Halliburton and Camping World have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – February 1, 2023 – Zacks Equity Research shares Halliburton HAL as the Bull of the Day and Camping World CWH as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Canadian Solar Inc. CSIQ, Enphase Energy ENPH and ReneSola SOL.
Here is a synopsis of all five stocks.
Bull of the Day:
Halliburton reported Q4 adjusted net income per share of 72 cents last week, surpassing the Zacks Consensus Estimate of 67 cents and well above the year-ago quarter profit of 36 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions.
Revenues of $5.6 billion were 30.5% higher than the corresponding period of 2021. North American revenues rose 46.4% year over year to $2.6 billion, while revenues from Halliburton’s international operations were up 19.1% from the year-ago period to nearly $3 billion.
This growth is noteworthy since HAL has outsized exposure to the North American land drilling market.
In more good news for investors, Halliburton raised its quarterly dividend by 33.3% to 16 cents per share (or 64 cents per share annualized).
The Big Three in Oil & Gas Services
Halliburton was the last of the "Big Three" oil services firms to report fourth-quarter results after rivals SLB (SLB) and Baker Hughes (BKR) came out with contrasting releases last week.
SLB, the largest oilfield contractor, announced fourth-quarter 2022 earnings of 71 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 69 cents. SLB recorded total revenues of $7.9 billion, outpacing the Zacks Consensus Estimate by 0.7%.
SLB's strong quarterly earnings resulted from strong activities in land and offshore resources in North America and Latin America. The company’s board approved a quarterly cash dividend of 25 cents per share, indicating a 43% increase from the last paid dividend.
Baker Hughes reported Q4 adjusted earnings of 38 cents per share, missing the Zacks Consensus Estimate of 41 cents due to higher costs and expenses.
BKR's revenues for the October-December period totaled $5.9 billion, also underperforming the Zacks Consensus Estimate by 2.6%. The negatives were partially offset by higher contributions from the Oilfield Services and Equipment business unit.
Inside Halliburton's Segments
Operating income from the Completion and Production segment was $659 million, 89.9% above the year-ago level of $347 million and ahead of the Zacks Consensus Estimate of $629 million. The division’s performance was buoyed by improving completion tool sales as well as cementing activity globally, to go with the strength in the pressure pumping business in North America onshore.
Drilling and Evaluation unit profit surged from $269 million in the fourth quarter of 2021 to $387 million in the corresponding period of 2022. The division also managed to beat the Zacks Consensus Estimate of $364 million. This was primarily due to a pickup in international drilling-associated services, testing services, and year-end software sales in, as well as increased project management activity in Mexico.
Management Commentary & Outlook
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong fourth-quarter (and 2022) performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe to drive strong margins home and away throughout this year and beyond. Looking ahead, Halliburton sees international region to deliver profitable growth, while optimizing value in its core north American market.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency, and the global presence points to a strong outlook. The Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns, as evinced by its recent dividend hike.
Bullish Analyst Reactions
In the past week since the company report, we've seen these very positive reactions to the HAL business...
Barclays analyst J. David Anderson raised his price target on Halliburton to $58 from $54 and kept an Overweight rating on the shares. Addressing the elephant in the room, he said that "despite strong Q4 results and a convincing outlook on 2023 for the Big 3 energy service names, the share underperformance suggests investors are questioning how much is already in the stocks."
With the cycle entering a "new, sustained growth phase" combined with margin expansion from pricing and operating leverage, the analyst now sees more than 30% upside in the shares.
HSBC analyst Abhishek Kumar raised the firm's price target on Halliburton to $57 from $44 and kept a Buy rating on the shares as the company's 2023 outlook looks solid with growth expected both from the U.S. and international.
Susquehanna analyst Charles Minervino raised his price target on Halliburton to $57 from $51 and kept a Positive rating on the shares. The analyst said the company should continue to see double-digit revenue growth in its North America segment due to pricing and service intensity and highlighted both the 33% dividend bump and the commitment to return 50%+ of FCF to shareholders through additional share repurchases in 2023.
Bottom-Line on HAL
Halliburton is a stable cash-gushing commodity play with 30%+ upside. While the overall outlook for US corporate earnings remains subdued, the data from across the globe looks significantly less recessionary than just a quarter ago so we want to find ways to participate in the positive elements of the turn. HAL shares should find good support at $39.50, with continued buyers coming in at the 50-day near $38.
Bear of the Day:
Camping World is a major provider of equipment and services for the recreational vehicle, or RV, market.
The company saw terrific sales growth to $6.9 billion in 2021 after mom & dad "hit the road" during the pandemic shutdown.
In 2022, sales leveled off with growth to just $6.96 billion, according to the current analyst consensus.
And EPS plummeted 36% from $6.88 to $4.39 from '21 to '22. What has put CWH back in the cellar of the Zacks Rank is that this year's earnings projections call for a 32% drop to $2.98.
Investors Camped Above $35 in 2021
CWH shares saw big accumulation in 2021 between $32 and $42, with the 50-week moving average rising above $35 by the end of the year.
But the "on the road again" party was not to last. In early December, my colleague Jeremy Mullin described the "break up" story this way...
The stock has had a rough 2022, down about 40% on the year. On top of market weakness, the stock has reported some earnings misses that have brought pressure in the name.
And now the stock is starting to trend lower as earnings estimates fall. Investors should be cautions as the stock zeros in on 2022 lows.
Since Jeremy wrote that, CWH has dropped and just kissed support above $20 and its 2022 lows.
The Camping World Story
I actually love this company, not least because the CEO Marcus Lemonis is a grizzly bear of entrepreneurship.
They actually acquired some of my favorite "outdoor stores" in Wisconsin from the brand Gander Mountain.
Camping World, headquartered in Lincolnshire, IL, was founded in 1966 and employs over 12,000 people.
Camping World operates in two segments, Good Sam Services and Plans; and RV and Outdoor Retail. The company operated through a network of approximately 187 retail locations in 40 states of the United States. It serves customers through dealerships, and online and e-commerce platforms.
Lemonis jumped in last summer and bought $1 million worth of CWH shares around $26. He now owns at least 45% of the company.
As my colleague Tracey Ryniec -- leader of the Insider Trader Portfolio -- would say, that's a big "confidence buy."
Q3 Earnings Details
The company reported EPS in early November, reporting a 16% EPS miss. This was their second earnings miss in just three quarters and the stock is trading about 15% lower since the earnings release.
Q3 came in at $1.07 v the $1.27 expected. Revenues slightly beat expectations, coming in at $1.86B v the $1.82B expected. EBITDA margins came in at 9.3% v the 15% a year ago and was down from 12.8% last quarter.
Same store revenues were down 4.8% year over year.
CWH is expected to report their Q4 in late February.
CSIQ Subsidiary to Expand Manufacturing Capacity in China
Canadian Solar Inc. recently announced that its subsidiary, CSI Solar, has inked an investment agreement with the municipal government of Yangzhou City in China to add manufacturing capacity in China.
Details of the Agreement
Through the agreement, CSI Solar aims to augment its manufacturing capacity in high-efficiency wafers, cells and modules, as well as battery systems, through a vertically integrated system in Yangzhou's clean energy manufacturing industrial park.
Canadian Solar plans to carry out project development activity in three phases, wherein phase I will comprise adding 14 gigawatts of wafer and cell capacity. This is expected to reach commercial operation in the second half of 2023. However, the execution of phase II and phase III is subject to change, as disclosed by the company.
The agreement tends to assist Canadian Solar in expanding its wafer, cell, module and battery storage amid the rising demand for solar products. This may boost its revenue generation prospects and also aid its margins as upstream raw material costs continue to decline.
Global Solar Market Boom
The global solar market is likely to witness an increased demand scenario supported by various government incentives and rebates, coupled with the falling cost of solar panels and other related technology that makes it affordable for homeowners. Moreover, the need to transition to clean energy sources to curtail climatic conditions adds to the demand.
Also, the advanced technology and system, which ease the process of the installation of solar panels, make it easier for homeowners to shift to solar-based energy for energy requirements. Per the report from Mordor Intelligence, the global solar energy market is likely to witness a CAGR of 12.7% over the 2023-2028 period.
Amid such an expanding market size projection, Canadian Solar’s strategy to increase its manufacturing capacity may prove prudent considering the current supply-chain environment.
Other than Canadian Solar, solar companies that are poised to benefit from the expanding market size are as follows:
Enphase Energy enjoys a valuable position in the global solar market by manufacturing fully integrated solar-plus-storage solutions and microinverters. As of Sep 30, 2022, more than 52 million microinverters were shipped, while approximately 2.7 million Enphase residential and commercial systems were deployed in more than 145 countries.
Enphase boasts a long-term earnings growth rate of 43.7%. ENPH shares have rallied 51.1% in the past year.
ReneSola continues to benefit from a steady flow of contracts from domestic and international customers. With the successful execution of its downstream strategy, SOL is currently expanding its business in international markets. It is committed to adding an incremental project pipeline to its core markets, including the United States, the United Kingdom, Spain, Poland, France, Germany and Hungary.
The Zacks Consensus Estimate for 2022 sales suggests a growth rate of 9.5% from the prior-year reported figure. ReneSola shares have increased 12.5% in the past three months.
In a year, shares of Canadian Solar have soared 42.5% compared with the industry’s growth of 42.6%.
Canadian Solar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Halliburton Company (HAL) : Free Stock Analysis Report
Renesola Ltd. (SOL) : Free Stock Analysis Report
Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
Camping World (CWH) : Free Stock Analysis Report
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
To read this article on Zacks.com click here.