For Immediate Release
Chicago, IL – June 29, 2022 – Zacks Equity Research J.Jill, Inc. JILL as the Bull of the Day and The Estee Lauder Companies Inc. EL asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on BP plc BP , Hess Corp. HES and Shell plc SHEL.
Here is a synopsis of all five stocks:
Bull of the Day:
J.Jill, Inc. is benefiting from the economic reopening as women are returning to "experiences" in 2022. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by double digits this year.
J.Jill is a national women's apparel retailer. It has 249 stores nationwide and sells online through its ecommerce platform.
It's a small cap retailer with a market cap of just $192.3 million.
A Huge Beat in the First Quarter of Fiscal 2022
On June 8, J.Jill reported its first quarter of fiscal 2022 results and blew by the Zacks Consensus by $0.65. Earnings were $1.02 versus the consensus of just $0.37.
It was the third big earnings beat in a row.
Sales were up 21.7% to $157.1 million from $129.1 million a year ago.
Comparable sales jumped 23.7% with direct-to-consumer net sales down 1.8% versus a year ago driven by lower levels of markdown sales. Direct-to-consumer, which is online, represented 46.4% of sales.
Gross margin rose to 69.7% from 68% last year due to strong full price selling and reduced promotions which more than offset the 250 basis points of freight expense due to supply chain disruptions.
Women are returning to their pre-pandemic lives which means attending events and experiences like weddings and parties. Women's apparel has had a strong spring.
Full Year Earnings Estimates Raised
After the strong first quarter, it's not surprising that analysts have raised full year earnings estimates.
The Fiscal 2022 Zacks Consensus Estimate rose to $2.67 from $2.24 since the earnings report. That's earnings growth of 25.4% as J.Jill made just $2.13 last year.
Shares Rally on Strong Q1 Results
The shares have been on a roller coaster this year but they rallied off the big first quarter beat.
Nevertheless, they're still down 7.9% year-to-date but that is outperforming the S&P 500 which is down 20.3%.
Shares are cheap, with a forward P/E of just 7.1.
But shares may be in for a wild ride as retail is an uncertain industry if the economy is slowing or going into a recession. J.Jill does not pay a dividend so there is no reward for being patient.
Nevertheless, given the strong rebound in women's apparel, investors interested in retail stocks might want to keep J.Jill on their short list.
Bear of the Day:
The Estee Lauder Companies Inc. is facing COVID restrictions in one of its biggest markets: China. This Zacks Rank #5 (Strong Sell) cut its full year earnings guidance in May.
The Estee Lauder Companies is one of the world's largest beauty companies whose products are sold in about 150 countries and territories.
It's brands include Estee Lauder, Aramis, Clinique, Lab Series, Origins, Tommy Hilfiger, MAC, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and Bumble, Michael Kors, Darphin Paris, TOM FORD BEAUTY, Smashbox, Ermenegildo Zegna, AERIN, Le Labo, Too Faced, Editions de Parfums Frederic Malle, GLAMGLOW, KILIAN PARIS, Dr. Jart+ and the DECIEM family of brands including The Ordinary and NIOD.
Estee Lauder Beats Again in the Third Quarter
On May 3, Estee Lauder reported its fiscal third quarter results which ended Mar 31, 2022. It beat on earnings again posting $1.90 versus the Zacks Consensus of $1.66.
It has one of the best earnings surprise records on the Street, with 7 beats in a row and just 1 miss in the last 5 years.
Organic net sales rose 9% in the quarter with growth in every product category and reflecting a continued recovery in brick-and-mortar retail stores. The Americas and Europe both saw double-digit growth.
But by mid-March, China was putting on bigger COVID-related restrictions in several cities. Those restrictions reduced consumer traffic and travel. Estee Lauder's distribution facilities in Shanghai operated with limited capacity to fulfill brick-and-mortar and online orders beginning in mid-March 2022.
Estee Lauder Cuts Fiscal 2022 Earnings Outlook
The COVID restrictions continued in China to start the fiscal fourth quarter, so it wasn't a surprise that the company cut its fiscal 2022 earnings outlook when it reported earnings in May.
It now expects earnings of $7.05 to $7.15.
The analysts had to cut their earnings estimates, with 12 analysts cutting in the last 60 days. That has pushed the Zacks Consensus down to $7.15 from $7.53, which is still at the high end of the company's new range.
And it's still earnings growth of 10.9% over fiscal 2021 as Estee Lauder made just $6.45 last year.
Analysts have also cut for next year, with the Fiscal 2023 Zacks Consensus falling to $8.01 from $8.44 in the last 2 months. But that is still earnings growth of 12%.
Shares Sell-Off in 2022
Estee Lauder has been one of the big 5-year winners but in 2022, shares have taken a tumble. They are down 30.5% year-to-date.
And with earnings still expected to see double digit growth, shares have gotten cheaper.
But even with the sell-off, Estee Lauder is still trading with a forward P/E of 37.
It is shareholder friendly with a dividend yielding about 1% and a share buyback program.
Beauty has been one of the big winners on the reopening and Estee Lauder is one of the top companies in the industry. Is the weakness in China from the COVID shutdowns already priced into the shares?
Investors interested in Estee Lauder might want to wait for the next earnings report, in August 2022, for further clarity on the China market before diving in.
3 Energy Firms to Gain from Record Gulf Coast Oil Exports
The Gulf of Mexico accounts for a significant portion of crude oil production in the United States. With the projection that U.S. Gulf Coast crude oil exports could hit a record high mark, the prospects of energy players operating in the region appear bright. Companies that may gain from the development are BP plc, Hess Corp. and Shell plc.
Massive Gulf Coast Oil Export
Export of crude oil from the U.S. Gulf Coast will possibly touch a record of 3.3 million barrels per day (bpd) in the June quarter, per Rystad Energy analyst. This is owing to the massive demand for U.S. oil from Europe as the European Union decided to ban Russian oil import by sea by the end of this year.
The huge crude export is supported by the bold decision of the United States to release 180 million barrels of oil from the Strategic Petroleum Reserve of the country, thereby offsetting the loss of Russian supply. Strong possibilities exist for crude export from the United States to grow further as Washington could enact so-called secondary sanctions with backing from Europe. By secondary sanctions, the United States could target those nations still doing business with Russia.
Which Energy Firms Will Gain?
Upstream players having exploration and production activities in the Gulf Coast will possibly gain. We have selected three key energy players operating in the U.S. Gulf of Mexico. All the companies carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
In the deepwater U.S. Gulf, BP plc is among the leading producers of oil. The major operating hubs where BP is continuing its investment and exploration activities are Atlantis, Mad Dog, Na Kika and Thunder Horse.
In the past 60 days, BP has witnessed upward earnings estimate revisions for 2022.
With the discovery of oil at the Baldpate field more than 25 years ago, Hess Corp. is among the active exploration and production players in the Gulf of Mexico (Offshore United States). In the first quarter of this year, the net production of Hess from the Gulf of Mexico was 30,000 barrels of oil equivalent per day.
For 2022, Hess is likely to witness earnings growth of more than 309%.
In the U.S. Gulf of Mexico, Shell is currently operating nine deep water production hubs. Two recent project startups in the area of Shell are Stones deepwater project and Appomattox, a deepwater oil and gas project.
For 2022, Shell is likely to witness earnings growth of more than 104%.
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