Yahoo Finance Interactive Brokers and Hertz Global have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 22, 2024 – Zacks Equity Research shares Interactive Brokers IBKR as the Bull of the Day and Hertz Global HTZ as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American Airlines AAL, Union Pacific Corp. UNP and Westinghouse Air Brake Technologies WAB.
Here is a synopsis of all five stocks:
Bull of the Day:
Interactive Brokers is a leading online brokerage firm with an advanced trading platform and global reach. The firm offers trading in a wide range of investment products, including stocks, options, futures, currencies, and bonds. The platform caters to both individual investors and institutions.
Because of its low-cost trading, advanced trading tools, and access to markets around the world, Interactive Brokers is the preferred choice for active traders and investors, making it a premium brand in the industry.
Interactive Brokers has grown its top line at a compound annual growth rate of 17.9% annually over the last five years and currently boasts a Zacks Rank #1 (Strong Buy) rating.
Additionally, while rising interest rates have become an issue for many companies, high rates have been a boon to Interactive Brokers' business. Because interest income is a major driver of revenue, the company welcomes the higher rates.
IBKR has been a market beating stock compounding at 16.7% annually over the last decade demonstrating its value generating abilities.
Analysts Raise Estimates
Reflecting its top Zacks Rank, analysts have unanimously raised earnings estimates across the timeframes.
Current quarter earnings estimates have been revised higher by 6.8% over the last two months and are projected to grow 19.7% YoY to $1.58 per share. FY24 earnings estimates have increased by 6.4% and are forecast to climb 12.4% YoY to $6.46 per share.
Over the next 3-5 years EPS are expected to grow at an annual rate of 15.2% annually.
Technical Breakout
IBKR stock has been forming a bullish technical pattern over the last two weeks. What is also notable is that on Thursday, equity markets were very heavy and trading lower, but Interactive Brokers showed considerable strength.
After trading above the $110 level, it signaled a technical breakout, and if it can hold above the level, should draw in buyers and continue to rally.
Historical Discount
Another welcome development is Interactive Brokers' valuation. As of today, IBKR is trading at a one year forward earnings multiple of 17.5x, which is below the market average and below its 10-year median of 22.4x.
Bottom Line
Interactive Brokers is a high-quality business, trading at a historical discount, with numerous bullish catalysts. For investors looking to add a quality compounder stock to their portfolios with a top Zacks Rank, IBKR is a very worthy consideration.
Bear of the Day:
Hertz Global is a vehicle rental company that operates rental brands throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia, and New Zealand. The brands include Hertz, Dollar, and Thrifty.
Hertz Global has struggled in recent years as annual sales have not managed to break above the pre-covid levels. Annual sales in 2019 were $9.8 billion and in 2023 were $9.4 billion.
Earnings have fallen rather precipitously over that time and so has the stock price, reflecting investors' distaste for the business.
Hertz Global has a Zacks Rank #5 (Strong Sell) rating, making it a stock that investors should avoid for now.
Falling Earnings Estimates
Analysts have unanimously lowered earnings estimates for Hertz Global across future timeframes.
Current quarter earnings estimates have been lowered by 24.2% over the last two months and are expected to fall -205% YoY to -$0.41. FY24 earnings estimates have been revised lower by -27.5% and are projected to decline -45.3% YoY to $0.29 per share.
Sales this year and next year are forecast to grow just 2.5% and 4.5% respectively.
Premium Valuation
What makes Hertz Global stock especially unappealing is that even with flat sales growth and falling earnings, it still has a high valuation.
Today, it is trading at a one year forward earnings multiple of 20.4x, which is well above its 10-year median of 6.4x.
Bottom Line
Hertz Global is clearly going through some growing pains. The car rental space is very competitive, with web-based options emerging most recently, further obfuscating Hertz's path forward. The company also holds a huge amount of debt and doesn't appear to have a plan to remedy weak growth forecasts.
Because of these bearish developments, I believe investors should avoid Hertz Global stock, and seek opportunities elsewhere in the market.
Additional content:
Is a Beat in Store for American Airlines (AAL) in Q1?
American Airlines is scheduled to report first-quarter 2024 results on Apr 25 before the market open.
American Airlines has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 119%. The Zacks Consensus Estimate for AAL's first-quarter 2024 earnings has been revised downward to 21.74% in the past 60 days.
Given this backdrop, let's see how things have shaped up for AAL this earnings season.
We expect upbeat air travel demand, particularly on the domestic front, to have boosted American Airlines' top-line performance in the to-be-reported quarter. Passenger revenues, which account for the bulk of the top line, are likely to have been high, strengthening total revenues. Per our model, passenger revenues in the first quarter of 2024 are likely to have increased 2.5% from the first-quarter 2023 actuals.
AAL's management expects the fuel cost per gallon of $2.8-$2.9 for the first quarter of 2024 (the earlier projection was at $2.65-$2.85). AAL projects the March-end quarter's loss per share (excluding net special items) to be in the lower end of the 15-35 cent range mentioned previously.
First-quarter available seat miles are expected to increase 6.5-8.5%. Total revenue per available seat mile is expected to increase 3.5-5.5% in the first quarter of 2024 from the first-quarter 2023 actuals.
What Our Model Says
Our proven model predicts an earnings beat for American Airlines this time. 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, which is the case here.
American Airlines has an Earnings ESP of +6.51% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Highlights of Q4
American Airlines' fourth-quarter 2023 earnings of 29 cents per share (excluding 26 cents from non-recurring items) beat the Zacks Consensus Estimate of 6 cents. In the year-ago quarter, AAL reported earnings of $1.17 per share. Operating revenues of $13.06 billion decreased 1% year over year. The top line missed the Zacks Consensus Estimate of $13.02 billion.
Other Stocks to Consider
Here are a few other stocks from the broader Zacks Transportation sector that investors might want to consider as our model shows that these also have the right combination of elements to beat on their first-quarter 2024 earnings.
Union Pacific Corp. has an Earnings ESP of +0.61% and a Zacks Rank #3. UNP is scheduled to report first-quarter 2024 results on Apr 25 before market open. You can see the complete list of today's Zacks #1 Rank stocks here.
UNP has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters and missing once, the average beat being 1.41%.
Westinghouse Air Brake Technologies has an Earnings ESP of +4.98% and a Zacks Rank #3. WAB is scheduled to report first-quarter 2024 earnings on Apr 24.
WAB has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 6.63%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Hertz Global Holdings, Inc. (HTZ) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
