For Immediate Release
Chicago, IL – October 30, 2020 –
Zacks Equity Research Shares of iRobot Corporation ( IRBT Quick Quote IRBT - Free Report) as the Bull of the Day, Post Holdings, Inc. ( POST Quick Quote POST - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Mattel, Inc. ( MAT Quick Quote MAT - Free Report) , Yext, Inc. ( YEXT Quick Quote YEXT - Free Report) and Box, Inc. ( BOX Quick Quote BOX - Free Report) . Here is a synopsis of all five stocks: iRobot Corp is a Zacks Rank #1 (Strong Buy) that designs, builds and sells robot products to the consumer market. The company makes the popular Roomba robot vacuum, but also makes mops, lawn mowers and a coding robot to help children learn coding. About the Company
iRobot is headquartered in Bedford, MA and employs over 1,100. The company was founded in 1990 and sells its products in chain stores, national retailers and online.
The company is valued at $2.3 billion and has a Forward PE of 23. IRBT holds a Zacks Style Score of “A” in Growth, but “F” in momentum.
Last week the company reported EPS and saw a big beat on both the top and bottom lines. Q3 came on at $2.58 v the $0.90 expected, a 183% beat above Zacks estimates. Revenues came in at $413M v the $314M expected and the company hiked its FY20 guidance. Domestic revenues are about half the total revenues and were up 75% year over year.
The beat on earnings is something investors are used to, as IRBT hasn’t missed in four years.
A negative in the report showed gross margins were slightly lower, with the company now seeing 48.3% v 48.5% from last year. The acceleration in demand for iRobot products began when people started working from home.
CEO Colin Angle had the following comments on the quarter:
"Customer response to our Genius platform and the i3 Series has been excellent thus far...We saw revenue in each geography exceed our original plans with notable strength in U.S. order levels." Estimates and Upgrades
Looking at estimates for the current year, we see them going higher. Over the last 30 days estimates have ticked from $2.45 to $3.53, a gain of 20%. For next year, estimates have gone up by 16% over the same time frame.
After earnings, the company saw some upgrades. Raymond James raised the stock to an Outperform with a $98 price target. Northland Capital reiterated its Outperform and price target of $100.
Stock Sells Off
The headlines number on earnings brought excitement after hours, with the stock trading above $110. However, next year brings uncertainty on a variety of issues, so the stock sold off, falling back to $80. Margins are an issue along with the potential for tariffs, so investors took profits on the move higher.
While there are risks, the company’s sales growth and earnings are impressive. After the big sell off, it looks like investors have stepped in at technical support and see longer-term opportunity.
The Technical Take
The stock fell all the way down to $30 during the March sell off, but then rallied above $70 where it sat for over three months. The recent quarter looked like a breakout, but now the stock is back to the low $80s.
This $80 level offers 50-day Moving average support and looks to be holding. For investors that want a larger pullback, the 200-day moving average is $67.
If the bulls can get above the $92 level, this would break the 61.8% retracement from the earnings highs and give us targets back at that $110 after hours high.
Earnings were great, but there are some risks as we head into 2021. However, the momentum behind the company product line is strong and the revenues numbers show growth both internationally and at home.
Investors should watch the technical support at current levels and if buyers defend enter with targets above $100.
Post Holdings is a Zacks Rank #5 (Strong Sell) that is a consumer package goods holding company. The stock has recently seen a technical pullback and investors should be concerned about earnings next month. About the Company
Post is headquartered in St. Louis, MO and employs over 10,000 people. The company was founded in 1895 and has a market cap of almost $6 billion. Post has a Zacks Style Score of “B” in Value, but “C” in Growth and “D” in Momentum.
The company has five segments including: Post Consumer, Weetabix, Foodservice, Refrigerated Retail and BellRing. The largest segment is the Post Consumer Brands which is 33% of FY19 sales and consists of ready -to-eat cereal products. Some popular brands include Honey Bunches of Oats, Pebbles, Grape-Nuts, Golden Crisp and more.
Earnings and Estimates
The company reported earnings back in August, seeing a 12% surprise to the upside. The stock didn’t really respond to the news, but started heading higher into September. However, the stock lost its momentum and has started to come in. With the recent market sell off, the stock has fallen 10% from the highs as earnings approach.
While the current quarter has ticked higher over the last 7 days, estimates have been trending lower. Over the last three months, estimate have fallen from $0.99 to $0.74 or 25%.
For next year, we are seeing estimates tick lower over the last 7 days, falling from $4.62 to $4.58. While this isn’t significant, analysts see issues as we head into 2021.
Perhaps the biggest red flag for the stock is the chart. After taking back the 200-day MA above $90, the bulls failed to hold it this week. From there, we saw a 10% drop and no support at the 50-day MA at $88. This is a worrisome failure of support as we head into earnings in just a few weeks. If the stock were to break September lows, the March lows around $70 could be in play.
When a stock breaks is moving averages its best to sit back and wait. With earnings approaching in just a few weeks, investors should avoid POST until there is some clarity on the price action. A disappointing report could lead to another leg down. For those looking to go long, a good report with a move back over the 200-day would offer a bullish setup.
Additional content: 3 Cheap Stocks to Buy Despite Renewed Coronavirus Fears
All three major U.S. indexes tumbled well over 3% Wednesday, as a continued rise in coronavirus cases in Europe and the U.S. spark fears about the possible return of broader lockdown measures. Meanwhile, the election is less than one week away, and Wall Street is worried about a lack of urgency on the stimulus front.
Heightened coronavirus fears have partially negated the fact that third quarter earnings continue to improve and the outlook for Q4 and beyond is even stronger. Investors also showed their concern for some of the biggest names in tech (also read:
Will Rising Infections Derail Improving Earnings).
Clearly, the unknowns of the election and the virus are cause for concern, especially in the near-term. But investors with longer-term horizons should try to remember that two key factors that drive stocks, earnings and interest rates, are still showing bullish signs.
This means that longer-term investors might want to consider buying stocks, or at least adding them to their watchlists even as the market falls. And we searched for highly-ranked stocks that are trading for under $20 per share that appear set to grow during these rough economic conditions.
Prior Close: $14.05 USD
Mattel is a toy games power, with a portfolio that features Barbie, Hot Wheels, Fisher-Price, and more. MAT topped our Q3 estimates on October 22. The firm’s revenue jumped 10%, with its Barbie category up 29%. This was the largest quarterly expansion by Barbie going back at least 20 years, the company said. Investors should note that MAT has increased its range of dolls to feature more skin tones, hair colors, career paths, and body sizes.
Mattel’s adjusted Q3 earnings soared 265% to $0.95 a share. And its fiscal 2020 and 2021 earnings outlook has surged since its report to help it land a Zacks Rank #1 (Strong Buy) right now. Our estimates call for the firm’s adjusted Q3 earnings to jump 100% on 6.5% higher revenue, with Q4 sales projected to pop over 9%. Shares of MAT have climbed 23% in the past month and are up over 30% in the last year. Despite its recent strength, Mattel was trading above $30 back in 2016, which could give it plenty of room to run heading into the holiday shopping season and beyond.
Management said recently they are seeing higher-than-expected demand. More importantly, there could be an active push from some parents for their kids to spend less time on screens in a world where more people are concerned about addiction to devices like smartphones—not to mention all the video-based schooling.
Prior Close: $16.94 USD
Yext and its “Search Experience Cloud” aim to help organizations maintain an accurate digital footprint. The goal is to consistently provide consumers with the most up-to-date and correct information about their business on their own websites, various search engines, virtual assistants like Siri, and elsewhere. Yext’s offerings have attracted some big-name clients like Marriott and Taco Bell, as our digital world becomes ever more crowded. It’s also worth pointing out that Yext announced a partnership with Adobe at the end of May that will enable “every Adobe rep in the world” to “refer Yext Answers to their customers…”
Yext in early September topped our Q2 FY21 estimates, with sales up 22%. On top of that, its customer count, which doesn't include its “small business and third-party reseller customers,” jumped 27% to roughly 2,200. Peeking ahead, ahead, Zacks estimates call for its fiscal 2021 revenue to climb 19% to $354.4 million, with FY22 projected to come in another 21.5% higher. Meanwhile, its adjusted losses are expected to continue to shrink during this stretch.
Yext’s positive bottom-line revisions help it land a Zacks Rank #2 (Buy) at the moment. The company went public in the spring of 2017 and its stock is up roughly 50% in the last three years. More recently, Yext has jumped 17% in 2020 to easily outpace its Technology Service Market’s 3% average decline. Despite its run, Yext closed regular trading Wednesday around 10% off its 52-week highs and 30% off its 2018 records of roughly $25 per share.
Prior Close: $16.07 USD
Box is a cloud content management firm. Its various services help customers integrate multiple applications, store files, and more, as part of a larger set of offerings that support the modern work-from-anywhere world. Box beat our second quarter estimates at the end of August, with revenue up over 11%. “Over 100,000 customers now rely on Box to power secure collaboration and critical processes across their businesses,” CEO Aaron Levie said Box’s Q2 earnings call.
The company also improved its cash flow and continues to try to boost its balance sheet. Our estimates call for Box’s FY21 revenue to jump 10.4%, with FY22 projected to come in 9.6% higher to reach $842.6 million. More impressively, its adjusted earnings are projected to skyrocket from $0.03 in the year-ago period to $0.58 per share, with its FY22 EPS figure set to climb to $0.70.
Box’s improved earnings outlook helps it hold a Zacks Rank #2 (Buy) right now, alongside its “A” grade for Growth in our Style Scores system. Even though it has grown during these tough times, the stock is down 9% in the last three months and 3% in the last year. Luckily, past performance is no indicator of future success for a stock that stands to benefit from the continued expansion of the remote work world.
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