For Immediate Release
Chicago, IL – April 12, 2024 – Zacks Equity Research shares Comfort Systems USA FIX as the Bull of the Day and Boeing BA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cardinal Health CAH, Baxter International BAX and Fresenius Medical Care FMS.
Here is a synopsis of all five stocks:
Bull of the Day:
Comfort Systems USA, a current Zacks Rank #1 (Strong Buy), offers comprehensive heating, ventilation, and air conditioning installation, maintenance, repair, and replacement services. Drilling a bit deeper, the company’s offerings also include chillers, cooling towers, and other critical components in data centers.
The stock boasts a Zacks Rank #1 (Strong Buy), with the revisions trend for its current fiscal year considerably bullish, up 40% over the last year and suggesting 30% year-over-year growth.
In addition to favorable earnings estimate revisions, the stock resides in the Zacks Building Products – Air Conditioner & Heating industry, currently ranked in the top 5% of all Zacks industries. Let’s take a closer look at how the company currently stacks up.
Comfort Systems USA
Robust quarterly results have regularly fueled shares over the last year, gaining 140% and widely outperforming the S&P 500. Regarding its latest release, FIX posted an 18% beat relative to the Zacks Consensus EPS estimate and continued its streak of recent beats.
And Comfort Systems remains optimistic about its growth trajectory, underpinned by 27% year-over-year backlog growth in FY23. Current consensus expectations allude to 30% earnings growth in FY24 and an additional 13% in FY25, with the stock carrying a Style Score of ‘A’ for Growth.
Investors can also reap a passive income stream from FIX shares, currently yielding a modest 0.3% annually. While the current yield is a tad underwhelming, the company’s 22% five-year annualized dividend growth rate helps bridge the gap in a big way.
Concerning the valuation picture, shares presently trade at a 25.7X forward 12-month earnings multiple, above the five-year median by a fair margin but reflective of investors’ positive growth expectations. The stock carries a Style Score of ‘C’ for Value.
Keep an eye out for the company’s upcoming release expected on April 24th, as consensus expectations suggest 50% earnings growth.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Comfort Systems USA would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
Boeing has been the premier manufacturer of commercial jetliners for decades. The company’s premier jet aircraft, along with varied defense products, positions it as one of the largest defense contractors in the United States.
Analysts have taken their earnings expectations lower across the board, landing the stock into a Zacks Rank #5 (Strong Sell).
Let’s take a closer look at how the company currently stacks up.
Boeing
Shares have faced turbulence year-to-date, down 33% and representing one of the worst-performing S&P 500 stocks in 2024. Operational issues have become a significant thorn in the company’s side, souring investors’ opinions overall.
Analysts have fully noted the issues, reflected in their negative revisions. The safety issues are undoubtedly expected to impact the company significantly, and the FAA has stated it won’t allow Boeing to ramp up production for any of its Max family of aircraft.
Mike Whitaker, FAA Administrator, said, “This won’t be back to business as usual for Boeing. We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered during this process are resolved.”
We’ll undoubtedly hear more about the situation during the company’s next quarterly release, expected on April 24th. Revenue revisions for the quarter-to-be-reported have similarly been slashed, with the $18.9 billion Zacks Consensus Sales estimate down 8.2% since mid-January.
Bottom Line
Analysts’ negative earnings estimate revisions, resulting from operational issues, paint a challenging picture for the company’s shares in the near term.
Boeing is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). These stocks sport a notably stronger earnings outlook and the potential to deliver explosive gains in the near term.
Additional content:
3 Medical Device Stocks with Solid Dividend Yields
The Zacks Medical sector is facing headwinds in the form of inflation, higher interest rates, supply-chain disruptions and high operating costs. These factors are likely to put pressure on the industry players’ margin.
Amid these ongoing headwinds, the sector has gained 2.5% until Apr 9, underperforming the S&P 500 Index’s 9.4% gain.
Meanwhile, amid the rising risk of a downtrend in the market, it would be a wise decision to invest in some dividend-paying companies like Cardinal Health, Baxter International and Fresenius Medical Care from the medical device industries to create a steady income source. These companies have consistently announced dividend hikes, thereby highlighting their pro-shareholder stance.
Stocks with a strong history of dividend growth are mature and less susceptible to large swings in the market. They act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, the stocks also offer downside protection with a consistent rise in payouts.
Additionally, these companies have superior fundamentals like a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics.
3 Medical Products Stocks to Embrace Now
In order to choose some of the best dividend stocks from the industry, we have run the Zacks Stock Screenerto identify those with a dividend yield in excess of 1.5% and a sustainable dividend payout ratio of less than 50%.
Cardinal Health: Headquartered in Dublin, OH, Cardinal Health is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. The company pays out a quarterly dividend of 50 cents ($2.00 annualized) per share, which gives it a 1.85% yield at the current stock price. This company’s payout ratio is 29%, with a five-year dividend growth rate of 0.96%. (Check Cardinal’s dividend history here.)
The company is also active on the buyback front. During the six months ended Dec 31, 2023, it deployed $750 million for share repurchases and $255 million for cash dividends. As of December-end, it had $3.5 billion available under the share repurchase program, previously authorized by the board of directors.
Baxter International: Headquartered in Deerfield, IL, Baxter engages in the development, manufacture and sale of a broad range of products, digital health solutions and therapies used by hospitals and other care-giving organizations, including at-home physicians.
Baxter pays annualized dividends of $1.16 per share, resulting in a 2.71% yield at the current stock price. This company’s payout ratio is 43%, with a five-year dividend growth rate of 7.2%. (Check Baxter’s dividend history here.)
The company also has buyback plans. Although it did not repurchase shares during the fourth quarter of 2023, it had $1.3 billion under its share repurchase authorization as of December 2023. BAX had repurchased 500,000 shares in 2022.
Fresenius Medical Care: Headquartered in Germany, Fresenius Medical is one of the largest integrated providers of products and services for individuals undergoing dialysis following chronic kidney failure. FMS pays out an annual dividend of 42 cents per share, which gives it a 2.16% yield at the current stock price. This company’s payout ratio is 30%. (Check Fresenius Medical’s dividend history here.)
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The Boeing Company (BA) : Free Stock Analysis Report
Baxter International Inc. (BAX) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Fresenius Medical Care AG & Co. KGaA (FMS) : Free Stock Analysis Report
Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report
