Health Catalyst, DocuSign, American Homes 4 Rent, MidAmerica Apartment Communities and Apartment Income REIT highlighted as Zacks Bull and Bear of the Day

·10 min read

For Immediate Release

Chicago, IL – October 15, 2021 – Zacks Equity Research Shares of Health Catalyst, Inc. HCAT as the Bull of the Day, DocuSign, Inc. DOCU as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American Homes 4 Rent AMH, MidAmerica Apartment Communities, Inc. MAA and Apartment Income REIT Corp. AIRC.

Here is a synopsis of all five stocks:

Bull of the Day:

Health Catalyst is a Zacks Rank #2 (Buy) that sports an F for Value and B for Growth.  I love to see that growth divergence with a strong growth style score and a weak value style score.  It tells me right away that I am on the correct path. HCAT is a provider of data and analytics technology and services to healthcare organizations. 

The company is utilizing data to address pain points for its customers and in watching a company event I learned that the customers are often the ones that build on the platform.  The company will then share this “best practice” with other customers in an effort to improve the overall system.

Let’s take a deeper look at this stock in this Bull of the Day article.

Description

Health Catalyst Inc. is a provider of data and analytics technology and services to healthcare organizations. Health Catalyst Inc. is based in Salt Lake City, Utah.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For HCAT, I see a good history of beating the Zacks Consensus Estimate.  There are four beats over the last four quarters.

The average positive earnings surprise over the last fours quarters works out to be 46%, which means the company is consistently posting good-sized beats of the Zacks Consensus Estimate. 

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher.  For HCAT, I see estimates moving higher.

Over the last 60 days, I see a few increases.

This quarter has seen a one cent increase.

Next quarter has held still.

The full year 2021 is holding still right now as well.

Next year has seen an increase of 1 cent.

Positive movement in earnings estimates like that is why this stock is a Zacks Rank #2 (Buy).

Valuation

The company is running a loss so there is no forward PE to lean on.  I see an 8x book multiple which is a little high.  The price to sales multiple is 10.2x, and that too is a bit high.  I say that as there is great growth of 37% in the most recent quarter.  This year the company is expected to post 23.5% topline growth and accelerate to 28.5% next year.  That year over year growth is just what we love to see from a name like this.  Throw in a few positive reports and this stock could easily be up triple digits a year from now.

Bear of the Day:

Docusign is a Zacks Rank #5 (Strong Sell) despite beating the Zacks Consensus Estimate in the most recent quarter.  Stocks that miss the number don’t always fall to a Zacks Rank #5 (Strong Sell) so let’s take a look at why that is the case in this Bear of the Day article.

Description

Founded in 2003 and headquartered in San Francisco, DocuSign is a global provider of cloud-based software. The company’s DocuSign Agreement Cloud is a cloud software suite that automates and connects the entire agreement process.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

In the case of DOCU, I see four straight beats of the Zacks Consensus Estimate over the last year. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.

The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For DOCU I see estimates fluctuating.

This quarter has increased from $0.39 to $0.46.

Next quarter has moved from $0.46 to $0.36 over the last 60 days.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is mixed for those numbers.

The 2021 consensus number has increased from $1.68 to $1.72.

The 2022 number has held still at $2.15 over the last 60 days.

Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).

It should be noted that a majority of stocks in the Zacks universe are seeing positive earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).

Additional content:

3 Top REITs to Buy as Inflation Hits 13-Year High

Americans spend a lot more on non-durable goods now than they did in 2020. This is because steady job additions and increased wages for quite some time have given U.S. consumers the scope to spend more on discretionary items. To put things into perspective, consumers' personal income went up 0.2% in August and their spending on commodities and services increased 0.8% in the same month, per the Commerce Department, citing a Wall Street Journal article.

However, an increase in inflation is threatening to hamper consumer spending levels, which may, in turn, disrupt the economic recovery process. According to the Labor Department, the consumer price index jumped 5.4% last month from a year ago and matched the largest increase since 2008, citing a U.S. News article. The article further noted that core inflation that generally excludes the volatile food and energy category increased 4% in September from a year earlier.

There has mainly been a sharp rise in prices of almost every item, including apparel, furniture, hotel rooms, new and used cars, and food and energy. The spread of the contagious Delta variant of the coronavirus compelled many factories, primarily in Asia, to shut down and slowed down operations at U.S. ports. This has led to supply shortages, eventually forcing U.S. consumers to pay more for goods. Shortage of semiconductors and supply chain disruptions, in particular, drove prices of new cars.

By the way, the price of electricity in the United States increased 0.8% last month from August, as mentioned in the U.S. News article. The article further added that furniture cost increased 2.4% in September, the biggest jump since 1988.

From the year-ago period, furniture cost has surged 11.2% last month, the maximum since 1951. Similarly, the cost of shoes and meals at full-service restaurants went up last month, while housing costs rose at a steady clip. Moreover, gas prices have leaped 42% from the year-ago level and coal prices continue to hover near-record high.

Meanwhile, crude oil prices continue to remain elevated as the shortage of adequate natural gas has led to more demand for other energy sources, ultimately pushing oil prices higher.

It’s worth pointing out that the Fed’s preferred inflation gauge has already climbed the maximum in three decades yearly. The personal consumption expenditure (PCE) index advanced 0.4% in August from July, quoting a MarketWatch article. Most importantly, the PCE index rose 4.3% in August from a year ago, its highest rate since 1991 (read more: 3 of the Best Stocks to Buy as Inflation Threat Rises).

From an investment perspective, inflation isn’t beneficial for growth-oriented stocks as it impacts their future cash flows. However, some stocks stand to gain from an increase in inflation.

For instance, real estate investment trust (REIT) tends to gain from inflation. In the case of a price increase, the values and rents of real estate tend to rise since leases are linked to inflation. Thus, amid such inflationary pressure, one should consider investing in the following three REITs that boast a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Homes 4 Rent is an internally managed real estate investment trust. It is focused on acquiring, renovating, leasing, and operating single-family homes as rental properties. The Zacks Consensus Estimate for its current-year earnings has moved up 3.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 14.7%.

MidAmerica Apartment Communities is a residential real estate investment trust (REIT) engaged in owning, acquiring, operating, and developing apartment communities, located primarily in the Southeast, Southwest and Mid-Atlantic regions of the United States. The Zacks Consensus Estimate for its current-year earnings has risen 1.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 5.1%.

Apartment Income REIT Corp. is focused on the ownership and management of apartment communities, principally in the United States. The Zacks Consensus Estimate for its current-year earnings has moved up 2.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 21.4%.

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MidAmerica Apartment Communities, Inc. (MAA) : Free Stock Analysis Report
 
American Homes 4 Rent (AMH) : Free Stock Analysis Report
 
DocuSign (DOCU) : Free Stock Analysis Report
 
Health Catalyst, Inc. (HCAT) : Free Stock Analysis Report
 
Apartment Income REIT Corp. (AIRC) : Free Stock Analysis Report
 
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