Zacks Analyst Blog Features Avis Budget Group, Marathon Petroleum, Pilgrim’s Pride, United Rentals and Unum Group

For immediate release

Chicago, IL – September 8, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: Avis Budget Group Inc. CAR, Marathon Petroleum Corp. MPC, Pilgrim’s Pride Corp. PPC, United Rentals Inc. URI and Unum Group UNM.

Here are highlights from Wednesday’s analyst blog:

Ignore Market Fluctuations With These 5 Most Important Value Stocks

High volatility is back on Wall Street after an impressive summer rally from mid-June to mid-August. US equity markets entered September with a series of serious short-term concerns. As a result, we are seeing similar extreme volatility in the first half of this year.

At this point, it would be prudent to choose value stocks with a favorable Zacks ranking to cushion the portfolio and derive gains from the upside potential. These actions could prove valuable once the rally resumes. Five of them are Avis Budget Group Inc., Marathon Petroleum Corp., Pilgrim’s Pride Corp., United Rentals Inc. and Unum Group.

Inflation, impending rate hike and other concerns

September is historically known as the worst performing month on Wall Street. The situation is more complicated this year. Inflation continues to be at its highest level in 40 years despite an increase in the Fed Fund rate from almost zero to 2.5% from March to July. Additionally, the central bank began systematically reducing the size of its balance sheet by $9 trillion from June.

Fed Chairman Jerome Powell and various other senior Fed officials with voting rights have indicated that the rigorous rate hike will continue until inflation is at least close to the 2% target rate of the Fed. Therefore, market participants are very concerned about a recession in the US economy in the near future.

According to CME FedWatch, currently 74% of market respondents expect a rate hike of 75 basis points at the September FOMC. Thereafter, there is a 72.3% chance of a 50 basis point rate hike in the November FOMC and a 71% chance of another 25 basis point hike in the November FOMC. december.

Q2 2022 results were better than expected despite margin compression. However, we are seeing a significant drop in earnings guidance for the third quarter. As of September 2, our estimate called for earnings per share growth of 1.4%, well below the 7.6% improvement expected on June 1.

On September 6, the yield on the benchmark 10-year US Treasury jumped to 3.345%, its highest level since June 16. The yield on the short-term US 2-year Treasury note stood at 3.499%. The inversion in yields between 10-year and 2-year Treasury bills continues for four consecutive months. Many economists and financial experts consider this situation as an indication of a short-term recession.

Our top picks

At this point, investors should be prepared to minimize fluctuations in their portfolio and therefore rebalance it with appropriate financial assets to maintain stability. We narrowed our search to five value stocks. Each of our picks carries a Zacks Rank #1 (Strong Buy) and a Value Score of A. You can see the full list of today’s Zacks #1 Rank stocks here.

Avis Budget Group offers car and truck rental, car sharing and ancillary services to businesses and consumers. CAR’s ability to meet a wide range of mobility demands helps it expand and strengthen its global presence through organic growth.

Avis Budget Group operates through distinct global brands that focus on different market segments and complement other brands in their respective regional markets. CAR’s fleet expansion and technology enhancement efforts are likely to improve its offerings.

Avis Budget Group’s current year P/E is 3.4X, below the industry average of 14.8X. CAR has a PEG ratio of 0.2, below the industry average of 1.3. Avis Budget Group forecasts profit growth of more than 100% for the current year. The Zacks consensus estimate for current-year earnings has improved 1.9% over the past 60 days.

Marathon Oil is poised for further price gains based on a slew of positives. MPC’s $21 billion in sales from its Speedway retail business provided it with a much-needed cash injection. The deal also comes with a 15-year fuel supply agreement under which Marathon Petroleum will supply 7.7 billion gallons of gasoline annually to 7-Eleven, ensuring a stable revenue stream.

MPC’s exposure to more stable cash flows from the logistics segment diversifies the revenue stream and provides protection against volatility in the refining business. Consequently, Marathon Petroleum is poised for significant capital appreciation and is considered a preferred downstream operator to own now.

Marathon Petroleum’s forward P/E for the current year is 4.7X, below the industry average of 6.2X. MPC has a PEG ratio of 0.3, below the industry average of 0.5. Marathon Petroleum has an expected earnings growth rate of over 100% for the current year. The Zacks consensus estimate for current-year earnings has improved 4.4% over the past 60 days.

Pilgrim’s Pride is engaged in the production, processing, marketing and distribution of fresh, frozen and value-added chicken products in the United States, United Kingdom, Europe and Mexico. Overall domestic demand is expected to remain strong in 2022 in the US market.

PPC’s catering business also saw improvements thanks to a sustained recovery in the commercial and non-commercial segments. Other than that, Pilgrim’s Pride continues to prioritize capital expenditure plans in 2022 to optimize its product mix and solidify partnerships with key customers.

Pilgrim’s Pride’s forward P/E for the current year is 6.6X, below the industry average of 8.1X. PPC has a PEG ratio of 0.2, below the industry average of 1.9. Pilgrim’s Pride has an expected earnings growth rate of 82% for the current year. The Zacks consensus estimate for current-year earnings has improved 11.6% over the past 60 days.

United Rentals benefits from the US administration’s increased focus on improving infrastructure. URI benefited from improved fleet productivity on widespread rental demand in the construction and industrial verticals.

Improved fleet productivity on the back of widespread rental demand in the non-residential construction and industrial verticals, higher total and rental income, and stronger pricing helped United Rentals’ results in the second quarter of 2022. during the period, rental income increased by 26.2% compared to a year ago. Adjusted gross margin increased by 360 basis points.

United Rentals’ forward P/E for the current year is 9.2X, below the industry average of 12X. URI has a PEG ratio of 0.5, below the industry average of 1.0. United Rentals forecasts a profit growth rate of 43.8% for the current year. The Zacks consensus estimate for current-year earnings has improved 2.3% over the past 30 days.

Unum GroupPrudent pricing and booking practices contributed to overall profitability. Sustained premium growth is fueled by high levels of persistence across key lines of business and strong sales volume and strong benefits experience.

Continued dental product rollout and geographic expansion has paid off for UNM as its acquired dental insurance business grows in the US and UK UNM has continuously improved shareholder value. Unum Group expects 2022 premiums to increase by around 2%. Adjusted operating EPS is expected to grow 15-20%.

Unum Group’s forward P/E for the current fiscal year is 6.3X, below the industry average of 14.5X. UNM has a PEG ratio of 0.8 below the industry average of 1.4. Unum Group forecasts a profit growth rate of 38.6% for the current year. The Zacks consensus estimate for current-year earnings has improved 5.4% over the past 30 days.

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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.

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Avis Budget Group, Inc. (CAR): Free Inventory Analysis Report

Unum Group (UNM): Free Stock Analysis Report

Pilgrim’s Pride Corporation (PPC): Free Stock Analysis Report

Marathon Petroleum Corporation (MPC): Free Inventory Analysis Report

United Rentals, Inc. (URI): Free Inventory Analysis Report

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