Diamond Resorts, Athlon Energy, iShares U.S. Aerospace & Defense ETF, PowerShares Aerospace & Defense Portfolio and SPDR S&P Aerospace & Defense ETF highlighted as Zacks Bull and Bear of the Day
CHICAGO, Nov. 3, 2014 /PRNewswire/ -- Zacks Equity Research highlights Diamond Resorts (NYSE:DRII-Free Report) as the Bull of the Day and Athlon Energy (NYSE:ATHL-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis oniShares U.S. Aerospace & Defense ETF (AMEX:ITA-Free Report), PowerShares Aerospace & Defense Portfolio (AMEX:PPA-Free Report) and SPDR S&P Aerospace & Defense ETF (AMEX:XAR-Free Report) .
Here is a synopsis of all five stocks:
Diamond Resorts (NYSE:DRII-Free Report) recently posted a solid earnings report and recent estimate increases have led the stock to become a Zacks Rank #1 (Strong Buy). Today it is the Bull of the Day.
DRII posted a nice beat last week, with sales coming in at $220M and earnings coming in at, well what were earnings? The release has a lot of information about the company, but if you are looking for an earnings per share number, you are not going to find it.
If I go with 75.66M shares outstanding, a number that I found on a financial information website, then the EPS numbers works out to be $0.35. I took the net income number from page 11 of the most recent release.
The Zacks Consensus Estimate of $0.37 per share was not adjusted at the time of publication of this article, so I cannot say if it was a beat or not.
Diamond Resorts is in the hospitality and vacation ownership industry. The company operates in two segments, Hospitality & Management Services, and Vacation Interest Sales & Financing. The company has 92 managed resorts, 210 affiliated properties, and 4 cruise itineraries. It also offers vacation ownership program. The company was incorporated in 2013 and is headquartered in Las Vegas, Nevada.
With 2014 almost in the books, most investors have begun looking mostly at the estimates for 2015. That said the 2014 Zacks Consensus Estimate for DRII recently kicked higher by a penny to $0.89. A penny isn't that much, but this isn't why this stock is a Zacks Rank #1 (Strong Buy).
The 2015 Zacks Consensus Estimate recently jumped, and maybe more than jumped it launched higher. As of September the number stood at $1.70, but following the recent earnings release and increase of guidance, the new number is $1.95. That $0.25 increase is huge, and the it is the main reason this stock is now a #1.
Athlon Energy (NYSE:ATHL-Free Report) is a Zacks Rank #5 (Strong Sell), and it is the Bear of the Day. But why is that, exactly? Well, I saw this stock as a #5 and thought this would be a great chance to explain which stocks become the Bear instead of the Bull of the Day.
Athlon Energy is an energy company that focuses on oil and liquids-rich natural gas reserves in the Permian Basin. The company holds approximately 23,500 net acres in Martin, Upton, Andrews, and Glasscock counties. As of December 31, 2013, it had 127 million barrels of oil equivalent of proved reserves; and proved undeveloped reserves comprising 659 gross potential vertical drilling locations.
A quick look at the chart will tell you this stock is pinned at roughly $58 for the last month or so. That is because they agreed to an all cash buyout of $58.50 on September 29, so there is very little room for an arbitrage out there which keeps the stock close the the offer amount.
But why would we rank it as a Sell?
The Zacks Rank is based on the revisions of earnings estimates. The stock price has nothing to do with the Zacks Rank. When estimates fall, the Zacks Rank will usually fall as well.
Following the announcement of the sale of the company, analysts cut their recommendations (but that doesn't impact the Zacks Rank) and they cut their estimates. It wasn't a huge move lower, but it is very likely that all the analysts moved numbers lower as estimates took a back seat to the deal.
A move from $1.54 to $1.43 for the Zacks Consensus Estimate for 2014 was accompanied by a similar, but large move for 2015 estimates. And that is most of the reason the stock moved from a prenial Zacks Rank #1 (Strong Buy) or #2 (Buy) down to a #5 (Strong Sell).
Additional content:
Top Aerospace and Defense ETFs to Play This Sector
Though the sector has been a laggard this year due to concerns over lofty valuations, defense budget cuts and on cost overrun related to delayed deliveries, it still has its solid fundamentals intact.
Most of the companies in the space have seen a surge in share prices post the solid Q3 earnings and improved outlook (read: Strong Industrial Stock Earnings Put These ETFs in Focus).
For investors who want to play the broad sector in order to capture the impressive trend, there are a few aerospace and defense ETFs available. Below, we have highlighted some of the key points regarding these funds for investors seeking to make a basket play on the space:
Shares U.S. Aerospace & Defense ETF (AMEX:ITA-Free Report)
With an asset base of $348.2 million, ITA is the largest player in this space. The fund trades in moderate volumes of roughly 50,000 shares a day and charges an annual fee of 43 basis points per year.
The fund holds 38 securities in its basket with United Technologies being the top stock with 8.5% allocation. BA, LMT, GD and NOC combined make up more than one-fourth of the fund. Aerospace takes about 52% of the asset base while defense accounts for the rest. The fund has a decent dividend yield of 1.33% and is a Zacks ETF Rank #2 (Buy) fund (see all Industrials ETFs here).
PowerShares Aerospace & Defense Portfolio (AMEX:PPA-Free Report)
PPA tracks companies involved in the development, manufacturing, operations and support of U.S. defense, homeland security and aerospace operations. The product has managed to garner $152.5 million in assets so far, which are currently invested in 52 securities.
Lockheed, Boeing, United Technologies, General Dynamic and Northrop are among the top 10 holdings and together occupy 30% of total fund assets. It charges 66 basis points in expenses and currently has a Zacks ETF Rank #2.
SPDR S&P Aerospace & Defense ETF (AMEX:XAR-Free Report)
XAR tracks the S&P Aerospace and Defense Select Industry index, holding a basket of three dozen stocks. This product has attracted an AUM of $60 million and charges 35 basis points in expenses.
General Dynamics, Lockheed Martin and Northrop Grumman score among the top 10 holdings. The fund has a dividend yield of 1.20% and has a Zacks ETF Rank #2.
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