Twitter, Constellation Brands, BlackBerry, Avid and Photronics highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
MasTec's (MTZ) strong backlog and accretive acquisitions bode well for its future earnings prospects.

For Immediate Release

Chicago, IL – October 10, 2018 – Zacks Equity Research Twitter TWTR as the Bull of the Day, Constellation Brands STZ as the Bear of the Day. In addition, Zacks Equity Research provides analysis on BlackBerry Limited BB, Avid Technology, Inc. AVID and Photronics, Inc. PLAB.

Here is a synopsis of all five stocks:

Bull of the Day:

Shares of Twitter have plummeted over the last three months as investors worry about potential government regulation and increased turmoil due to its role in the spreading of  “fake news” and misinformation. Yet, the social media company’s top and bottom line growth outlook appears strong amid its streaming video push.

Recent News

Twitter has ramped up its fight against fake news as we approach November’s midterm elections. The company said last week that its new automated detection system continuously monitors for “potentially spammy and automated accounts,” according to a Twitter blog post.

Jack Dorsey’s company said that it “challenged an average of 9.4 million accounts each week” during the first half of September. Twitter also noted that the number of spam-related reports it gets from users has declined on average. “We continue to partner closely with the RNC, DNC, and state election institutions to improve how we handle these issues,” the company wrote.

Bear of the Day:

Constellation Brands stock is down around 1% this year, which lags the S&P 500’s roughly 8% climb. The seller of Corona and other alcoholic beverages faces a changing market that has prompted Constellation to dive into the booming marijuana industry.

Recent News & Overview

Constellation’s portfolio of brands includes import beer powers Corona and Modelo, Kim Crawford and Robert Mondavi wines, as well as Casa Noble tequila and Svedka vodka. The New York-based company made headlines when it announced this summer its nearly $4 billion investment in Canadian marijuana company Canopy Growth Corp. The deal allows Constellation to take a controlling stake in the firm in the future.

Constellation plans to roll nonalcoholic, cannabis-infused drinks in Canada along with other legal markets. Some analysts have noted that the deal adds to Constellation’s relatively significant debt load. But beyond Canada, investors should note that the legalization of marijuana has happened relatively quickly in the U.S. on a state-by-state basis.

The beer and wine power could see its Canopy investment turn out to be a major success, but it seems far too early to tell. With that said, Constellation is coming off a solid quarter that saw its sales climb 9% to $2.53 billion. The company also raised its fiscal year earnings outlook and reaffirmed its sales outlook for both beer as well as wine and spirits.

Stock Price Movement

Now let’s look at Constellation’s recent performance to help investors understand where STZ stands at the moment. Shares of STZ have soared roughly 270% over the last five years, which destroys the S&P’s 75% jump. If we narrow our focus, Constellation and the index are neck and neck, with STZ up roughly 32% over the past 24 months and the index up 33%.

But we can see that STZ has outperformed its industry for some time now. Shares of Constellation have climbed roughly 8% over the last 12 months, compared its industry’s nearly 15% decline. 

Outlook & Earnings Trends  

Looking ahead, our current Zacks Consensus Estimate is calling for Constellation’s quarterly revenues to pop 6.8%. Meanwhile, its full-year revenues are projected to jump 7.3% to reach $8.14 billion.          

Moving on, STZ’s adjusted quarterly earnings are projected to climb by just 3%, while its fiscal year EPS figure is expected to jump 7.6%. With that said, Constellation’s quarterly earnings revision picture has turned negative.

Constellation has seen six downward earnings estimate revisions for Q3 over the last seven days, against zero upward changes. The Corona seller’s earnings revision picture has been more mixed for its current fiscal year and the following fiscal year. 

Bottom Line

Constellation is currently a Zacks Rank #5 (Strong Sell) based on its recent earnings revision trends. This tells us that some analysts are less positive about the company’s future earnings outlook. The company also sports an “F” grade for Value in our Style Scores system. Therefore, STZ might be a stock to stay away from for now.

But make sure to pay close attention to Constellation’s Canopy investment as the marijuana industry looks ready to explode. Plus, imported beers continue to perform better than their domestic counterparts.

Investors interested in the alcoholic beverage industry might want to look elsewhere for now, as many of Constellation’s peers are also currently Zacks Rank #4 (Sell) or #5 (Strong Sell) stocks.

Additional content:

3 Tech Stocks Under $10 to Buy Now

Here at Zacks, we don’t generally classify stocks as “cheap” or “expensive,” and rather than looking at the stock’s face value, we have a system that puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.

That being said, low-priced stocks can be attractive to smaller investors that can’t necessarily afford large stakes in companies with higher priced stocks.

When looking at these low-priced stocks, we can look at the same trends in growth, value, and momentum and apply the Zacks Rank to properly analyze the potential that these companies have. We are also keenly aware of the latest sector trends and make sure to cover all of the hottest industries.

Today we’ve highlighted three stocks that fall into the broad “technology” sector. Each of these three stocks is currently trading for less than $10 per share and holds a Zacks Rank #2 (Buy) or better. Take a look at the strong estimate revision activity and other factors that make these tech companies stick out right now:

1. BlackBerry Limited

Prior Close: $9.93

BlackBerry is best known to the public for its once-iconic brand of smartphones, but the company ditched hardware manufacturing recently and now serves as an enterprise software and services company. The new BlackBerry’s claim to fame is its security software, which is on track to be a major option in the budding self-driving car market.

BB is a Zacks Rank #1 (Strong Buy). A struggle to meet expectations on high valuations has hurt the stock this year, but BlackBerry looks to have found a bottom and could very well be poised to rebound as earnings estimates move higher.

The company has witnessed three positive revisions to its full-year EPS estimates within the past 30 days. Analysts are now expecting earnings to be six cents higher than estimates suggested just a month ago. This positive analyst sentiment should help lift shares if the positive trend holds.

2. Avid Technology, Inc.

Prior Close: $5.78

Avid develops and sells a portfolio of software products used to create digital media content, including professionally-used music and video creation solutions. The stock is currently sporting a Zacks Rank #2 (Buy). AVID shares have surged nearly 28% in the past six months, which might make the stock an interesting momentum play, but valuations still look attractive at their current levels.

Near-term earnings look shaky and caused AVID’s P/E to become stretched, but other measures of value look sharp. For instance, the stock has a P/S ratio of 0.6, which is a steep discount to the industry average. Investors often prefer to look at this revenue-based value indicator when considering smaller software firms.

3. Photronics, Inc.

Prior Close: $9.23

Photronics is of one the world’s leading producers of photomasks, which are high-precision quartz plates that contain images of electronic circuits. These photomasks are a piece in the production of computer semiconductors and flat-panel displays. Photronics currently holds a Zacks Rank #1 (Strong Buy) and an “A” grade in the Value category of our Style Scores system.

PLAB is trading at just 15.8x forward earnings. It has a PEG ratio of 1.6, so investors are getting its near-term EPS growth outlook at a nice price. For the current year, that growth is expected to be a staggering 210%. In the long-term, Photronics is expected to see an annualized earnings growth rate of 10%.

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Twitter, Inc. (TWTR) : Free Stock Analysis Report
 
Constellation Brands Inc (STZ) : Free Stock Analysis Report
 
Avid Technology, Inc. (AVID) : Free Stock Analysis Report
 
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BlackBerry Limited (BB) : Free Stock Analysis Report
 
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