For Immediate Release

Chicago, IL – September 14, 2016 – Zacks Equity Research highlights Norbord (OSB) as the Bull of the Day and Buckle (BKE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Kroger Co. (KR),Whole Foods Market, Inc. (WFM) and Sprouts Farmers Market, Inc. (SFM).

Here is a synopsis of all the five stocks:

Bull of the Day :

The investing world is pretty uncertain these days, and with the threat of Fed action, the close of the year doesn’t look to be any less volatile. Add in somewhat sluggish economic indicators and a presidential election, and investors have a very unstable situation on their hands.

In these kinds of environments, it is probably best to bet on the top industries for investment. These top industries are seeing the best track records in terms of earnings estimate revisions, while the top half of our industry rank outperforms the bottom half by a two to one margin historically.

But today, let’s not look at some industry that is just barely getting into the top 50%, let’s look at one that is in the top one percent instead, the building products- wood segment. This area actually doesn’t have a single stock that is ranked ‘sell’ right now, while six of the eight names in the space have a rating of at least ‘buy.’

With these types of numbers, this could be a good space to watch in the near term. But which is the best bet in this industry? Well, one name to like right now is certainly Norbord (OSB) , which has gone from a ‘Strong Sell’ to a ‘Strong Buy’ in just the past week alone. Let’s take a look at why this company is surging up the rank list, and why this might be the best choice in this impressive industry.

OSB in Focus

Norbord is a Toronto, Canada-based manufacturer and distributor of oriented strand boards which are used in a variety of home construction applications such as flooring, roofing, and sheathing. The company, like many others in the space, is benefiting from the robust housing market which is boosting demand for its key products.

And while the positive story for the sector is pretty well-known—as evidenced by the solid industry rank—investors are only just now beginning to understand OSB’s potential. This is best seen by inspecting the shift in the consensus estimate over the past two months in order to see what the impact of recent estimate revisions has been on OSB earnings expectations.

OSB Consensus

If we look to the recent changes in earnings expectations, we can see that the current quarter consensus has skyrocketed by nearly 60% in the past 60 days, a huge shift in expectations. Granted, the following quarter has seen estimates get cut by roughly 24%, but we are still seeing a double digit increase in expectations for the full year in just the past two months.

However, it isn’t just the current year that is great for OSB, as the following year is very solid as well. The consensus estimate on that front has gone from $2.01/share 60 days ago to $2.44/share today, an increase of 21%, baking in a nice rate of growth for OSB investors.

With recent shifts like this, it shouldn’t be a surprise that OSB has gone from a sell to a buy, and why this industry is looking promising right now too. And with a forward PE below 16, there is plenty to like about this stock, especially given its recent bump up into ‘strong buy’ territory.

Bear of the Day:

Despite continued concerns over Amazon and shifting consumer tastes, this earnings season was actually a pretty good one for the retail sector. Numerous companies in the space delivered nice surprises, while share prices soared across the board too.

However, not all companies have benefited from this trend, as several saw weakness in the quarter, continuing their overall bearish trends. One such firm that stumbled this earnings season and may be one to continue avoiding is The Buckle (BKE).

BKE in Focus

The Buckle is a retailer of casual footwear and apparel for both men and women in the U.S. market. The company currently has over 450 stores in 44 states, so it has a pretty wide geographic reach. Unfortunately for BKE though, the company has largely fallen on tough times lately, as the stock has lost over 36% of its value in the last 52 weeks alone.

The company has struggled in this uncertain market environment, and a big reason for the sluggish stock price has definitely been its performance in earnings season. In the past four quarters, the company has missed expectations in three of them, posting a four-quarter average miss of roughly 3.1%.

Misses in earnings season aren’t the only reason investors have been punishing the company though, as analysts have been ratcheting their expectations for BKE earnings lower in recent weeks. In fact, recent estimate cuts have taken the consensus estimate down by 10% in the past two months for the current quarter, and down 6.6% for the full year.

With these recent cuts, BKE is now expected to see earnings shrink by 22% this year when compared to last, while sales are expected to fall by 8% this year as well. Clearly, more pain is ahead for BKE in the near term—though it does see some more favorable numbers in the following year—and that is why we currently have a Zacks Rank #5 (Strong Sell) for the stock.

Additional content:

What’s Wrong with These Supermarket Stocks?

Major grocery chains such as The Kroger Co. (KR),Whole Foods Market, Inc. (WFM) and Sprouts Farmers Market, Inc. (SFM) are going through a rough patch. Analysts believe that industry-wide weakness is hurting the margins of these supermarket chains. Stiff competition, food price deflation, an aggressive promotional environment and waning store traffic are the headwinds with which these providers of daily need items are grappling.

Share prices of these food store chains have been hit hard recently. Sprouts Farmers Market, Kroger and Whole Foods have plunged roughly 27%, 26% and 15.3% year to date, respectively. Yesterday, Kroger and Whole Foods touched a 52-week low of $30.70 and $28.06, respectively, while the share price of Sprouts Farmers Market is hovering close to its 52-week low of $18.70.

What is Wrong with These Stocks?

Sprouts Farmers Market recently lowered its sales and earnings outlook citing a tough retail environment. The company now expects third-quarter comparable-store sales (comps) to be flat, down from the previous forecast of 3–4% growth. For full-year 2016, the company now predicts earnings in the band of 83–86 cents a share against 92–94 cents projected earlier. Further, the company significantly lowered its comps growth guidance for the year to the range of 1.5–2.5% from the previous forecast of 3.5–4.5%.

On other hand, Whole Foods has been struggling with its dwindling comps. The company saw its comps decline 2.6% in third-quarter fiscal 2016. During the first three weeks of the fourth quarter, comps dropped 2.4%. Comps were down 3% and 1.8% in the second and first quarters of fiscal 2016, respectively, and slid 0.2% in the final quarter of fiscal 2015. Management expects comps to decline of 2.4% during the fourth quarter of fiscal 2016.

Last week, Kroger came up with its second-quarter fiscal 2016 results. The company posted adjusted earnings of 47 cents a share that beat the Zacks Consensus Estimate by a couple of cents, and increased 6.8%. Despite delivering a positive earnings surprise for the eleventh straight quarter, this Cincinnati-based company lowered its fiscal 2016 earnings projection on account of a deflationary environment. The company also trimmed its identical supermarket sales (excluding fuel) growth forecast. (Read: Kroger Q2 Earnings Beat, Revenues Miss; View Slashed )

Bottom Line

The grocery business is highly competitive and fragmented. And as more companies are entering as well as expanding their presence, it is becoming tough for the existing players to retain their market share. Kroger currently carries a Zacks Rank #3 (Hold), while Whole Foods and Sprouts Farmers Market holds Zacks Rank #4 (Sell) and #5 (Strong Sell), respectively.

Market experts believe that short-term investors should shift their focus from grocery stocks at least for the time being and bet their bucks on other lucrative counters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

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NORBORD INC (OSB): Free Stock Analysis Report
 
BUCKLE INC (BKE): Free Stock Analysis Report
 
KROGER CO (KR): Free Stock Analysis Report
 
WHOLE FOODS MKT (WFM): Free Stock Analysis Report
 
SPROUTS FMR MKT (SFM): Free Stock Analysis Report
 
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