Yahoo Finance Royal Gold and Bath & Body Works have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 19, 2023 – Zacks Equity Research shares Royal Gold Inc. RGLD as the Bull of the Day and Bath & Body Works, Inc. BBWI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on SilverBow Resources SBOW, Cheniere Energy LNG and Comstock Resources CRK.
Here is a synopsis of all five stocks:
Bull of the Day:
Want to invest in gold and silver? Royal Gold Inc. is a precious metals stream and royalty company. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits this year.
Royal Gold acquires and manages precious metal streams, royalties and similar production-based interests. As of Mar 31, 2023, Royal Gold owned interests on 182 properties on 5 continents, including interests on 40 producing mines and 19 development stage projects.
It is not a gold miner.
Investor Day and 2023 Guidance Coming on Apr 20, 2023
On Apr 20, 2023, Royal Gold will hold a Virtual Investor Day from 9:30 am to 12:00 ET where it will give a strategic update of the business. This will include 2023 guidance.
The company will issue a press release detailing the 2023 guidance before the market opens. There will be a live question and answer session during the Investor Day.
It will report first quarter 2023 results on May 4, 2023.
Beat in the Fourth Quarter 2022
On Feb 15, 2023, Royal Gold reported fourth quarter and full year 2022 results and beat on the Zacks Consensus by $0.08. Earnings were $0.91 versus the Zacks Consensus of $0.83.
"Our solid fourth quarter results capped off another very successful year for Royal Gold," said Bill Heissenbuttel, CEO of Royal Gold.
"We manage our business adhering to a long term strategy that considers adding growth by acquiring high quality assets, funding that growth with limited equity dilution, maintaining a strong balance sheet and liquidity, and increasing our capital return to shareholders," he added.
For the full year, revenue was $603.2 million, with $417.8 million from stream revenue and $185.4 million from royalty revenue.
It saw an average gold price of $1,800 per ounce, an average silver price of $21.73 per ounce and an average copper price of $3.99 per pound. Average prices were weaker than in 2021. In 2021, the average gold price was $1,799 per ounce, the average silver price was $25.14 per ounce and the average copper price was $4.23 per pound.
In 2022, Royal Gold's mix was 73% gold, 11% silver and 12% copper.
Analysts Are Bullish
The analysts are bullish on Royal Gold in 2023. 1 estimate has been raised in just the last week, pushing the Zacks Consensus for 2023 up to $4.02 from $3.77 in the last 30 days.
That's earnings growth of 17.2% as the company made $3.43 last year.
They expect the growth to continue in 2024 as well with the Zacks Consensus at $4.26, or another 6.1% gain.
Royal Gold Joined the S&P High Yield Dividends Index
In the fourth quarter, Royal Gold raised its dividend by 7% to $1.50 per share. That was the 22nd consecutive year it increased its dividend.
That puts it in exclusive company among other dividend aristocrats, who have raised their dividend every year for over 20 years.
The company was added to the S&P High Yield Dividend Index last year. It's dividend is currently yielding 1.1%.
Shares Up Big in 2023
The precious metals are back in favor in 2023 and so are the stocks. Shares of Royal Gold are up 23.7% year-to-date but it's been a wild five year ride.
It's not cheap on a P/E basis, with a forward P/E of 34.6.
But if you're looking at gold and silver this year, Royal Gold should be on your short list.
Bear of the Day:
Bath & Body Works, Inc. expects sales to slow this year. Following weak 2023 guidance, this Zacks Rank #5 (Strong Sell) has seen its earnings estimates cut.
Bath & Body Works is a leader in personal care and home fragrance, including fine fragrance mist, body lotion and body cream, 3-wick candles, home fragrance diffusers and liquid hand soap.
It operates 1,800 company-operated Bath & Body Works locations in the U.S. and Canada and more than 425 international franchised locations along with online sales at bathandbodyworks.com.
Another Beat in the Fourth Quarter
On Feb 23, 2023, Bath & Body Works reported fiscal fourth quarter 2022 results and beat on the Zacks Consensus Estimate for the 11th quarter in a row. It has only missed once in the last 5 years. That's impressive.
Earnings were $1.86 compared to the Zacks Consensus of $1.63.
Revenue fell 5% to $2.889 billion in the fourth quarter from $3.027 billion a year ago.
Cost cutting is expected to pick up this year. Bath & Body Works announced an enterprise-wide effort to reduce expenses and improve operating efficiency. It's targeting $200 million of annual cost savings with over half of those savings contemplated in its 2023 outlook, primarily impacting the second half of 2023.
2023 Guidance Was Below Consensus
On Feb 23, 2023, Bath & Body Works gave first quarter 2023 net sales and full year earnings guidance. The first quarter was expected to continue to see weakness with net sales declining in the low - to mid-single digits year-over-year.
For the full year, earnings were expected to be in the range of $2.50 to $3.00. This was below the Zacks Consensus so analysts have been cutting estimates since the earnings report.
9 estimates were cut in the last 60 days for fiscal 2023. The Zacks Consensus Estimate has fallen to $2.97 from $3.72 in that time period. That's a decline of 12.7% from last year, where the company made $3.40. This is at the high end of the company's guidance range, however.
Bath & Body Works is expected to report first quarter earnings in May.
Shake-Up in Management
On Apr 6, Bath & Body Works announced some changes to its management team.
The key announcement was that Wendy Arlin, the CFO, would step down effective July 29, 2023, or earlier, if a successor was named. The company has initiated a search for a successor with the assistance of an executive search firm.
Shares Slide in 2023
Given the company's caution, it's not surprising that investors feel the same. Shares of Bath & Body Works have slid 16% year-to-date.
It's cheap, with a forward P/E of 11.9 and a PEG ratio of just 0.96. A PEG under 1.0 usually indicates a company has both value and growth.
Bath & Body Works is also shareholder friendly. It pays a dividend which is currently yielding 2.3%.
However, with the economy still slowing, investors looking at Bath & Body Works might want to wait on the sidelines until the earnings estimates and Zacks Rank turn around.
Additional content:
Here's What's Happened to the Natural Gas Market
The U.S. Energy Department's weekly inventory release showed a bigger-than-expected increase in natural gas supplies. Despite the negative inventory numbers, futures rose more than 5% week over week, overwhelmed by unseasonal cold weather in certain swathes of the country.
Notwithstanding last week's movement, a string of bearish factors continues to surround the commodity. In fact, the market hasn't been kind to natural gas in 2023, with the commodity trading considerably lower year to date and briefly breaking below the $2 threshold for the first time since 2020.
While macro challenges are leading to some concerns, we advise investors to focus on stocks like SilverBow Resources and Cheniere Energy.
EIA Reports a Build Larger Than Anticipated
Stockpiles held in underground storage in the lower 48 states rose 25 billion cubic feet (Bcf) for the week ended Apr 7, above the guidance of 20 Bcf addition. The increase compared with the five-year (2018-2022) average net injection of 28 Bcf and last year's growth of 8 Bcf for the reported week.
The first build of the year puts total natural gas stocks at 1,855 Bcf, which is 460 Bcf (33%) above the 2022 level at this time and 295 Bcf (18.9%) higher than the five-year average.
The total supply of natural gas averaged 105.3 Bcf per day, up 0.3 Bcf per day on a weekly basis due to slight increases in dry production shipments from Canada.
Meanwhile, daily consumption deteriorated 4.6% to 95.2 Bcf from 99.8 Bcf in the previous week, mainly reflecting lower residential/commercial demand.
Natural Gas Prices Post a Gain
Natural gas prices trended upward last week despite the larger-than-expected inventory build. Futures for May delivery ended Friday at $2.114 on the New York Mercantile Exchange, rising around 5.3% from the previous week's closing. The increase in natural gas realization is the result of unseasonable cool weather across certain regions.
As is the norm with natural gas, changes in temperature and weather forecasts can lead to price swings. Despite last week's surprise cold bout, mild spring weather is set to take hold in the days ahead, which would translate into bigger inventory additions due to tepid requirements for heating and cooling. Therefore, prices are likely to be impacted adversely. Compounding the matter, daily production has hovered around the record 100 Bcf mark due to a relatively mild winter, and this has pushed stocks significantly above historical levels.
However, a stable demand catalyst in the form of continued strong LNG feedgas deliveries is also supporting natural gas. LNG shipments for export from the United States have been elevated for months on the back of environmental reasons and record-high prices of the super-chilled fuel elsewhere.
Now, with the Russia-Ukraine conflict dragging on, LNG has become even more coveted. As a matter of fact, last year, the United States entered into a partnership with the EU to export additional LNG to wean the bloc off its dependence on Russian natural gas supplies. This means that LNG deliveries are poised to remain robust, especially with squeezed natural gas supplies from Moscow to Europe, following a shutdown in the Nord Stream pipeline from last August.
Finally, the return of the Freeport LNG export plant in Texas to full capacity will lead to more gas flowing overseas. The Quintana, TX facility — responsible for around 15% of U.S. liquefaction capacity — was knocked offline by a blast in June last year and was only partially functional until recently.
Final Thoughts
Based on several factors, the natural gas market is down some 53% so far this year. As a matter of fact, the space is currently quite unpredictable and spooked by the sudden changes in weather. As such, investors are rather unsure of what to do. As of now, the lingering uncertainty over the fuel means that they should preferably opt for holding on to fundamentally strong stocks like SilverBow Resources and Cheniere Energy.
SilverBow Resources: SilverBow has operations across roughly 130,000 net acres in the Eagle Ford, and more than 80% of its total output comprises natural gas. The Zacks Rank #3 (Hold) company's exposure to premium markets and focus on costs and margins should help it to benefit from any increase in natural gas prices.
You can see the complete list of today's Zacks #1 Rank stocks here.
SilverBow beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 80.8%. Valued at around $569.8 million, SBOW has lost 36.2% in a year.
Cheniere Energy: Being the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal, Cheniere Energy certainly enjoys a distinct competitive advantage.
Cheniere Energy has a projected earnings growth rate of 187.6% for the current year. The Zacks Consensus Estimate for this #3 Ranked natural gas exporter's 2023 earnings has been revised 8.7% upward over the past 60 days. LNG shares have gained 7.8% in a year.
At the same time, investors might want to sell some bottom-ranked stocks like Comstock Resources.
Comstock Resources: CRK is a leading operator in the Haynesville shale — a premier natural gas basin — with 323,000 net acres. About 98% of the company's total output is natural gas.
Comstock Resources has a projected earnings growth rate of -59.5% for the current year. Valued at around $3.1 billion, this Zacks Rank #5 (Strong Sell) company's 2023 earnings have been revised 49.5% downward over the past 60 days. CRK shares have lost 38.9% this year.
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Comstock Resources, Inc. (CRK) : Free Stock Analysis Report
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Royal Gold, Inc. (RGLD) : Free Stock Analysis Report
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Bath & Body Works, Inc. (BBWI) : Free Stock Analysis Report
