The Fed’s strong determination to bring the multi-decade high inflation levels under control finally seems to show results as the CPI report for October came in lower-than-expected after six aggressive rate hikes. Inflation rose 0.4% sequentially and 7.7% year-over-year last month, lower than analysts’ estimates. Furthermore, the Fed’s policy meeting earlier this month also indicated a slower pace of rate hikes going forward.
Although many are concerned that the historic pace of interest rate hikes could tip the economy into a recession, research by Goldman Sachs shows that the U.S. economy will probably stick to a ‘soft landing’ next year. The bank believes that there is just a 35% chance of a recession against the 65% median, as per a Wall Street Journal survey.
Therefore, investors should scoop up more shares of quality stocks AT&T Inc. (T), Acuity Brands, Inc. (AYI), and Progress Software Corporation (PRGS) that seem poised to deliver stable returns in the future.
AT&T Inc. (T)
AT&T is a global telecommunications, media, and technology service provider that operates through the Communications; and Latin America segments. Its Communications segment provides wireless voice and data communications services and sells wireless data cards, wireless computing devices, and handsets. The Latin America segment offers wireless services in Mexico and video services in Latin America.
On October 5, T introduced Fiber Broadband in Rural Vanderburgh County, Indiana, by collaborating with the local government to increase internet access and close the digital divide in the area. The company is now working with the Cities of Boonville and Martinsville on public-private partnerships to bring AT&T Fiber to both municipalities and install fiber at more than 20,000 sites in the county. This should help the company expand its revenue stream.
The company pays a $1.11 per share dividend annually, which translates to a 5.89% yield on the current price. Its four-year average dividend yield is 5.39%.
For the fiscal 2022 third quarter ended September 30, 2022, T’s service revenues increased 5.6% year-over-year to $15.30 billion, while its broadband revenues grew 6.1% year-over-year. Its income from continuing operations came in at $6.35 billion, up 26.4% year-over-year.
Analysts expect T’s EPS and revenue for the fiscal second quarter ending June 2023 to increase 1% and 1.6% year-over-year to $0.66 and $30.13 billion, respectively. Furthermore, T has an impressive earnings surprise history as it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 7% over the past month to close the last trading session at $18.90.
T’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is also rated a B for Quality and Value. T is ranked #4 of 19 stocks in the Telecom-Domestic industry.
To see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for T, click here.
Acuity Brands, Inc. (AYI)
AYI provides lighting and building management solutions internationally. The company operates through two segments- Acuity Brands Lighting and Lighting Controls (ABL); and the Intelligent Spaces Group (ISG).
On September 29, the Board of Directors of AYI declared a quarterly dividend of 13 cents per share. The dividend was payable on November 1, 2022. AYI pays a $0.52 per share dividend annually, which translates to a 0.28% yield on the current price.
For the fiscal fourth quarter ended August 31, AYI’s net sales increased 11.8% year-over-year to $1.11 billion. The company’s adjusted EBITDA increased 6.8% year-over-year to $182.90 million. AYI’s adjusted diluted earnings per share for the same period increased 20.8% from the prior-year period to $3.95.
The consensus EPS estimate for the fiscal first quarter ending November 2022 of $3.01 represents a 5.6% improvement year-over-year. Analysts expect AYI’s revenue for the same period to increase 6.9% year-over-year to $989.89 million. The company surpassed EPS estimates in each of the four trailing quarters, which is commendable.
AYI has gained 9.1% over the past three months to close its last trading session at $189.08.
AYI’s POWR Ratings reflect its strong outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It is also rated an A for Quality and a B for Value. Within the Home Improvement & Goods industry, AYI is ranked #3 of 60 stocks.
Click here to see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for AYI.
Progress Software Corporation (PRGS)
PRGS develops, deploys, and manages business applications. Its products include OpenEdge, Developer Tools, Sitefinity, Corticon, DataDirect Connect, MOVEit, Chef, WhatsUp Gold, and Kemp Flowmon Network Visibility. The company sells its products to end users, independent software vendors, original equipment manufacturers, and system integrators.
On September 22, PRGS announced the expansion of its collaboration with Microsoft Corp. (MSFT) to enable Microsoft Azure customers to accelerate cloud migration in India with PRGS’ Chef DevSecOps automation tools. This should help the companies bring together two powerful tools to deliver a ‘cloud-first’ infrastructure quickly and securely.
On September 23, PRGS declared a quarterly dividend of $0.18 per common share, payable to shareholders on December 15. PRGS pays a $0.70 per share dividend annually, which translates to a 1.33% yield on its current price. Its dividend payouts have grown at a CAGR of 3.8% over the past three years and 4.1% over the past five years.
PRGS’ revenue increased 3% year-over-year to $151.22 million for the third quarter that ended August 31, 2022. Its net cash flows from operating activities increased 12.6% year-over-year to $39.67 million. In the same period, the company’s net income and EPS stood at $21.80 million and $0.50, respectively.
For the quarter ending November 30, 2022, PRGS’ EPS and revenue are expected to increase 18.3% and 13% year-over-year to $1.09 and $162.41 million, respectively. It surpassed Street EPS estimates in each of the trailing four quarters.
The stock has gained 19% over the past nine months to close the last trading session at $52.85.
PRGS’s POWR Ratings reflect solid prospects. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It also has an A grade for Quality and a B for Value. It is ranked #5 of 139 stocks in the Software – Application industry.
In addition to the POWR Rating grades stated above, you can see the other ratings for PRGS here (Growth, Momentum, Stability, and Sentiment).
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T shares were trading at $18.92 per share on Tuesday afternoon, up $0.10 (+0.53%). Year-to-date, T has gained 8.78%, versus a -15.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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