For Immediate Release
Chicago, IL – August 2, 2022 – Zacks Equity Research shares HeritageCrystal Clean (HCCI) as the Bull of the Day and LendingClub LC as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix NFLX, Adobe ADBE, and Oracle ORCL.
Here is a synopsis of all five stocks:
Bull of the Day:
Sometimes, the dirty businesses make the cleanest money. That’s the case with today’s Bull of the Day that happens to be in the pollution business. Whether it’s oil or environmental services, this company has it covered. Analysts have caught wind of the profits as well, pushing up their earnings estimates for the stock.
I’m talking about Zacks Rank #1 (Strong Buy) HeritageCrystal Clean. Heritage-Crystal Clean, Inc., through its subsidiary, Heritage-Crystal Clean, LLC, provides parts cleaning, hazardous and non-hazardous waste, and used oil collection services to small and mid-sized customers in the industrial and vehicle maintenance sectors in the United States and Canada. It operates through two segments, Environmental Services and Oil Business. The Environmental Services segment offers parts cleaning, containerized waste management, wastewater vacuum, antifreeze recycling, and field services. The Oil Business segment engages in the collection of used oil, the sale of recycled fuel oil, and used oil filter removal and disposal activities, as well as the re-refining of used oil into lubricant base oil and other products. The company also collects and disposes wastewater.
The company has been cleaning up in profits as well. Over the last ninety days, our Zacks Consensus Estimate for the current year is up from $1.99 to $2.33, while next year’s number is up from $2.06 to $2.09. A history of upside earnings surprises for this stock as well with last quarter’s 47-cent beat nearly doubling expectations calling for a 50-cent quarter. It was the latest in a line of earnings beats dating back eight consecutive quarters.
Bear of the Day:
The market is heating up here at the end of the summer. It’s bringing back confidence to some investors. Let’s just not get ahead of ourselves. Remember what wins in the long run. Stocks with the strongest earnings trends are likely to return the most over time. The reason is really quite simple, make money and you make money for investors.
Today’s Bear of the Day is a stock that has struggled to establish a strong earnings trend. I’m talking about Zacks Rank #5 (Strong Sell) LendingClub. LendingClub Corporation, operates as a bank holding company for LendingClub Bank, National Association that provides range of financial products and services through a technology-driven platform in the United States. 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. It also operates an online lending marketplace platform that connects borrowers and investors.
The reason for the unfavorable Zacks Rank is the series of earnings estimate cuts coming from analysts. Over the last week alone, three analysts have cut their estimates for the current year and next year. The bearish sentiment has dropped our Zacks Consensus Estimate for the current year from $1.58 to $1.50 while next year’s number is off from $2.15 to $1.68.
3 Tech Stocks With Insider Buys in 2022
After a challenging start to 2022, a somewhat clearer economic outlook has lifted stocks as of late. Buyers have finally returned after seemingly being nowhere to be found.
However, they weren’t entirely gone.
Throughout the year, there have been several notable insider buys within several tech titans, including Netflix, Adobe, and Oracle.
Insider buys are widely followed by investors as they’re generally a good indicator of the company’s current health. After all, if an insider is selling, why would an investor want to buy?
Let’s take a closer look at each company's forecasted growth rates to get a clearer view of what enticed the insiders.
We’re all familiar with Netflix, the titan that has taken the digital streaming industry to the next level. Earlier in the year, an Officer purchased approximately 51,000 NFLX shares at a price of around $385 per share.
It’s undoubtedly been a rough stretch for Netflix shares in 2022, down more than 60%. A slowdown in subscriber growth has been a primary driving force behind the poor share performance. However, the company has chained together four consecutive bottom-line beats.
Netflix’s bottom-line is forecasted to decrease by nearly 11% in FY22, but growth is projected to pick back up in FY23, with the Zacks Consensus EPS Estimate of $10.06 reflecting a solid 9% uptick in earnings year-over-year.
The company’s top-line appears to be in much better shape - for FY22, NFLX is forecasted to generate $31.7 billion in revenue, a 6.6% increase when compared to FY21 sales of $29.7 billion. In addition, the top-line is projected to tack on an additional 7.3% in FY23.
Following the sell-off, Netflix shares trade at much more reasonable valuation levels. The company’s 22.4X forward earnings multiple is a fraction of its five-year median of 82.1X. Shares now trade at a 19% premium relative to the S&P 500.
Adobe is one of the biggest software companies in the world, generating the bulk of its revenue via licensing fees from its customers. In January, an Adobe Director purchased approximately 1,000 ADBE shares at a price of roughly $515 per share.
Software stocks have tumbled in 2022, and ADBE has been no exception – shares are down more than 25% year-to-date. However, the company has continued to report bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in 14 consecutive quarters.
In addition, growth estimates for both the top and bottom-lines are rock-solid. For the current fiscal year (FY22), Adobe’s bottom-line is projected to register a solid 8.3% uptick year-over-year. And in FY23, earnings are forecasted to grow an additional 16%.
Adobe’s top-line is also in remarkable shape; annual revenue is forecasted to climb to $17.7 billion in FY22, a notable 12% uptick year-over-year. Even more impressive, the FY23 annual sales estimate of $20.1 billion reflects another double-digit increase in revenue of 14% year-over-year.
Adobe’s valuation levels are elevated but are low relative to where shares have traded in the past. Its 37.3X forward P/E ratio is nowhere near its five-year median of 45.6X and highs of 66.3X in 2020.
Shares trade at a 99% premium relative to the S&P 500.
Oracle is an American multinational computer technology corporation selling database software and technology, cloud-engineered systems, and enterprise software products. Around the beginning of February, a Director within Oracle purchased a whopping 15,000 shares at an approximate price tag of $83 per share.
Oracle shares have been stronger than the S&P 500 by a fair margin year-to-date, signaling that buyers have defended the stock at a much higher level than most. The company has been firing on all cylinders – Oracle has exceeded top and bottom-line estimates in seven of its eight previous quarterly reports.
Bottom-line projections allude to rock-solid growth. For the current fiscal year, the Zacks Consensus EPS Estimate resides at $5.21, reflecting a solid 6.3% year-over-year uptick. Furthermore, earnings are expected to grow an additional 9.3% in FY23.
Top-line projections are just as stellar – Oracle is forecasted to generate $49.7 billion in revenue in the current fiscal year (FY23), a 17% double-digit year-over-year increase. The growth doesn’t stop there, as the company’s top-line is forecasted to tack on an additional 5.2% in FY24.
Oracle shares trade at an enticing 6% discount relative to the S&P 500. The company’s forward earnings multiple of 17.6X is just above its five-year median of 16.6X but well below highs of 25.6X in 2021.
It’s seemed that buyers have entirely retreated in 2022 amid the vast sea of red. However, insiders are still buying, undoubtedly a positive.
Of course, it’s always a good sign to see an insider buy a stock. It’s generally a reflection of their views on the company, signaling that they believe the stock price will go up.
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
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LendingClub Corporation (LC) : Free Stock Analysis Report
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