Zacks Coal Industry is currently in the bottom 10% of almost 250 Zacks industries which has led to ARLP landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Fading Inflationary Mojo
Easing inflation is another factor regarding declining coal prices and Alliance Resource Partners appears to be losing its inflationary mojo from higher commodity prices.
Higher profits are starting to subside with Q2 earnings expected to decline -31% to $0.89 a share versus $1.30 per share in the comparative quarter. On the top line, Q2 sales are projected to dip -2% to $642.72 million. The Zacks ESP (Expected Surprise Prediction) also indicates Alliance Resource Partners could miss earnings expectations with the Most Accurate Estimate having Q2 EPS at $0.86 and 3% below the Current Zacks Consensus.
Also, while total sales are slated to be virtually flat for the foreseeable future, annual earnings are now projected to fall -21% this year and are forecasted to dip another -5% in fiscal 2025 to $3.60 per share.
Declining Earnings Estimate Revisions
More concerning and indicative of short-term weakness in Alliance Resource Partners stock is that FY24 and FY25 EPS estimates have fallen -8% and -13% over the last 60 days respectively.
Bottom Line
On the horizon, Alliance Resource Partners 6.6X forward earnings multiple looks cheap but ALRP could end up being a value trap as plummeting coal prices suggest the company’s EPS outlook may continue to weaken.
Additional content:
A.I. Goes Nuclear: 2 Energy Stocks Set to Benefit
We’ve all grown accustomed to the positivity surrounding the artificial intelligence frenzy, as the topic is in nearly every market headline.
Of course, beloved Nvidia has been leading the charge, with several other large-cap technology companies also set to benefit.
But for those looking for unique exposure to the trade, nuclear stocks should be considered, as data centers use a remarkable amount of power to operate. That’s precisely where several energy companies, namely Constellation Energy and Vistra, come into play.
Market participants have taken note of their favorable stance, with each enjoying strong performance over the last year.
Let’s take a closer look at each.
Vistra Envisions Long-Term Growth
Vistra safely operates a reliable, efficient, power generation fleet of natural gas, nuclear, coal, solar, and battery energy storage facilities with an innovative, customer-centric approach. The stock sports a Zacks Rank #1 (Strong Buy), with its earnings outlook moving higher nearly across all timeframes.
Burke, CEO, concluded its latest quarterly results by stating, "Recent power market developments are certainly notable, and we see multiple drivers underlying a projected long-term acceleration in load growth in many of the geographies we serve. The increase in our potential long-term financial expectations reflects the attractive position provided by our integrated business mode.”
Shares have cooled considerably from their high, down 16% since and reflecting a potential opportunity for investors looking to join the momentum.
Constellation Energy Enjoys Robust Results
Constellation Energy is the Nation’s largest producer of clean, carbon-free energy and a leading supplier of energy products and services. Analysts have taken note of its favorable stance, increasing their earnings estimates accordingly across the board.
Joe Dominguez, CEO, on the company’s latest set of quarterly results, ‘We had another strong quarter as support grows for nuclear energy as a reliable, clean source to meet growing demand from electric vehicles, heavy industry and emerging technologies, such as AI and related digital infrastructure.’
Bottom Line
The artificial intelligence theme is undoubtedly here to stay for some time, with many different angles to play the frenzy.
Data centers reflect one of these angles, but those who keep the lights on within data centers are a deeper play, precisely where Constellation Energy and Vistra come into play. For those looking to obtain exposure, both stocks can’t be overlooked.
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Constellation Energy Corporation (CEG) : Free Stock Analysis Report
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Block, Inc. (SQ) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
