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US Foods Holding, Pandora Media and Nvidia highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – Feb 26, 2018 – Zacks Equity Research highlights US Foods Holding Corp. (USFD - Free Report) as the Bull of the Day, Pandora Media  as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nvidia (NVDA - Free Report) .

Here is a synopsis of all three stocks:

Bull of the Day:

US Foods Holding Corp. provides its customers with a broad range of food offerings, as well as a comprehensive suite of e-commerce, technology and business solutions.

At the time of its 2016 IPO, the company was the second-largest U.S. food-service distributor and the 10th biggest private company in the country, with a 2014 market share of 9%.

US Foods is headquartered in Rosemont, IL, and provides food for over 250,000 customer locations, including local and national restaurant chains, hospitals, nursing homes, hotels, universities, and military organizations.

Solid Fourth Quarter Results

Earlier this month, the Zacks Rank #1 (Strong Buy) stock reported better-than-expected results for its fourth quarter.

Adjusted earnings of 44 cents per share just edged past the Zacks Consensus of 43 cents, while gross profit of $1.1 billion increased $1.1 billion.

Revenues jumped 5.6% to $6 billion, which also beat our consensus estimate.

Adjusted EBITDA increased 9.4% to $290 million.

Total case volume grew 1.9% (0.9% of this was organic growth) thanks to strong growth with US Foods’ targeted independent restaurant, healthcare, and hospitality customers. Independent restaurant case volume increased 7.1%.

Looking ahead at fiscal 2018, US Foods expects total case volume growth of 1-2%, revenue growth between 3-4%, adjusted EBITDA growth of 6-8%, and adjusted EPS in the range of $2.00-$2.10 per share.

Estimates are Rising

For US Foods, its bottom line is headed down a steady upward track for the foreseeable future.

Earnings are expected to grow almost 78% for the current quarter. One analyst has revised their estimate upwards in the last 30 days, though one analyst has also cut their estimate for the same time period.

Fiscal 2018 figures are also looking pretty promising, with four estimates moving higher in the past month. The consensus estimate trend has jumped from $1.78 per share to $2.05 per share.

Earnings estimates for 2019 are on the rise as well, jumping from $2.01 per share to $2.34 per share in the last 30 days.

Can Shares Push Higher?

Shares of USFD have only gained 2.8% since the start of the year, and about 18% in the past one-year period.

Bear of the Day:

Originally launched in 2000, Pandora Media is often referred to as an Internet radio pioneer. Its technology has helped it lead the free online music listening movement. With Pandora, a listener can enter a single song, artist, or genre to start a station, and its mathematical algorithms will combine with individual and collective feedback to suggest songs and build personalized playlists.

Pandora offers its users a free, ad-supported version, as well as Pandora Premium, a $9.99 per month subscription that lets you play and choose any song or album and utilize playlist creation features.

Sitting at a Zacks Rank #5 (Strong Sell), Pandora reported mixed fourth-quarter results, but the company has been on a steady decline for a few years now. Is there any chance for a rebound for this Internet radio innovator?

Q4 Earnings: A Deep Dive

Last week, Pandora reported an adjusted loss per share of 21 cents, missing the Zacks Consensus of a loss of 7 cents and falling short of the year-ago quarter’s loss of 13 cents per share as well.

Revenues grew just 0.7% to $395 million, which beat our consensus estimate of $375 million. If you exclude sales from Ticketfly and the recent winding down of operations in Australia and New Zealand, sales would have climbed 7%.

Subscription and other revenues increased as well, up 63.2% year-over-year thanks to subscriber growth and higher average revenue per paid subscriber (ARPU).

ARPU was $6.08, up 32.8% from the year-ago period; this metric was driven by growth in Pandora Premium subscribers.

However, advertising revenues fell 5% to $297.7 million, while total listener hours declined 6.5% on a year-over-year basis to 5.03 billion. The number of active listers also decreased, down 6% year-over-year to 74.7 million.

Earnings Estimates

For the current quarter, one analyst cut their outlook in the last 30 days, and the consensus has dipped from $-0.25 to $-0.26. Earnings are expected to decline about 8.3% for this time period.

Three analysts have revised their estimates downward for the current fiscal year, though earnings are expected to grow over 51% in that time frame.

Looking at the next fiscal year, earnings could grow over 77%, but analysts have been slashing their outlook for this time period as well. And, the current consensus has dipped from $-0.04 to $-0.08 in the last 30 days.

What’s Next for Pandora?

Shares of Pandora are down nearly 11% so far this year, and have plummeted almost 67% in the past one year.

Additional content:

Why Nvidia's the Cheapest It's Been in Nearly a Year

It is no secret that Nvidia is one of Wall Street’s most popular stocks. The graphics chip maker is a dominant force in the global gaming industry, and its tireless investments in self-driving cars, machine learning, and artificial intelligence all but guarantee the company a spot among the tech industry’s leaders for years to come.

Nvidia’s leadership and innovation have also led to a massive surge in the company’s stock. Over the last two years, NVDA has climbed more than 800%, thanks in large part to excitement over the company’s future-focused technology.

But some of that surge has also been caused by rapid earnings and revenue expansion, with the company notching adjusted EPS growth of 61% and sales growth of 41% in its most recent fiscal year.

Nevertheless, Nvidia remains a speculative growth stock with sky-high valuations. NVDA is currently trading with a P/E ratio of 38.2, coming in significantly higher than the broader market average, as well as the 15.8 average displayed by its “Semiconductor – General” industry peers.

To those skeptical of rising valuations in the sector, Nvidia’s high P/E is just another example of the bubble forming around tech stocks right now. Believers in Nvidia’s future, on the other hand, argue that investors simply have to pay a premium for companies with the potential to lead humanity into the next great technological age.

One thing that nearly everyone can agree on is that Nvidia is quite the unique company. Prudent investors are correct to compare the stock to the others around it, but the uniqueness of the situation might also demand special consideration. In other words, investors looking to determine whether Nvidia is “cheap” or “expensive” might be best served by comparing the stock to itself.

Nvidia was battered by the late-January sell-off, but shares have recovered quite nicely. That means that the cause of this lower P/E is also an improved analyst outlook and rising earnings estimates.

Within the past 60 days, we have seen 12 revisions with 100% agreement to the upside for Nvidia’s fiscal 2019 earnings estimates. Over this same timeframe, the Zacks Consensus Estimate for that fiscal period, which ends in January 2019, has gained a staggering $1.56.

Nvidia is now expected to witness adjusted full-year earnings of $6.34 per share in fiscal 2019, which would represent growth of nearly 29% on a year-over-year basis.

This strong revision activity has helped NVDA earn a Zacks Rank #1 (Strong Buy), giving investors yet another clue that now might just be the perfect time to scoop up some shares.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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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.

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