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Alarm.com, Activision, Snap and Amazon highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – January 17, 2018 – Zacks Equity Research Alarm.com (ALRM - Free Report) as the Bull of the Day, Activision Blizzard asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Snap (SNAP - Free Report) and Amazon (AMZN - Free Report) .
Alarm.comis a Zacks Rank #1 (Strong Buy) that sports a D for Value and an A for Growth. I like that sort of divergence on the growth scores. I also see a 13% short interest position. So this stock fits well with where I have been having success lately.
Earnings History
I see a great history here with four consecutive beats of the Zacks Consensus Estimate. The most recent beat was 11 cents, or 44% ahead of the estimate. On average the ALRM has topped the Zacks Consensus Estimate by 27% over the last four reports.
We like to see a good earnings history like this because it tells us that management knows how to guide the analysts to a beatable number.
Estimate Revisions
I know this is a Zacks Rank #1 (Strong Buy) and that usually means that we get a lot of positive earnings estimate revisions, but that doesn’t seem to be the case here. I see a few moves higher, like the 2018 number moving from $1.21 to $1.28 but that really seems to be it.
I have come across this a lot lately as analysts, it seems, are not willing to stick their necks out on the line lately. The recent downturn in the market might have more than a few analysts gun shy about hiking numbers.
Valuation
I see a nearly 41x forward earnings multiple, and we get a number that high because the topline is showing strong growth of 24% on an annual basis. The Zacks System does not show a price to book multiple so we move on to the price to sales multiple of 6.8x. That is pretty high and part of the reason this is a low Value Style Score stock.
Activision Blizzard is the Bear of the Day as it is a Zacks Rank #5 (Strong Sell). But how could it be the Bear of the Day after it beat the Zacks Consensus Estimate the last time it reported? That is a good question and one this article seeks to answer.
Recent Earnings
ATVI last reported on November 8, and topped the Zacks Consensus Estimate of $0.51 by a penny. That was good for a 2% positive earnings surprise, but the Zacks Rank is much more concerned with earnings estimates than just beating the number.
If the Rank were just about beating the number ATVI would be at the top as they have topped the Zacks Consensus Estimate in each of the last four quarters.
Estimate Revisions
Beating the number is great, but what really matters is what is ahead. Analysts took estimates lower following the good quarter and that pushes the Zacks Rank down.
I see the current quarter shaping up for $1.30 in EPS, but that is down from 90 days ago when the Zacks Consensus Estimate was at $1.39.
60 days ago the next quarter was looking for $0.54, but that number is also down to $0.49.
90 days ago the 2018 full year estimate stood at $2.64, and now it is 3 cents lower. The 2019 Zacks Consensus Estimate was at $2.96 and fell to $2.67 over the same time horizon.
End Of The Day
The Zacks Rank really cares most about what the Zacks Consensus Estimate does. While there are some minor moves in estimates, the direction all looks to be trending in the same direction.
Investors would be wise to wait and see how the next earnings results are before making a move on this gaming stock.
Why Was SNAP Down So Badly on Wednesday?
Shares of Snap were down more than 11% at the open on Wednesday after the company announced that its chief financial officer is stepping down from the position less than one year after taking the job.
Snap shared the news in an SEC filing released Tuesday. The messaging app maker said that the resignation of CFO Tim Stone “is not related to any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise).”
Stone’s departure adds to a growing exodus of key executives from Snap. In just the past year, the embattled company has lost chief strategy officer Imran Khan, VP of communications Marry Ritti, VP of monetization engineering Stuart Bowers, and Stone’s predecessor, Andrew Vollero.
Stone brought nearly 20 years of experience at Amazon to Snap. He joined in May, when the stock was down roughly 36.5% from its IPO price.
At the time of his hiring, Stone was considered a solid addition for Snap, which desperately needed a focused financial head to take control of its books and put the company on the path to profitability. Wedbush Securities analysts wrote that the hiring of Stone and other key employees suggested “increased focus on shareholder value.”
Nevertheless, Snap has struggled to generate positive momentum with Stone at the helm of its finances. Shares continued to make all-time lows throughout the second half of 2018, and the struggling stock has shed about 50% of its value in the past six months.
To many investors, Stone’s departure will represent another bump in what has proven to be a treacherous road for Snap since its IPO in 2017. However, the picture sharing pioneer did include one silver lining in Tuesday’s SEC filing.
Snap mentioned that its quarterly results are expected to be “slightly favorable” to the high end of its guidance range when it reports early next month. The company previously predicted revenue in the range of $355 million to $380 million for the period.
This updated guidance could improve revenue and earnings estimates ahead of Snap’s upcoming report. According to our current Zacks Consensus Estimates, analysts expect Snap to report an adjusted loss of 8 cents per share, which would represent a year-over-year improvement of 38.5%. This would put the company on track for a full-year loss of 53 cents per share, up about 13%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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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Alarm.com, Activision, Snap and Amazon highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – January 17, 2018 – Zacks Equity Research Alarm.com (ALRM - Free Report) as the Bull of the Day, Activision Blizzard asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Snap (SNAP - Free Report) and Amazon (AMZN - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Alarm.comis a Zacks Rank #1 (Strong Buy) that sports a D for Value and an A for Growth. I like that sort of divergence on the growth scores. I also see a 13% short interest position. So this stock fits well with where I have been having success lately.
Earnings History
I see a great history here with four consecutive beats of the Zacks Consensus Estimate. The most recent beat was 11 cents, or 44% ahead of the estimate. On average the ALRM has topped the Zacks Consensus Estimate by 27% over the last four reports.
We like to see a good earnings history like this because it tells us that management knows how to guide the analysts to a beatable number.
Estimate Revisions
I know this is a Zacks Rank #1 (Strong Buy) and that usually means that we get a lot of positive earnings estimate revisions, but that doesn’t seem to be the case here. I see a few moves higher, like the 2018 number moving from $1.21 to $1.28 but that really seems to be it.
I have come across this a lot lately as analysts, it seems, are not willing to stick their necks out on the line lately. The recent downturn in the market might have more than a few analysts gun shy about hiking numbers.
Valuation
I see a nearly 41x forward earnings multiple, and we get a number that high because the topline is showing strong growth of 24% on an annual basis. The Zacks System does not show a price to book multiple so we move on to the price to sales multiple of 6.8x. That is pretty high and part of the reason this is a low Value Style Score stock.
Bear of the Day:
Activision Blizzard is the Bear of the Day as it is a Zacks Rank #5 (Strong Sell). But how could it be the Bear of the Day after it beat the Zacks Consensus Estimate the last time it reported? That is a good question and one this article seeks to answer.
Recent Earnings
ATVI last reported on November 8, and topped the Zacks Consensus Estimate of $0.51 by a penny. That was good for a 2% positive earnings surprise, but the Zacks Rank is much more concerned with earnings estimates than just beating the number.
If the Rank were just about beating the number ATVI would be at the top as they have topped the Zacks Consensus Estimate in each of the last four quarters.
Estimate Revisions
Beating the number is great, but what really matters is what is ahead. Analysts took estimates lower following the good quarter and that pushes the Zacks Rank down.
I see the current quarter shaping up for $1.30 in EPS, but that is down from 90 days ago when the Zacks Consensus Estimate was at $1.39.
60 days ago the next quarter was looking for $0.54, but that number is also down to $0.49.
90 days ago the 2018 full year estimate stood at $2.64, and now it is 3 cents lower. The 2019 Zacks Consensus Estimate was at $2.96 and fell to $2.67 over the same time horizon.
End Of The Day
The Zacks Rank really cares most about what the Zacks Consensus Estimate does. While there are some minor moves in estimates, the direction all looks to be trending in the same direction.
Investors would be wise to wait and see how the next earnings results are before making a move on this gaming stock.
Why Was SNAP Down So Badly on Wednesday?
Shares of Snap were down more than 11% at the open on Wednesday after the company announced that its chief financial officer is stepping down from the position less than one year after taking the job.
Snap shared the news in an SEC filing released Tuesday. The messaging app maker said that the resignation of CFO Tim Stone “is not related to any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise).”
Stone’s departure adds to a growing exodus of key executives from Snap. In just the past year, the embattled company has lost chief strategy officer Imran Khan, VP of communications Marry Ritti, VP of monetization engineering Stuart Bowers, and Stone’s predecessor, Andrew Vollero.
Stone brought nearly 20 years of experience at Amazon to Snap. He joined in May, when the stock was down roughly 36.5% from its IPO price.
At the time of his hiring, Stone was considered a solid addition for Snap, which desperately needed a focused financial head to take control of its books and put the company on the path to profitability. Wedbush Securities analysts wrote that the hiring of Stone and other key employees suggested “increased focus on shareholder value.”
Nevertheless, Snap has struggled to generate positive momentum with Stone at the helm of its finances. Shares continued to make all-time lows throughout the second half of 2018, and the struggling stock has shed about 50% of its value in the past six months.
To many investors, Stone’s departure will represent another bump in what has proven to be a treacherous road for Snap since its IPO in 2017. However, the picture sharing pioneer did include one silver lining in Tuesday’s SEC filing.
Snap mentioned that its quarterly results are expected to be “slightly favorable” to the high end of its guidance range when it reports early next month. The company previously predicted revenue in the range of $355 million to $380 million for the period.
This updated guidance could improve revenue and earnings estimates ahead of Snap’s upcoming report. According to our current Zacks Consensus Estimates, analysts expect Snap to report an adjusted loss of 8 cents per share, which would represent a year-over-year improvement of 38.5%. This would put the company on track for a full-year loss of 53 cents per share, up about 13%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
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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.