For Immediate Release
Chicago, IL – August 3, 2022 – Zacks Equity Research shares Phillips 66 PSX as the Bull of the Day and Noodles & Company NDLS asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Curtiss-Wright CW, Spirit Aerosystems SPR, and Triumph Group TGI.
Here is a synopsis of all five stocks:
Bull of the Day:
Phillips 66 is able to cash in on high refining margins and gasoline prices. This Zacks Rank #1 (Strong Buy) pays a big dividend and is paying down debt.
Phillips 66 is an energy company that includes Midstream, Chemicals, Refining, and Marketing and Specialties businesses.
It operates 12 refineries in the US and Europe and owns 7,540 gas stations in 48 states.
Another Beat in the Second Quarter
On July 29, Phillips 66 reported its second quarter results and beat on the Zacks Consensus by $0.85. Earnings were $6.77 versus the consensus of $5.92.
It was the 6th earnings beat in a row.
The quarter was driven by strong refining operations including execution of its planned turnarounds. It also saw continued record-setting NGL fractionated volumes.
"Our earnings reflect the strong market environment during the second quarter driven by a tight global product supply and demand balance," said Mark Lashier, CEO.
Adjusted pre-tax income for Refining was $3.1 billion in the second quarter, up from the adjusted pre-tax income of $140 million in the first quarter of 2022. The improvement was primarily due to higher realized margins driven by market crack spreads.
The composite global market crack increased to $46.72 per barrel, up from $21.93 per barrel in the first quarter. Realized margins were $28.31 per barrel in the second quarter, up from $10.55 per barrel in Q1.
The gas stations, which is marketing, also saw a big increase in the quarter. Adjusted pre-tax income for Marketing and Other was $656 million in the second quarter, an increase of $453 million from Q1. The increase was mainly due to higher realized fuel margins including inventory impacts.
Balance Sheet and Dividends
In the second quarter, Phillips 66 repaid $1.5 billion of debt and funded $467 million of dividends, $66 million of share repurchases and $376 million of capital expenditures and investments.
The dividend is generous. It is yielding 4.4%.
2022 and 2023 Earnings Estimates Revised Higher
The analysts were already bullish going into the report due to the crack spread. But they are raising estimates again after the report.
One estimate is higher in the last week for 2022, pushing the Zacks Consensus up to $14.86 from $13.17 in the last 30 days.
That is earnings growth of 160.7% compared to 2021 when the company made just $5.70.
Analysts are also bullish on 2023 even though its still 5 months away. 2 estimates were revised higher for 2023 in the last week, pushing up the Zacks Consensus to $10.90 from $9.75 in the last month.
Shares Up in 2022 But Still on Sale
Energy has been one of the best performing industries in 2022. Phillips 66 shares are up 15.6% year-to-date.
But, since June 8, 2022, they have fallen 20.6%.
They're on sale with a forward P/E of just 5.9 and a PEG ratio of 0.5. A PEG ratio under 1.0 usually indicates a company has both growth and value.
For investors trying to find companies that are cheap, but also growing earnings, Phillips 66 is one to keep on the short list.
Bear of the Day:
Noodles & Company is still navigating a difficult environment of the coronavirus and inflationary pressures. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall double digits in 2022.
Noodles & Company operates 450 restaurants in the United States, serving noodle and pasta dishes from Wisconsin Mac & Cheese to good-for-you Zoodles.
A Miss in the Second Quarter
On July 27, Noodles & Company reported its second quarter results and missed on the Zacks Consensus by $0.02. Earnings were $0.05 versus the Zacks Consensus of $0.07.
The system-wide comparable restaurant sales rose 5.1%, comprised of a 5.1% increase at company-owned restaurants and a 5.3% increase at franchise restaurants.
Comparable restaurant sales were boosted by continued momentum in the in-person channels as consumers want to be out of the house, in addition to price increases in the core menu.
Digital sales, however, accounted for 51.7% of total revenue. And company average units volumes were up 5.3% to $1.42 million over the second quarter of last year and were 18.3% higher compared to the pre-covid second quarter of 2019.
In a positive going forward, key commodity prices, especially on chicken, have come down from record highs.
Noodles & Company also launched its new Leanguini product, which offers 56% less net carbs and 44% more protein than traditional wheat pasta. It is also offering value in this inflationary environment to customers with new $7 menu options.
Additionally, it still expects to open another 21 to 23 new restaurants in 2022 despite the challenging environment.
Outlook for the Third Quarter
The company sees third quarter comps in the positive, but in the low-single digits.
The analysts didn't like guidance as they've been cutting full year estimates.
3 estimates were cut in the last week for 2022 pushing down the Zacks Consensus to $0.03 from $0.13. That's an earnings decline of 82.4% because Noodles & Company made $0.17 last year.
2 estimates were also lower for 2023, but analysts are more bullish on next year, as some of the growth initiatives kick in and inflation moderates. The 2023 Zacks Consensus Estimate is looking for $0.51, a gain of 1,599% from 2022.
Shares Fall in 2022
Shares of Noodles & Company have taken it on the chin in 2022, falling 43.2%.
But they still aren't cheap. It trades with a forward P/E of 154. It doesn't pay a dividend for your patience, either.
For investors interested in restaurant stocks, you might want to stay on the sidelines until inflationary pressures ease further.
Aerospace & Defense Q2 Earnings Due on Aug 3: CW, SPR & TGI
The aerospace and defense stocks that have released their Q2 results have come up with a mixed performance. Some players in this industry, namely Curtiss-Wright, Spirit Aerosystems, and Triumph Group are set to reveal their quarterly figures tomorrow.
Factors that Influenced Aerospace & Defense Stocks
The continuous recovery in global air travel, both domestic and international, over the past few quarters is expected to boost the Q2 results of the aerospace and defense stocks, particularly those engaged in commercial aviation. Boeing witnessed a solid year-over-year surge of 53.2% in its commercial shipments during the second quarter. With Boeing being the largest jet maker in the nation, we expect the Q2 results of the remaining aerospace majors to reflect a similar improvement in delivery trends. Such solid deliveries must have boosted the overall top-line growth of the Aerospace sector, which houses all aerospace and defense stocks.
On the other hand, stocks in this industry that are more focused on combat must have gained as a result of steady government support. Moreover, a steady order flow observed in the past couple of quarters, along with improved deliveries in recent times, buoyed by recovering economic trends are projected to have bolstered Q2 revenues of aerospace and defense stocks.
However, persistent headwinds like supply chain disruption along with some unfavorable project timing as the result of coronavirus might have an adverse impact on the Q2 results of some of the industry majors.
Aerospace sector Q2 earnings are expected to decline 9.2% from the prior-year quarter’s reported figure, while revenues are projected to drop 1.2%.
For more details on quarterly releases, you can go through the latestEarnings Preview.
Aerospace & Defense Stocks to Watch
Let's take a look at three defense companies that are scheduled to report second-quarter 2022 earnings on Aug 3 and find out how things have shaped up prior to their announcements.
Curtiss-Wright delivered a four-quarter earnings surprise of 4.54%, on average. The Zacks Consensus Estimate for its Q2 sales, pegged at $604.9 million, implies a decline of 2.7% from the prior-year quarter reported figure.
The consensus estimate for Q2 earnings, pegged at $1.68 per share, indicates an improvement of 7.7% from Q2 of 2021. The estimate has inched up 0.6% over the past 30 days.
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Curtiss-Wright currently has an Earnings ESP of +0.90% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Spirit Aerosystems has a four-quarter earnings surprise of 19.47%, on average. The Zacks Consensus Estimate for its Q2 sales, pegged at $1.25 billion, suggests an improvement of 24.3% from the prior-year quarter figure.
The consensus estimate for the Q2 bottom line, pegged at a loss of 23 cents per share, indicates an improvement from a loss of 31 cents that the company had incurred in Q2 of 2021. The estimate has deteriorated from a loss of 21 cents over the past 30 days.
Spirit Aerosystems currently has an Earnings ESP of +5.71% and a Zacks Rank 3.
Triumph Group delivered a four-quarter earnings surprise of 42.00%, on average. The Zacks Consensus Estimate for its Q2 sales, pegged at $300 million, indicates a decline of 19.3% from the prior-year quarter figure.
The consensus estimate for Q2 earnings, pegged at 9 cents per share, implies no change from earnings recorded in Q2 of 2021. The estimate has surged 50% over the past 30 days.
Triumph Group currently has an Earnings ESP of 0.00% and a Zacks Rank 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Triumph Group, Inc. (TGI) : Free Stock Analysis Report
Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report
Phillips 66 (PSX) : Free Stock Analysis Report
CurtissWright Corporation (CW) : Free Stock Analysis Report
Noodles & Company (NDLS) : Free Stock Analysis Report
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