Chicago, IL – February 12, 2024 – Zacks Equity Research shares H&R Block HRB as the Bull of the Day and Douglas Dynamics PLOW as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cisco Systems CSCO, Shopify SHOP and Twilio TWLO.
Here is a synopsis of all five stocks.
With tax season approaching now appears to be an ideal time to buy H&R Block’s stock which currently sports a Zacks Rank #1 (Strong Buy) and lands the Bull of the Day.
Even better, here’s a look at why the tax preparation services leader is shaping up to be a viable investment for 2024 and beyond.
H&R Block’s fiscal third quarter is most crucial for the company as it leads up to the tax filing deadline which is typically April 15. After posting a narrower adjusted earnings loss in its Q2 report on Tuesday and sales growth of 7% momentum is building for the busy current quarter.
Most importantly, H&R Block’s Q3 earnings are expected to be up 12% to $4.71 per share with sales forecasted to rise 2% to $2.15 billion. To that point, H&R Block is well positioned upon implementing artificial intelligence into its offerings and launching its AI Tax Assist at the beginning of the year to streamline the tax preparation process.
Overall, H&R Block’s annual earnings are now projected to rise 10% in fiscal 2024 and climb another 11% in FY25 to $4.69 per share. Plus, total sales are forecasted to be up 2% this year and rise another 2% in FY25 to $3.64 billion.
H&R Block’s price performance has roughly matched the S&P 500 over the last year rising +20% to easily top its Zacks Consumer Services-Miscellaneous Market’s +2%. More impressive, over the last three years, HRB shares have soared +139% to largely outperform the benchmark and its Zack Subindustry.
Furthermore, HRB shares still trade at 10.8X forward earnings which is a considerable discount to the S&P 500’s 21X and nicely beneath its Zacks Consumer Services-Miscellaneous industry average of 12X.
Adding more value to H&R Block’s stock is its 2.8% annual dividend yield in an industry where most companies don’t offer a payout to shareholders. It’s also noteworthy that this tops the S&P 500’s 1.32% average and H&R Block’s dividend has increased four times in the last five years. Better still, H&R Block’s payout ratio is only at 33% and suggests there is plenty of room for more dividend increases in the future.
H&R Block’s stock is starting to check the boxes heading into the busy tax season and in addition to its strong buy rating has an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.
Providing snow and ice control equipment for work trucks, another milder-than-expected winter throughout the U.S. could lead to more downside for Douglas Dynamics stock with the spring approaching.
Landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day here is an overview of why investors may want to be cautious of Douglas Dynamics stock at the moment.
Douglas Dynamics is expected to post weaker Q4 results later in the month on Monday, February 26. Fourth quarter earnings are forecasted to drop -62% to $0.19 a share compared to $0.52 a share in Q4 2022. On the top line, Q4 sales are projected to dip -16% to $134 million.
This comes after Douglas Dynamics' third quarter earnings of $0.25 a share missed the Zacks Consensus of $0.52 a share by -52% in October. Furthermore, the company missed Q3 sales estimates by -11%. Overall, Douglas Dynamics is expected to round out fiscal 2023 with total sales falling -8% and EPS down -45% to $1.00 a share versus $1.84 per share in 2022.
Declining earnings estimates have correlated with Douglas Dynamics' stock plummeting -36% in the last year and now down -46% over the last three years.
Unfortunately, the trend of earnings estimate revisions has remained bleak. To that point, FY23 EPS estimates have declined -28% in the last 30 days. Dimming the anticipation of a potential rebound in Douglas Dynamics' bottom line is that FY24 EPS estimates are down -22% over the last month from projections of $2.24 per share to $1.75 a share.
There could be more disappointment ahead for Douglas Dynamics stock and investors hoping for a rebound may want to be cautious as declining earnings estimates are very concerning ahead of the company’s Q4 report later in the month.
Cisco Systems is set to release itssecond-quarter fiscal 2024 results on Feb 14.
The company anticipates second-quarter fiscal 2024 revenues between $12.6 billion and $12.8 billion. Non-GAAP earnings are expected to be between 82 and 84 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $12.72 billion, indicating a decline of 6.38% from the year-ago quarter’s reported figure.
The consensus mark for earnings has decreased by a penny in the past 30 days to 84 cents per share.
Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. Quote
CSCO’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 5.19%.
Let’s see how things have shaped up for Cisco prior to this announcement.
Cisco's second-quarter fiscal 2024 results are anticipated to benefit from strength across its diverse product portfolio and broad end-user base.
Cisco's commitment to innovation in key areas, such as generative AI, cloud, security, and full stack observability, is expected to have been the key top-line growth driver in the to-be-reported quarter.
Cisco's scalable fabric for AI, combined with the proven power-saving capabilities of Cisco Silicon One, is expected to have been another tailwind for the company.
Cisco's increasing focus on fortifying its unified security platform driven by product launches is likely to have been a key growth catalyst in the to-be-reported quarter.
The launch of the Cisco XDR solution is expected to have aided its recovery capabilities by empowering security teams to snapshot and restore critical data at the earliest sign of a ransomware attack.
These enhancements are expected to have helped in the faster adoption of Cisco’s security products in the to-be-reported quarter.
However, macroeconomic headwinds and a decline in new orders due to elevated inventory levels are expected to have hurt Cisco’s top-line growth.
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Cisco has an Earnings ESP of -0.98% and currently carries a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are a couple companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:
Shopify has an Earnings ESP of +1.02% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify is scheduled to release fourth-quarter 2023 results on Feb 13. SHOP’s shares have gained 12.8% in the year-to-date period.
Twilio has an Earnings ESP of +31.37% and a Zacks Rank #2.
Twilio is set to announce fourth-quarter 2023 results on Feb 14. TWLO’s shares have declined 7.3% in the year-to-date period.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
H&R Block, Inc. (HRB) : Free Stock Analysis Report
Douglas Dynamics, Inc. (PLOW) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
Twilio Inc. (TWLO) : Free Stock Analysis Report
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