S&T Bancorp, Ultratech, Hawaiian Holdings, Marvel Technology and CME Group highlighted as Zacks Bull and Bear of the Day
CHICAGO, July 31, 2013 /PRNewswire/ -- Zacks Equity Research highlights S&T Bancorp (Nasdaq:STBA-Free Report) as the Bull of the Day and Ultratech, Inc. (Nasdaq:UTEK-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onthe Hawaiian Holdings (Nasdaq:HA-Free Report), Marvel Technology (Nasdaq:MRVL-Free Report) and CME Group (Nasdaq:CME-Free Report).
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Here is a synopsis of all five stocks:
S&T Bancorp (Nasdaq:STBA-Free Report) delivered a big second quarter earnings beat on July 23, prompting analysts to revise their estimates significantly higher for both 2013 and 2014. This sent the stock to a Zacks Rank #1 (Strong Buy).
Along with strong earnings momentum and favorable industry tailwinds, valuation looks attractive too, and the bank pays a dividend that yields a solid 2.5%. This provides investors with strong total return potential.
S&T Bancorp, Inc. is a holding company for S&T Bank, which provides a full range of financial services to individuals and businesses primarily in Pennsylvania. It has assets of more than $4.5 billion and is headquartered in Indiana, Pennsylvania.
S&T delivered a big second quarter earnings beat on July 23. Earnings per share jumped 57% year-over-year to 47 cents, crushing the Zacks Consensus Estimate of 36 cents.
Net interest income before the provision for loan losses rose 2% as solid loan growth more than offset a contraction in the net interest margin. The company also experienced strong operating leverage in the quarter as the efficiency ratio improved 344 basis points to 58.4%.
Ultratech, Inc. (Nasdaq:UTEK-Free Report) reported disappointing second quarter results on July 18 as revenue and earnings both came in below expectations. This prompted analysts to revise their estimates significantly lower for both 2013 and 2014, sending the stock to a Zacks Rank #5 (Strong Sell).
Although shares of Ultratech sold off after the report, shares are still not cheap at 24x forward earnings. Investors may want to wait for earnings momentum to turn around before establishing a long position.
Ultratech, Inc. manufactures photolithography, laser thermal processing and inspection equipment for manufacturers of semiconductor devices. The company was founded in 1979 and is headquartered in San Jose, California.
Ultratech reported disappointing second quarter results on July 18. Earnings per share came in at 3 cents, missing the Zacks Consensus Estimate of 4 cents. It was a significant decline from 41 cents earned in the same quarter last quarter.
Revenue came in below expectations too. Total net sales dropped 27.5% to $42.9 million, well below the consensus of $45.0 million. The gross profit margin declined from 54.2% to 47.3%.
Additional content:
3 Stock Fundamental and Technical Traders Can Embrace
The stock market has had a strong run year to date with the S&P 500 up roughly 18%, but the rally has paused recently with the S&P 500 struggling with 1700. The S&P 500 is about 10% above its 200 day moving average which is high, but not excessive. Likewise, the percentage of stocks in the S&P 500 above their 50 day moving average is elevated at 76%, but not extreme. A reading closer to 90% would suggest the market is vulnerable to running out of gas.
The S&P 500's history in August:
The 2013 stock market rally is mature going into August, which has historically been an average month for gains, but also a month of great volatility in return. Going back to 1928, the S&P 500 has rallied 58.8% of the time in August. This puts August in the middle of the pack for up months. The average return has been 74 bps which is the 5th highest of the 12 months. The average return for just up months is 401 bps, while the average return for just down months is -393 bps. August has seen the greatest volatility of the year based on standard deviation. The standard deviation of return is 6.28% and the highest of any month.
Looking for favorable fundamental and technical factors:
Given this backdrop, companies which are seeing their earnings estimates rise and holding a potentially positive technical backdrop may provide fruitful investment ideas. In an extended market, owning a stock with strong fundamentals and favorable technical factors can make investing less worrisome. A combination of companies with a Zacks #1 Rank (strong buy) and a chart story were set as investment criteria. Here are three ideas that caught my attention:
Hawaiian Holdings (Nasdaq:HA-Free Report): Investing in airlines has not been one of my favorite themes, but HA has seen analysts revise up 2013 and 2014 earnings sharply in recent months. Over the last seven days, the 2013 estimate has risen 7 cents to $0.88 and the 2014 estimate increase 10 cents to $1.16. The chart shows the stock breaking out of a 1+ year range to the upside, and an extension of the rally from September 2011 to early 2012 could put the $9.00 area in play. Clear movement back into the range would destroy the breakout pattern and cause a rethinking of the chart story.
Marvel Technology (Nasdaq:MRVL-Free Report): This semiconductor name has seen its earnings estimates stabilize after a period of decline. Besides being a Zacks Rank #1, the stock is trading cheap compared to its historical tangible book value. It is trading about 2.7x tangible book value compared to a median 6.9x. It looks inexpensive based on its longer term valuation range. Technically, the stock formed a double bottom in late 2012 and has established an uptrend. It has rotated over congestion at $12.00 and has been stair stepping higher. The chart sets up the chance for a test of the 2012 high near $17.00 with patches of resistance near $13.00 and $14.50 along the way. A break of the uptrend line may question further price strength.
CME Group (Nasdaq:CME-Free Report): This high profile futures, options, and swaps exchange has seen its 2013 and 2014 earnings per share estimates rise 5 cents to $3.24 and 3 cents to $3.73 respectively in the past 30 days. The CME could benefit from trading activity linked to the potential for the Fed to begin its tapering of QE and uncertainty surrounding a new Fed Chairman. The chart pattern shows a channel being formed on the daily bar. The pattern looks like a pause before prices leg higher. The outlook for a rally would improve on a move over $76.00. A decline below the bottom of the channel would question the validity of the bullish technical set up.
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