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Olin, DMC Global, Apple, Netflix and Amazon highlighted as Zacks Bull and Bear of the Day

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·8-min read
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For Immediate Release

Chicago, IL – October 27, 2021 – Zacks Equity Research Shares of Olin Corporation OLN as the Bull of the Day, DMC Global Inc. BOOM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc. AAPL, Netflix, Inc. NFLX and Amazon.com, Inc. AMZN.

Here is a synopsis of all five stocks:

Bull of the Day:

Inflation, whether transitory or not, is creating opportunities all over the market. It’s making some stocks into absolute rockstars. One way to uncover these stocks is by leaning on the power of the Zacks Rank.

The Zacks Rank helps find stocks with strong earnings trends. These strong trends often lead to price appreciation because, after all, the name of the game is earnings. Companies that bring in the highest profits often gain the attention of investors.

Today’s Bull of the Day is Olin. Olin Corp. manufactures and distributes chemical products in the United States, Europe, and internationally. It operates through three segments: Chlor Alkali Products and Vinyls; Epoxy; and Winchester.

Olin is a Zacks Rank #1 (Strong Buy) in the Chemical – Diversified industry. The stock just reported strong earnings after the bell last Thursday, October 21st. Q3 earnings came in at $2.38, 14% better than expectations. That was the latest in a string of 3 consecutive quarterly earnings beats.

Analysts have taken note of the trend. Over the last thirty days, four analysts have increased their earnings estimates for next year. The bullish sentiment has pushed up our Zacks Consensus Estimate for next year from $5.77 to $7.33. A similar move on has happened on current year estimates where the Zacks Consensus Estimate is up from $6.41 to $7.95. That current year number represents year-over-year growth of an astounding 688%.

Bear of the Day:

While the title of this article is in fact a “Bear of the Day” it is a bit of a misnomer. Meaning, I am not bearish about the long-term prospects of this company. Rather, I am merely pointing out some bearish activity that has been happening in earnings estimates. This could be a warning sign that is flashing for long-term investors to consider. I’m here to help weigh the good versus the bad.

Today’s Bear of the Day is DMC Global. DMC Global Inc. provides a suite of technical products for the energy, industrial, and infrastructure markets worldwide. The company operates in two segments, NobelClad and DynaEnergetics.

The company sells its products through direct sales personnel, program managers, and independent sales representatives. The company was formerly known as Dynamic Materials Corporation and changed its name to DMC Global Inc. in November 2016.

The stock is currently a Zacks Rank #5 (Strong Sell) because of earnings estimates coming from analysts all over Wall Street. Analysts have been slashing their numbers, expecting less from the company. At first glance, this is bearish.

Take the current year EPS number for example. Ninety days ago, our Zacks Consensus Estimates called for 56 cents EPS for the year. That number has since dropped down to 22 cents. The trend continues in next year’s numbers as well as our Zacks Consensus Estimate is off from $1.57 to 99 cents. That’s the bearish news.

On the flipside, these numbers still represent huge growth. Current year estimates call for 214% earnings growth, even at 22 cents per share, while next year’s 99-cent number is good for another 350% of growth. This is something the long-term investors in the stock should point to as a bullish point. That growth helps to partly justify the stock’s PE ratio. It is way up at 187x earnings though. Compare that to an industry average of 15.4x and the S&P 500’s 22.78x.

Additional content:

What to Expect When Apple (AAPL) Reports Earnings

Apple is set to report fourth-quarter fiscal 2021 results on Oct 28.

Apple expects revenues to grow double digits year over year in the September quarter, but to be lower than the June quarter’s revenue growth rate. This is due to the negative impact from foreign exchange, normal growth in the Services segment and supply constraints (iPhone and iPad).

The Zacks Consensus Estimate for revenues is currently pegged at $85.49 billion, indicating growth of 32.1% from the year-ago quarter’s reported figure.

The consensus mark for earnings is currently pegged at $1.23 per share, unchanged over the past 30 days and indicating 70% growth from the figure reported in the year-ago quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the earnings surprise being 23.74%, on average. 

Let’s see how things are shaping up for the upcoming announcement.

Strong iPhone 13 Demand to Drive Y/Y Sales Growth

Apple’s fortunes are heavily reliant on the iPhone, which is by far its biggest revenue contributor. The device accounted for 48.6% of net sales in the last-reported quarter, wherein sales increased 49.8% year over year to $39.57 billion.

Strong demand for the 5G-enabled iPhone 13 is expected to have driven the top line in the to-be-reported quarter despite component shortages. Per Canalys, Apple regained the second spot in terms of market share in third-quarter 2021. Samsung led the market with 23% share followed by Apple’s 15% and Xiaomi’s 14%.

The Zacks Consensus Estimate for iPhone sales currently stand at $42.61 billion, indicating 61.1% growth from the year-ago quarter’s reported figure.

Services Momentum to Boost Top Line

The Services segment became the new cash cow for Apple, which currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The increasing popularity of the App Store has been a key catalyst. Apple currently has more than 700 million paid subscribers across its Services portfolio. App Store continues to grab the attention of prominent developers from around the world, helping the company offer exciting new apps that drive traffic.

Services like Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle are expected to have contributed to overall growth.

Apple TV+’s endeavors to expand its streaming content portfolio is expected to have improved Apple’s footprint in the streaming market currently dominated by the likes of Netflix and Amazon Prime, among others.

The Zacks Consensus Estimate for Services revenues currently stands at $17.43 billion, indicating 19.8% growth from the year-ago quarter’s reported figure.

Wearables’ Growth to Remain Strong

Apple is dominating the wearables market, thanks to strong adoption of Apple Watch. The company’s Fitness+ subscription service, built on Apple Watch, is a game changer. Fitness+ tracks health- and workout-related data from Apple Watch that users can view on their iPhones, iPads or Apple TVs.

Apple Watch’s adoption rate continues to grow rapidly, thanks to the company’s endeavor to add healthcare features like electrical heart sensor and ECG app, along with Blood Oxygen sensor and app to its smartwatch.

Apple Fitness+ introduced guided Meditation, a simple way to practice mindfulness anywhere and anytime, and Pilates, a new low-impact, body-conditioning workout type, on Sep 27.

Apple Watch’s expanding user base is helping the company steer off competition from the likes of Garmin, Xiaomi, Samsung Electronics and Huawei Technologies.

The consensus estimate for Wearables, Home and Accessories revenues currently stands at $9.36 billion, indicating 19% growth from the year-ago quarter’s reported figure.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
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Olin Corporation (OLN) : Free Stock Analysis Report
 
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