SNA Hits 52-Week High: Can Growth Initiatives Further Drive the Stock?

It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.

The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM Score

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Ralph Lauren (RL)

Ralph Lauren Corp. is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia, and internationally. It offers products in the apparel, footwear, accessories, home furnishings, and other licensed product categories. The company possesses a strong portfolio of globally recognized brand names such as Polo Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Double RL, Lauren Ralph Lauren, Polo Golf Ralph Lauren, Ralph Lauren Golf, RLX Ralph Lauren, Polo Ralph Lauren Children, Chaps, Club Monaco and American Living.

RL is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.

Momentum investors should take note of this Consumer Discretionary stock. RL has a Momentum Style Score of A, and shares are up 4.3% over the past four weeks.

Six analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025. The Zacks Consensus Estimate has increased $0.42 to $11.71 per share. RL boasts an average earnings surprise of 9.1%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, RL should be on investors' short list.

Zacks Investment Research

Investors interested in Consumer Discretionary stocks should always be looking to find the best-performing companies in the group. Choice Hotels (CHH) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? By taking a look at the stock's year-to-date performance in comparison to its Consumer Discretionary peers, we might be able to answer that question.

Choice Hotels is one of 270 individual stocks in the Consumer Discretionary sector. Collectively, these companies sit at #6 in the Zacks Sector Rank. The Zacks Sector Rank gauges the strength of our 16 individual sector groups by measuring the average Zacks Rank of the individual stocks within the groups.

The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks. This system has a long record of success, and these stocks tend to be on track to beat the market over the next one to three months. Choice Hotels is currently sporting a Zacks Rank of #2 (Buy).

Over the past 90 days, the Zacks Consensus Estimate for CHH's full-year earnings has moved 7% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

Our latest available data shows that CHH has returned about 27.9% since the start of the calendar year. In comparison, Consumer Discretionary companies have returned an average of 11.3%. This means that Choice Hotels is performing better than its sector in terms of year-to-date returns.

Another Consumer Discretionary stock, which has outperformed the sector so far this year, is Gildan Activewear (GIL). The stock has returned 46.6% year-to-date.

The consensus estimate for Gildan Activewear's current year EPS has increased 1.8% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

Looking more specifically, Choice Hotels belongs to the Hotels and Motels industry, which includes 14 individual stocks and currently sits at #181 in the Zacks Industry Rank. Stocks in this group have gained about 26.8% so far this year, so CHH is performing better this group in terms of year-to-date returns.

Gildan Activewear, however, belongs to the Textile - Apparel industry. Currently, this 20-stock industry is ranked #52. The industry has moved -13.5% so far this year.

Going forward, investors interested in Consumer Discretionary stocks should continue to pay close attention to Choice Hotels and Gildan Activewear as they could maintain their solid performance.

Zacks Investment Research

BrightView Holdings, Inc. BV posted fourth-quarter fiscal 2024 results, wherein the top line declined year over year but surpassed the Zacks Consensus Estimate. The bottom line increased year over year but lagged the Consensus Estimate.

However, the company’s fourth-quarter results confirm fiscal 2024 as a breakthrough year, highlighting continued business transformation. The One BrightView culture is gaining momentum, positioning the company for fiscal 2025 to be another record-setting year.

BrightView Holdings, Inc. Price, Consensus and EPS Surprise

BrightView Holdings, Inc. price-consensus-eps-surprise-chart | BrightView Holdings, Inc. Quote

More on BV’s Q4 Results

This leading commercial landscaping services company posted adjusted quarterly earnings of 30 cents per share, showcasing an improvement from 19 cents in the year-ago period. However, the metric missed the Zacks Consensus Estimate of 31 cents per share.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Total revenues of $728.7 million slightly surpassed the Zacks Consensus Estimate of $728 million and decreased 2% year over year. The decline was due to a drop in Maintenance Services revenues, partially offset by an increase in Development Services revenues.

The gross profit decreased 1.9% year over year to $182.1 million. We note that the gross margin is 25%, flat year over year.

Adjusted EBITDA increased almost 3.5% year over year to $105.2 million. Also, as a percentage of total revenues, the metric rose 70 basis points (bps) to 14.4%. The increase was driven by a $12.1 million rise in Development Services EBITDA, partially offset by a decline in Corporate EBITDA due to the disposal of corporate assets in the previous year.

BrightView’s Q4 Revenue Insights by Segments

In the fourth quarter, revenues for the Maintenance Services Segment declined 6.6% year over year to $486.5 million compared to the Zacks Consensus Estimate of $500 million. This decrease was due to a shortfall in core commercial landscape services, driven by strategic reductions in non-core business areas and, to a lesser extent, a reduction in ancillary services.

The segment’s adjusted EBITDA margin increased by 110 basis points to 16.8%, compared to 15.7% in 2023. This margin improvement was the result of lower overhead costs from the company’s cost management efforts, along with strategic reductions in non-core businesses.

Revenues for the Development Services Segment rose 8.6% year over year to $244.1 million, exceeding the Zacks Consensus Estimate of $229.8 million, due to higher project volumes. Also, the adjusted EBITDA margin improved by 390 basis points to 16.9% from 13% in the prior year. These gains in adjusted margin were driven by the revenue increase.

BV’s Financial Health Snapshot

BrightView ended the quarter with cash and cash equivalents of $140.4 million, long-term debt of $802.5 million and total shareholders’ equity of $1.28 billion.

Net cash provided by operating activities for the fiscal year ended Sept. 30, 2024, was $205.6 million. Free cash flow rose by $65.1 million for the fiscal year, reaching $145.3 million, up from $80.2 million in the previous year. Capital expenditures were $78.4 million in fiscal 2024.

BrightView’s Fiscal 2025 Outlook

For fiscal 2025, the company anticipates total revenues in the range of $2.75 to $2.84 billion. The company reported total revenues of $2.78 billion in fiscal 2024. Adjusted EBITDA is expected to be between $335 and $355 million compared with $324.7 million reported in fiscal 2024, while free cash flow is projected to range from $40 to $60 million.

Shares of this Zacks Rank #3 (Hold) company have increased 23.7% in the past three months as compared with the industry’s growth of 4.5%.

Key Picks

Some better-ranked stocks are Abercrombie & Fitch Co. ANF, Gildan Activewear Inc. GIL and Steven Madden, Ltd. SHOO.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

ANF delivered a 16.8% earnings surprise in the last reported quarter.

The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 64.2% and 13%, respectively, from the fiscal reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.

Gildan is a manufacturer and marketer of premium quality branded basic activewear for sale principally in the wholesale imprinted activewear segment of the North American apparel market. It currently carries a Zacks Rank #2.

The consensus estimate for Gildan’s current financial-year earnings and sales indicates growth of 15.6% and 1.5%, respectively, from the 2023 figures. GIL has a trailing four-quarter average earnings surprise of 5.4%.

Steven Madden designs, sources, markets and sells fashion-forward, name-brand and private-label footwear. It currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 8.2% and 13.4%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.8%.

Zacks Investment Research