For Immediate Release
Chicago, IL – June 06, 2017 –Zacks Equity Research Radiant Logistics (NYSEMKT: RLGT – Free Report ) as the Bull of the Day, Dean Foods (NYSE: DF – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft (NASDAQ: MSFT – Free Report ), Apple (NASDAQ: AAPL – Free Report ) and Amazon (NASDAQ: AMZN – Free Report ).
Here is a synopsis of all five stocks:
Almost two months to the day I wrote aboutRadiant Logistics (NYSEMKT: RLGT – Free Report ) as the Bull of the Day, since then there was a solid earnings beat and a recent acquisition. Let’s take a look at this stock’s two month performance as it is the Bull of the Day once again.
First Time Around
Back on April 10, RLGT was the Bull of the Day and the stock closed at $5.68 on that day. On June 2, the close was $6.24 – a 9.8% move. The thesis remains the same, a strong stock in a strong sector that has a solid tailwind behind it.
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Description
Radiant Logistics, Inc. operates as a third-party logistics company, providing multi-modal transportation and logistics services.
Earnings
On May 10, the company reported earnings of $0.07 when the Zacks Consensus Estimate was calling for just $0.01. That 6 cent beat translates to a 600% positive earnings surprise. The company also beat on top too, but shares traded down following the report.
Estimates
In the previous Bull of the Day, I highlighted how earnings estimates moved from a loss of a penny to $0.23 for 2017. That number has moved higher to $0.27, and further positive earnings surprises will only send the number higher still.
The 2018 Zacks Consensus Estimate is now at $0.24 while two months ago the number was at $0.20.
Estimates continue to move in the right direction.
Acquisition
On June 1, the company announced that it had acquired the assets of its strategic operating partner Dedicated Logistics Technologies. The privately held company that has historically operated under the Company’s Service By Air brand in Newark and Los Angeles. Terms were not disclosed.
Strong Trends
Recently, I have seen the entire transportation sector heating up. Trucking stocks have done very well, but this was followed by a huge move in the shippers and good earnings from the rail stocks. One of the reasons that I believe the strength will continue for the truckers as well as the logistics stocks is the demand for Class 8 trucks. The chart below shows how demand has strengthened over the last several months.
Dean Foods (NYSE:DF – Free Report ) has missed the Zacks Consensus Estimate in each of the last two-quarters and that has led to lower earnings estimates. The Zacks Rank focuses on earnings estimate revisions, and as those numbers move lower so does the Rank. DF has slipped to a Zacks Rank #5 (Strong Sell) and is the Bear of the Day.
Description
Dean Foods Company is a leading processor and distributor of fresh milk and other dairy products and a leader in the specialty foods industry. The company produces a full line of company-branded and private label dairy products such as milk and milk-based beverages, ice cream, coffee creamers, half and half, whipping cream, whipped toppings, sour cream, cottage cheese, yogurt, dips, dressings and soy milk.
Earnings
As noted above, each of the last two-quarters were misses, with the company reporting earnings below the Zacks Consensus Estimate. The December 2016 quarter saw earnings of $0.38 when $0.41 was expected. The company also missed the top line estimate and as a result, the stock fell 9.4% in the session following the report.
The most recent quarter was reported on 5/9 and was also a miss. The company reported EPS of $0.13 when the Zacks Consensus was 4 cents higher than that. The 23.5% negative earnings surprise came with an impressive beat on the topline of $32M or about 1.4% ahead of the estimate. The stock was up 1.36% in the session following the report.
Estimates
Estimates for DF have been falling. The Zacks Consensus for 2016 stood at $1.63 in January and slipped to $1.44 by April. Following the most recent earnings, the number has tumbled down to $1.36.
Valuation
The valuation looks good right now for DF. The 13.5x forward multiple is well below the 24x industry average. The price to book multiple of 2.8x is also well below the 4.6x industry average. Finally price to sales at 0.2x is well below the 1.5x industry average. This tells me that the stock is trading at a discount, so while estimates are falling the valuation looks pretty good.
Additional content:
Microsoft Shares Hit New Highs: Should You Buy?
Microsoft (NASDAQ:MSFT – Free Report ) shares continued their impressive run on Monday morning, moving more than 1.5% higher and hitting a new 52-week high in the process. The software giant will now try to break into a new range, which could lead some investors to wonder whether now is a great—or risky—time to buy this stock.
After closing at $71.76 per share on Friday, MSFT gained as much as 1.6% in early trading Monday, hitting an intraday peak of $72.89 per share—a new 52-week high.
Microsoft has been one of several tech giants to capture the attention of investors throughout the year. The software pioneer has gained a solid 13% year-to-date, outpacing the S&P 500—but notably behind its on-fire rivals like Apple (NASDAQ: AAPL – Free Report ) and Amazon (NASDAQ: AMZN – Free Report ).
Nevertheless, the stock has ignited over the past several trading days, gaining more than 4% since this time last week. Shares have actually been steadily climbing ever since Microsoft’s latest earnings report in late April, as the company once again reported better-than-expected EPS results.
The catalyst for Microsoft’s recent success—and its primary potential growth driver in the near future—is its rapid cloud growth. In the latest quarter, Microsoft’s Intelligence Cloud revenue increased 11% to $6.8 billion. Breaking that down, the company’s “Server Products and Cloud Services” revenue increased 15%, driven by Azure revenue growth of 93%. Interestingly enough, that growth rate was actually down from the 120% growth in Azure that Microsoft posted in the prior-year quarter.
As we look towards Microsoft’s future, the Azure division will continue to be a major factor for its stock performance. The company has certainly doubled down on Azure, and recent rumors indicate that the company is eyeing smaller cloud companies to buyout—a strategy that is clearly an effort to chip away at Amazon Web Services’ lead in the public cloud space.
It’s also worth noting that Microsoft’s recent purchase of LinkedIn (NYSE:LNKD) provides the company with a plethora of new enterprise data, which could be used to expand into the CRM space and compete with the likes of Salesforce (CRM).
Nevertheless, Microsoft remains a Zacks Rank #3 (Hold). The Zacks Rank is a short-term indicator, so the company’s long-term potential is less of a factor, and we’ve seen some mixed estimate revision activity for the stock recently.
Indeed, Microsoft has seen plenty of positive revisions to its current-quarter, full-year, next-quarter, and next-year earnings, but its Zacks Rank is being held down slightly by a couple of negative revisions in those categories.
Still, there’s plenty of growth opportunity here, especially considering how long Microsoft has been around. Our current consensus estimates would represent sales growth of nearly 18% in both the current and next quarter.
As MSFT looks to break into a new range, investors should focus on whether sentiment surrounding the industry remains positive, as well as any M&A rumors or other noteworthy stock movers. If the company can post another earnings beat on the back of strong cloud growth when it reports again, that should definitely send shares higher. We expect Microsoft to report again on July 20.
Want more stock market analysis from this author? Make sure to follow @ Ryan_McQueeney on Twitter!
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>
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Radiant Logistics, Inc. (RLGT): Free Stock Analysis Report
Dean Foods Company (DF): Free Stock Analysis Report
Microsoft Corporation (NASDAQ:MSFT): Free Stock Analysis Report
Apple Inc. (NASDAQ:AAPL): Free Stock Analysis Report
Amazon.com, Inc. (NASDAQ:AMZN): Free Stock Analysis Report
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