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Fortinet and Light & Wonder have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – November 29, 2022 – Zacks Equity Research shares Fortinet FTNT as the Bull of the Day and Light & Wonder LNW as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cheniere Energy LNG, EQT Corp. EQT and Comstock Resources CRK.

Here is a synopsis of all five stocks:

Bull of the Day:

Fortinet is a Zacks Rank #1 (Strong Buy) and it sports a F for Value and an A for Growth.  I love to see that sort of growth divergence where we have a weak value score and a strong growth score.  As a growth investor, that tells me right away that I am on the right path. This security company posted a good beat in early November.  Let's explore more about this company in this Bull of The Day article.

Description

Fortinet, Inc. provides cybersecurity solutions. It offers FortiGate hardware and software licenses that provide various security and networking functions, including firewall, intrusion prevention, anti-malware, virtual private network, application control, web filtering, anti-spam, and wide area network acceleration. It sells its security solutions to channel partners and directly to various customers in telecommunications, technology, government, financial services, education, retail, manufacturing, and healthcare industries. It has a strategic alliance with Linksys. Fortinet, Inc. was incorporated in 2000 and is headquartered in Sunnyvale, California.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market's expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.

For FTNT, I see four straight beats of the Zacks Consensus Estimate.  That is great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).

The average positive earnings surprise over the course of the last year works out to be 14.5%.

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher.

Over the last 60 days, earning estimates have moved up for FTNT.

This quarter has moved up from $0.35 to $0.39.

Next quarter has increased from $0.27 to $0.28.

The full fiscal year 2022 has increased from $1.05 to $1.14.

Next fiscal year has seen the estimate move from $1.29 to $1.39.

Positive movement in earnings stock is a Zacks Rank #1 (Strong Buy).

Valuation

The valuation for this name isn't low, but there is solid growth. I see a forward PE of 46x which is very high, but the company is coming off a quarter that saw topline growth of more than 32%. The price to book is an NA as that number works out to be a negative number.

A software name like this is an asset slim business so when the number does go positive it would not be surprising to see a double digit price to book multiple. Price to sales comes in a 10x and that is a big number, but the growth is there to support it. I see margins increasing in the most recent quarter and with revenue growth expected to be 32% this year that should continue to drive earnings higher.

Bear of the Day:

Light & Wonder is a Zacks Rank #5 (Strong Sell) and recently missed earnings. Despite the recent earnings miss, it has continued higher. Most times, when a company misses earnings the stock will trade lower, so this is a very interesting case. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.

Description

Light & Wonder Inc. is a cross-platform games and entertainment company. Its OpenGaming(TM) platform powers digital-gaming networks in the industry. Light & Wonder Inc., formerly known as Scientific Games Corporation, is based in Las Vegas NV.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market's expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of LNW, I three misses of the  Zacks Consensus Estimate and one beat. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn't make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For LNW I see annual estimates moving lower.

The current fiscal year consensus number moved lower from a loss of $1.49 to a loss of $1.83 over the last 60 days.

The next year has moved from $2.22 to $1.70.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

Additional content:

Natural Gas Spikes Above $7 After First Draw of the Season

The U.S. Energy Department's weekly inventory release showed a smaller-than-expected decrease in natural gas supplies — the season's first withdrawal. Despite the negative inventory numbers, futures jumped more than 11% week over week, thanks to bone-chilling temperatures that drove heating load demand across much of the Lower 48.

At the same time, there appears to be some uncertainty associated with the extended outage at the nation's biggest LNG export plant at Freeport. In this context, it would be wise to build a position in quality names such as Cheniere Energy, EQT Corp. and Comstock Resources.

EIA Reports a Withdrawal Smaller Than Market Expectations

Stockpiles held in underground storage in the lower 48 states fell 80 billion cubic feet (Bcf) for the week ended Nov 18, below the guidance of around 85 Bcf decline per the analysts surveyed in major polls.

However, the decrease was above last year's pull of 14 Bcf for the same corresponding week and the five-year (2017-2021) average net shrinkage of 48 Bcf.

The first draw of the winter heating season puts total natural gas stocks at 3,564 Bcf, which is 62 Bcf (1.7%) below the 2021 level at this time and 39 Bcf (1.1%) lower than the five-year average.

Natural Gas Still Logs a Healthy Weekly Gain

Natural gas prices trended upward last week, despite the lower-than-expected inventory draw. Futures for December delivery ended Friday at $7.0240 on the New York Mercantile Exchange, rising around 11.4% from the previous week's closing. The increase in natural gas realization — for the third straight week — is the result of heavy snow and bitterly cold weather.

As is the norm with natural gas, changes in temperature and weather forecasts can lead to price swings. The latest models anticipate strong temperature-driven consumption over the near term (with extensive use of heaters across homes and businesses), which is a positive for prices.

Another thing supporting natural gas is a stable demand catalyst in the form of continued strong LNG feedgas deliveries. LNG shipments for export from the United States have been robust for months on the back of environmental reasons and record-high prices of the super-chilled fuel elsewhere.

Now, with the Russia-Ukraine conflict, LNG has become even more coveted. As a matter of fact, earlier this 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 rise further, especially with squeezed natural gas supplies from Moscow to Europe, following leaks in the key Nord Stream pipeline.

However, the protracted downtime associated with the fire breakout at the Freeport LNG export plant in Texas has drowned out some of the positives as of now. The Quintana, TX facility — responsible for around 15% of U.S. liquefaction capacity — was knocked offline by the Jun 8 blast and is expected to only partially restart in mid-December after several missed target dates. Consequently, some of the LNG cargoes due for export are likely to have been diverted to the domestic market despite huge demand abroad.

Final Thoughts

Despite some hiccups in between, the natural gas market is still up almost 90% so far this year. While fundamental indicators continue to suggest strong price levels, the natural gas market 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 fundamentally strong stocks like Cheniere Energy, EQT and Comstock Resources.

Cheniere Energy: It is valued at around $43 billion. LNG reported EPS of $7.80 for the third quarter, reflecting a 42.9% surprise over consensus.

Cheniere Energy has a projected earnings growth rate of 56.5% for the current year. The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) natural gas exporter's fourth-quarter earnings has been revised 69.3% upward over the past 60 days. LNG shares have climbed 62.4% in a year.

You can see the complete list of today's Zacks #1 Rank stocks here.

EQT: EQT is primarily an explorer and producer of natural gas, with primary focus on the Appalachian Basin in Ohio, Pennsylvania and West Virginia. In terms of average daily sales volumes, EQT is the largest natural gas producer in the domestic market.

The company has an expected earnings growth rate of 362% for the current year. The Zacks Consensus Estimate for EQT's 2022 earnings has been revised 13.6% upward over the past 90 days. EQT — valued at around $15.8 billion — has soared 107.8% this year.

Comstock Resources: The company is active in the Haynesville shale in North Louisiana and East Texas — a premier natural gas basin. As of now, CRK has a projected earnings growth rate of 214.7% for the current year.

The Zacks Consensus Estimate for Comstock Resources' 2022 earnings has been revised 9.6% upward over the past 90 days. CRK shares have surged 124.5% so far this year.

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Comstock Resources, Inc. (CRK) : Free Stock Analysis Report

EQT Corporation (EQT) : Free Stock Analysis Report

Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report

Fortinet, Inc. (FTNT) : Free Stock Analysis Report

Light & Wonder, Inc. (LNW) : Free Stock Analysis Report

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