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Ruth's Hospitality Group, Bloom Energy, Roku and Snap highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – July 2, 2021 – Zacks Equity Research Shares of Ruth's Hospitality Group, Inc. as the Bull of the Day, Bloom Energy Corporation (BE - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Roku, Inc. (ROKU - Free Report) and Snap Inc. (SNAP - Free Report) .
Ruth's Hospitality Group is a Zacks Rank #1 (Strong Buy) that develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name.
After the company saw a big earnings beat back in May, the stock has struggled to gain any momentum. Investors are now wondering if the stock is stuck or if next quarter can show better performance. With the reopening in full swing and earnings estimates ticking higher the bulls should have faith in what Ruth's has cooking.
About the Company
Ruth's Hospitality employs over 2,600 and is headquartered in Winter Park, FL. The company was founded in 1965 and now operates over 150 Ruth's Chris Steak House locations worldwide specializing in USDA Prime grade steaks.
RUTH is valued at $800 million and has a Forward PE of 21. The company holds a Zacks Style Score of "D" in Value, but "A" in Momentum and a "B" in Growth.
Q1 Earnings and Price Action
In early May, Ruth's reported a large EPS beat that sent the stock higher on the headline number. Q1 came in at $0.26 v the $.10 expected and revenues came in at $87.3M v the $86.7M expected. While EPS was great, the revenues weren't as impressive and after a spike to 2021 highs, the stock fell to April lows.
While Ruth's didn't offer FY21 guidance the company sees capex at $20-25M. CEO Cheryl Henry had a positive outlook on the conference call:
"With dining rooms now open in nearly all of our restaurants and our improved financial position, we are focusing our efforts on growing sales and cash flow, building upon the digital foundation we've developed during the last year, and investing in new unit growth. This includes two to three new restaurants this year and an additional three to four planned for 2022. I'm optimistic about the future and confident that our iconic brand and our talented team members have us well positioned for growth."
When you compare the numbers to 2019, RUTH saw sales increase 2.7%. This despite three markets (Boston, Hawaii and Manhattan) seeing continued challenges with local restrictions.
The EPS beat was the fourth straight and the company will now look to make it five in a row on August 8th.
Estimates Headed Higher
The earnings momentum should continue as we head into next quarter. We will talk about the reopening in a moment, but for now, let's discuss the rising estimates.
For the current quarter, we see a 10% jump, with numbers rising from $0.09 to $0.10 over the last 60 days.
For the current year, we see an 81% rise over that same time frame. Analysts have taken their numbers up from $0.59 to $1.07 as economies continue to make progress towards fully being open.
The Reopening and Same Store Sales
Like many restaurants, RUTH's was hit by the pandemic and the restrictions put in place. However, now they find themselves in a pent-up demand situation where people are craving to go out. This is giving the company a tailwind as we head into the back half of the year.
We see evidence in this after May same store sales numbers were released in late June, showing a 6% move higher when compared to 2019. June was 2.1%, so we can see the uptick the month difference makes and we would expect that to continue into the earnings report.
The Technical Take
The stock had a great rally off the COVID lows, going from $6 to $28 after the most recent earnings. The stock has been stuck since, slowly grinding lower below the 50-day moving average.
A bullish EPS number would likely help the stock blast through resistance and make new all-time highs. For those looking to buy the dip, watch the $19.50 area, which is where the 200-day moving average resides.
In Summary
As economies fully reopen RUTH's and other fine dining restaurants are poised to benefit from the pent-up demand. There is no telling how long that will last, but looking at the SSS numbers, we see this momentum is just getting started.
Bloom Energy is a Zacks Rank #5 (Strong Sell) that generates and distributes renewable energy. The company designs, manufactures, and sells solid-oxide fuel cell systems for on-site power generation in the United States, Japan, China, India, and the Republic of Korea.
After earnings took the stock almost 50% off lows, investors need to consider taking profits as the valuations start to get high.
About the Company
Bloom is headquartered in San Jose, CA and employs over 1,3000 people. The company was founded in 2006 and serves hospitals, healthcare companies, retailers, and data centers
JKS is valued at $4.5 billion and investors should be concerned with the valuation. The company holds a Zacks Style Score of "F" in both Value and Growth.
Q1 Earnings
The company reported earnings back in May with a slight beat on the bottom line, but a miss on revenues. Q1 EPS came in at -$0.07 v the -$0.08 expected, while revenues came at $194 million v the $203 million expected.
The company affirmed their FY21 revenue outlook, seeing a wide range of $950-$1.0B v the $978 million expected. The company continues to grow revenues and increase margins, but estimates are ticking lower.
Estimates
Over the last sixty days, estimates have slipped for the upcoming quarters. For the current quarter, analysts have dropped their numbers to -$0.09 from -$0.08. For the next quarter, numbers have fallen from -$0.04 to -$0.05, or 20%.
Despite the miss and analysts dropping expectations, the stock has rallied, moving from $20 to almost $28.
Should Investors Sell the Rally?
Bloom is improving margins, reducing costs and expanding its portfolio. However, the benefits of this might take longer than investors want as demand is not where it needs to be to justify the valuation.
So after the almost 50% rally of the recent lows, investors might want to take profits and let this story play out on its own.
Technical Take
BE was surging earlier in the year and made a high of $44.95. However, an earnings report back in February brought a sense of fundamental reality and the stock plummeted back down to $25.
Since the drop, the stock has been sideways, but also flushed out some weaker players under the $20 level. Since earnings back in May, the stock has rallied, almost printing the $30 level.
The 200-day is rising, which is good. But if this level fails to hold at $25.50, expect a quick drop to $24.25, where the 50-day resides. From there, if the 50-day sees no defense, the stock could challenge 2020 lows
In Summary
Alternative energy is a challenging sector and very volatile. Bulls have to be confident in the story and Bloom just isn't there yet. Investors should consider taking profits on the way up and looking to other names that are looking fundamentally better.
Additional content:
2 Tech Stocks to Buy in Q3 and Hold for Years
The S&P 500 hit new records on the final day of the second quarter. The benchmark index has climbed over 14% in the first half of 2021 and is up roughly 27% from its pre-pandemic levels in February 2020. This helps provide more context for where Wall Street is at the moment and might help ease some worries that the market is super overheated.
The Nasdaq has also soared back to new highs to end Q2, with the technology-heavy index up roughly 12% since May 12. Wall Street has used every pullback and healthy recalibration in big tech as a chance to buy their favorite stocks.
Wall Street has driven stocks to highs amid the low volume summer in the face of inflation fears. The market has seemingly shrugged off the possibility of higher interest rates and the yield on the 10-year U.S. Treasury note has actually slipped back to 1.47% from 1.75% in late March.
The ability to look beyond rising prices amid the booming U.S. economy could mean Wall Street understands that there is no alternative investing won't end anytime soon, with interest rates set to remain historically low even when the Fed begins to lift them. This means investors will likely be left chasing returns in equities for the foreseeable future.
The growth is, of course, supported by the resurgent U.S. economy and the impressive S&P 500 earnings picture that is expected to keep getting better (also read: Q2 Earnings Growth Reflects More Than Easy Comps).
All that said, some investors might be hesitant to buy stocks with the market at new highs, and there are clearly valid reasons to avoid doing so. But timing the market is extremely difficult and trying to do so can lead to buying high and selling low and missing out on comebacks.
Instead, long-term investors, with horizons of a year or longer are often better suited buying strong stocks and staying constantly exposed to the market even during dips and corrections, which are healthy and common. Today we dive into two stocks poised to grow in a world dominated by technology that might be worth buying in Q3 and beyond...
Roku
The pandemic cemented streaming TV as the future of entertainment in the U.S. and beyond, after its ascendance helped Netflix become one of the star stocks of the last decade. In the last several years, Apple and Disney have stormed into the streaming market to take on NFLX, Amazon and others. Disney already crushed its own subscriber goals and laid out a lofty new path and Netflix has amassed over 200 million subscribers worldwide.
Clearly, streaming is a space Wall Street wants to cash in on and Roku is one of the only pure-play streaming stocks not named Netflix. The company rose to prominence on the back of its small devices that plug into TVs and allow users to watch streaming TV content. Roku's tech is also built into smart TVs, and it was the No. 1 smart TV OS sold in the U.S. in 2020, with nearly 40% market share.
Roku's hardware is strong, but it became a Wall Street standout because of its ability to sell ad space across its marketplace, taking a piece of streaming service subscription revenue, ad inventory, and more. Roku allows marketers to buy targeted ads, which is crucial since eMarketer projects digital will account for 65% of the roughly $240 billion-a-year ad industry in the U.S. by 2023, up from around one-third a few years ago.
The company also has a Roku Channel that enables users to watch free, ad-supported streaming movies and TV shows. And it boosted its platform with its purchase of the streaming rights to the short-form shows the now-defunct Quibi created.
Furthermore, Roku bought Nielsen's Advanced Video Advertising business and "entered into a long-term strategic partnership" with the historic marketing research firm and media data giant to further boost its advertising bona fides.
Roku topped our Q1 estimates in May, with revenue up 78%. And its +$0.54 a share adjusted earnings blew away our bottom-line estimate that called for a -$0.12 loss.The growth wasdriven by its ad-heavy platform revenue that skyrocketed 101% to account for 80% of total sales and it added 2.4 million active accounts to close at 53.6 million. Investors should know Roku's monetized video ad impressions more than doubled YoY.
Looking ahead, Zacks estimates call for Roku's FY21 revenue to surge 53% from $1.8 billion to $2.7 billion, with it set to add another $1 billion, or 39% to end 2022 at $3.8 billion. These estimates would follow 58% top-line growth in 2020, 52% in FY19, and 45% in 2018.
At the bottom end, Roku is projected to swing from an adjusted loss of -$0.14 a share to +$0.37 this year, with FY22 set to soar 161% $0.97 a share.
Roku currently lands a Zacks Rank #3 (Hold), alongside an "A" grade for Growth in Style Scores system. And 16 of the 20 brokerage recommendations Zacks has are "Strong Buys." ROKU shares have surged 260% in the past year, as part of a much larger run, and it has rebounded right near its February records on the back of a 50% climb since May 12.
The resurgence has pushed the stock above overbought RSI territory of 70, which could mean it's in for a pullback. Therefore, some investors might want to wait for a more enticing possible entry point. But Roku appears like a strong long-term tech buy that's poised to grow no matter who wins the streaming wars, and it boasts a solid balance sheet.
Snap
Snap has continually enhanced its social media app that became famous for disappearing photos and videos. Today, Snapchat is full of video content and shows from social media stars to celebrities like Kevin Hart, as well as mega brands like the NFL, Disney, and many others.
Snapchat's Discover page has gained traction and it's been in the booming mobile gaming market for over two years. The company also constantly releases various augmented reality offerings and it launched its Spotlight feature late last year that aims to challenge TikTok.
Snap's beefed-up portfolio of entertainment offerings has attracted advertisers as more people disconnect from ad-supported legacy media and simply ignore more traditional online banner ads. Investors should also know that Snap has boasted that in the U.S. it reaches "more than 90% of 13-to-24-year-olds and more than 75% of 13-to-34-year-olds."
Snap's ability to reach this "unduplicated and hard-to-reach audience" has attracted Wall Street's attention, as it continues to add users and monetize its growing platform, as Facebook and other giants face government scrutiny. Snap beat our first quarter estimates, with revenue up 66% and its daily active users up 22% to 280 million. Plus, it posted break-even earnings to top our estimate that called for a loss of -$0.06 a share.
Snap's FY21 and FY22 earnings estimates surged since its report, with some positive revisions recently as well. Zacks estimates call for Snap's FY21 revenue to surge 56% to reach $3.9 billion, with FY22 projected to climb another 49% to $5.8 billion. These estimates would represent its best growth as a public company and follow three-straight years of between 43% to 46% revenue expansion.
Meanwhile, Snap is expected to soar from an adjusted loss of -$0.06 last year to +$0.23 a share in FY21, with 2022 set to skyrocket 200% to +$0.69 a share. And the company has blown away Zacks bottom-line estimates in the trailing four periods.
Snap lands a Zacks Rank #3 (Hold) at the moment, next to an "A" grade for Growth. Like Roku, Wall Street is high on Snap, with 20 of the 25 brokerage recommendations Zacks at "Strong Buys," with none below a "Hold."
SNAP has climbed 190% in the past year, but it fell victim to the growth selling that began in February. Luckily, it has mounted a big comeback, up over 30% since mid-May.
The stock closed regular hours Wednesday just off its records at around $68 a share. Despite trading near its records, its trades well below its year-long highs of 27X forward sales at 21.3X. And it still rests below overbought RSI levels at 65.
Clearly, there could be more selling pressure with the Nasdaq at fresh highs. And some might want to wait for Snap to report its Q2 earnings. Of course, as we touched on, investors with long-term outlooks might want to buy Snap now given its ability to constantly evolve its modern media platform that plays into overall smartphone addiction, while attracting a vital demographic in the new age of entertainment.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the "Internet of Money" and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we're still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks' has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Ruth's Hospitality Group, Bloom Energy, Roku and Snap highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 2, 2021 – Zacks Equity Research Shares of Ruth's Hospitality Group, Inc. as the Bull of the Day, Bloom Energy Corporation (BE - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Roku, Inc. (ROKU - Free Report) and Snap Inc. (SNAP - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Ruth's Hospitality Group is a Zacks Rank #1 (Strong Buy) that develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name.
After the company saw a big earnings beat back in May, the stock has struggled to gain any momentum. Investors are now wondering if the stock is stuck or if next quarter can show better performance. With the reopening in full swing and earnings estimates ticking higher the bulls should have faith in what Ruth's has cooking.
About the Company
Ruth's Hospitality employs over 2,600 and is headquartered in Winter Park, FL. The company was founded in 1965 and now operates over 150 Ruth's Chris Steak House locations worldwide specializing in USDA Prime grade steaks.
RUTH is valued at $800 million and has a Forward PE of 21. The company holds a Zacks Style Score of "D" in Value, but "A" in Momentum and a "B" in Growth.
Q1 Earnings and Price Action
In early May, Ruth's reported a large EPS beat that sent the stock higher on the headline number. Q1 came in at $0.26 v the $.10 expected and revenues came in at $87.3M v the $86.7M expected. While EPS was great, the revenues weren't as impressive and after a spike to 2021 highs, the stock fell to April lows.
While Ruth's didn't offer FY21 guidance the company sees capex at $20-25M. CEO Cheryl Henry had a positive outlook on the conference call:
"With dining rooms now open in nearly all of our restaurants and our improved financial position, we are focusing our efforts on growing sales and cash flow, building upon the digital foundation we've developed during the last year, and investing in new unit growth. This includes two to three new restaurants this year and an additional three to four planned for 2022. I'm optimistic about the future and confident that our iconic brand and our talented team members have us well positioned for growth."
When you compare the numbers to 2019, RUTH saw sales increase 2.7%. This despite three markets (Boston, Hawaii and Manhattan) seeing continued challenges with local restrictions.
The EPS beat was the fourth straight and the company will now look to make it five in a row on August 8th.
Estimates Headed Higher
The earnings momentum should continue as we head into next quarter. We will talk about the reopening in a moment, but for now, let's discuss the rising estimates.
For the current quarter, we see a 10% jump, with numbers rising from $0.09 to $0.10 over the last 60 days.
For the current year, we see an 81% rise over that same time frame. Analysts have taken their numbers up from $0.59 to $1.07 as economies continue to make progress towards fully being open.
The Reopening and Same Store Sales
Like many restaurants, RUTH's was hit by the pandemic and the restrictions put in place. However, now they find themselves in a pent-up demand situation where people are craving to go out. This is giving the company a tailwind as we head into the back half of the year.
We see evidence in this after May same store sales numbers were released in late June, showing a 6% move higher when compared to 2019. June was 2.1%, so we can see the uptick the month difference makes and we would expect that to continue into the earnings report.
The Technical Take
The stock had a great rally off the COVID lows, going from $6 to $28 after the most recent earnings. The stock has been stuck since, slowly grinding lower below the 50-day moving average.
A bullish EPS number would likely help the stock blast through resistance and make new all-time highs. For those looking to buy the dip, watch the $19.50 area, which is where the 200-day moving average resides.
In Summary
As economies fully reopen RUTH's and other fine dining restaurants are poised to benefit from the pent-up demand. There is no telling how long that will last, but looking at the SSS numbers, we see this momentum is just getting started.
Bear of the Day:
Bloom Energy is a Zacks Rank #5 (Strong Sell) that generates and distributes renewable energy. The company designs, manufactures, and sells solid-oxide fuel cell systems for on-site power generation in the United States, Japan, China, India, and the Republic of Korea.
After earnings took the stock almost 50% off lows, investors need to consider taking profits as the valuations start to get high.
About the Company
Bloom is headquartered in San Jose, CA and employs over 1,3000 people. The company was founded in 2006 and serves hospitals, healthcare companies, retailers, and data centers
JKS is valued at $4.5 billion and investors should be concerned with the valuation. The company holds a Zacks Style Score of "F" in both Value and Growth.
Q1 Earnings
The company reported earnings back in May with a slight beat on the bottom line, but a miss on revenues. Q1 EPS came in at -$0.07 v the -$0.08 expected, while revenues came at $194 million v the $203 million expected.
The company affirmed their FY21 revenue outlook, seeing a wide range of $950-$1.0B v the $978 million expected. The company continues to grow revenues and increase margins, but estimates are ticking lower.
Estimates
Over the last sixty days, estimates have slipped for the upcoming quarters. For the current quarter, analysts have dropped their numbers to -$0.09 from -$0.08. For the next quarter, numbers have fallen from -$0.04 to -$0.05, or 20%.
Despite the miss and analysts dropping expectations, the stock has rallied, moving from $20 to almost $28.
Should Investors Sell the Rally?
Bloom is improving margins, reducing costs and expanding its portfolio. However, the benefits of this might take longer than investors want as demand is not where it needs to be to justify the valuation.
So after the almost 50% rally of the recent lows, investors might want to take profits and let this story play out on its own.
Technical Take
BE was surging earlier in the year and made a high of $44.95. However, an earnings report back in February brought a sense of fundamental reality and the stock plummeted back down to $25.
Since the drop, the stock has been sideways, but also flushed out some weaker players under the $20 level. Since earnings back in May, the stock has rallied, almost printing the $30 level.
The 200-day is rising, which is good. But if this level fails to hold at $25.50, expect a quick drop to $24.25, where the 50-day resides. From there, if the 50-day sees no defense, the stock could challenge 2020 lows
In Summary
Alternative energy is a challenging sector and very volatile. Bulls have to be confident in the story and Bloom just isn't there yet. Investors should consider taking profits on the way up and looking to other names that are looking fundamentally better.
Additional content:
2 Tech Stocks to Buy in Q3 and Hold for Years
The S&P 500 hit new records on the final day of the second quarter. The benchmark index has climbed over 14% in the first half of 2021 and is up roughly 27% from its pre-pandemic levels in February 2020. This helps provide more context for where Wall Street is at the moment and might help ease some worries that the market is super overheated.
The Nasdaq has also soared back to new highs to end Q2, with the technology-heavy index up roughly 12% since May 12. Wall Street has used every pullback and healthy recalibration in big tech as a chance to buy their favorite stocks.
Wall Street has driven stocks to highs amid the low volume summer in the face of inflation fears. The market has seemingly shrugged off the possibility of higher interest rates and the yield on the 10-year U.S. Treasury note has actually slipped back to 1.47% from 1.75% in late March.
The ability to look beyond rising prices amid the booming U.S. economy could mean Wall Street understands that there is no alternative investing won't end anytime soon, with interest rates set to remain historically low even when the Fed begins to lift them. This means investors will likely be left chasing returns in equities for the foreseeable future.
The growth is, of course, supported by the resurgent U.S. economy and the impressive S&P 500 earnings picture that is expected to keep getting better (also read: Q2 Earnings Growth Reflects More Than Easy Comps).
All that said, some investors might be hesitant to buy stocks with the market at new highs, and there are clearly valid reasons to avoid doing so. But timing the market is extremely difficult and trying to do so can lead to buying high and selling low and missing out on comebacks.
Instead, long-term investors, with horizons of a year or longer are often better suited buying strong stocks and staying constantly exposed to the market even during dips and corrections, which are healthy and common. Today we dive into two stocks poised to grow in a world dominated by technology that might be worth buying in Q3 and beyond...
Roku
The pandemic cemented streaming TV as the future of entertainment in the U.S. and beyond, after its ascendance helped Netflix become one of the star stocks of the last decade. In the last several years, Apple and Disney have stormed into the streaming market to take on NFLX, Amazon and others. Disney already crushed its own subscriber goals and laid out a lofty new path and Netflix has amassed over 200 million subscribers worldwide.
Clearly, streaming is a space Wall Street wants to cash in on and Roku is one of the only pure-play streaming stocks not named Netflix. The company rose to prominence on the back of its small devices that plug into TVs and allow users to watch streaming TV content. Roku's tech is also built into smart TVs, and it was the No. 1 smart TV OS sold in the U.S. in 2020, with nearly 40% market share.
Roku's hardware is strong, but it became a Wall Street standout because of its ability to sell ad space across its marketplace, taking a piece of streaming service subscription revenue, ad inventory, and more. Roku allows marketers to buy targeted ads, which is crucial since eMarketer projects digital will account for 65% of the roughly $240 billion-a-year ad industry in the U.S. by 2023, up from around one-third a few years ago.
The company also has a Roku Channel that enables users to watch free, ad-supported streaming movies and TV shows. And it boosted its platform with its purchase of the streaming rights to the short-form shows the now-defunct Quibi created.
Furthermore, Roku bought Nielsen's Advanced Video Advertising business and "entered into a long-term strategic partnership" with the historic marketing research firm and media data giant to further boost its advertising bona fides.
Roku topped our Q1 estimates in May, with revenue up 78%. And its +$0.54 a share adjusted earnings blew away our bottom-line estimate that called for a -$0.12 loss.The growth wasdriven by its ad-heavy platform revenue that skyrocketed 101% to account for 80% of total sales and it added 2.4 million active accounts to close at 53.6 million. Investors should know Roku's monetized video ad impressions more than doubled YoY.
Looking ahead, Zacks estimates call for Roku's FY21 revenue to surge 53% from $1.8 billion to $2.7 billion, with it set to add another $1 billion, or 39% to end 2022 at $3.8 billion. These estimates would follow 58% top-line growth in 2020, 52% in FY19, and 45% in 2018.
At the bottom end, Roku is projected to swing from an adjusted loss of -$0.14 a share to +$0.37 this year, with FY22 set to soar 161% $0.97 a share.
Roku currently lands a Zacks Rank #3 (Hold), alongside an "A" grade for Growth in Style Scores system. And 16 of the 20 brokerage recommendations Zacks has are "Strong Buys." ROKU shares have surged 260% in the past year, as part of a much larger run, and it has rebounded right near its February records on the back of a 50% climb since May 12.
The resurgence has pushed the stock above overbought RSI territory of 70, which could mean it's in for a pullback. Therefore, some investors might want to wait for a more enticing possible entry point. But Roku appears like a strong long-term tech buy that's poised to grow no matter who wins the streaming wars, and it boasts a solid balance sheet.
Snap
Snap has continually enhanced its social media app that became famous for disappearing photos and videos. Today, Snapchat is full of video content and shows from social media stars to celebrities like Kevin Hart, as well as mega brands like the NFL, Disney, and many others.
Snapchat's Discover page has gained traction and it's been in the booming mobile gaming market for over two years. The company also constantly releases various augmented reality offerings and it launched its Spotlight feature late last year that aims to challenge TikTok.
Snap's beefed-up portfolio of entertainment offerings has attracted advertisers as more people disconnect from ad-supported legacy media and simply ignore more traditional online banner ads. Investors should also know that Snap has boasted that in the U.S. it reaches "more than 90% of 13-to-24-year-olds and more than 75% of 13-to-34-year-olds."
Snap's ability to reach this "unduplicated and hard-to-reach audience" has attracted Wall Street's attention, as it continues to add users and monetize its growing platform, as Facebook and other giants face government scrutiny. Snap beat our first quarter estimates, with revenue up 66% and its daily active users up 22% to 280 million. Plus, it posted break-even earnings to top our estimate that called for a loss of -$0.06 a share.
Snap's FY21 and FY22 earnings estimates surged since its report, with some positive revisions recently as well. Zacks estimates call for Snap's FY21 revenue to surge 56% to reach $3.9 billion, with FY22 projected to climb another 49% to $5.8 billion. These estimates would represent its best growth as a public company and follow three-straight years of between 43% to 46% revenue expansion.
Meanwhile, Snap is expected to soar from an adjusted loss of -$0.06 last year to +$0.23 a share in FY21, with 2022 set to skyrocket 200% to +$0.69 a share. And the company has blown away Zacks bottom-line estimates in the trailing four periods.
Snap lands a Zacks Rank #3 (Hold) at the moment, next to an "A" grade for Growth. Like Roku, Wall Street is high on Snap, with 20 of the 25 brokerage recommendations Zacks at "Strong Buys," with none below a "Hold."
SNAP has climbed 190% in the past year, but it fell victim to the growth selling that began in February. Luckily, it has mounted a big comeback, up over 30% since mid-May.
The stock closed regular hours Wednesday just off its records at around $68 a share. Despite trading near its records, its trades well below its year-long highs of 27X forward sales at 21.3X. And it still rests below overbought RSI levels at 65.
Clearly, there could be more selling pressure with the Nasdaq at fresh highs. And some might want to wait for Snap to report its Q2 earnings. Of course, as we touched on, investors with long-term outlooks might want to buy Snap now given its ability to constantly evolve its modern media platform that plays into overall smartphone addiction, while attracting a vital demographic in the new age of entertainment.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the "Internet of Money" and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we're still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks' has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>
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