For Immediate Release
Chicago, IL – February 7, 2024 – Zacks Equity Research shares MSA Safety Inc. MSA as the Bull of the Day and Columbia Sportswear Company COLM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on KornFerry International KFY, Heidrick & Struggles International, Inc. HSII and TrueBlue, Inc. TBI.
Here is a synopsis of all five stocks.
Bull of the Day:
Safety equipment and technologies are essential aspects across many crucial industries that companies must remain constantly focused on. MSA Safety Inc. is one of the leaders in the safety equipment and solutions industry and MSA shares have crushed the S&P 500 during both the last 25 years and the past decade.
MSA Safety found support at some key moving averages and its earnings outlook has surged over the last year. MSA Safety also pays a dividend and it trades 14% below its average Zacks price target. These are just some of the core reasons to consider buying MSA Safety stock.
Protecting Workers, Industries & Your Portfolio
MSA Safety is a worldwide leader in the development, manufacture, and supply of safety products and solutions. The company, which was started back in 1914, seeks to integrate electronics, software, mechanical systems, and advanced materials across its offerings to help keep people safe in tons of settings.
MSA Safety’s wide range of equipment and gear services industries such as fire services, construction, oil and gas, utilities, industrial manufacturing, mining, the military, and beyond. MSA Safety’s various equipment protects its users against hazardous and life-threatening situations that many people in critical, hard-to-automate jobs experience every day.
MSA Safety’s portfolio spans from self-contained breathing equipment and portable gas detection to helmets, fall protection, and beyond. The company also offers on-demand, interactive certification training programs across various fields alongside other safety training efforts and more.
Growth Outlook & Earnings Revisions
MSA Safety’s revenue is projected to climb by 15% in fiscal 2023 to reach $1.76 billion and then pop another 5.5% in 2024 to hit $1.86 billion. This expected growth would follow 9% sales expansion in FY22.
The company’s adjusted earnings are projected to soar by 22% in FY23 and then jump 8% higher next year, based on the most recent Zacks estimates. MSA Safety’s bottom-line outlook appears even more impressive considering that it already posted 21% adjusted earnings expansion in fiscal 2022.
MSA Safety has topped our bottom-line estimates for eight straight quarters, including an average beat of 22% in the past four periods. More importantly, MSA Safety’s earnings estimates for FY23 and FY24 have climbed by 25% and 20%, respectively over the last year to help it land a Zacks Rank #1 (Strong Buy) right now.
Performance, Technical Levels & Valuation
MSA shares have soared over 2,200% in the past 25 years to blow away the S&P 500’s 370% run and the Zacks Industrial Products sector’s 180%. The impressive outperformance remained during the trailing 10 years, with the stock up 250% vs. the benchmark’s 180% and its sector’s 60%.
MSA stock has come back to the pack over the last five years, underperforming the S&P 500. MSA stock is trading around where it was three years ago. MSA shares are currently floating around 8% below their early September highs and 14% under their average Zacks price target.
MSA Safety found support at its 50-week moving average in late October and it is trading above its 21-week moving average and at neutral RSI levels, after landing firmly above overbought when it reached new highs in September. MSA is also trading above both its 21-day and 50-day moving averages right now.
The recent pullback, coupled with its strong earnings outlook helps MSA shares trade at a 37% discount to their 10-year highs and right near their median at 22.4X forward 12-month earnings.
Bottom Line
MSA Safety’s dividend yields 1.1% right now and its balance is stable. The company is poised to grow because its offerings are the definition of essential across critical industries that are in constant demand. Better yet, the firm is benefitting from long-term secular trends across various parts of the U.S. and global economies, including infrastructure and energy expansion.
MSA Safety’s lack of flash is part of its long-term appeal. Investors might want to consider buying the safety equipment and technology stock, with its fourth quarter earnings projected to be released on February 21.
Bear of the Day:
Columbia Sportswear Company fell solidly short of our fourth quarter earnings estimate on February 1 and provided downbeat guidance on the back of cautious retail customers and broader economic uncertainty.
The historic outdoor clothing company faces near-term setbacks and a rapidly fading earnings outlook that’s prompted it to roll out a “multi-year profit improvement program,” which includes planned corporate layoffs.
Quick COLM Overview
Founded in the late 1930s, Columbia remains near the forefront of outdoor clothing, apparel, and footwear. The Portland, Oregon-headquarter firm currently owns multiple outdoor-focused brands, including boot standout Sorel and higher-end apparel maker Mountain Hardwear. The company also owns prAna, which makes everything from rock climbing clothes to yoga gear, and is part of a group of brands attempting to compete against Lululemon.
The diversification and portfolio expansion has helped Columbia. Still, its namesake brand is by far the largest revenue contributor, bringing in around 80% to 85% of total sales in most quarters.
Columbia competes against The North Face, Patagonia, and others. The company has boosted its direct-to-consumer business, with that key segment accounting for around 60% of sales during the recently reported fourth quarter.
Recent Performance & Outlook
Columbia’s fiscal 2021 and 2022 sales soared following an 18% drop in 2020. The big Covid-era decline stopped a nice run of solid top line expansion. The company’s fiscal 2023 revenue then climbed by around 0.7%, with fourth quarter sales down 9% YoY. The company’s adjusted quarterly earnings sank as well, missing our EPS estimate by 7%.
Columbia cited a “difficult U.S. marketplace and a warm winter” for some of its fourth quarter woes. Looking ahead, the outdoor apparel maker expects “2024 to be a challenging year.” CEO Tim Boyle noted in prepared Q4 remarks that “retailers are placing orders cautiously, and economic and geopolitical uncertainty remains high.”
Columbia’s fiscal 2024 sales are projected to dip by 2.6% YoY to $3.40 billion. The company’s adjusted earnings are then expected to drop 9% YoY, with a 45% decline expected in the first quarter of 2024, based on current Zacks estimates.
COLM’s earnings outlook is still getting worse, with its most accurate/most recent estimates coming in solidly below its already beaten-down earnings outlook.
Columbia’s downward earnings revisions help it earn a Zacks Rank #5 (Strong Sell) right now. The recent earnings negativity also extends a decline that started in early 2022.
Bottom Line
Columbia stock is down 17% in the last five years to lag the Zacks Consumer Discretionary sector’s 13% decline and the S&P 500’s 83% surge. COLM is trading below its long-term 200-week and 50-week moving averages and 7% above its average Zacks price target.
Columbia is attempting to “mitigate erosion in profitability and to improve the efficiency of our operations” by rolling out a “multi-year profit improvement program targeting $125 to $150 million in annual savings by 2026.” Investors might, therefore, want to keep COLM on their watchlists while avoiding the stock in the near-term.
Additional content:
3 Staffing Stocks in Focus as Jobs Market Remains Resilient
One of the major challenges for the Federal Reserve in tackling inflation has been the resilient job market. Inflation hit a 40-year high in 2022 and the Federal Reserve adopted a strict monetary tightening policy by hiking rates by 525 basis points for the past 21 months.
This saw a sharp decline in inflation, which now appears to be nearing the Federal Reserve’s 2% target. However, the job market continues to be on solid ground even after that. Although the labor market softened slightly last year, job additions have been on the rise again.
The Department of Labor reported on Feb 2 that the U.S. economy added 353,000 nonfarm jobs in January, almost double the consensus estimate of 185,000.
Also, job additions were upwardly revised by 126,000 for November and December 2023. December job gains totaled 333,000, while November’s numbers came in at 182,000.
Job additions in January were seen across sectors, with professional and business services leading with 74,000 new employments. Healthcare added 70,000 new heads, while retail trade, government, social assistance and manufacturing added 23,000, 36,000, 30,000 and 45,000 new jobs, respectively.
While it is difficult to assess the job market at the beginning of the year given that a large number of jobs are created during this time because of the holiday season and are temporary, the overall numbers hint at a resilient labor market.
Also, the unemployment rate held steady at 3.7% in January against expectations of 3.8%.
The average workweek came in at 34.1 in January, down from 34.3 in December. The hourly wage rate saw a 0.6% increase in January, surpassing the December rate of 0.4% and economists’ expectations of 0.3%.
On a year-over-year basis, the hourly wage rate jumped 4.5%, surpassing the consensus estimate of 4.1%.
Moreover, the labor market is poised to remain resilient in the first half of 2024 as the Conference Board’s Employment Trends Index raced to a reading of 113.15 in December from November’s downwardly revised reading of 112.48.
Stocks to Watch
Given the steady job additions to the economy and promising outlook, it would be ideal to invest in staffing firms like KornFerry International, Heidrick & Struggles International, Inc. and TrueBlue, Inc.
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
KornFerry International is the world's leading and largest executive recruitment firm with the broadest global presence in the executive recruitment industry. KFY provides executive recruitment services exclusively on a retained basis and serves the global recruitment needs of our clients from middle to executive management. KornFerry International’s clients are many of the world's largest and most prestigious public and private companies, middle-market and emerging growth companies as well as governmental and not-for-profit organizations.
KornFerry International’s expected earnings growth rate for next year is 8.9%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. KFY has a Zacks Rank #2.
Heidrick & Struggles International, Inc. serves the executive talent and leadership needs of the world's top organizations as the premier provider of leadership consulting, culture shaping and senior-level executive search services. HSII is one of the leading global executive search firms.
Heidrick & Struggles International’s expected earnings growth rate for next year is 5.2%. Shares of HSII have gained 20.9% in the past three months. Heidrick & Struggles has a Zacks Rank #3.
TrueBlue, Inc. is a leading provider of specialized workforce solutions, helping clients improve growth and performance by providing staffing, workforce management, and recruitment process outsourcing solutions. TBI’s specialized workforce solutions meet clients' needs for a reliable, efficient workforce in a wide variety of industries.
TrueBlue’s expected earnings growth rate for next year is 325%. Shares of TBI have gained 13.1% in the past three months. TrueBlue presently carries a Zacks Rank #3.
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Korn/Ferry International (KFY) : Free Stock Analysis Report
Columbia Sportswear Company (COLM) : Free Stock Analysis Report
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TrueBlue, Inc. (TBI) : Free Stock Analysis Report
MSA Safety Incorporporated (MSA) : Free Stock Analysis Report
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