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There is still a hint of uncertainty in the air on Wall Street, but bullish investors are looking to take firm control of certain sectors and industries as we head toward what should be a historic holiday shopping season. One retailer and product maker to play this optimism is Fossil Group.
Fossil is an accessories designer, distributor, and retailer. It has several of its own brands that make products such as watches and wallets, and it also makes licensed accessories for the likes of Skechers, Marc Jacobs, and Michael Kors. You can find Fossil products in the company’s branded stores, online, and at other familiar retail locations.
It has been a difficult five years for Fossil, and the stock suffered as management fell behind on new consumer trends like wearables and smart accessories. But shares finally found a bottom in late 2017, thanks in large part to a strategic turnaround plan:
Fossil has put the stop on its downward trend and is now looking to continue a strong rebound. Recently, investors have been buzzing about Fossil since it crushed earnings expectations last week. Now, the #1 (Strong Buy)-ranked stock looks like the ideal option ahead of the holiday shopping period.
Latest Earnings & Outlook
Fossil reported earnings of 19 cents per share for its most recent quarter, crushing the Zacks Consensus Estimate of an 11-cent loss. The company notched 30% sales growth from its connected watches and improved its gross margin by 720 basis points.
Total revenue was down due to restructuring and store closures, but the above metrics—and Fossil’s improvement to full-year guidance—were enough to see that the accessory giant’s turnaround plan is coming along well.
A rocky start to this week’s trading reminded investors that volatility has not miraculously disappeared. But history tells us we are in store for an extended post-midterms rally, and consumer confidence is high heading into the holiday shopping period. This cocktail gives the bulls plenty to get excited about over the next few months.
Nevertheless, the lingering threat of uncertainty means investors should approach this stretch with prudent strategies. One thing to avoid right now is a company that is both noticeably underperforming its industry and witnessing lackluster business trends. This is exactly why Red Robin Gourmet Burgers has earned our “Bear of the Day” designation today.
Red Robin Gourmet Burgers is a casual restaurant chain known for its burgers, fries, and relaxed—primarily suburban—dining locations. There are more than 550 Red Robin restaurants across the U.S. and Canada, including company-owned and franchised stores.
Red Robin reported its most recent quarterly results last week. The burger chain posted earnings of $0.16 per share, beating the Zacks Consensus Estimate by four cents. Revenue totaled $294.9 million, down about 3.5% from the year-ago period. Comps at company-owned stores were down 1.9%, and restaurant-level operating margin contracted to 16.8% from 18.6%.
Management also issued lackluster guidance for 2018. Red Robin now expects earnings to fall between $1.60 and $1.80 per share, which was below where estimates stood before the report. In the previous quarter, Red Robin said comps are now projected to shrink 1% to 2%, whereas previous estimates saw comps improve 50 to 150 basis points.
Red Robin shares have significantly underperformed the industry over the past year, but the stock did surge after its earnings report, as the bottom-line beat was seemingly enough to convince investors that the worst was over.
But as we can see from the above chart, earnings estimates are on the decline for Red Robin. This means that there is a divergence between the company’s share price momentum and its earnings outlook momentum. This is a troubling trend when earnings estimates are on the way down, as we expect share prices to eventually follow that indicator.
Additional content:
Can Strong Demand for GPUs Aid NVIDIA’s Q3 Earnings?
NVIDIA is consistently witnessing steady growth on the back of robust demand for graphic processor units (GPUs) and the momentum is likely to be reflected in the impending third-quarter fiscal 2019 results, scheduled to be announced on Nov 15.
The chip-making giant is well known for its high-performance GPUs used by PC gamers. However, for the last couple of years, NVIDIA’s strategy of applying its GPUs in the artificial intelligence (AI) models has helped it expand its presence in several fast-growing fields including self-driving cars and datacenter.
The growing trend of adopting AI techniques in the aforesaid industries is primarily responsible for driving GPU demand. NVIDIA’s constant focus on introducing an array of fast and innovative products is a key growth driver in this regard.
Click here to know how the company’s overall Q3 performance is likely to be.
Datacenter: A Perpetual Key Growth Catalyst
Datacenter presents a solid growth opportunity for the company. As more and more businesses are shifting to cloud computing, the need for datacenters is surging. The company now seems well poised to capitalize on this emerging trend.
NVIDIA’s GPUs are most preferred by datacenter operators, which should continue to boost its top and the bottom line. The company is a leading player in selling GPUs to data-center service providers boasting clients like Amazon and Alphabet.
Management has successfully marketed the company’s solutions to compete with industry leaders like Intel. Notably, the company’s revenues from this segment increased to $1.93 billion in fiscal 2018 from $317 million in fiscal 2015.
Strong adoption of AI, deep learning, high-performance computing (HPC) and a solid traction of the new Volta architecture are boosting revenues at the datacenter segment. Notably, with the AI gaining ground among other vertical industries like transportation, energy, manufacturing, smart cities and healthcare, is proving beneficial for NVIDIA.
Moreover, the company’s AI inference solution is helping it extend its total addressable market. During the last reported quarter, NVIDIA launched Tensor RT 4, which facilitates speech recognition, speech synthesis, translation and recommendation systems. With this, the company expects to “address a much larger portion of deep learning inference workloads, delivering up to 190x performance speed-up relative to CPUs.”
The company also recently announced that the new NVIDIA T4 GPU has recorded the quickest adoption of any server GPU.
Furthermore, the company’s fully optimized AI server, DGX, is a prime growth booster of its datacenter business.
The Zacks Consensus Estimate for datacenter revenues in the fiscal third quarter is pegged at $821 million, indicating year-over-year growth of 64%.
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.
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Fossil, Red Robin, NVIDIA, Amazon and Alphabet highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 14, 2018 – Zacks Equity Research Fossil Group (FOSL - Free Report) as the Bull of the Day, Red Robin Gourmet Burgers (RRGB - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA (NVDA - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
There is still a hint of uncertainty in the air on Wall Street, but bullish investors are looking to take firm control of certain sectors and industries as we head toward what should be a historic holiday shopping season. One retailer and product maker to play this optimism is Fossil Group.
Fossil is an accessories designer, distributor, and retailer. It has several of its own brands that make products such as watches and wallets, and it also makes licensed accessories for the likes of Skechers, Marc Jacobs, and Michael Kors. You can find Fossil products in the company’s branded stores, online, and at other familiar retail locations.
It has been a difficult five years for Fossil, and the stock suffered as management fell behind on new consumer trends like wearables and smart accessories. But shares finally found a bottom in late 2017, thanks in large part to a strategic turnaround plan:
Fossil has put the stop on its downward trend and is now looking to continue a strong rebound. Recently, investors have been buzzing about Fossil since it crushed earnings expectations last week. Now, the #1 (Strong Buy)-ranked stock looks like the ideal option ahead of the holiday shopping period.
Latest Earnings & Outlook
Fossil reported earnings of 19 cents per share for its most recent quarter, crushing the Zacks Consensus Estimate of an 11-cent loss. The company notched 30% sales growth from its connected watches and improved its gross margin by 720 basis points.
Total revenue was down due to restructuring and store closures, but the above metrics—and Fossil’s improvement to full-year guidance—were enough to see that the accessory giant’s turnaround plan is coming along well.
Bear of the Day:
A rocky start to this week’s trading reminded investors that volatility has not miraculously disappeared. But history tells us we are in store for an extended post-midterms rally, and consumer confidence is high heading into the holiday shopping period. This cocktail gives the bulls plenty to get excited about over the next few months.
Nevertheless, the lingering threat of uncertainty means investors should approach this stretch with prudent strategies. One thing to avoid right now is a company that is both noticeably underperforming its industry and witnessing lackluster business trends. This is exactly why Red Robin Gourmet Burgers has earned our “Bear of the Day” designation today.
Red Robin Gourmet Burgers is a casual restaurant chain known for its burgers, fries, and relaxed—primarily suburban—dining locations. There are more than 550 Red Robin restaurants across the U.S. and Canada, including company-owned and franchised stores.
Red Robin reported its most recent quarterly results last week. The burger chain posted earnings of $0.16 per share, beating the Zacks Consensus Estimate by four cents. Revenue totaled $294.9 million, down about 3.5% from the year-ago period. Comps at company-owned stores were down 1.9%, and restaurant-level operating margin contracted to 16.8% from 18.6%.
Management also issued lackluster guidance for 2018. Red Robin now expects earnings to fall between $1.60 and $1.80 per share, which was below where estimates stood before the report. In the previous quarter, Red Robin said comps are now projected to shrink 1% to 2%, whereas previous estimates saw comps improve 50 to 150 basis points.
Red Robin shares have significantly underperformed the industry over the past year, but the stock did surge after its earnings report, as the bottom-line beat was seemingly enough to convince investors that the worst was over.
But as we can see from the above chart, earnings estimates are on the decline for Red Robin. This means that there is a divergence between the company’s share price momentum and its earnings outlook momentum. This is a troubling trend when earnings estimates are on the way down, as we expect share prices to eventually follow that indicator.
Additional content:
Can Strong Demand for GPUs Aid NVIDIA’s Q3 Earnings?
NVIDIA is consistently witnessing steady growth on the back of robust demand for graphic processor units (GPUs) and the momentum is likely to be reflected in the impending third-quarter fiscal 2019 results, scheduled to be announced on Nov 15.
The chip-making giant is well known for its high-performance GPUs used by PC gamers. However, for the last couple of years, NVIDIA’s strategy of applying its GPUs in the artificial intelligence (AI) models has helped it expand its presence in several fast-growing fields including self-driving cars and datacenter.
The growing trend of adopting AI techniques in the aforesaid industries is primarily responsible for driving GPU demand. NVIDIA’s constant focus on introducing an array of fast and innovative products is a key growth driver in this regard.
Click here to know how the company’s overall Q3 performance is likely to be.
Datacenter: A Perpetual Key Growth Catalyst
Datacenter presents a solid growth opportunity for the company. As more and more businesses are shifting to cloud computing, the need for datacenters is surging. The company now seems well poised to capitalize on this emerging trend.
NVIDIA’s GPUs are most preferred by datacenter operators, which should continue to boost its top and the bottom line. The company is a leading player in selling GPUs to data-center service providers boasting clients like Amazon and Alphabet.
Management has successfully marketed the company’s solutions to compete with industry leaders like Intel. Notably, the company’s revenues from this segment increased to $1.93 billion in fiscal 2018 from $317 million in fiscal 2015.
Strong adoption of AI, deep learning, high-performance computing (HPC) and a solid traction of the new Volta architecture are boosting revenues at the datacenter segment. Notably, with the AI gaining ground among other vertical industries like transportation, energy, manufacturing, smart cities and healthcare, is proving beneficial for NVIDIA.
Moreover, the company’s AI inference solution is helping it extend its total addressable market. During the last reported quarter, NVIDIA launched Tensor RT 4, which facilitates speech recognition, speech synthesis, translation and recommendation systems. With this, the company expects to “address a much larger portion of deep learning inference workloads, delivering up to 190x performance speed-up relative to CPUs.”
The company also recently announced that the new NVIDIA T4 GPU has recorded the quickest adoption of any server GPU.
Furthermore, the company’s fully optimized AI server, DGX, is a prime growth booster of its datacenter business.
The Zacks Consensus Estimate for datacenter revenues in the fiscal third quarter is pegged at $821 million, indicating year-over-year growth of 64%.
NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.