Archer Daniels Midland and Estee Lauder have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – November 8, 2022 – Zacks Equity Research shares Archer Daniels Midland ADM as the Bull of the Day and The Estee Lauder Companies, Inc. EL asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Lenovo Group Ltd. LNVGY, HP Inc. HPQ and Dell Technologies Inc. DELL.

Here is a synopsis of all five stocks.

Bull of the Day:

The Zacks Consumer Staples sector has fared better than most in 2022, down roughly 7% and widely outperforming the general market.

Companies in the sector have the advantageous ability to generate revenue in the face of many economic situations, helping explain why it’s been a brighter spot in an otherwise dim market.

A widely-recognized company residing in the realm, Archer Daniels Midland, has seen its near-term earnings outlook turn visibly bright over the last several months, helping to land the stock into the highly-coveted Zacks Rank #1 (Strong Buy).

Archer Daniels Midland is a leading producer of food and beverage ingredients and goods made from various agricultural products.

Let’s take a deeper dive into how the company currently stacks up.

Share Performance

Year-to-date, ADM shares have been visibly strong, tacking on more than 40% in value and leaving the S&P 500 in the dust.

Over the last month, shares have continued on their market-beating trajectory, up a double-digit 11% and again outperforming the S&P 500.

The strong price action of ADM shares in 2022 indicates that buyers have been present all year long, something we can’t say for the majority of stocks in 2022.

Valuation

Shares are reasonably priced, further bolstered by its Style Score of an A for Value.

ADM shares trade at a 12.9X forward earnings multiple, nicely beneath the 14.2X five-year median and reflecting a 35% discount relative to its Zacks sector average.

Quarterly Performance

ADM has been on an impressive earnings streak, exceeding both revenue and earnings estimates in eight consecutive quarters.

Just in its latest print, Archer Daniels Midland penciled in a sizable 31% bottom-line beat paired with a 7.8% sales surprise.

Dividends

Investors love dividends. After all, who doesn’t enjoy getting paid?

ADM’s annual dividend yield currently sits at 1.7%, lower than that of its Zacks sector. Still, the company’s 4.1% five-year annualized dividend growth rate helps to pick up the slack in a big way.

Further, ADM has a sustainable payout ratio of 22% of its earnings.

Bottom Line

One of the best ways investors can find expected winners is by utilizing the Zacks Rank – one of the most potent market tools out there that gives investors a massive advantage.

The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.

Archer Daniels Midland would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).

Bear of the Day:

The Zacks Consumer Staples sector has fared better than most in 2022, down roughly 7% and widely outperforming the general market.

However, one company in the realm that’s been a slight exception is The Estee Lauder Companies, Inc.

The Estee Lauder Companies is one of the world's leading manufacturers and marketers of skincare, makeup, fragrance, and hair care products. The company's products are sold through department stores, mass retailers, company-owned retail stores, hair salons, and travel-related establishments.

Analysts have been bearish regarding EL’s near-term earnings outlook, pushing it into a Zacks Rank #5 (Strong Sell).

Let’s take a deeper dive into the company.

Share Performance

It’s been a challenging road for EL shares in 2022, down more than 40% and widely underperforming the general market.

And over the last three months, shares have continued on their downward trajectory, down more than 20% and again underperforming the general market.

The adverse price action of EL shares tells us that sellers have remained in control, something we’ve seen with many stocks in a historically-volatile 2022.

Valuation

The company’s forward earnings multiple sits at 38.4X, on the higher end of the spectrum and perhaps steering away value-focused investors.

Further, the current value is above its five-year median of 34.1X and reflects a 92% premium relative to its Zacks sector average of 19.9X.

The company carries a Value Style Score of an F.

Quarterly Performance

Still, the company carries a strong earnings track record, surpassing the Zacks Consensus EPS Estimate in nine consecutive quarters. Just in its latest print, EL registered a 6.2% bottom-line beat.

Revenue results have also been strong, with EL penciling in seven top-line beats across its last ten quarters.

Bottom Line

Negative earnings estimate revisions and steep valuation multiples paint a less-than-ideal picture for the company in the short term.

The Estee Lauder Companies is a Zacks Rank #5 (Strong Sell), telling us it has a weak near-term earnings outlook.

Investors should pivot to stocks that either carry a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) – these stocks have a much stronger earnings outlook and potential to deliver explosive gains in the short term.

Additional content:

Can the PC Market Bounce Back from Its Recent Lows?

Global PC sales, which surged at the height of the pandemic, have once again started declining. Sales of PCs, which include laptops and tablets, saw an unexpected jump during the peak of the pandemic as millions worked remotely. However, demand appears to be declining once again as things return to normal and people go back to their workplaces and schools.

However, there are several other factors that are posing challenges for the PC market, the supply chain crisis being one of the biggest. It must overcome a number of obstacles, including a supply-chain problem. The industry thus needs to overcome these challenges to bounce back from the present situation.

Global PC Shipment Hit New Low

Several industries were left battered by the COVID-19 outbreak but some also managed to be big beneficiaries of the pandemic. One of them that benefited the most was the PC sector. However, things have once more shifted, and this year's sales are in free fall.

According to a report from Gartner, global PC shipments totaled 68 million units in the third quarter of 2022, a 19.5% decline year over year. This is the sharpest drop in nine years and the second straight quarter of double-digit decline. PC shipments totaled 72 million in the second quarter, recording a decline of 12.6% year over year.

PC sales started slowing last year once the economy started reopening. This year has particularly been worse given that sales have declined drastically in all the first three quarters of the year.

The primary reason behind the decline in the third quarter was the lack of demand for PCs during the back-to-school season and shrinking enterprise purchasing.

Challenges Galore

Industry leaders have been suffering the most because of the decline in demand for PCs. The top three PC makers have likewise had the biggest loss throughout this time, despite the fact that their ranking has not changed.

Lenovo Group Ltd., which is still the market leader, saw its market share increase in the third quarter of 2022 to 23.7%. However, on a year-over-year basis, LNGVY recorded a 16% decline in sales. This is also the fourth straight quarter of sales decline for Lenovo Group Limited.

HP Inc. held its position as the second largest in terms of market share. HP now holds 18% of the market share but it managed to sell only 12.7 million units. This is also the second consecutive quarter when HP had less than 20% market share. Moreover, HP recorded a 26.5% year-over-year decline in sales in the third quarter.

Dell Technologies Inc., the third largest player, saw its shipments plummet more than 20% in third-quarter 2022, after declining 5.2% in the previous quarter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The United States, one of the biggest markets, has seen a steep decline in PC sales in 2022. The U.S. PC market plummeted 17.3% in the third quarter, recording five straight quarters of declines. Slowing laptop sales is affecting the overall PC market in the United States, although demand for desktops showed modest improvement.

The PC industry is facing several challenges. Inflation has been a major concern in the United States, which has seen people cutting down on expensive goods. The third quarter saw the supply-chain crisis finally easing but high inventory is now a fresh concern as demand continues to shrink in both the consumer and business markets.

Lower demand for PC is also impacting semiconductor sales now. Several chipmakers have said that weaker demand for PCs is impacting its revenues.

Overall, 2022 has been fairly challenging for the PC market and experts believe that the market will not improve before 2023. Given the ongoing challenges and weak demand, 2022 is likely to see a 13% year-over-year fall in global PC shipments, according to Gartner. The firm had earlier predicted a 9.5% year-over-year decline in sales

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HP Inc. (HPQ) : Free Stock Analysis Report
 
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
 
Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
 
The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
 
Lenovo Group Ltd. (LNVGY) : Free Stock Analysis Report
 
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