For Immediate Release
Chicago, IL – March 18, 2021 – Zacks Equity Research Shares of Mogo Inc.
MOGO
as the Bull of the Day, Cars.com Inc.
CARS
as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford Motor Company
F
, Volkswagen AG
VWAGY
and Tesla, Inc.
TSLA
.
Here is a synopsis of all five stocks:
Bull of the Day
:
Mogo
is a Zacks Rank #2 (Buy) that has a great growth divergence. I see a strong A for the Zacks Style Score for Growth and an F for the Zacks Style Score for Value. Value investors and growth investors are looking for different things, so when I see a big divergence in the style scores I know I am on the right path. Let’s take a deeper look at this stock as it is the Bull of the Day.
Description
Mogo Inc. operates as a financial technology company in Canada. The company provides a finance app that empowers consumers with solutions to help them get in control of their financial wellness. It offers users a free MogoAccount and provides access to various products, including free credit score monitoring, identity fraud protection, digital spending account with Platinum Prepaid Visa Card, digital mortgage experience, the MogoCrypto account, a product within MogoWealth that enables the buying and selling of bitcoin, and access to smart consumer credit products through. The company’s platform delivers digital experience with various products all through one account. Mogo Inc. was founded in 2003 and is headquartered in Vancouver, Canada.
Monster Valuation
Over the weekend another player in the space (Stripe) raised $600M at a $95B valuation, and that will probably serve as a long term driver for this stock. MOGO has a $350M valuation… but that should be moving higher here as the stock looks like it is about to break out.
Earnings History
I always look at the earnings history as it tells me if management can effectively communicate with Wall Street. In the case of MOGO, I see three beats in the last four quarters and the one time there wasn’t a beat it was an earnings meet.
These beats have been getting bigger and bigger, with the first one coming in 33% ahead of the Zacks Consensus Estimate. The next was 71% and then 109%.
Bigger and bigger beats are just what we like to see.
Earnings Estimates
I see estimates for this quarter are holding still, but there was a 1 cent improvement in the estimates for next quarter.
The full year is also holding still right now at a loss of 35 cents.
Next year is seeing some positive earnings estimate revisions. I see that number moving from a loss of 34 cents to a loss of 30 cents.
This is the main reason this stock is a Zacks Rank #2 (Buy)
Valuation
Since there are no earnings, the PE is not there for us to lean on. I don’t even see a price to book for this stock. I see an 8x price to sales, which is a lot… but margins are moving in the right direction and should really move when the company becomes profitable.
Bear of the Day
:
Cars.com
is a Zacks Rank #5 (Strong Sell) and this comes as used car prices are spiking. That is not something you want to see and that is the reason that this stock is now the Bear of the Day.
Description
Cars.com Inc. operates an online automotive platform. The Company offers new and used vehicle listings, expert and consumer reviews, research tools and other information. It also engaged in the sale of display advertising to national advertisers. Cars.com Inc. is based in Chicago, United States.
Used Car Prices Spike
There are multiple reports about the price of used cars being up around 17% on a year over year basis. This should be drawing a lot of people to sites like cars.com as they shop for the best deals.
One site that is looking a lot better is CarGurus, as that stock has a Zacks Rank #3 (Hold) and sports a great growth divergence with an A for Growth and a D for Value. I personally like this site a lot more than Cars.com — as they offer some neat charts and good information.
Earnings History
I always look at the earnings history as it tells me if management can effectively communicate with Wall Street. In the case of CARTS, I see three beats in the last four quarters. The one time the company didn’t beat the number it posted a big miss.
The most recent quarter has the company reporting 9 cents when 35 cents was expected. That translates to a 26 cent miss or a negative 74% earnings surprise. This is not what you want to see.
Earnings Estimates
I see estimates for this quarter are dropping down to 26 cents from 29 cents just 30 days ago
Next quarter is down to 27 cents from 29 cents over the same time period.
The full year only dropped one cent to $1.31, so that’s bad.
Next year is holding still at $1.49.
Valuation
The valuation isn’t that bad for CARS. I see a 11x forward earnings multiple and a price to book of 3x. Both of those levels are pretty low considering this is an asset slim business. The price-to-sales multiple of 1.8x is also right where it should be.
Operating Margins dropped from 17% to 10.5% in the most recent quarter and that isn’t something that investors like to see. Contrast that to
CARG
which has seen margins increase in the last two quarters, moving from 8.8% to 12.9% and then 15.6% in the most recent quarter.
Additional content:
Ford (F) Upping Its EV Game in Europe, Turkey
Ford Motor Company
recently announced that its next generation Ford Transit Custom range for the European market will go into production in Turkey in the first half of 2023. The range will include an all-electric model in addition to hybrid, mild hybrid and conventional engine versions.
All versions of the next generation Transit Custom will be built by Ford Otosan — Ford’s joint venture in Kocaeli in Turkey.
Additionally, Ford Otosan will also build
Volkswagen
’s one-tonne commercial vehicle as part of a strategic alliance between the two automakers.
Amid the heightening climate change concerns and tightening government regulations on CO2 emissions, automakers like
Tesla
and many others have been rapidly shifting gears to electric vehicles (EV). Moreover, improving battery technology to provide greater range at lower costs and soaring e-commerce deliveries amid the pandemic have spurred the demand for commercial EVs.
Amid this transforming scenario, Ford has vowed that by 2024 its entire commercial vehicle range will be carbon-neutral and by 2030, two-thirds of its commercial vehicle sales in Europe will be fully electric or plug-in hybrids. In fact, the company recently announced that it would invest $22 billion in electrification through 2025, nearly twice the amount it had previously committed to EVs.
Ford currently dominates the commercial vehicle market in Europe with a share of 15%. In 2020, the company retained its position as the leader in commercial vehicle sales in Europe for the sixth successive year. The trend has continued into 2021, with Ford maintaining its position as the continent’s best-selling commercial vehicle brand.
Moreover, the U.S.-based automaker considers its commercial vehicle business as key to future growth and profitability. The auto giant considers the Transit Custom range as the most crucial offering in its commercial vehicle lineup, which will help the company to strengthen its presence in Europe further and capitalize on the trending race to EV supremacy.
With the Transit Custom range being built at the Kocaeli plants, the facility will be transformed into Turkey’s first and only integrated production center for the assembly of EVs and batteries. The investment, which will span over a decade, will be the key to Ford’s future success in Europe’s EV market.
Ford Backs Out of Investment in Ohio Assembly
Ford has recently backed out on its contractual commitment to invest $900 million in its Ohio Assembly Plant in Avon Lake for an unnamed product line that instead will be produced in Mexico. The automaker’s decision has been heavily criticized by United Auto Workers (UAW).
Ford’s promised investment at the Ohio Assembly Plant was made during 2019 contract negotiations. The plant currently employs around 1,700 hourly workers producing Ford E-series vans and Super Duty pickup trucks.
Per UAW vice president and director Gerald Kariem’s recent letter, they totally renounce the company’s decision to put materiality and more potential profits over American job security and the future of its members. In fact, UAW has asked Ford officials to explain the decision but have received limited information so far.
Ford currently carries a Zacks Rank of 3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, shares of Ford have soared 149.3% in the past year, compared with the
industry
’s rally of 414.4%.
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