For Immediate Release
Chicago, IL – November 3, 2022 – Zacks Equity Research shares GasLog Partners GLOP as the Bull of the Day and Lending Club LC as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Qualcomm QCOM and Roku ROKU.
Here is a synopsis of all four stocks:
Bull of the Day:
GasLog Partners is a Zacks Rank #1 (Strong Buy) that acquires, owns, and operates liquefied natural gas (LNG) carriers under multi-year charters. Higher energy prices continue to be a tailwind for LNG carriers. This has brought attention to the sector and companies like GasLog.
The stock has broken out to levels not seen since early 2020. In a year where many stocks have struggled, GLOP is up over 85% on the year.
The company recently reported a big earnings beat and analysts are hiking estimates. With the stock heading higher on that news, it looks like investors think there is more meat on the bone for GLOP.
More about GasLog
The company was founded in 2014 and is headquartered in Piraeus, Greece. As of February 24, 2022, it operated a fleet of 15 LNG carriers.
GLOP has market cap of $410 million and pays a dividend of 0.50%. The stock has a Zacks Style Score of "A" in both Value and Momentum, as well as a "B" in Growth.
Q3 Earnings Beat
In late October, GasLog reported an EPS beat of 133%. Q2 came in at $0.63 v the $0.34 last year and revenue was $95.7M, up from $80.5M last year. Adjusted EBITDA came in at $73.3M v the 57.3M y/y.
The big beat stemmed from higher LNG spot rates in a very tight market.
Management said the strength was a result of their ability to secure period charters for their vessels. Additionally, management had positive comments on de-risking the balance sheet, which was accomplished by their deleveraging strategy.
Three months ago, we wrote about GLOP and its success being derived from strong LNG demand. The story continues today as we still see low inventories in Europe and continued disruption of gas pipeline imports from Russia.
While LNG imports have recovered to seasonal levels, their dependence on carriers because of the Russian/Ukraine conflict continues. Investors should expect LNG demand to remain high as the war continues.
Since earnings, the company has seen analysts aggressively raising estimates.
Over the last 7 days, numbers have gone higher across all time frames. For the current quarter, we have seen a move from $0.45 to $0.72, or 60%. For the current year, estimates have gone 42% higher, while next year they have surged 48%.
The Technical Take
The stock recently took out the $8 level, a spot it has not seen since before the pandemic. With the fundamentals so good, investors should not be scared at the fact that the stock has almost doubled on the year.
While it's a hard year to chase stocks, the energy sector has separated itself from the rest of the market. If the stock consolidates below the $8 level, but makes new highs, we could see a quick move above $9.
Longer-term investors looking for a pullback could look at the moving averages for an entry. As of this writing, the 21-day is $6.95 and the 50-day is $6.35. The 200-day likely won't trade this year again, as it's all the way down at $5.40.
The success of GasLog been fueled by a surge of global energy prices. The company has deleveraged to position themselves better for the future. And now, the stock is trading at multi-year highs, bringing more attention to the name.
If energy prices remain strong, investors should expect GLOP to resume its trend higher into 2023.
Bear of the Day:
Lending Club is a Zacks Rank #5 (Strong Sell) that provides internet financial services. The company provides commercial and industrial, commercial real estate, small business, and equipment loans, as well as leases equipment; and unsecured personal and auto, patient finance, and education finance loans. Lending Club also operates an online lending marketplace platform that connects borrowers and investors.
The stock is trading at 2022 lows after earnings disappointed investors. With the stock down 80% from 2021 highs, it looks like investors will continue to let this one bleed lower.
About the Company
Lending Club was founded in 2006 and is headquartered in San Francisco, CA. The company employs over 1300 people.
LC is valued just over $1 billion and has a Forward PE of 7. The company holds a Zacks Style Scores of "A" in Value, but "C" in Growth.
The good news is that Lending Club surprised to the upside for Q3, beating expectations by 3%. This was the ninth straight beat on EPS, a streak that started in late 2020.
The bad news is the company guided Q4 revenues lower and narrowed their top line FY22 guide below expectations.
For the most part, the quarter wasn't as bad as some tech companies have reported this quarter. However, marketplace volumes are being impacted by the rapid increase in interest rates. So, future growth is coming into question and investors sold the stock.
LC was trading at $12 before EPS and fell all the way to $9.60 after earnings were released.
Since earnings, analysts have taken estimates down aggressively.
For the current quarter, estimates have dropped from $0.31 to $0.19 over the last 7 days, or 38%. For next quarter, the numbers have fallen 30% over the same time frame.
For the current year, estimates have fallen 7% over the last 30 days. For next year, they have been cut 20% over that same time frame.
The stock saw a big short squeeze that took its price from $15 to $49 in just three months. LC was part of the meme stock movement that took some names to irrational levels.
For about a year, the stock has just grinded lower, trapping any new buyer that entered the stock. When a stock bleeds lower like LC has, there are a lot of investors just looking to get out on the next pop higher.
The stock will see resistance at $12, which is the 50-day moving average. If for some reason the bulls start to push, the next selling spot is the 200-day at $14.40.
So where could one buy the stock?
The $5 level where it traded during the onset of the pandemic could be the spot. Considering the potential for a tough 2023 on the fundamental side, investors might start to come in based on valuation.
Lending Club is starting to see some growth issues as we head into 2023. With the stock down over 80% from 2021, some investors view the stock as a bargain.
However, there is room lower, so patience should be stressed here as the macro story plays out in 2023.
Fed Chair Powell Throws Cold Water on Market Sentiment
Want the good news or the bad news first? OK, the good news: market indices reached intraday highs crossing notable thresholds — such as the Dow back up over 33K for the first time since late August — on some dovish word usage in the Fed's monetary policy statement out early this afternoon. The Fed still rose 75 basis points (bps), as expected, but the statement acknowledged the lagging effects on the overall economy resulting from eight straight months of aggressive rate hikes.
Which brings us to the bad news: two days after Halloween, Fed Chair Jay Powell might as well have stepped up to the podium dressed as the Grim Reaper. He promptly punched a hole in any perceived dovishness from the Fed statement, instead commenting, "We still have some ways to go" in hiking rates, and that it's "very premature to think about pausing." This set analysts back to their slide rules — now projecting upwards of 5.00% on the Fed funds rate by this spring.
This press conference sent market indices down to session lows: the Dow fell -505 points from today's open, -1.55%, while the S&P 500 dropped an even steeper -2.51%. The Nasdaq slipped -366 points, or -3.36% on the day as cloud-computer stocks led the markets downward. In fact, anything consumer-oriented had a very rough afternoon. Even the comparably successful Russell 2000 notched a -3.36% loss on the day.
This inference toward 5% interest rates is notably higher than the Fed's September forecasts. And for the time being, it appears we can forget about the Fed moving to +4.5% and then pausing to see what happens. Thus, it matters hardly at all whether the Fed's December 14th meeting will bring another 75 bps hike or 50 bps, as many (most?) analysts had been penciling in — what really matters is how fast we get to 5% (and whether something will break in the meantime).
Powell again cited a 2% inflation rate as the goal, and made mention of core Personal Consumption Expenditures (PCE) at +5.1% on the latest print. He acknowledged that the economy has already slowed significantly, particularly in the housing market and real disposable income. But he reiterated that ongoing rate hikes are appropriate in once again regaining price stability, which is the Fed's main responsibility and the "bedrock of our economy."
For now, price-in 75 bps for December as long as economic reads are only gradually showing signs of improvement. (This would allow: if the economy starts to crumble much faster, the Fed will step in to change its policy.) Because even with a 50 bps move next month to 4.25-4.50% on Fed funds, we appear to have a date with 5.00% eventually, unless something crucial in the economy falls apart in the meantime. How lovely.
Qualcomm is out with fiscal Q4 earnings after the closing bell this Hump Day, missing on its bottom line for the first time in eight years: earnings of $3.13 per share missed the Zacks consensus by 2 cents. Revenues of $11.39 billion show an improvement of +22% year over year. But a -6% drop in QCOM shares followed a drastic reduction in earnings guidance for fiscal Q1: $2.25-2.45; the Zacks consensus had been for $3.51 per share. The stock is now down more than -40% year to date.
Roku is having an even worse late trading session, -17%, after its beat on top and bottom lines, but with guidance of an EBITDA loss next quarter almost 3x expectations. Negative earnings of -88 cents per share improved over the expected -$1.37, and revenues were notably stronger at $761 million versus the estimated $699 million. The company noted it expects negative revenue growth for its Player/Platforms next quarter, as macro conditions continue to pressure the consumer.
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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
GasLog Partners LP (GLOP) : Free Stock Analysis Report
LendingClub Corporation (LC) : Free Stock Analysis Report
Roku, Inc. (ROKU) : Free Stock Analysis Report
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