For Immediate Release
Chicago, IL –November 25, 2024 – Zacks Equity Research shares Monday.com MNDY, as the Bull of the Day and Polaris Inc. (PII), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corporation NVDA, Microsoft Corp. MSFT and Meta Platforms, Inc. META.
Here is a synopsis of all five stocks:
Bull of the Day:
Monday.com is a business software company ripping off impressive earnings and revenue growth. MNDY stock has doubled the Zacks Tech sector over the past two years, soaring 190%.
See the Zacks Earnings Calendarto stay ahead of market-making news.
Monday.com posted a strong beat-and-raised third quarter on November 11 helping earn its Zacks Rank #1 (Strong Buy). Still, MNDY stock trades roughly 25% below its all-time highs even as the Nasdaq and plenty of big tech stocks appear a bit overheated in the near term.
Why MNDY Is a Great Growth Tech Stock
The foundation of Monday.com’s business is its work-focused operating system. Monday.com’s Work OS is a “low code-no code” platform that helps businesses build work management tools and software applications across various industries.
Monday.com operates in a critical growth segment since companies and startups of all stripes must digitize their workflows to thrive in the modern economy.
Monday.com has accumulated over 225K customers across 200 industries in over 200 countries. The company boasts an impressive net dollar retention rate of 111% (in Q3), showcasing its ability to retain its existing revenue from current customers when factoring in upgrades, downgrades, and churn.
Monday.com is growing its reach with larger customers though it is still built on the back of smaller businesses. MNDY grew its paid customers with over $100K in Annual Recurring Revenue by 44% in the third quarter.
The company highlighted that its “second-largest customer - an international technology company - more than doubled their seat count to 60,000 from 25,000.”
Monday.com grew its third-quarter revenue by 33% to $251 million while surpassing $1 billion in ARR during the period. MNDY also expanded its adjusted Q3 EPS by 33% after it swung from a full-year loss of -$0.73 in 2022 to +$1.85 per share in 2023.
Monday.com Stock’s Impressive Growth Outlook
The business software firm’s FY24 consensus earnings estimate has jumped 16% since its November 11 release with its FY25 estimate 13% higher. MNDY’s recent upbeat EPS outlook helps it land a Zacks Rank #1 (Strong Buy) and is part of an impressive surge in bottom-line revisions.
Monday.com is expected to expand its adjusted earnings by 73% in FY24 and 12% next year. MNDY has topped our EPS estimates by an average of 72% in the trailing four quarters.
MNDY is projected to grow its revenue by 32% in 2024 and 26% in 2025 to reach $1.21 billion vs. $729.7 million in 2023. This expansion comes on top of FY23’s 41% growth and 2022’s 68% surge.
MNDY Stock Performance and Technical Levels
Monday.com stock ripped off a 190% gain in the last two years to blow away the Zacks Tech sector’s 82%. The stock is up 53% YTD to double Tech. Monday.com has roughly matched the Zacks Tech sector since its June 2021 IPO, up around 40%.
Despite all of this, MDNY stock is trading around 25% below its 2021 peaks and 17% below its average Zacks price target. The stock popped on Friday to retake its 50-day and 21-day moving averages. The stock is also far from overheated, trading at neutral RSI levels.
Time to Buy Monday.com Stock Down 25% from Its Highs?
Monday.com’s valuation levels are worrisome and holding the stock back. But the company is improving its bottom line and remains committed to growth.
Monday.com’s balance sheet is stellar, with $1.4 billion in cash and equivalents and $1.6 billion in total assets compared to only $614 million in total liabilities. This should help MNDY pursue expansion efforts and possibly boost its artificial intelligence (AI) investments.
Wall Street is bullish on the stock, with 16 of the 22 brokerage recommendations Zacks has coming in at “Strong Buy,” with no sells.
Bear of the Day:
Polaris Inc. is an off-road vehicles star facing a “challenging retail environment throughout the rest of 2024 and into next year.”
Polaris fell short of our Q3 earnings estimate in late October and its EPS outlook has tanked over the last year.
The Basics of Polaris Stock
Polaris is one of the kings of off-road vehicles with a growing reach on the street and the water. The company’s portfolio includes all-terrain off-road vehicles such as side-by-sides and ATVs. Polaris’ Indian Motorcycle and Slingshot segments can be found on roads and highways.
Polaris also makes snowmobiles and boats, including industry-leading Bennington pontoon boats. Polaris sells to regular consumers as well as commercial customers and government and defense buyers.
Polaris grew its revenue at a rather impressive clip over the last 15 years outside of a few pullbacks. The company went on a big run in 2021 and 2022 as consumers flush with cash flocked to its offerings. Polaris did another 4% sales growth in 2023, following 16% and 18%, respective expansions the prior two years.
But the company is projected to see its sales slide 21% YoY in 2024 to dip below its 2021 total at $7.11 billion. Polaris is also expected to see its adjusted earnings sink by 65% YoY in 2024. PII’s FY24 consensus estimate has fallen 65% in the last 12 months with its FY25 estimate 63% lower.
Polaris missed our Q3 EPS estimate by 16% and provided downbeat guidance. PII’s overall downward earnings revisions help it earn a Zacks Rank #5 (Strong Sell). “As consumer confidence and retail demand remain challenging, we have maintained our focus on managing dealer inventory and delivering better operational efficiency,” CEO Mike Speetzen said in prepared remarks.
“A healthy dealer network is one of the critical components to our long-term success, which is why we have anchored our current production and shipment plans to our goal of lowering dealer inventory by 15 to 20 percent by the end of the year, and I am encouraged by the progress being made. We expect a challenging retail environment throughout the rest of 2024 and into next year.”
Time to Avoid Polaris Stock?
Polaris stock has fallen 60% in the last 10 years while its Auto-Tires-Trucks sector climbed 45%. PII shares are down 28% YTD and trading solidly below their long-term 200-week moving average.
A bottom might be in for Polaris soon. But investors might be safer waiting for signs that a turnaround is underway at Polaris before they consider buying.
Additional content:
3 Reasons Besides Q3 Data Center Success to Buy NVIDIA Stock
NVIDIA Corporation has delivered better-than-expected sales and earnings in its latest quarterly report as it continues to progress banking on the incessant demand for its artificial intelligence (AI) chips.
Amid the recent data center success, NVIDIA stock remains attractively priced, exhibits a bullish trend, and is fundamentally strong, making it a good buy for investors. Let’s see in detail –
NVIDIA Stock – Positive Q3 Data Center Result & Outlook
NVIDIA recently reported fiscal third-quarter results, in which its revenues jumped 94% to $35.1 billion from the same period a year ago. Earnings per share (EPS) came in at $0.81, up 103% from a year ago.
The company’s revenues exceeded Wall Street expectations due to record gains from the data center business. Third-quarter revenues from the data center came in at $30.8 billion, up 112% from a year ago.
CEO Jensen Huang admitted that demand for its Superchips and related hardware was robust, particularly for its present Hopper chips. Huang expects continued high demand for Hopper chips into next year.
The advanced H200 chips will be available in several cloud services, such as Azure, Google Cloud and AWS. Beyond big tech cloud operators, Denmark launched its AI supercomputer driven by H100 Tensor Core graphic processing units (GPUs). The government’s demand for Hopper chips, beyond private companies, fuels NVIDIA’s growing data center business in the information arms race.
But it’s not all about Hopper chips, Huang clarified that the demand for the much-awaited next-generation Blackwell chips remains “staggering” for the fourth quarter and next year.
Companies like Microsoft Corp. and Meta Platforms, Inc. will likely adopt the Blackwell chips for higher AI throughput than the current Hopper chips. The Blackwell platform can enhance AI training performance and train large language models cost-effectively.
According to SoftBank Corp, NVIDIA’s Blackwell platform will build Japan’s most powerful AI supercomputer. Also, NVIDIA’s Blackwell platform may power Taiwan’s fastest AI supercomputer. Therefore, the data center business will drive NVIDIA’s success and increase its share price, making it an enticing buy.
NVIDIA Stock Is Less Pricey Than Its Peers
NVIDIA’s strong third-quarter performance comes as no surprise since the company has been delivering promising quarterly results for quite some time. NVIDIA is one of the top performers on the S&P 500 and is the most valuable company.
Despite all the success, buying NVIDIA stock as of now will burn a smaller hole in your pocket than its peers. After all, per the price/earnings, the NVDA stock trades at 51.7X forward earnings, less than the Semiconductor - Generalindustry’s 59.6X forward earnings multiple.
NVIDIA Stock Has Bullish Chart Patterns
Despite NVIDIA’s commendable third-quarter performance, its share price dipped initially as the hype surrounding its earnings results was insane. The stock was in overbought territory and a short-term dip after the earnings release was inevitable.
However, the NVIDIA stock is currently trading above the short-term 50-day moving average (DMA) and long-term 200-DMA, a tell-tale bullish trend, making it a sound investment option.
NVIDIA Stock Is Fundamentally Solid
NVIDIA has been able to manage its costs efficiently and generate profits persistently for a somewhat long time, which anyhow makes it the best stock to invest in.
NVIDIA’s net profit margin is 55%, higher than the industry’s 47.3%. Any reading greater than 20% indicates a high profit margin.
Similarly, NVIDIA’s return on equity (ROE) of 120.4% exceeded the industry average of 78.3%, showcasing that the net income surpassed equity.
NVIDIA, thus, rightfully has a Zacks Rank #1 (Strong Buy) (read more: This Is Why NVIDIA Joined the Dow; And Why It's Time to Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
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