For Immediate Release
Chicago, IL – August 4, 2022 – Zacks Equity Research shares Camping World Holding CWH as the Bull of the Day and Intel INTC as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Shaols Technologies SHLS, Gevo GEVO and Enovix Corporation ENVX.
Here is a synopsis of all five stocks:
Bull of the Day:
Camping World Holding is a Zacks Rank #1 (Strong Buy) that is a provider of services, protection plans, products and resources for recreational vehicle enthusiasts.
The stock was hot during the pandemic, as people yearned to get outdoors. One way of doing that was camping, which brought people into Camping Worlds all over the country.
The stock topped out in early 2021, coming up just shy of $50 a share. Since then, the stock has lost over 50% of its value, falling to a 2020 low below the $21 level.
But after a solid earnings report, investors are jumping back into the stock. CWH has now moved almost 50% off its June lows, so the question is how much is left in the tank for this stock.
More about Camping World
The company was founded in 1966 and is headquartered in Lincolnshire, Illinois. The company employs over 12,000 people and has a market cap of $1.3 billion. The stock pays a healthy dividend of over 9%.
he company’s brands consist of Camping World and Good Sam. It offers new and used RVs for sale, vehicle service and maintenance through retail locations and membership clubs.
The stock has a Zacks Style Score of “B” in Value and Momentum, but “F” in Growth. The growth issue has been a problem for investors, but after the recent big earnings beat, that could be changing.
Q2 Earnings Beat
On August 2nd, Camping World reported earnings, seeing a 15% EPS beat. Q2 came in at $2.16 v the $1.87 expected. Revenue was higher, coming in at $2.17B v the $2.03 expected. EBITDA margin came in at 12.8% v last year’s 16.2%, while same store revenue was up 0.1% year over year.
Management had the following comments on the call:
“We are pleased with the sale of almost 39,000 new and used RVs which contributed to record revenues for the second quarter. We believe our team has both the focus and experience to navigate our business through changes in market conditions as evidenced by our solid financial results.”
The quarter, with its record revenues, impressed investors who bought the stock higher by over 15%.
Estimates To Rise
Because earnings just came out, the Zacks Consensus estimate has yet to reflect what analysts are doing after EPS. These numbers are something to keep any eye on to see if analysts agree with investors on this bullish sentiment.
There are some analysts already out with commentary. Raymond James commented that robust average selling prices are offsetting volume declines and margin pressures.
Additionally, inventory is stabilizing and because margins were not as bad as feared, the company should benefit substantially when the environment normalizes.
Truist was also impressed with the beat, saying that the numbers imply a market share gain during the quarter.
Investors should expect more positive commentary from analysts and look for those estimates to trend higher.
The Technical Take
The stock was struggling all year until June, when it finally traded above the 50-day MA. Form there, it chopped around until earnings.
The big pop in shares after earnings took the stock right to the 200-day moving average just under $32. Investors can expect some selling at these levels and then look to buy any pullbacks.
Some levels of interest for investors eyeballing a pullback:
The $28 level is the pre-earnings gap higher.
$25.50 is the is the 21-day Moving average, while $25.00 is the 50-day moving average.
It has been a rough ride for those investors that were camped out in Camping World. After a year of pain seeing the stock bleed lower, there is now some hope as the stock showed the company is fighting off the current inflationary atmosphere.
Investors should eyeball pullbacks in the stock and look for opportunities as the stock starts a fresh bullish trend higher.
Bear of the Day:
Intel is a Zacks Rank #5 (Strong Sell) that engages in the design, manufacture, and sale of computer products and technologies worldwide.
The stock has come under hard times as loss of market share and an earnings miss has brought INTC to five-year lows. Now investors are struggling with the idea if lower prices as the Intel’s peers see relief.
About the Company
Intel is headquartered in Santa Clara, CA. The company was founded in 1968 and employs over 120,000.
Intel offers platform products, such as central processing units and chipsets, and system-on-chip and multichip packages; and non-platform or adjacent products, including accelerators, boards and systems, connectivity products, graphics, and memory and storage products.
INTC is valued at $148 billion and has a Forward PE of 15. The company holds a Zacks Style Score of “C” in Value, but “F” in Growth. The stock pays out a dividend of 4%.
The company reported EPS in late July, seeing a miss of 58%. This was the first miss since 2014, so investors were not happy with the quarter and sold the stock to new 2022 lows.
Looking at the quarter, Q2 came in at $29 cents v the $0.69 cents expected. Revenues were a big miss, with Intel reporting $15.3B vs the 17.9B expected.
To make matters worse, the company slashed their outlook.
The Q3 guide came in at $0.35 v the $0.90 expected. Revenues are seen at $15.16B v the $18.9B previous.
Intel also cut their FY22 outlook to $2.30 v the previous $3.46. With that, the company cut Capex.
Margins were an issue, coming in at 44.8% v the 59.8% last year. The Client Computing group was down 25% y/y, while Data Center Group was off 16%.
Intel management said “The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues”.
With the big miss on earnings and the big cut in the outlook, estimates for Intel are dropping rather quickly.
Over the last seven days, we have seen numbers go down across the board. For the current quarter, estimates have fallen from $0.90 to $0.40, or 55%. For the current year, they have fallen from $3.43 to $2.36, or 31%.
This drastic drop in earnings estimates is forcing analysts to drop price targets as well. After earnings, Wedbush dropped their targets from $44 to $35. Morgan Stanley also cut had a similar cut, dropping from $46 to $36
Looking at the chart, there isn’t much to like. The stock is now trading at the 2017 spot where it sat before it broke out. There is a good chance that the stock is dead money until there is a proven turn around in the fundamentals.
The $35 area could hold up if the market can rally. But if we get some more weakness, look out for the support levels at $30.50, $28 and even $20.
There are other tech and semiconductor names that are performing well as the market starts to rally off 2022 lows. After the current earnings report, investors should shift their focus elsewhere.
3 Clean Energy Stocks Set to Beat Q2 Earnings Estimates
A handful of clean energy stocks, particularly solar and alternative energy companies, which are part of the broader Oil-Energy sector, are yet to release their Q2 numbers. Notably, the results of these companies are expected to reflect solid installation activities, driven by the economic recovery in recent times that has been boosting demand.
Amid this backdrop, we expect clean energy stocks like Shaols Technologies, Gevo and Enovix Corporation to report favorable Q2 results.
What to Expect from Clean Energy Stocks’ Q2 Results?
Factors like rapidly increasing corporate investments in renewables, favorable government policies such as extended federal Investment Tax Credit (ITC) for offshore wind energy, the extension of production tax credit along with the declining price of raw materials like wind turbines and solar modules are likely to have contributed to clean energy stocks’ quarterly performance.
Moreover, thanks to the economic recovery observed over the past few quarters, there has been an upward trend in installation activities for clean energy stocks, a trend expected to have driven demand in the second quarter of 2022 as well.
Evidently, shipments of solar batteries as well as microinverters of Enphase Energy (ENPH) , a prominent solar stock, observed a solid year-over-year surge in the United States during the second quarter. Such solid shipments boosted the Enphase’s Q2 revenues significantly, a trend expected to be reflected in the results of other clean energy stocks as well.
On the other hand, as stated by the American Clean Power Association (ACPA), wind is currently the largest source of renewable electricity generation in the United States, providing almost 9.8% of the country’s electricity. So, no doubt clean energy stocks focused on wind energy must have also performed well in Q2.
Also, growing interest in hydrogen as an alternative transportation fuel owing to its ability to power fuel cells in zero-emission vehicles has been driving revenues and earnings of clean energy stocks. Hence, both the earnings and revenue Q2 projections for the broader market indicate a decent improvement from the second-quarter 2021 scorecard.
However, higher logistics costs and component costs as a result of global supply chain pricing pressure may have continued to partially impact the overall performance of the clean energy companies.
Per the latest Earnings Preview, second-quarter earnings of the Oil-Energy sector are expected to improve a solid 231.7% on 47.3% sales surge.
Given the high degree of diversity in the clean energy space, finding the right stocks with the potential to beat estimates might be quite a daunting task.
However, our proprietary Zacks methodology makes this fairly simple.
We are focusing on stocks that have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with this combination, the chances of an earnings surprise are as high as 70%.
Earnings ESP provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Here we present three stocks that are expected to beat earnings estimates in this reporting cycle.
Shaols Technologies: It manufactures a diverse portfolio of solar balance-of-systems products, including combiner/re-combiner boxes, disconnect boxes, custom harnessing solutions, junction boxes, wire, in-line fuses and racking and monitoring solutions. During the second quarter, Shaols increased the size of its existing revolving credit facility by $50 million to $150 million, which in turn reflects its solid financial position.
The company, with an Earnings ESP of +4.26% and a Zacks Rank #3, is slated to release earnings on Aug 15. The Zacks Consensus Estimate for SHLS’ Q2 sales implies an improvement of 23.4% from the prior year quarter figure.
Gevo: It is a renewable chemicals and advanced biofuels company engaged in the development of biobased alternatives to petroleum-based products using a combination of synthetic biology and chemistry. During the second quarter, Gevo announced that its renewable natural gas project in Northwest Iowa has been producing biogas and upgrading and injecting RNG into the natural gas pipeline. This is likely to have boosted its Q2 revenues.
The company, with an Earnings ESP of +25.00% and a Zacks Rank #2 is slated to release earnings on Aug 8. The Zacks Consensus Estimate for GEVO’s Q2 sales suggests an improvement of 44.1% from the prior-year quarter figure. The consensus estimate for the bottom line also indicates an increase.
Enovix: It is involved in the design and manufacture of 3D Silicon Lithium-ion batteries. During the second quarter, Enovix announced that it had started shipping its first commercial battery cells for revenues, which in turn is expected to have boosted its Q2 performance.
The company, with an Earnings ESP of +6.67% and a Zacks Rank #3, is slated to release earnings on Aug 10. The Zacks Consensus Estimate for ENVX’s Q2 bottom line indicates a solid improvement when compared with the prior-year quarter figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Intel Corporation (INTC) : Free Stock Analysis Report
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Enovix Corporation (ENVX) : Free Stock Analysis Report
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