Hawaiian Holdings, Chemtura, Lennar, Ryland Group, KB Home, DR Horton and PulteGroup highlighted as Zacks Bull and Bear of the Day
CHICAGO, Nov. 20, 2014 /PRNewswire/ -- Zacks Equity Research highlights Hawaiian Holdings (Nasdaq:HA-Free Report) as the Bull of the Day and Chemtura Corporation (NYSE:CHMT-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onLennar Corp. (NYSE:LEN-Free Report), Ryland Group, Inc. (NYSE:RYL-Free Report), KB Home (NYSE:KBH-Free Report), DR Horton, Inc. (NYSE:DHI-Free Report) and PulteGroup Inc. (NYSE:PHM-Free Report).
Here is a synopsis of all seven stocks:
Hawaiian Holdings (Nasdaq:HA-Free Report) recently delivered its 4th consecutive positive earnings surprise, prompting analysts to revise their estimates higher for both 2014 and 2015. This sent the stock to a Zacks Rank #1 (Strong Buy).
Like many airlines this year, shares of Hawaiian Holdings have soared this year. But given favorable industry tailwinds, strong growth projections, solid earnings momentum and reasonable valuation, the stock can continue flying even higher.
Hawaiian Holdings is the parent of Hawaiian Airlines, which offers non-stop service to Hawaii from 11 U.S. gateway cities, along with service from Japan, South Korea, China, Australia, New Zealand, American Samoa and Tahiti. Hawaiian also provides approximately 160 jet flights daily between the Hawaiian Islands.
Hawaiian Holdings posted better-than-expected Q3 results on October 21. Adjusted earnings per share came in at $0.79, beating the Zacks Consensus Estimate by 5 cents. It was a 14% increase over the same quarter last year.
Earnings estimates have fallen sharply for Chemtura Corporation (NYSE:CHMT-Free Report) after the company delivered disappointing third quarter results on October 28. This drove the stock to a Zacks Rank #5 (Strong Sell).
Although shares of Chemtura have taken it on the chin so far this year, it still does not look like a value with a forward P/E of 20x and an EV/EBITDA multiple of 11.
Chemtura Corporation manufactures and markets specialty chemicals that serve various industries, including transportation, building & construction, and energy & electronics. The majority of its chemical products are sold to industrial manufacturers for use as additives, ingredients or intermediates that add value to their end products.
Chemtura reported disappointing Q3 results on October 28. Adjusted earnings per share came in at 20 cents, missing the Zacks Consensus Estimate of 29 cents.
Net sales declined 2% year-over-year to $558 million, below the consensus of $574 million. Management stated that it experienced weak demand and excess capacity in some of its segments.
Meanwhile, adjusted operating income fell 3% to $32 million.
Additional content:
Homebuilders' Confidence Up in November
Homebuilders' confidence, as indicated by the National Association of Home Builders (NAHB)/Wells Fargo housing market index, rose 4 points to 58 in November – a relief after a drop of the same magnitude in the number in October.
The index reflects an optimistic outlook among builders for the upcoming quarters as demand for new homes increases with the improving job market and growing consumer confidence.
Any reading on this index above 50 indicates good housing conditions. The index has remained above 50 for five consecutive months this year.
Stabilizing mortgage rates this year, improving job market, moderating home prices and rising inventory levels have paved the way for a steady recovery in the housing sector after a slump at the beginning of the year. Housing market momentum is expected to continue in 2015.
Though mortgage rates in 2014 are higher than the average rate in 2013, they are still below historical levels, making housing affordable. According to the Freddie Mac mortgage survey, the 30-year fixed mortgage rate has gone down from 4.43% in January to 4.04% in October.
Moreover, though home prices have been rising in 2014, the rates have moderated since the last year. A report from the S&P/Case-Shiller home price data through August showed a persistent slowdown in price increases this year. The year-over-year reading for the 20-city index showed price increases of 5.6% in August, softer than the 6.7% increase in July.
Further, a slew of data released recently signals steady growth in the housing market. Housing starts rose 6.3% in September from the prior month to an annualized rate of 1.017 million units — topping the 1 million mark for the third time this year. Sales of new single-family homes in the U.S. rose 0.2% in September, rising for three consecutive months. Sale of existing homes in September went up 2.4%, after a modest decline in August.
Homebuilder stocks have gained significantly this month following the string of upbeat housing data. While Lennar Corp. (NYSE:LEN-Free Report) and Ryland Group, Inc. (NYSE:RYL-Free Report) were up around 6%, KB Home (NYSE:KBH-Free Report) and DR Horton, Inc. (NYSE:DHI-Free Report) increased around 8%. PulteGroup Inc. (NYSE:PHM-Free Report) witnessed a more than 10% rise this month.
However, what keeps us concerned is the probability of a hike in short-term interest rates in 2015 as the Fed has ended its six-year long quantitative easing program in October, assuming that the economy will not need any meaningful assistance at current levels.
Though the Fed has reaffirmed that the key interest rate will be kept at the record low level for a 'considerable time,' investors have started speculating over the timing of the destined rate hike.
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