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Quanex Building Products and Autodesk have been highlighted as Zacks Bull and Bear of the Day

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·10-min read
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For Immediate Release

Chicago, IL – June 28, 2022 – Zacks Equity Research shares Quanex Building Products NX as the Bull of the Day and Autodesk ADSK asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Baker Hughes Company BKR, Whiting Petroleum Corp. WLL and Continental Resources, Inc. CLR.

Here is a synopsis of all five stocks:

Bull of the Day:

Quanex Building Products is a Zacks Rank #1 (Strong Buy) that recently reported a strong quarter and has been moving higher ever since. Just what were the details of the report and how did the outlook change for this building products company?  Let's explore more about this stock in this Bull Of The Day article.

Description

Quanex Building Products Corp., together with its subsidiaries, provides components for the fenestration industry in the United States, Europe, Canada, Asia and internationally. It offers flexible insulating glass spacers, extruded vinyl profiles, window and door screens, and precision-formed metal and wood products, as well as cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry.

The company also provides various non-fenestration components and products, including solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components. The company was founded in 1927 and is based in Houston, Texas.

Most Recent Earnings Report

I see the most recent earnings report was a huge beat.  The company posted $0.80 in EPS when Wall Street was looking for $0.45.  That 35 cent difference translates to a positive earnings surprise of 77%.

Following the report, analysts that cover this stock raised their earnings estimates for the next  quarter as well as for the full year and the next full year as well.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market's expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For NX, I see four straight quarters where the company beat of the Zacks Consensus Estimate.  That is always good to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).

The average positive earnings surprise over the course of the last year works out to be 30%.

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher.  For AVT, I see annual estimates moving higher.

Over the last 60 days, I see a few increases.

The full fiscal year 2022 has moved from $1.93 to $2.35.

Next year has also increased from $2.16 to $2.47.

Positive movement in earnings estimates like that is why this stock is a Zacks Rank #1 (Strong Buy).

Valuation

I see a great valuation for Avnet (AVT).  The forward PE is 10x and that is very low considering the 20% topline growth the company posted in the most recent quarter.

The price to book of 1.7x is very low given the growth in earnings.  The price to sales comes in at 0.6x, which is low and indicates that the market does not value each sales dollar all that highly.  Margins have seen a steady increase over the last three quarters, moving from 5.4% to 5.5% and then most recently clocking in at 6.3%.

Bear of the Day:

Autodesk is a Zacks Rank #5 (Strong Sell) despite beating the bottom line estimate back at the end of May.  Since the earnings beat, the stock has been all over the place. Let's look at why this stock is a Zacks Rank #5 (Strong Sell) in this Bear of the Day article.

Description

Autodesk, Inc. provides 3D design, engineering, and entertainment software and services worldwide. The company offers AutoCAD Civil 3D, a surveying, design, analysis, and documentation solution for civil engineering, including land development, transportation and environmental projects. It sells its products and services to customers directly, as well as through a network of resellers and distributors. Autodesk, Inc. was incorporated in 1982 and is headquartered in San Rafael, California.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market's expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.

In the case of ADSK, I see four straight beats of the Zacks Consensus Estimate. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn't make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For ADSK I see annual estimates moving lower.

The current year 2022 consensus number has dropped from $6.73 to $6.51 over the last 60 days.

The next year has dropped from $8.30 to $7.95 over the same time period.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

Additional content:

Permian Basin, Eagle Ford Rig Counts Increase

In its weekly release, Baker Hughes Company reported that the U.S. rig count was higher than the prior-week tally. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.

Baker Hughes' data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the prior-week figure indicates the demand trajectory for Baker Hughes' oilfield services from exploration and production companies.

Details

Total U.S. Rig Count Rises: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 753 for the week ended Jun 24. The figure is higher than the prior week's count of 740. The current national rig count is higher than the year-ago level of 470.

The onshore rigs in the week ended Jun 24 totaled 734 compared with the prior week's count of 721. In offshore resources, 16 rigs were operating, in line with the prior-week count.

U.S. Oil Rig Count Rises: Oil rig count was 594 for the week ended Jun 24, higher than the prior week's figure of 584. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is up from the year-ago figure of 372.

U.S. Natural Gas Rig Count Rises: Natural gas rig count of 157 was higher than the prior-week figure of 154. The count of rigs exploring the commodity is higher than the prior-year week's tally of 98. Per the latest report, the number of natural gas-directed rigs is 90.2% lower than the all-time high of 1,606 recorded in 2008.

Rig Count by Type: The number of vertical drilling rigs totaled 27 units, in line with the prior-week count. Horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 726 compared favorably with the prior-week level of 713.

Gulf of Mexico (GoM) Rig Count Flat: GoM rig count was 15 units, all oil-directed. The count was flat with the prior-week number.

Rig Count in the Most Prolific Basin

Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 348, higher than the prior week's count of 344. In the Eagle Ford, the tally for weekly oil drilling rigs was 62, higher than the prior-week count of 60.

Outlook

The West Texas Intermediate crude price is trading higher than the $100-per-barrel mark, reflecting a massive improvement in the past year. Higher oil prices will likely pave the way for rig additions despite a slowdown in drilling activities as upstream players mainly focus on stockholder returns rather than boosting output.

Meanwhile, investors may keep a close eye on energy stocks like Whiting Petroleum Corp. and Continental Resources, Inc.. The companies are expected to benefit from the current healthy oil price scenario.

Whiting Petroleum is a leading upstream energy company and the top producer of crude oil in North Dakota. With oil prices improving rapidly, Whiting Petroleum is expected to continue generating handsome cash flows while maintaining a healthy balance sheet.

Headquartered in Denver, CO, Whiting Petroleum has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. Looking at the price chart, WLL has gained 33% over the past year, outpacing the 15.5% rise of the composite stocks belonging to the energy sector. WLL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. The oil inventories of Continental Resources are among the best in the industry.

Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. Considering the price chart, Continental Resources — currently carrying a Zacks Rank #3 (Hold) — has gained 78.1% in the past year, outpacing the 15.5% rise of the composite stocks belonging to the sector.

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Autodesk, Inc. (ADSK) : Free Stock Analysis Report
 
Quanex Building Products Corporation (NX) : Free Stock Analysis Report
 
Continental Resources, Inc. (CLR) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
Whiting Petroleum Corporation (WLL) : Free Stock Analysis Report
 
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