Today’s news:
• Bristol-Myers Squibb (BMY) reported great first-quarter results; moves from Hold to Strong Buy.
• Equitable Holdings (EQH) reported good first-quarter results.
• NV5 Global (NVEE) reported good first-quarter results.
• Quanta Services (PWR) reported good first-quarter results.
• Universal Electronics (UEIC) reported a first-quarter earnings and revenue miss.
Bristol-Myers Squibb Company (BMY 62 – yield 2.9%) reported first-quarter results yesterday. Non-GAAP EPS of $1.72 far surpassed the $1.49 consensus estimate, and revenue was $10.8 billion vs. the $10.0 billion estimate. The quarter featured strong sales, robust operating performance and significant advancement of the company’s pipeline.
The company affirmed its 2020 non-GAAP EPS guidance range of $6.00 to $6.20 and 2021 non-GAAP EPS guidance range of $7.15 to $7.45. This translates to an expectation of approximately 30% and 20% EPS growth in 2020 and 2021, respectively. Refer to the earnings press release for details about the quarter’s performance.
I’m moving BMY from Hold to a Strong Buy recommendation, now that it seems to be done resting from its March-April run-up. BMY is an undervalued growth stock, appropriate for both growth investors and income investors. The stock is traveling toward its February peak at 67. Barring another downturn in the broader stock market, I believe BMY can begin a new run-up past 67 in the next few months. Strong Buy.
Equitable Holdings (EQH 17.50 – yield 3.9%) reported first-quarter non-GAAP EPS of $1.08 vs. the $1.12 consensus estimate, within the targeted range of recent corporate guidance. CEO Mark Pearson commented, “We are well-capitalized with an RBC ratio of 450-475% and our liquidity position remains strong.”
As of March 31, 2020, Equitable has $646 billion assets under management (AUM), and book value per common share, excluding accumulated other comprehensive income (“AOCI”), was $37.78 per share. The company spent $274 million on dividends and share repurchases during the quarter, and expects to continue delivering a 50-60% payout ratio. Refer to the earnings press release for additional performance figures.
Equitable Holdings owns two principal franchises: Equitable Life Insurance Co. and a majority stake in AllianceBernstein Holdings L.P. (AB), an investment management firm. EQH is a very undervalued growth stock, appropriate for dividend investors, growth investors and traders. The price chart is bullish, with short-term upside price resistance at 19 and 22. Strong Buy.
NV5 Global (NVEE 44) reported first-quarter results yesterday. Adjusted EPS of $0.84 missed the $0.86 consensus estimate. Revenues totaled $167.0 million, beating the $161.2 million estimate. CEO Dickerson Wright commented, “We are fortunate that a majority of NV5 services are non-discretionary, minimizing the impact of economic cycles on business performance…”
NV5 Global is a leading provider of professional and technical engineering and consulting solutions for public and private sector clients in the infrastructure, construction, real estate, and environmental markets.
NVEE is an undervalued micro-cap growth stock, appropriate for risk-tolerant growth investors and traders. The stock has recently traded between 42-48 amidst an uptrend, with additional upside resistance near 55. Strong Buy.
Quanta Services (PWR 34 – yield 0.6%) reported first-quarter results yesterday. Adjusted diluted EPS of $0.47 beat the $0.46 consensus estimate. Revenue of $2.76 billion slightly exceeded the $2.7 billion estimate. The company repurchased $200 million of stock during the quarter, and the current backlog totals $14.7 billion. Due to COVID-19 expenses and business disruptions, the company now expects full-year 2020 EPS to be roughly equal to last year’s $3.33 per share.
CEO Duke Austin said, “We ended the quarter with near record backlog and a strong balance sheet, which we believe demonstrates the sustainability of our business and favorable positioning going forward. We estimate that 80% to 90% of our revenues are derived from utility, communications and certain pipeline and industrial infrastructure services that we believe will continue to be resilient, even in the current challenging environment, and we expect to achieve record backlog during the year.”
Quanta Services is a leading specialty infrastructure solutions provider serving the utility, energy and communication industries. PWR is an undervalued, mid-cap growth stock. This morning, Citigroup raised their price target to 42. The stock is resting after a recent run-up, largely trading between 33-37. Hold.
Universal Electronics (UEIC 35) reported first-quarter results yesterday, which included $152.0 million in revenue and $0.81 earnings per diluted share, lower than the consensus estimates of $168.2 million revenue and $0.83 EPS.
CEO Paul Arling said, “We entered 2020 with the strongest foundation in our history, having devoted 2019 to ongoing technology development and the implementation of strategic initiatives to improve profitability. As a result, we are better positioned to address challenging macro-economic conditions.”
Bryan Hackworth, UEI’s CFO, stated, “In the first quarter of 2020, we generated strong gross margins and improved operating margins, even though revenue was disrupted by unforeseen events. In China, our labor pool is back to pre-shutdown levels, and our factories in both China and Mexico are producing at required capacity. Overall, UEI is prepared to manage through uncertain times by leveraging our diverse customer base, manufacturing facilities in two hemispheres, deep supplier partnerships, and strong balance sheet.”
Universal Electronics is a manufacturer and world leader of wireless and voice remote control products, software and audio-video accessories for the smart home. UEIC is a volatile, undervalued, micro-cap growth stock, appropriate for risk-tolerant investors and traders. The stock reacted poorly to the earnings report this morning, falling toward April price support levels near 34. At this point, UEIC will most likely trade between 34-40 for a couple of months as it stabilizes from today’s price drop. Buy.