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Fiat Chrysler, Sotheby's, Chipmos Tech, Seadrill and Adidas AG highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – May 17, 2016– Zacks Equity Research highlights Fiat Chrysler (FCAU) as the Bull of the Day and Sotheby's (BID) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Chipmos Tech (IMOS), Seadrill (SDLP) and Adidas AG (ADDYY).

Here is a synopsis of all five stocks:

Bull of the Day :

Fiat Chrysler (FCAU) recently beat the Zacks Consensus Estimate and will report again in early August. The stock is a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.

The Numbers

FCAU beat the Zacks Consensus Estimate of $0.21 by $0.17 for an 81% positive earnings surprise.

Description

Fiat Chrysler Automobiles (FCA) is the Netherlands-based company active in the automobile industry. Its portfolio includes various brands, such as Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Rama and SRT.

Earnings History

The Zacks Research Service that I lean on heavily to do my research has some data issues with this stock, but there is more than enough to justify it as a Bull of the Day. As I look at the earnings history, I only have data on 3 of the last 6 reports, but 2 of those were beats and one was a meet. The most recent report was a huge beat of the Zacks Consensus Estimate with the company posting EPS of $0.38 compared to the $0.21 estimate for a beat of $0.17 or a nearly 81% positive earnings surprise.

Estimates

The Zacks Consensus Estimate for 2016 started the year at $1.80 and then plunged down to $1.55 in February and kicked lower to $1.52 in March. Prior to the recent beat, analysts became much more positive on the stock and raised numbers of the stock to $1.76 in April and that is where we stand today.

The 2017 number saw some similar moves, bottoming out at $1.92 in February and then crawling higher to $2.09 in March and is now at $2.17.

Estimates for an automobile manufacturer will be a little more volatile than other stocks as they report car sales at the beginning of each month. By the time the earnings report is out the analysts will have a good idea of what the top line is going to look like.

Valuation

FCAU has a forward PE of 4x and that is well below the 9x industry average. The price to book of 0.5x is less than one third of the 1.7x industry average and the price to sales multiple is 0.1x compared to a 0.6x industry average. Clearly the valuation is really low here, and that makes this that much better of an investment for the long term.

Bear of the Day:

Sotheby's (BID) has missed the Zacks Consensus Estimate in two of the last four reports, and it wasn't even close. Misses of $0.21 and $0.13 translated into a misses of 16% and 59%. The stock is now a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.

The Numbers

BID missed the Zacks Consensus Estimate of -$0.22 by $0.13 for a 59% negative earnings surprise. Revenues came below expectations at $107M for a 13% negative revenue surprise.

Description

Sotheby's Holdings is one of the world's second largest auctioneers of fine arts, antiques and collectibles, offering property in collecting categories, among them paintings, jewelry, decorative arts, and books. The Company operates in countries, with principal salesrooms located in New York and London.

Earnings History

Usually when a stock is the Bear of the Day, the earnings history is filled with misses. This is not the case for BID, as there are only two misses in the last four quarters.

Estimates

Here is the real reason the stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day. The Zacks Consensus Estimate has fallen steadily over the last few months. The FY16 estimate stood at $2.76 in October but fell to $2.22 in January and is now down to $1.65 in May.

Next year has seen estimates move from $2.59 when they first came out in November of last year. It has kicked lower to $2.09 as of May, but there is limited visibility to those numbers at this time.

Additional content:

The Simple Mechanics in Range-Trading 2016

In the last 4 months of 2016, (February to May) major stock indices and the U.S. 10-year Treasury rate entered a new trading range.

  • “Risk-on” and long gets rates up to near 2.0% on 10-yr Treasuries

  • “Risk-off” and short gets rates back to 1.70% where the 10-yr left off last Friday


On Monday May 16th, this Global Week Ahead started U.S. Treasuries at 1.73%. The markets show you a modest shift back into a “Risk-on” and long posture in this trading range.

This rotation should catch your interest.


In the latest swing trade, the 10-yr hit 1.93% late in April. Stock indices topped off. Then, the 10-yr risk-free rate headed down for a 3-week range-trading journey to the 1.70% bottom. On the way down, traders sell stock indices. They put the money in a fixed income safe haven. Then, they reverse the swing trade at the bottom of the trading range.

Rinse and repeat.

Without any fresh macro catalysts, this is what traders do to major stock indices and fixed income.

After reviewing coming global-macro indicators in the Global Week Ahead, there is nothing to get excited about. News of a stronger U.S. housing construction sector is coming this week -- in terms of permits, starts, and leading indicators. This data is likely fully priced in.

GDPNow says Q2 GDP growth for the U.S. economy will be +2.8%. A fully anticipated seasonal spring rebound is on for the U.S. economy.

If you just want to play the new 2016 trading range, I have an idea for you.

An interesting Zacks #1 Rank stock to look at is Chipmos Tech (IMOS). This is a Taiwanese company. It is an independent provider of total semiconductor testing and packaging solutions to fabless companies.

This stock is a small-cap at $468 million. Shares are priced at the bottom of a trading range at $17 a share. The stock has a Zacks Value rating of A. The respected investor Seth Klarman’s Baupost Group controls 13.75% of ChipMOS.

What isn’t in a trading range is the price of oil!

Global Brent crude oil prices rose to nearly $49 a barrel on Monday. That’s a 7-month high. This week, Energy is a #65 out of 265 (top 29%) Zacks-ranked Industry. The higher oil prices go, the higher Energy stocks go.

Oil price momentum is on.

If you are looking for an Energy sector stock ticker play, take a look at Zacks #1 Rank Seadrill (SDLP). This stock also gets a composite Zacks VGM rating of A.

This dirt-cheap $4.60 a share stock offers a PEG ratio of 0.06. It doesn’t get much cheaper than that! The market cap is currently a paltry $360 million and the chart shows you nice upward trading momentum.

Seadrill Partners LLC is engaged in owning, operating and acquiring offshore drilling rigs. The company's drilling rigs are under long-term contracts with major oil companies. The firm is based in London.

Finally, for the more risk-averse, take a look at Adidas AG (ADDYY). This is the large cap global German shoe & apparel company. The $24.6 billion market cap stock holds a Zacks VGM rating of B.

These are the three most interesting global stocks up to a Zacks #1 Rank (Strong Buy) over the weekend.

This Friday -- as is the tradition -- G7 finance ministers and central bankers meet in Japan. Finance minister and central banker meetings are held typically one week ahead of a 2-day meeting of G7 leaders planned for May 26th and May 27th.

Japan holds the presidency of the G7 this year. President Obama of the USA will visit the Hiroshima nuclear site on that Friday in two weeks’ time. That’s the first time a sitting U.S. president has visited.

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About the Bull and Bear of the Day

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FIAT CHRYSLER (FCAU): Free Stock Analysis Report
 
SOTHEBYS (BID): Free Stock Analysis Report
 
CHIPMOS TEC LTD (IMOS): Free Stock Analysis Report
 
SEADRILL PTNRS (SDLP): Free Stock Analysis Report
 
ADIDAS AG-ADR (ADDYY): Free Stock Analysis Report
 
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