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Tenaris and Comstock have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – April 3, 2023 – Zacks Equity Research shares Tenaris S.A. TS as the Bull of the Day and Comstock Resources, Inc. CRK as the Bear of the Day. In addition, Zacks Equity Research provides analysis on United Airlines UAL, Hawaiian Holdings HA and Spirit Airlines SAVE.

Here is a synopsis of all five stocks.

Bull of the Day:

Tenaris S.A. has sold off on worries about the energy industry. But this Zacks Rank #1 (Strong Buy) is expected to grow its earnings by the double digits this year.

Tenaris is headquartered in Luxembourg. It manufactures pipes and related services for the world's energy industry. It's manufacturing system integrates steelmaking, pipe rolling and forming, heat treatment, threading and finishing across 16 countries. Tenaris has employees in more than 30 countries worldwide.

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It is in the Zacks Industry of Steel and Pipes, which is currently ranked in the top 5% of all Zacks Industries.

Increased Free Cash Flow in 2022

On Feb 15, 2023, Tenaris reported its fourth quarter and full year results. It missed on the Zacks Consensus for the second quarter in a row, but just by a penny, reporting $1.37 versus the Zacks Consensus of $1.38. In both quarters it missed by just $0.01.

Sales rose 76% in Q4 to $3.62 billion from $2.057 billion a year ago and were also up 22% sequentially, due to further increases in shipments and realized prices in most regions. It was a record quarterly results.

Free cash flow in the quarter rose to $416 million after capex payments of $108 million and the operating working capital days declined to 128.

After paying a dividend out for $201 million in Nov 2022, Tenaris' net cash position increased to $921 million as of Dec 31, 2022.

For the full year, sales rose 80% to $11.763 billion from $6.521 billion due to the strong recovery of oil and gas drilling activity in the Americas, a more delayed recovery in Eastern Hemisphere activity, which is now picking up steam, and the solid contribution of most of its market and product segments.

Analysts Bullish About 2023

With drilling activity on the rise globally in the energy industry, the analysts are bullish.

6 estimates have been raised for 2023 in the last 60 days, pushing the Zacks Consensus Estimate up to $6.12 from $5.32 during that time. This is the reason Tenaris has the highest of the Zacks Rank recommendations, the #1 (Strong Buy). The analysts are all in agreement and are all bullish.

That's earnings growth of 41.3% as the company made just $4.33 last year.

The Stock is Cheap

Shares of Tenaris have fallen 19.2% year-to-date as crude prices have fallen. With the earnings estimates expected to jump higher, the stock is cheaper than its ever been, with a forward P/E of just 4.6.

It's also shareholder friendly and has to do something with all of its free cash flow. It has proposed an annual dividend, which will still need to be approved by the shareholders, of $0.34 per share, or $0.68 per ADS, or approximately $401 million. It will be paid on May 24, 2023, to shareholders of record as of May 23, 2023. It goes ex-dividend on May 22, 2023.

If investors don't want to own the energy companies directly, a steel pipe manufacturer like Tenaris may be the way to invest instead.

[In full disclosure, the author of this article owns shares of Tenaris in the Zacks Value Investor portfolio.]

Bear of the Day:

Comstock Resources, Inc. was supposed to be flying high in 2023 on higher natural gas prices. Instead, earnings are expected to fall 50% year-over-year and it's now a Zacks Rank #5 (Strong Sell).

Comstock Resources is a leading independent natural gas producer with operations focused on the development of the Haynesville Shale in North Louisiana and East Texas.

From Boom in 2022 to Bust?

In 2022, with natural gas prices soaring, Comstock generated free cash flow from operations of $673 million, including $129 million in the fourth quarter.

Oil and gas sales, including realized hedged losses, jumped 58% in 2022 to $2.3 billion from 2021.

It also retired $506 million of debt and conversion of preferred stock.

Everything was looking so good, that Comstock resumed its quarterly dividend, which is now $0.125 per share, and is yielding 4.8%.

Earnings Estimates Slashed for 2023

But as natural gas prices have fallen to multi-year lows, the analysts have slashed their full year estimates.

The 2023 Zacks Consensus Estimate has fallen to $1.86 from $4.60 in the last 90 days, with one analyst even cutting in the last 7 days. That $1.86 is a 50.1% decline from 2022, when Comstock made $3.73.

A Buying Opportunity?

Shares of Comstock are down 21.3% year-to-date. It's cheap, with a forward P/E of 5.6.

But until natural gas prices rebound off of 2023 lows, most investors will probably stay away from the natural gas stocks. That presents a buying opportunity for those who believe that natural gas will soon bottom.

Remember, the Zacks Rank is a short term recommendation of 1 to 3 months. When natural gas finally turns around, the estimates likely will too.

Investors interested in playing the rebound should probably keep Comstock on their watch list.

Additional content:

Airline Stock Roundup: Pre-Q1 Earnings Edition

In the past week, United Airlines announced plans to invest $15 million in carbon capture technology firm, Svante. The deal is in line with the objective to reduce carbon emissions. In yet another show of the environmentally friendly attitude of airlines, Hawaiian Holdings’ subsidiary, Hawaiian Airlines, entered into a sustainable aviation fuel (SAF) sales agreement with biofuel company, Gevo.

Hawaiian Airlines was also in the news recently, courtesy of its decision to adjust its schedule to match the anticipated demand swell during summer. That story was covered in details in the previous write-up.

Meanwhile, Spirit Airlines also hogged the limelight in the past week owing to its plan to significantly boost its workforce during the current year.

Recap of the Latest Top Stories

1 United Airlines’ decision to invest $15 million in Svante is in line with its plan to go 100% green by 2050. This is the latest environmentally friendly investment from the United Airlines Ventures Sustainable Flight Fund. Svante provides materials and technology as part of the value chain that has the ability to transform CO2 removed from the atmosphere and industrial emission sources into SAF.UAL’s investment will fund and support Svante’s commercial-scale filter manufacturing facility in Vancouver.

This move is in line with the airline’s aim to go 100% green by reducing its greenhouse gas emissions by 2050, without relying on traditional carbon offsets. UAL, currently carrying a Zacks Rank #3 (Hold), has so far invested in the future production of more than three billion gallons of SAF, the most by any airline in the world.

United Airlines was also in the news when it reportedly reached two-year tentative agreements with the International Association of Machinists and Aerospace Workers, the union representing nearly 30,000 ground workers.

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

2. Per Hawaiian Airlines’ environmentally-friendly deal with Gevo, the former will purchase 50 million gallons of SAF over five years. Gevo is anticipated to supply SAF from a facility to be constructed in the Midwestern United States and start deliveries to Hawaiian Holdings’ gateway cities in California in 2029. This deal is subject to certain conditions, which include Gevo developing, financing and constructing the facility to produce SAF.

3. Spirit Airlines intends to hire 4000 plus employees across various roles (pilots, flight attendants, aviation maintenance technicians and other support center staff) in 2023. Per Linde Grindle, senior vice president and chief human resources officer at Spirit Airlines, "We're welcoming thousands of new Spirit Family Members across our network this year and have a broad range of positions available for people with all different interests, talents and experience levels." Given the carrier’s plans to expand its fleet and buoyant air-travel demand, the decision to go on a hiring spree seems to be a prudent one.

Performance

All airline stocks have traded in the green over the past five trading days. The NYSE ARCA Airline Index has increased 7.5% to $58.57. Over the course of the past six months, the NYSE ARCA Airline Index has gained 13.2%.

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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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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report

Comstock Resources, Inc. (CRK) : Free Stock Analysis Report

Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report

Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report

Tenaris S.A. (TS) : Free Stock Analysis Report

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