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United Rentals, Fogo de Chao, Amazon.com, Alphabet and Microsoft highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – October 27, 2017 – Zacks Equity Research highlights United Rentals, Inc. (URI - Free Report) as the Bull of the Day and Fogo de Chao, Inc. as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com (AMZN - Free Report) , Alphabet (GOOGL - Free Report) and Microsoft (MSFT - Free Report) .
United Rentals, Inc. crushed the consensus again in the third quarter as the North American construction industry heats up. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 20% this year.
United Rentals is the largest equipment rental company in the world with 1,019 rental locations in 49 states and every Canadian province.
It recently acquired Neff Corporation for $1.3 billion which has boosted its employee count to 15,000. The company serves construction and industrial customers, utilities, municipalities, the oil and gas sector, homeowners and others.
A Big Beat in the Third Quarter
On October 18, United Rentals reported its third quarter results and blew by the Zacks Consensus by $0.25. Earnings were $3.25 versus the consensus of $3.00.
Rental revenue jumped 16.2% year-over-year as it saw a 0.9% increase in rental rates. This was the first increase in rental rates in 8 quarters.
Time utilization jumped by 160 basis points to a third quarter record of 71.9%, with each month of the quarter also establishing a new monthly record.
The quarter was boosted by the Trench, Power and Pump specialty segment which saw rental revenue soar 32.9%.
Non-residential construction and infrastructure also increased by double digits.
Optimistic About the Fourth Quarter
United Rentals was optimistic about the outlook for the fourth quarter saying that it expected market activity to "exceed normal seasonality."
Additionally, it has seen some recovery in its oil and gas segment, including in Canada which was up 9% in the quarter and is on the rebound.
The company also commented on the hurricanes, saying that it was shipping fleet to its national accounts in Puerto Rico and saw $6 million in revenue in September from hurricane activities.
It increased capex by $200 million this year as it expects severe need by some customers.
As a result, the analysts are bullish on the full year 2017 as well as on 2018.
The 2017 Zacks Consensus Estimate jumped to $10.38 from $9.82 as 7 estimates were revised higher. That is earnings growth of 20%.
Similarly, the 2018 Zacks Consensus Estimate also rose to $12.08 from $10.86, which would be earnings growth of another 16.4%.
Shares at New Highs
Shares have soared 33% this year on optimism over growing strength in non-residential construction, even without an infrastructure spending bill.
Because earnings are also on the rise, valuations are still attractive.
Fogo de Chao, Inc. got hit by the hurricanes in its US business as the restaurant industry continues to struggle. This Zacks Rank #5 (Strong Sell) is expected to see declining earnings in 2017.
Fogo de Chao is a Brazilian steakhouse, or churrascaria, which specializes in fire-roasting meats using centuries-old Southern Brazilian cooking techniques.
It opened its first restaurant in Brazil in 1979 and now operates 36 restaurants in the United States, 9 in Brazil, two join venture restaurants in Mexico and one joint venture in Jeddah, Saudi Arabia. It offers a tasting menu of a variety of meats including beef, lamb, pork and chicken along with a Market Table that has seasonal salads, soups, fresh vegetables and desserts.
Disappoints on Preliminary Third Quarter Results
On Oct 17, Fogo de Chao reported preliminary third quarter results which disappointed investors.
Comparable restaurant sales, the key metric for restaurant chains, fell 5.1% with US company-owned comparable restaurant sales falling 2.1%.
Fogo de Chao also guided below the Zacks Consensus for the quarter, giving a range of $0.08 to $0.10, including hurricane impacts of about $0.03.
The Zacks Consensus had been at $0.17 and has now been slashed to $0.11.
“Though we anticipated traffic pressures as a result of lapping last year’s Olympic Games in Brazil, we also continued to feel the impact of industry softness in the U.S.," said Larry Johnson, Chief Executive Officer of Fogo de Chao.
"Our third quarter results were further impacted by short-term challenges, including three hurricanes; a spike in beef inflation due to retail demand pressures; and security issues in Rio de Janeiro, as a result of increased crime the government is currently addressing."
"More specifically, as a result of the hurricane activity, we lost 19 operating days during the quarter and experienced a decline in sales and traffic that extended before landfall through the post-hurricane clean up periods."
Estimates for 2017 and 2018 Cut
The analysts didn't waste any time in cutting full year 2017 estimates as well as 2018 estimates reflecting the mood that the restaurant industry is struggling right now despite the strong US economy.
Additional content:
Amazon Surprises with Big Q3 Earnings Beat
Amazon.com, not typically known for blowing away quarterly earnings estimates, posted a big earnings beat in its Q3 earnings report after the bell today. From expectations of just $0.01 per share, Amazon put up 52 cents per share, exactly meeting its year-ago earnings total. Revenues of $43.74 billion outperformed the $42.18 billion in the Zacks consensus.
The company's acquisition of Whole Foods in the quarter (August 28) brought a positive impact of 1000 basis points (10%) to Amazon's results. Amazon Web Services (AWS) posted 42% net sales growth year over year, with operating income in the quarter of $2977 million. Operating cash flow rose 14% to $17.1 billion in Amazon's Q3 2017.
This is only the third bottom-line beat for Amazon in the past five quarters. Generally, huge investments into new markets soak up all of Amazon's quarterly profits, while investors focus mostly on the enormous and widening revenue streams. The Whole Foods turnaround looks to be accretive to Amazon's gains at an earlier point than most of Amazon's new businesses.
Guidance for Q4 display very wide ranges for both net sales ($56.0-60.5 billion, 28-38%) and operating income ($300 million - $1.6 billion). Even still these numbers look a tad conservative, with the pre-report Zacks consensus revenue estimate at $58.93 billion. If Amazon posts another quarter like the one just reported, it could plausibly eviscerate those estimates.
Amazon shares are now trading up over 8% in the after-market today. Shares had already gone up 30% year to date, but had been down more than 7% since the company's rather disappointing Q2 earnings report. Amazon has now already made up for that shortfall, and then some. Prior to its earnings surprise, Amazon was a Zacks Rank #4 (Sell) stock, with a Zacks Style Score of B.
For the latest Alphabet earnings report, click here.
For the latest Microsoft earnings report, click here.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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United Rentals, Fogo de Chao, Amazon.com, Alphabet and Microsoft highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 27, 2017 – Zacks Equity Research highlights United Rentals, Inc. (URI - Free Report) as the Bull of the Day and Fogo de Chao, Inc. as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com (AMZN - Free Report) , Alphabet (GOOGL - Free Report) and Microsoft (MSFT - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
United Rentals, Inc. crushed the consensus again in the third quarter as the North American construction industry heats up. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 20% this year.
United Rentals is the largest equipment rental company in the world with 1,019 rental locations in 49 states and every Canadian province.
It recently acquired Neff Corporation for $1.3 billion which has boosted its employee count to 15,000. The company serves construction and industrial customers, utilities, municipalities, the oil and gas sector, homeowners and others.
A Big Beat in the Third Quarter
On October 18, United Rentals reported its third quarter results and blew by the Zacks Consensus by $0.25. Earnings were $3.25 versus the consensus of $3.00.
Rental revenue jumped 16.2% year-over-year as it saw a 0.9% increase in rental rates. This was the first increase in rental rates in 8 quarters.
Time utilization jumped by 160 basis points to a third quarter record of 71.9%, with each month of the quarter also establishing a new monthly record.
The quarter was boosted by the Trench, Power and Pump specialty segment which saw rental revenue soar 32.9%.
Non-residential construction and infrastructure also increased by double digits.
Optimistic About the Fourth Quarter
United Rentals was optimistic about the outlook for the fourth quarter saying that it expected market activity to "exceed normal seasonality."
Additionally, it has seen some recovery in its oil and gas segment, including in Canada which was up 9% in the quarter and is on the rebound.
The company also commented on the hurricanes, saying that it was shipping fleet to its national accounts in Puerto Rico and saw $6 million in revenue in September from hurricane activities.
It increased capex by $200 million this year as it expects severe need by some customers.
As a result, the analysts are bullish on the full year 2017 as well as on 2018.
The 2017 Zacks Consensus Estimate jumped to $10.38 from $9.82 as 7 estimates were revised higher. That is earnings growth of 20%.
Similarly, the 2018 Zacks Consensus Estimate also rose to $12.08 from $10.86, which would be earnings growth of another 16.4%.
Shares at New Highs
Shares have soared 33% this year on optimism over growing strength in non-residential construction, even without an infrastructure spending bill.
Because earnings are also on the rise, valuations are still attractive.
Bear of the Day:
Fogo de Chao, Inc. got hit by the hurricanes in its US business as the restaurant industry continues to struggle. This Zacks Rank #5 (Strong Sell) is expected to see declining earnings in 2017.
Fogo de Chao is a Brazilian steakhouse, or churrascaria, which specializes in fire-roasting meats using centuries-old Southern Brazilian cooking techniques.
It opened its first restaurant in Brazil in 1979 and now operates 36 restaurants in the United States, 9 in Brazil, two join venture restaurants in Mexico and one joint venture in Jeddah, Saudi Arabia. It offers a tasting menu of a variety of meats including beef, lamb, pork and chicken along with a Market Table that has seasonal salads, soups, fresh vegetables and desserts.
Disappoints on Preliminary Third Quarter Results
On Oct 17, Fogo de Chao reported preliminary third quarter results which disappointed investors.
Comparable restaurant sales, the key metric for restaurant chains, fell 5.1% with US company-owned comparable restaurant sales falling 2.1%.
Fogo de Chao also guided below the Zacks Consensus for the quarter, giving a range of $0.08 to $0.10, including hurricane impacts of about $0.03.
The Zacks Consensus had been at $0.17 and has now been slashed to $0.11.
“Though we anticipated traffic pressures as a result of lapping last year’s Olympic Games in Brazil, we also continued to feel the impact of industry softness in the U.S.," said Larry Johnson, Chief Executive Officer of Fogo de Chao.
"Our third quarter results were further impacted by short-term challenges, including three hurricanes; a spike in beef inflation due to retail demand pressures; and security issues in Rio de Janeiro, as a result of increased crime the government is currently addressing."
"More specifically, as a result of the hurricane activity, we lost 19 operating days during the quarter and experienced a decline in sales and traffic that extended before landfall through the post-hurricane clean up periods."
Estimates for 2017 and 2018 Cut
The analysts didn't waste any time in cutting full year 2017 estimates as well as 2018 estimates reflecting the mood that the restaurant industry is struggling right now despite the strong US economy.
Additional content:
Amazon Surprises with Big Q3 Earnings Beat
Amazon.com, not typically known for blowing away quarterly earnings estimates, posted a big earnings beat in its Q3 earnings report after the bell today. From expectations of just $0.01 per share, Amazon put up 52 cents per share, exactly meeting its year-ago earnings total. Revenues of $43.74 billion outperformed the $42.18 billion in the Zacks consensus.
The company's acquisition of Whole Foods in the quarter (August 28) brought a positive impact of 1000 basis points (10%) to Amazon's results. Amazon Web Services (AWS) posted 42% net sales growth year over year, with operating income in the quarter of $2977 million. Operating cash flow rose 14% to $17.1 billion in Amazon's Q3 2017.
This is only the third bottom-line beat for Amazon in the past five quarters. Generally, huge investments into new markets soak up all of Amazon's quarterly profits, while investors focus mostly on the enormous and widening revenue streams. The Whole Foods turnaround looks to be accretive to Amazon's gains at an earlier point than most of Amazon's new businesses.
Guidance for Q4 display very wide ranges for both net sales ($56.0-60.5 billion, 28-38%) and operating income ($300 million - $1.6 billion). Even still these numbers look a tad conservative, with the pre-report Zacks consensus revenue estimate at $58.93 billion. If Amazon posts another quarter like the one just reported, it could plausibly eviscerate those estimates.
Amazon shares are now trading up over 8% in the after-market today. Shares had already gone up 30% year to date, but had been down more than 7% since the company's rather disappointing Q2 earnings report. Amazon has now already made up for that shortfall, and then some. Prior to its earnings surprise, Amazon was a Zacks Rank #4 (Sell) stock, with a Zacks Style Score of B.
For the latest Alphabet earnings report, click here.
For the latest Microsoft earnings report, click here.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think. See This Ticker Free >>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.