The stock has been trending higher since last reporting earnings in late July. If the earning momentum can continue, the stock should follow suit.
With analyst hiking estimates across the board, investors should be eyeing this name on any pullback.
SoFi was founded in 2011 and is headquartered in San Francisco, California. The stock is valued at $8.5 billion, and the company employs 4,400.
SoFi operates through three segments: Lending, Technology Platform, and Financial Services. It offers personal, student, and home loans, and related services.
The company also runs Galileo, a technology platform serving financial and non-financial institutions, and Technisys, a cloud-native banking platform. Additionally, it provides SoFi Money for checking, savings, and cash management, and SoFi Invest for trading and robo-advisory solutions.
The stock has a Zacks Style Score of "A" in Momentum, and "C" in Growth. However, the stock has a "F" in Value, with a Forward PE over 80.
In late July, SoFi reported a 1 cent EPS beat and beat revenue expectations. The company guided Q3 earnings and revenues higher and sees adjusted EBITDA at $160-165M.
Moreover, SoFi raised expectations for FY24 revenues, FY24 adj EBITDA and FY24 GAAP Net income.
Total members are now at 8.77M v 4.32M a year ago, showing rapid annual growth in customers.
Management highlighted a strong Q2, attributing success to product innovation and member growth. Their one-stop shop strategy is driving growth across segments, despite macroeconomic challenges. Financial Services and Tech Platform segments now represent 45% of adjusted net revenue, up from 38% a year ago, growing 46% year-over-year. The company sees its Tech Platform evolving into the "AWS of financial services" and is well-positioned to capitalize once the lending environment improves.
Since reporting earnings, analysts have been lifting their earnings estimates and price targets.
For the current quarter, estimates went from $0.03 to $0.4 since EPS, or 33% higher.
For the current year, the last 60 days has seen a move higher from $0.08, to $0.10, or 25%.
For next year, estimates have slowly been raised over the last 90 days. Analysts now see $0.27 v $0.24, a jump of 11%.
The stock is up almost 20% since reporting earnings, but some analysts think there is more room. After earnings, Needham analyst Kyle Peterson reiterated SoFi with a Buy and maintained the $10 price target.
More recently, SoFi presented at a Goldman Sach conference. CEO Anothony Noto commented that they anticipate more student loan refinancing demand and the more they spend on marketing, the more they grow.
These comments reiterate that the lower interest rates go the more demand and business the company will see.
This was a $28 stock after its IPO in late 2020, so the bulls have some work to do to get back to all-time highs. In the meantime, the stock is on the verge of breaking out to 2024 highs. However, sellers are showing up as the stock has seen some resistance in the $8.50 level.
Investors looking to target a pullback to buy should look at the following support areas:
The 200-day moving average is at $7.55.
The 21-day MA is $7.70.
The 50-day is $7.35.
One thing to watch out for is a potential "Golden Cross." This would trigger when the 50-day gets over the 200-day MA and could bring in some fresh buyers into the stock.
SoFi Technologies is showing strong growth across its key segments, driven by innovation, and expanding customer base.
The company's recent Q2 earnings beat expectations, and management has raised guidance for the remainder of FY24. With rising analyst estimates and increased demand expected in the student loan refinancing space, SoFi is well-positioned to capitalize on improving market conditions.
While the stock has gained nearly 20% since its earnings report, there may be more room for upside, especially if technical indicators, like a potential "Golden Cross," attract new buyers.
Valero Energy is a Zacks Rank #5 (Strong Sell) that is the largest independent refiner and marketer of petroleum products in the United States.
The stock has made a slow as steady move lower since April and due to the recent drop in crude oil, lower prices are warranted.
While the stock has a nice dividend and looks like a bargain to where it was earlier in the year, investors should be patient. If crude were to drop closer to $60, this stock could flush lower, and lose 2024 gains entirely.
Valero Energy was founded in 1980, employs almost 10,000, and is headquartered in San Antonio, Texas.
Valero manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products in the United States, Canada and internationally. It operates through three segments: Refining, Renewable Diesel, and Ethanol.
VLO is valued at $43 billion and has a Forward PE of 13. The stock holds Zacks Style Scores of "B" in Value and pays a 3.1% dividend.
This company never misses earnings, so a 4% EPS beat in late July was not a surprise.
Revenues came in just short of expectations and the company commented that they see continued strength in the U.S. wholesale system.
However, crude oil was over $80 in late July. It is currently trading under $70 now and looks like it could continue lower.
There is concern that lower energy prices could lower margins for Valero and hurt upcoming earnings performance. This idea is evident with analysts lowering earnings estimates and price targets.
Looking back to before earnings, or the last 90 days, analysts have slashed Valero's estimates aggressively.
For the current year, estimates have dropped from $5.01 to $2.09, over that time frame. That is a cut of 58%.
The current year has fallen from $16.29 to $10.26 (37%) and next year had dropped from $14.18 to $11.93 (16%).
As earnings projections have fallen, so have price targets:
-TD Cowen dropped their target to $143 from $170.
-Piper/Sandler has gone to $123 from $169.
-Goldman has lowered theirs to $131 from $149.
If oil continues to fall, the market will likely get more worried about Valero's upcoming earnings.
The stock started the year off great, moving from $130 to $184. However, almost all those gains have been erased, with the stock trading around the $135 level.
The 50-day MA is below the 200-day MA, which signals a "Death Cross" for the stock. Investors should be patient as the stock looks like it could test the Q4 2023 support area around $120.
If oil sees further pressure, the $100 level has been long-term support and an area that long-term investors might be interested in.
Valero faces significant challenges that raise concerns for investors. The sharp reductions in earnings estimates—down 58% for the current year—reflect a declining outlook as lower crude oil prices threaten to erode margins and earnings. Analysts have aggressively cut price targets, signaling a loss of confidence in the stock's short-term prospects.
While the dividend yield may seem attractive, the risks of a total loss of 2024 gains are mounting. With continued pressure on oil prices likely to impact Valero's performance, a cautious approach is warranted, suggesting that investors should hold off on new positions until the market shows clearer signs of stabilization.
The U.S. Energy Department's latest inventory report showed a lower-than-expected increase in natural gas supplies. Following this bullish data, together with worries over possible Hurricane-related production disruption, futures ended the week higher.
However, natural gas is expected to remain in a volatile state depending on the weather outlook, supply/demand balance etc. In this situation, investors should focus on resilient stocks like Antero Resources and Coterra Energy, while it may be wise to avoid higher-risk options like Comstock Resources.
Stockpiles held in underground storage in the lower 48 states rose 47 billion cubic feet (Bcf) for the week ended Sept. 20, below analysts' guidance of a 53 Bcf addition. The increase compared with the five-year (2019-2023) average net injection of 88 Bcf and last year's growth of 82 Bcf for the reported week.
The weekly build put total natural gas stocks at 3,492 Bcf, which is 159 Bcf (4.8%) above the 2023 level and 233 Bcf (7.1%) higher than the five-year average.
The total supply of natural gas averaged 107.2 Bcf per day, unchanged on a weekly basis.
Meanwhile, daily consumption rose to 97.2 Bcf from 95.4 Bcf in the previous week, mainly reflecting higher natural gas consumed for power generation.
Natural gas prices climbed last week, driven by a smaller-than-expected inventory build. Prices also got a lift from the anticipated fall in production on account of Hurricane Helene's landfall. November futures closed at $2.90 on the New York Mercantile Exchange, marking a 6.7% increase — the fifth consecutive weekly rise.
However, even with the recent outperformances, one has to consider the formidable natural gas supply surplus and the lingering uncertainty associated with it. With current inventories remaining well above both last year's levels and the five-year average, the rally can be short-lived. Investors must remember that natural gas prices dipped to a four-month low of $1.88 in late August, underscoring the market's ongoing volatility.
The natural gas market continues to struggle with oversupply, along with shifts in weather and production dynamics. With rising prices, production may see an uptick in the coming month. However, the increase in prices could dampen demand, potentially leading to a shortfall as the market balance shifts.
As such, investors should remain cautious. Focusing on fundamentally strong stocks like Antero Resources and Coterra Energy may offer more stability amid the uncertainty.
Antero Resources:It is one of the leading natural gas producers in the United States. Antero Resources has more than two decades of premium low-cost drilling inventory in the prolific Appalachian Basin, indicating a strong production outlook. AR churned out 311 billion cubic feet equivalent (Bcfe) in the most recent quarter, of which more than 60% was natural gas.
Antero Resources beat the Zacks Consensus Estimate for earnings in two of the last four quarters, met once and missed in the other. This Zacks Rank #3 (Hold) natural gas explorer has a trailing four-quarter earnings surprise of roughly 18.8%, on average. AR shares have moved up 18.7% in a year.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Coterra Energy:It is an independent upstream operator primarily engaged in the exploration, development and production of natural gas. Headquartered in Houston, TX, the firm owns some 183,000 net acres in the gas-producing Marcellus Shale of the Appalachian Basin. This #3 Ranked company churned out an average of 2,779.8 million cubic feet daily of the commodity from these assets in the June quarter.
Coterra beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters and missed in the other two, the average being 5.9%. Valued at around $17.6 billion, CTRA has fallen 9.8% in a year.
On the other hand, companies like Comstock Resources appear risky in the near term. CRK is a leading independent natural gas producer with operations focused on the Haynesville Shale in North Louisiana and East Texas.
Reflecting the risks around natural gas, the Zacks Consensus Estimate for the Zacks Rank #5 (Strong Sell) company's EPS has seen downward revisions. Over the past 60 days, analysts have lowered their estimates for both the current quarter and fiscal year by 333% and 185%, respectively.
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