EXL Service (EXLS) – $7B market cap; $50M ADV: We removed EXL Service from the U.S. Focus List as the stock broke below its 100-DMA and the bottom of its recent base ($43.68) on above average volume in the past couple of sessions amid general market weakness. The company reported Q4 FY24 results in February. Overall results were decent, with revenue and earnings growth accelerating, but the general market conditions could be weighing on the stock. It is testing support at its 200-DMA, with the next level of support at $38.36 (-8%). Fundamental & Technical note
Author: vipin khare
O’Neil Capital Equipment Sector Weekly
Stocks in News
Cintas (CTAS), a provider of workplace uniforms, reported better-than-expected Q3 FY25 results. Revenue (+8% y/y) beat estimates by 1%, and diluted EPS (+18% y/y) beat estimates by 7%. Revenue growth was driven by increases across segments, with uniform rental services revenue growing 8% y/y and first aid and safety services revenue increasing 11% y/y. Operating margin expanded to 23.4% (+180bps y/y), beating estimates by 100bps. Management raised FY25 EPS guidance by 1.6%, 1% above estimates, and narrowed the revenue guidance range in line with consensus. The stock gapped above all its key moving averages on above average volume following the Q3 print. It faces resistance at $210.2 (+1%), followed by $215.4 (+3%). It is forming the right side of a stage-two cup base, with the pivot 9% away. RS line is close to a 52-week high, with a strong RS Rating of 88. Acc/Dist Rating of B indicates good money inflows.
Industrials Themes
Key points from this report:
Solid waste management is a defensive industry due to recurring volumes in the business. It has been a consistent compounder over the long term.
The number of landfills in the U.S. is decreasing, allowing large waste management firms that already own these assets to exercise pricing power.
WM, WCN, RSG, GFL, and CWST collectively own and operate ~50% of the landfills.
The increasing level of automation and technology adoption for business operations, with a focus on increasing waste internalization rates, is helping margins.
Acquisitions, a key growth strategy, drive volumes and market share.
Included are annotated Datagraphs® for the top five solid waste management firms in the U.S.: WM, WCN, RSG, GFL, and CWST
O’Neil Capital Equipment Sector Weekly
Rheinmetall (RHMX.DE; RHM GR) – $64B market cap; $744M ADV: We booked a 121% gain and removed Rheinmetall from the Developed Markets Focus
List as the stock has formed a climax top on the daily chart with five criteria. It has pulled back 10% from its all-time high and is testing support at its 10-DMA
(-2%). We have booked profits in strength here and continue to believe that Rheinmetall, being Germany’s largest defense contractor, is one of the biggest
beneficiaries of a multi-year defense cycle in Europe. Next support is at its 21-DMA (-8%). Fundamental & Technical note
O’Neil Capital Equipment Sector Weekly
Science Applications International (SAIC), a provider of technology integration and engineering solutions, reported better-than-expected Q4
FY25 results. Revenue (+6% y/y) beat estimates by 1% and adjusted EPS (+80% y/y) beat estimates by 23%. Ramp-up of volume on new and
existing contracts drove revenue growth. After the close of Q4, it received a $1.8B order, one of its largest recompete wins in recent years. Adjusted
EBITDA margin expanded to 9.6% (+230bps y/y), beating estimates by 60bps. FY26 revenue guidance, came 1% above consensus and adjusted
EPS guidance came 4% above consensus. The stock gapped above its 50-DMA (-5%) and faced resistance at its 100-DMA (+4%). It is 27% off its
52-week high. RS line has bounced off its lows, with a poor RS Rating of 34. Good Acc/Dist Rating of B+
Industrials Conference
Key points from this report:
- The following select ideas are showing near term relative strength while displaying good O’Neil Fundamental ratings and rankings: RHMX.DE, HWM, SNA, RBC, AZZ, PBI, REVG, BBSI
- The following select ideas are showing near term technical weakness with poor O’Neil Ratings and Rankings: BA, PH, CARR, ROK, ALLE, ITT, MTZ, AIT, RKLB, TKR, VNT, THO, ENS, PRIM, NSP, OSIS, ALRM, PATK, LCII, ATKR, POWL, SXI, CDRE, NVEE, ARLO, BLBD, THR, ERII, LMB, CECO, AIOT, AMSC, RDW, LUNR, HY
O’Neil Capital Equipment Sector Weekly
Rheinmetall (RHMX.DE): Reported FY24 results today before market open. Revenue (+36% y/y) missed estimates by 2%, while diluted EPS (+37% y/y) missed
estimates by 15%. The stock is making new highs and is very extended from all its key moving averages. Investors could book some gains in strength here. Wait for the long-term moving averages to catch up and the stock to form a new base before adding positions.
Industrials Conference: Annotated Charts For Select Ideas
Key points from this report:
- The following select ideas are showing near-term relative strength while displaying good O’Neil Fundamental ratings and rankings: EA3.BR, MMM, and AER.
- The following select ideas are showing near-term technical weakness with poor O’Neil Ratings and Rankings: HON, HRI, VRT, TT, PNR, HUBB, CTOS, KMT, R, AL, ROK, DOV, ATS.CA, AVY, RS, ATI, AGCO, GTES, LMT, and REZI.
Rolls-Royce (RR.GB) – Trim Positions as the Stock is Forming a Climax Top
Key points from this report:
- RR.GB has formed a climax top on the daily chart with five criteria. We recommend investors book some profits into strength and wait for a new base formation and a traditional buy point from the O’Neil perspective for adding positions.
- We are not taking it off the Focus List as the stock continues to trade above all its key moving averages.
- Included is an annotated Datagraph® of RR.GB highlighting climactic top signals.
Rheinmetall (RHMX.DE) – Trim Positions as the Stock is Forming a Climax Top
Key points from this report:
- RHMX.DE has formed a climax top on the daily chart with four criteria. We recommend investors book some profits into strength and wait for a new base formation and a traditional buy point from the O’Neil perspective for adding positions.
- We are not taking it off the Focus List as the stock continues to trade above all its key moving averages.
- Included is an annotated Datagraph® of RHMX.DE highlighting climactic top signals.
