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Korn/Ferry International, Manitowoc, eBay, Morgan Stanley and PayPal highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – April 20, 2018 – Zacks Equity Research highlights Korn/Ferry International (KFY - Free Report) as the Bull of the Day, The Manitowoc Company, Inc. (MTW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on eBay (EBAY - Free Report) , Morgan Stanley (MS - Free Report) and PayPal (PYPL - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

Korn/Ferry International is cashing in on the strong global staffing trends. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits both in Fiscal 2018 and Fiscal 2019.

Korn Ferry is an organizational consulting firm which specializes in executive search. Headquartered in Los Angeles, it has 7,000 employers in more than 50 countries.

A Big Beat in the Third Quarter of Fiscal 2018

On Mar 6, Korn Ferry reported its fiscal third quarter 2018 results and blew past the Zacks Consensus Estimate by $0.11. Earnings were $0.70 compared to the Zacks Consensus of $0.59.

This was the sixth earnings beat in a row.

It saw record fee revenue in the quarter which rose 17.2% to $447.6 million from $381.9 million in the year ago quarter.

All three lines of the business drove growth with Futurestep up 29.4%, Executive Search up 18.1% and Hay Group up 12.7%.

Free revenue growth was partially offset by increased compensation and benefits as well as general administrative expenses.

Guided Q4 Range Above Consensus

Korn Ferry gave an earnings range for the fourth quarter between $0.66 to $0.70 which was at the higher range of the Zacks Consensus, at $0.67.

Revenue is expected to be in the range of $448 million and $462 million.

The analysts are bullish. They raised estimates following this quarter with 4 estimates moving higher for fiscal 2018. It pushed the full year estimate up to $2.63 from $2.49 over the last 60 days.

That's earnings growth of 17.4%.

3 estimates also moved higher for fiscal 2019 which pushed the Zacks Consensus up to $3.05 from $2.83 over the last 2 months.

That's another year of double digit earnings growth, with the analysts looking for 16% growth.

For investors looking for a way to play the hot job market, Korn Ferry is a stock that should be on the short list.

Shares at 5 Year Highs

With the global economy humming, it's not surprising that the staffing industry is hot.

Wall Street has figured it out as shares of Korn Ferry have jumped 75.8% in the last year and are up another 36% year-to-date.

Even with the big stock move, the shares are attractively priced for a growth stock.

It trades with a forward P/E of 20.7.

For investors looking for a way to invest in the hot job market, Korn Ferry is a stock to keep on the short list.

Bear of the Day:

The Manitowoc Company, Inc. finally hit the bottom of the industrial equipment cycle in 2017 but then the steel tariffs hit this Zacks Rank #5 (Strong Sell).

Manitowoc makes cranes and lift solutions in 20 countries. Headquartered in Wisconsin, it provides crawler cranes, tower cranes and mobile cranes for the heavy construction industry.

Over half its 2017 revenue was generated outside the United States.

2017 Was the Bottom

On Feb 8, Manitowoc reported its fourth quarter 2017 results and missed on the Zacks Consensus Estimate by 9 cents. Earnings fell $0.15 versus the consensus of a decline of $0.06.

However, the company saw continued improvement in the underlying business. While full year 2017 revenue fell 2% year-over-year, other fundamentals showed improvement by the end of the year.

Fourth quarter orders rose 78% to $620.2 million year-over-year.

The year-end backlog as of Dec 31, 2017 jumped 87% to $606.6 million, up from $328.8 million as of Dec 31, 2016.

Fourth quarter net sales also rebounded, coming in at $481.5 million, up from $378.2 million in the fourth quarter of 2016. The majority of that increase was due to increased demand, especially in the U.S. and European markets.

Everything seemed on track for this company to see a big pick-up in earnings and revenue in 2018.

But then the steel tariffs were announced.

Steel Tariffs Hammer the Stock

The 25% tariff on imported steel sent Manitowoc shares tumbling. The company uses a large amount of steel in its crane manufacturing and Wall Street panicked.

The stock hasn't yet recovered. It's still down 27% year-to-date.

Full Year Estimates Cut

After the company gave guidance for 2018 in February, some analysts lowered their 2018 full year estimates as they were overly bullish.

4 estimates were cut in the last 60 days but 3 were also cut in the last month, which is probably a reflection of the concern about the steel tariffs. Although, one analyst has also raised in the last week.

The 2018 Zacks Consensus fell to $0.44 from $0.57 just 60 days ago.

Additional content:

Should You Buy eBay Ahead of Q1 Earnings?

Shares of eBay have climbed 23% over the last year, and Morgan Stanley analysts just recently “double upgraded” the stock. With that said, investors must still consider how eBay is expected to perform in the first quarter, as Q1 will likely have a greater impact on eBay’s near-term price movement than Morgan Stanley’s positive long-term outlook.

Morgan Stanley analysts raised their eBay rating to “overweight” all the up way from “underweight.” The investment bank also up its price target from $36 per share to $58 a share, which marks a nearly 40% premium compared to eBay’s closing price on Wednesday.

The reason for this substantial upgrade centers on the fact that eBay, which split from PayPal a few years ago, will finally start to transition away from the online payment platform—with a full transition expected by mid-2020. “EBay acting as both marketplace and payment intermediator could simplify and reduce costs for merchants, who would pay a single fee to eBay,” analyst Brian Nowak wrote in a note to clients.

However, eBay’s recent upgrade and year-long momentum don’t mean investors should consider buying the stock ahead of its Q1 earnings report.

Therefore, we have to look at what to expect from eBay’s first quarter earnings results to let investors decide if they want to buy eBay stock in order to take home some possible near-term gains.

Latest Outlook & Valuation

EBay’s Q1 revenues are projected to surge by 17.2% to reach $2.6 billion, based on our current Zacks Consensus Estimates. Meanwhile, the company’s EPS figure is expected to expand by 8.2% to reach $0.53 per share.

It is also worth noting that eBay has experienced nothing but positive Q1 earnings estimate revision activity recently.

Of course, revenue and earnings growth estimates are just two of the many metrics investors will consider when eBay reports its first quarter financial results.

Heading into Thursday, eBay was trading with a Forward P/E of 21.9, which marks a substantial discount compared to the “Internet - Commerce” industry’s average of 49.7. Investors should be excited to see that eBay offers such great value, especially compared to its industry, for a company that is expected to experience big Q1 revenue growth.  

EBay has also consistently traded at this earnings multiple over the last year, while its stock price has climbed. This signals that eBay’s earnings estimates have also continually climbed higher over this period.

Earnings ESP Whispers

Investors will also want to understand what chance eBay has to surprise with better-than-anticipated earnings results. For this, we turn to our Earnings ESP figure.

Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Ebay is currently a Zacks Rank #2 (Buy) and sports an Earnings ESP of 0.31%. The company’s Most Accurate Estimate—the representation of the most recent analyst sentiment—calls for earnings of $0.54 per share, which comes in 1 cent above our current consensus estimate.

Therefore, investors can consider eBay a stock that looks poised to top Q1 earnings estimates when it reports its Q1 financial results after market close on Wednesday, April 25.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

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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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