For Immediate Release
Chicago, IL – May 07, 2015– Zacks Equity Research highlights Dot Hill Systems () as the Bull of the Day and Donaldson Company ( (DCI - Free Report) ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tesla Motors ((TSLA - Free Report) ) and Keurig Green Mountain ().
Here is a synopsis of all four stocks:
Bull of the Day:
Dot Hill Systems () is one of those small cap stocks that I bet you haven't even heard of. If that is the case, you are in luck as I am going review this stock the morning that it is set to report earnings. HILL is a Zacks Rank #2 (Buy) and has an "A" Growth Style Score and today it is the Bull of the Day.
Out of sight, out of mind is a theme that I see repeated time and again on small cap stocks. Let's face it, if you don't use their product, there is a good chance as an investor that you have never heard of this stock. Hopefully this article will get you to look under the hood of some of the other small caps out there like HILL.
Dot Hill Systems makes a range of software and hardware storage systems for the entry and mid-range storage markets. Its storage solutions consist of integrated hardware, firmware, and software products. Dot Hill Systems Corp. was founded in 1988 and is headquartered in Longmont, Colorado.
At a recent analyst day meeting, management positioned the company as being the storage company that is showing growth and profitability. This company showed a telling slide of the bifurcation of the storage industry, listing competitors that have "profit without growth" and another group that was showing "growth without profit."
One other slide that stopped me in my tracks was their "three simple objectives" slide. A lot of times companies have similar stories or products, but at the end of the day, you have to see execution. Without a proven history of executions, executives are just selling smoke, but that is clearly not the case with HILL.
Bear of the Day :
Donaldson Company ((DCI - Free Report) ) recently guided Wall Street down, and that means lower revenue and earnings projections. The stock is now a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.
Donaldson Company makes and sells filtration systems and replacement parts. The company operates in the United States, Europe, the Asia Pacific, and internationally. Donaldson Company was founded in 1915 and is based in Minneapolis, Minnesota.
I normally expect to see a lot of earnings misses when I look at a Zacks Rank #5 (Strong Sell) stock. That is not the case for DCI as it has missed the Zacks Consensus Estimate only twice in the last six quarters. That is good, but beats alone will not give a stock a strong Zacks Rank.
Estimates for DCI experienced a sudden drop recently, and that was the company telling investors that revenue and earnings were going to be lower than what was expected. The Zacks Consensus Estimate for Fiscal 2015 was already falling, as it stood at $1.93 in October of last year and then tumbled down to $1.896 in November. The next leg lower was in February of this year when the number slid to $1.76. Another penny was taken off the top before the big hit came at the start of May. The current number is $1.55.
The Fiscal 2016 Zacks Consensus Estimate is also seeing a lot of downward pressure. It has moved from $2.17 in October of last year to $1.87 - a drop of $0.30 per share.
Tesla Tops Q1 Estimates, Keurig Misses
After Wednesday's closing bell, Tesla Motors ((TSLA - Free Report) ) reported earnings results for its first quarter. The electric car giant reached -$0.70 per share (accounting for stock-based compensation) on revenues of $1.1 billion, both better than the expected -$0.81 per share and $1.07 billion anticipated in sales.
Tesla delivered a record 10,045 new cars in Q1, slightly more than expected, and anticipates a 12 percent increase in Q2 shipments to 12,500. Further, the company announced that the long-awaited Model X SUV remains on target for its first deliveries to be in late Q3. Finally, its gross margins were announced to be on target for the reporting quarter, even with a strong dollar affecting sales overseas.
Shares for Tesla are up 2.75 percent upon the earnings announcement but prior to the company's conference call, at which time CEO Elon Musk often hosts Q&A sessions for more than an hour. Much will be made of Tesla's fledgling battery business from its gigafactory, though in the company's letter to shareholders, Tesla announced that the total addressable size for the battery business is "enormous."
Musk will likely go into some detail about his company's "secret weapon" for demand generation and the "missing piece" to Tesla's sustainable future, which the company has been hinting about for the past week or so. We shall see if the conference call indeed brings forth a revelation that may shoot Tesla shares even higher. Currently the company trades at roughly 30x book value.
Also, Keurig Green Mountain () reported fiscal Q2 earnings after the bell today, narrowly missing on the bottom line with earnings per share of $1.03, as opposed to the $1.05 expected. This marks the company's second-straight earnings miss. Revenues were also lower: Keurig posted sales of $1.13 billion in the quarter, down from the $1.15 billion expected in the Zacks consensus estimate.
2015 has been a tough year for Keurig so far, with shares having tumbled -18 percent year to date even before the 2.85 percent drop in after-hours trading. Fiscal year guidance was also lower than our anticipated guidance of $1134 million for fiscal Q3. With a conference call coming up at 5:00pm ET, investors may have some serious questions about how this company seems to be losing its head of steam from a year ago.
Prior to the earnings announcements, both Tesla and Keurig -- two companies that have emerged in their present form since the turn of the century -- held a Zacks Rank #3 (Hold). We'll see what happens with analysts revisions for both companies following each conference call addressing future challenges and opportunities.
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About the Bull and Bear of the Day
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