Chicago, IL – November 8, 2024 – Zacks Equity Research shares Target TGT as the Bull of the Day and Hershey’s HSY asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Union Pacific UNP, Ryanair RYAAY and SkyWest SKYW.
Here is a synopsis of all five stocks:
Making significant progress in addressing inventory concerns, Target's stock appears to be at a positive inflection point ahead of its Q3 results on Wednesday, November 20.
Sporting a Zacks Rank #1 (Strong Buy) and landing the Bull of the Day, let's take a look at why investing in Target looks favorable again.
Based on Zacks estimates, Target's Q3 sales are projected to increase 2% to $25.97 billion. On the bottom line, Q3 EPS is expected to rise 8% to $2.28 versus $2.10 per share in the comparative quarter.
Target most recently surpassed Q2 earnings expectations by nearly 19% in August with EPS at $2.57 compared to estimates of $2.16 a share. Notably, Target has surpassed the Zacks EPS Consensus in three of its last four quarterly reports posting an average earnings surprise of 20.26%.
Target has been at the forefront of addressing shrink concerns as theft and damaged goods have affected many retailers in recent years. To that point, Walmart WMT, TJX Companies TJX, and Dollar General DG are some of the other notable names that have dealt with the dismal effects of shrink.
As reported by Yahoo Finance, Target has been a leader in increasing security measures by installing locking cases for items prone to theft while investing in additional security members and third-party training services.
Target also plans to partner with the US Department of Homeland Security to develop cyber defense technology in a bid to curb organized retail crime. These efforts have largely attributed to Target's increased probability considering shrink reduced its profit by an astonishing $1.2 billion in the last two years.
Boosting investor sentiment by addressing its shrink issues, Target's stock is up a modest +6% year to date but has now soared +37% over the last year. Edging the benchmark S&P 500's one-year performance, Target has trailed Walmart's +53% but has topped TJX's +28% and Dollar General's plummet of -34%.
Most intriguing, is that TGT trades at 15.4X forward earnings which is a pleasant discount to the S&P 500's 25.1X and Walmart's 34.2X.
Magnifying this perceived discount is that Target's annual earnings are forecasted to increase 7% in its current fiscal 2025 and are projected to climb another 11% in FY26 to $10.56 per share.
It's also noteworthy that TGT trades at just 0.6X sales with its top line expected to be virtually flat in FY25 but slated to increase 3% in FY26 to $110.27 billion.
Correlating with Target's strong buy rating is that earnings estimate revisions have remained higher for FY25 and FY26. The Average Zacks Price target of $177.28 a share suggests 20% upside in TGT with Target checking an overall "A" VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.
Reporting lackluster third quarter results on Thursday, there could be more downside risk ahead for Hershey’s stock.
To that point, the iconic chocolate manufacturer had already seen a decline in its earnings estimate revisions with HSY landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Attributed to what it called a challenging consumer environment, Hershey’s Q3 sales of $2.98 billion dipped 1% from the comparative period and missed estimates of $3.07 billion by 3%.
Lower sales volumes curtailed Hershey’s profit with Q3 EPS of $2.34 dipping 10% from a year ago and missing expectations of $2.50 per share by 6%.
Furthermore, Hershey previously missed Q2 earnings and sales estimates in August with surprises of -12% and -10% respectively.
Causing more concern was Hershey’s acknowledgment that historically high cocoa prices are weighing on its operating efficiency as well. As the prime ingredient in producing chocolate, cocoa prices are still toward the high end of its 50-year range at over $7,000 per ton.
Leading to the strong sell rating for Hershey’s stock, EPS estimates for fiscal 2024 and FY25 have continued to decline over the last 90 days. Unfortunately, the trend of declining earnings estimate revisions will likely continue as Hershey’s full-year FY24 EPS guidance of $9.00-$9.10 came in below the current Zacks Consensus of $9.39 per share.
For now, it could be best to avoid Hershey’s stock as weaker snacking demand and high cocoa prices are starting to weigh on North America’s largest chocolate producer.
Hershey’s stock is now down -7% year to date and has dropped -25% in the last three years. Correlating with such, it’s noteworthy that Hershey’s Zacks Food-Confectionary Industry is currently in the bottom 5% of over 250 Zacks industries.
Union Pacific's robust cost-cutting initiatives are boosting the company's operations, backed by improved technology and automation. The shareholder-friendly approach bodes well for the company. However, softness in demand and reduced coal volumes are adversely impacting UNP's prospects.
Core pricing gains, enhanced operational efficiency and the sale of intermodal equipment are boosting Union Pacific's financial performance.
Union Pacific's efforts to expand are praiseworthy. In October, the company announced a four-year partnership with US Speedskating, highlighting UNP's support for athletic achievement and workforce development.
The company's focus on technology and automation across its transportation, mechanical and engineering teams has boosted locomotive productivity in the September-end quarter of 2024 by 5%. These innovations enhance operational efficiency and improve safety. Overall, Union Pacific excels in performance, efficiency and safety, driving sustainable growth.
Moreover, Union Pacific's bottom line is benefiting from its robust cost-cutting initiatives, boosting the company's operational efficiency. In the third quarter of 2024, UNP's operating expenses fell by 2% year over year. This fall was driven by reduced fuel costs and other expenses.
UNP's safety focus is driving year-to-date improvements in derailments and injuries, positioning the company to become the safest railroad. In the third quarter of 2024, freight car velocity rose 5% year over year to 210 miles per day, with recent performance nearing 220 miles per day. The company also improved the Intermodal and Manifest Service Performance Index by 1 and 5 points, managing a 33% surge in international shipments while minimizing disruptions. UNP is delivering strong safety and operational results.
Union Pacific's commitment to rewarding its shareholders through dividends and share repurchases is commendable. The company's shareholders have received $3.2 billion through dividends and share repurchases year to date, including third-quarter repurchases of $738 million.
Shares of Union Pacific have rallied 17.5% in the past year compared with its industry's growth of 10.5% in the same period.
Union Pacific experienced an 18% fall in other revenues in the third quarter of 2024, down by $73 million, driven by several factors, including lower accessorial revenues from intermodal equipment sales, reduced demand for auto parts shipments at the company's subsidiary, the ongoing transfer of metro operations and a one-time $12 million contract settlement.
Moreover, Coal volumes remain a challenge for UNP due to reduced demand, high inventories and competition from low natural gas prices. Automotive volumes dropped from unplanned production adjustments despite some new business wins.
United Pacific currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors' consideration in the Zacks Transportation sector include Ryanair and SkyWest.
Ryanair currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. RYAAY has an expected earnings growth rate of 9.2% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average miss of 31.05%. Shares of RYAAY have risen 12.3% in the past year.
SKYW sports a Zacks Rank #1 at present and has an expected earnings growth rate of 2.6% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 79.1%. Shares of SKYW have surged 156.5% in the past year.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Target Corporation (TGT) : Free Stock Analysis Report
Union Pacific Corporation (UNP) : Free Stock Analysis Report
Hershey Company (The) (HSY) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
免责声明：投资有风险，本文并非投资建议，以上内容不应被视为任何金融产品的购买或出售要约、建议或邀请，作者或其他用户的任何相关讨论、评论或帖子也不应被视为此类内容。本文仅供一般参考，不考虑您的个人投资目标、财务状况或需求。TTM对信息的准确性和完整性不承担任何责任或保证，投资者应自行研究并在投资前寻求专业建议。