Smith & Wesson Brands, Okta, Google, NVIDIA and Amazon highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – May 10, 2021 – Zacks Equity Research Shares of Smith & Wesson Brands, Inc. SWBI as the Bull of the Day, Okta, Inc. OKTA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Alphabet Inc. GOOGL, NVIDIA Corporation NVDA and Amazon.com, Inc. AMZN.

Here is a synopsis of all five stocks:

Bull of the Day:

Smith & Wesson Brands is a Zacks  Rank #1 (Strong Buy) that has an A for the Value Style Score and an A for the Growth Style Score.  As the aggressive growth stock strategist here at Zacks, I always lean to the growth side of things and when I see a strong growth score I know I am already on the right path.  Let’s take a deeper look at this stock in this Bull of the Day article.

Description 

  Smith & Wesson Brands, Inc. designs, manufactures, and sells firearms worldwide. Smith & Wesson Brands, Inc. markets its products through independent dealers, retailers, in-store retails, and direct to consumers; print, broadcast, and digital advertising campaigns; social and electronic media; and in-store retail merchandising strategies. The company was formerly known as American Outdoor Brands Corporation and changed its name to Smith & Wesson Brands, Inc. in June 2020. Smith & Wesson Brands, Inc. was founded in 1852 and is based in Springfield, Massachusetts.

Earnings History

The first thing I do when I look at stock 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 been able to communicate to the market.  A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For SWBI, I see a good history of beating the Zacks Consensus Estimate.  There are four beats over the last four quarters.

The average positive earnings surprise over the last fours quarters works out to be 48%, which means that they are posting results that are more than what is expected.

Earnings Estimates

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

This quarter has moved from $1.04 cents to $1.07 cents.

Next quarter is holding still at $1.00.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is even better for those numbers.

I see 2021 moving from $4.00 to $4.04 over the last 60 days.

The 2022 number has moved from $1.79 to $2.20 over the same time horizon.

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

Valuation

Good growth is hard to find these days, buy SWBI has it.  I see 54% topline growth in the most recent quarter and analysts are calling for more of the same.  I see some pretty big estimates for growth for the rest of the year, analyst expect 392% this year and then some contraction next year. For this huge growth this year and concretion next year, investors are only paying 9x forward estimates.  Price to book of 4.6x is a little more than where value investors would be interested, but at only 1.03x sales the valuation is still super solid.

Bear of the Day:

Okta beat earnings back at the start of March and the stock has moved all over the place.  The question becomes if this stock has bottomed out here in the low $240 range or is it primed for a rebound? Let’s take a deeper look in this Bear of the Day article.

Description

Okta, Inc. provides identity management platforms for enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and internationally.  Okta, Inc. sells its products directly to customers through sales force, as well as through channel partners. The company was formerly known as Saasure, Inc. Okta, Inc. was incorporated in 2009 and is headquartered in San Francisco, California.

Earnings History

The first thing I do when I look at stock 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 been able to communicate to the market.  A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of OKTA, I see four straight beats of the Zacks Consensus Estimate.  So you might wonder, why is this stock the Bear of the Day?

Well 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 OKTA, I see estimates moving lower across the board.

This quarter has moved from a loss of 8 cents to a loss of 20 cents.

Next quarter has seen a similar decrease from -10 cents to -13 cents.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is also negative for those numbers.

I see 2021 moving from a loss of $0.45 to -$0.50 over the last 60 days.

The 2022 number has moved from a loss of $0.05 to -$0.10 over the same time horizon.

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

Valuation

I am partial to growth, so when I see this stock posting 40% topline growth in the more recent quarter I want to think that most of the bad news is baked into the stock. The analysts that cover OKTA are suggesting there will be 31% topline growth this year and 29% next year, so fairly consistent growth on top.

The forward earnings multiple is NA as the company is going to be running at a loss for the next year and a half or so.  The price to book at 44x is absurdly high… but this is an asset slim business.  Price to sales is also very high at 37x.

Additional content:

Stocks to Watch Amid Rising Adoption of Machine Learning

Machine learning (“ML”) has been gaining precedence over the past few years as organizations are rapidly implementing ML solutions to increase efficiency by delivering more accurate results as well as providing a better customer experience. Notably, when it comes to automation, ML has become a driving force as it involves training the Artificial Intelligence (“AI”) to learn a task and carry it out efficiently, minimizing the need for human intervention.

In any case, ML was already witnessing rapid adoption and the outbreak of the COVID-19 pandemic last year helped in accelerating that demand, as organizations began to rely heavily on automation to carry out their operations.

Markedly, ML is gradually becoming an integral part across various sectors as the trend of digitization is picking up. Notably, ML is finding application in the finance sector as among other usages, it helps in better fraud detection and enabling automated trading for investors. Meanwhile, ML is also making its way into healthcare as with the help of algorithms, big volumes of data like healthcare records can be studied to identify patterns related to diseases, thereby allowing practitioners to deliver more efficient and precise treatments.

Moreover, the retail segment has been using ML to optimize the experience of their customers by providing streamlined recommendations. Interestingly, ML also helps retailers in gauging the current market situation and determine the prices of their products accordingly, thereby increasing their competitiveness. Meanwhile, virtual voice assistants are also utilizing ML to learn from previous interactions and in turn, provide a much-improved user experience over time.

Hyperautomation Driving the Need for ML

In its Top 10 Strategic Technology Trends for 2020 report, Gartner mentioned hyperautomation as one of the top-most technological trends. Notably, it involves the use of advanced technologies like AI and ML to automate processes and augment humans. This means that in tasks where hyperautomation will be implemented, the need for human involvement will gradually reduce as decision-making will increasingly become AI-driven.

Machine Learning Poised to Grow

Reflective of the positive developments that ML is bringing to various organizations spread across multiple sectors, the ML market looks set to grow. A report by Verified Market Research stated that the ML market is estimated to witness a CAGR of 44.9% from 2020 to 2027.

Moreover, businesses are also using Machine Learning as a Service (“MLaaS”) models to customize their applications with the help of available ML tools. Notably, a report by Orion Market Reports stated that the MLaaS is estimated to grow at an annual average of 43% from 2021 to 2027, as mentioned in a WhaTech article.

3 Stocks to Watch

Machine learning has been taking the world of technology by storm, allowing computers to learn by studying huge volumes of data and deliver improved results while reducing the need for human intervention. This makes it a good time then to look at companies that can make the most of this ongoing trend.

Notably, we have selected four such stocks that carry 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.

Alphabet’s Google has been using ML across various applications like YouTube, Gmail, Google Photos, Google Voice Assistant and so on, to optimize the user experience. Moreover, Google’s Cloud AutoML allows developers to train high-quality models suited to their business needs.

The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 27.3% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 50%.

NVIDIA Corp. offers ML and analytics software libraries to accelerate the ML operations of businesses. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 2.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 35.6%.

Amazon.com is making use of ML models to train its virtual voice assistant Alexa. Moreover, Amazon’s AWS platform offers ML services to suit specific business needs. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 11.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 31.7%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
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Smith & Wesson Brands, Inc. (SWBI) : Free Stock Analysis Report
 
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