For Immediate Release
Chicago, IL – June 1, 2023 – Zacks Equity Research shares EnerSys ENS as the Bull of the Day and Sphere Entertainment SPHR as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Marathon Petroleum Corp. MPC, EOG Resources, Inc. EOG and Phillips 66 PSX.
Here is a synopsis of all five stocks.
Bull of the Day:
EnerSys stock is standing out this earnings season after impressively surpassing its fiscal fourth-quarter EPS estimates on May 24.
As a leader in stored energy solutions for industrial products, EnerSys was able to capitalize on its pricing power and increase organic growth. Notably, the Manufacturing-Electronics Industry is in the top 10% of over 250 Zacks industries which further bolsters EnerSys' Zacks Rank #1 (Strong Buy).
EnerSys remains well-positioned as a distributor of various industrial batteries, battery chargers, and other power equipment along with outdoor cabinet solutions. Already up +31% this year, there could be legs to the rally in EnerSys stock which scores an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.
EnerSys achieved record net sales and operating earnings during the fourth quarter. Impressively, earnings came in 32% above EPS expectations at $1.82 per share compared to estimates of $1.38 a share. Fourth-quarter earnings also soared 51% from the prior-year quarter. On the top line, sales surpassed estimates by 4% at $989.90 million and rose 9% year over year.
The impressive top and bottom line growth during Q4 also helped EnerSys achieve record numbers in annual sales and earnings. Total sales for EnerSys’ fiscal 2023 came in at $3.7 billion and increased 10% YoY with EPS of $5.34 jumping 19% from a year ago.
Record Growth Continues
Making EnerSys stock more attractive is that its record fiscal 2023 is expected to be eclipsed going forward. EnerSys’ earnings are expected to soar 28% in its current fiscal 2024 and climb another 19% in FY25 at $8.19 per share.
Fiscal 2025 projections represent 82% EPS growth over the last five years with 2021 earnings at $4.49 per share. Total sales are forecasted to be up 4% in FY24 and rise another 4% in FY25 to $4.04 billion.
Now appears to be an ideal time to buy EnerSys stock as the company is poised to continue achieving record growth on its top and bottom lines. While there could certainly be more upside in shares of ENS this year, EnerSys stock is also becoming a very sound investment for 2023 and beyond.
Bear of the Day:
Sphere Entertainment currently lands a Zacks Rank #5 (Strong Sell) as the company has moved futher away from profitability at the moment.
The road ahead may be bumpy upon Sphere's spinoff from Madison Square Garden Entertainment (MSG) on April 20. Sphere’s first independent venue is currently under construction in Las Vegas and will weigh on its bottom line with the company planning to open a second venue in London as well.
Furthermore, Sphere’s two regional television networks, MSG Network and MSG Sportsnet will naturally face increasing competition from a plethora of streaming services.
Declining Earnings Estimates
Alluding to the challenges ahead and the near-term impact of potentially opening a second venue in London is the decline in fiscal 2024 earnings estimates. Fiscal 2024 EPS estimates have largely declined from projections of $2.54 per share a month ago to forecast of an adjusted loss of -$1.77 a share.
While earnings estimates for the current year have gone up, an adjusted loss of -$5.43 a share is still expected.
Trading at $23 a share, the declining earnings estimates point to more volatility and downside risk ahead for Sphere stock. To that point, shares of SPHR dropped -20% in May and are now down -60% since its spinoff from Madison Square Garden.
Although Sphere has a vision of being a next-generation entertainment company its growth potential from live performances is still a few years away. For now, investors may want to stay on the sidelines as declining earnings estimates for FY24 have dimmed Sphere’s outlook.
3 Dividend Stocks to Gain Despite Energy Market Volatility
Since the onset of the coronavirus pandemic, the market has witnessed wild swings in oil prices. This reflects that notorious volatility is an integral part of the energy sector. However, due to some key factors, dividend-paying stocks in the same space are relatively less volatile, thereby setting Marathon Petroleum Corp., EOG Resources, Inc. and Phillips 66 up for growth.
Extremely Volatile Energy Market
We should never forget how oil prices behaved since the beginning of the coronavirus outbreak. The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity’s price plunged to a negative $36.98 per barrel on Apr 20, 2020.
However, with the rapid developments of vaccines by scientists, which in turn led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration. Oil is currently trading at close to $70 per barrel.
Dividend Stocks to Keep an Eye On
Overall oil pricing scenario seems scary, which could easily deter an investor from allocating money to energy companies. Despite this volatility constraint, investors could consider dividend-paying companies belonging to the industry. This is because, generally, companies with stable dividend-paying history are usually relatively less volatile than stocks with no dividend history. It is expected that companies that have been rewarding stockholders with dividends will try their best to continue paying at the same pace or higher, making the stocks attractive and less volatile to the vagaries of the market.
We have employed our Stock Screener to zero in on three such stocks. All the stocks carry a Zacks Rank #3 (Hold). With a dividend yield of more than 2%, all the companies have raised dividends over the past five years. Moreover, with a payout ratio of less than 60%, the companies ensure sustainability with enough scope for future dividend increases.
3 Stocks to Gain
Marathon Petroleum Corporation: As a leading, integrated, downstream energy player, Marathon Petroleum is the operator of the largest refining system in the nation. MPC is well poised to gain on strong refining fundamentals, backed by the reduction in refining capacity across the world. It pays out a quarterly dividend of 75 cents ($3.00 annualized) per share, which gives it a 2.78% yield at the current stock price. (Check Marathon Petroleum’s dividend history here).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marathon Petroleum Corporation dividend-yield-ttm | Marathon Petroleum Corporation Quote
EOG Resources, Inc: In the United States, EOG Resources is a leading exploration and production player. Since transitioning to premium drilling, EOG boasted that it has returned billions in cash to shareholders. The firm pays a quarterly cash dividend on the common stock of 82.5 cents ($3.30 annualized) per share. EOG also paid a special dividend of $1.00 per share on Mar 30. (Check EOG Resources’ dividend history here).
EOG Resources, Inc. dividend-yield-ttm | EOG Resources, Inc. Quote
Phillips 66: Phillips 66 is a diversified energy manufacturing and a logistic player with a presence in Midstream, Chemicals, Refining, and Marketing and Specialties businesses. With a strong focus on disciplined capital allocation and maintaining financial strength, PSX is well-positioned to continue rewarding shareholders with dividend growth. Phillips 66 pays a quarterly cash dividend on the common stock of $1.05 ($4.20 annualized) per share. (Check Phillips 66’s dividend history here).
Phillips 66 dividend-yield-ttm | Phillips 66 Quote
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