For Immediate Release
Chicago, IL – May 06, 2016 – Zacks Equity Research highlights New Oriental Education & Technology Group ((EDU - Free Report) ) as the Bull of the Day and Bank of America (BAC - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on FireEye (FEYE - Free Report) and CyberArk (CYBR - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
China’s largest private education provider delivered another strong quarter. Analysts have been raising their price and earnings estimates after solid results, sending the stock back to a Zacks rank #1 (Strong Buy).
About the Company
Founded in 1993, New Oriental Education & Technology Group ( (EDU - Free Report) ) is the largest provider of private educational services in China with over 24.2 million student enrollments. The company IPO’d on the NYSE in September 2006.
Headquartered in Beijing, New Oriental group currently has a network of 727 schools/learning centers and over 17,700 teachers in 54 cities. Additional it has a large online network with over 12.9 million users.
They provide a comprehensive range of educational products for students of all ages, including POP kids programs, summer camps, private schools, after school tutoring, adult English as well as domestic and overseas entrance tests preparation.
Excellent Quarterly Results
The company reported its Q3 FY 2016 (ended February 29) results on April 19. Revenue for the quarter increased 20.6% year-over-year to $346.9 million. Net income increased 16.8% year-over-year to $48.4 million. Strong growth was mainly attributable to the ongoing increases in total enrollments. Their K-12 all-subjects after-school tutoring business continued to perform well, with gross revenue up 35% year over year and enrollment up 31% year over year.
Per CEO, "we continued to make solid progress on all fronts given improved product mix, positive market dynamics and increased efficiency in operations.”
New Oriental expects fourth fiscal quarter total revenues to be in the range of $378.1 million to $391.3 million, representing year-over-year growth in the range of 15% to 19%
After strong results, analysts have been raising their estimates for the company. Zacks Consensus Estimates for current and the next fiscal year have gone up to $1.47 per share and $1.82 per share respectively, from $1.39 and $1.74, before the results. Rising estimates sent the stock to a Zacks Rank # 1 (Strong Buy).
Investment by Tencent
In February, the company announced that an affiliate of Tencent has agreed to invest about $50 million in its online education platform, Koolearn.com. Tencent is a leading internet company in the world and its investment should further help drive growth of the online platform.
The Bottom Line
The company has a recognized brand name and a leadership position in areas like overseas test prep, English language tutoring, overseas study consulting and K-12 after school tutoring. Private education industry in China has been growing rapidly thanks mainly to rising incomes of the expanding middle class in the country. Strong brand awareness and pricing power will continue to drive profits going forward for this company.
Bear of the Day :
Big banks continue to face a challenging environment. Stricter regulations have hurt their investment banking and trading businesses and persistently low interest rates continue to impact profitability. Bank of America (BAC - Free Report) reported a 13% decline in its first quarter profit, missing the Zacks Consensus Estimate and sending the stock to a Zacks Rank #5 (Strong Sell).
About the Company
Headquartered in Charlotte, NC, Bank of America is the second largest bank in the US by assets behind J.P. Morgan. Its banking and non-banking subsidiaries provide a diverse range of banking and non-banking financial services and products.
Disappointing First Quarter Results
BofA reported its first quarter results on April 14. Net earnings of $0.21 per share lagged the Zacks Consensus Estimate of $0.21 and were down from $0.25 recorded in the same quarter a year ago.
The bank reported revenues $19.5 billion, missing the Zacks Consensus Estimate of $20.5 billion and down 7% year-over-year. Lower revenue was the main reason behind the earnings miss. Three of the bank’s four main operating segments reported revenue declines.
The bank said low interested rates were partly responsible for revenue and earnings misses. Trading revenues fell about 16% year-over-year as volatility and uncertainty prevailing in financial markets impacted trading. The positive news was they were able to cut their expenses by 6%.
BofA increased its reserves for energy loan losses by an additional $525 million to about $1 billion, or about 4.6% of its energy loans.
After lackluster results, analysts have revised their estimates for the company sharply downwards. Zacks Consensus Estimates for the current and the next fiscal year are now $1.34 per share and $1.60 per share, down from $1.43 and $1.65 respectively before the results.
The Bottom Line
After strict regulatory norms imposed on big banks, they have been finding it difficult to generate profits in their investment banking and trading businesses. Rising market volatility has also impacted their traditional businesses. Further continued low interest rates have hurt their lending profitability.
In addition to Zacks Rank #5, the stock has a poor VGM score of “D” and Zacks Industry Rank of 204 out of 265 (Bottom 23%). It would be safer for investors to avoid this stock until the outlook for big banks improves.
Cybersecurity Q1 Earnings: FEYE Bombs, CYBR Trounces
After the closing bell Thursday on an extraordinarily busy afternoon, among the onslaught of earnings reports being released are a couple from the cybersecurity segment of the technology industry: FireEye (FEYE - Free Report) and CyberArk ( (CYBR - Free Report) . To say results were a mixed bag between these 2 firms is a huge understatement.
Moments after regular trading ended today, Silicon Valley-based FireEye posted a loss per share of -83 cents on quarterly sales of $168 million. The bottom line beat the Zacks consensus estimate of -89 cents per share, but below the $172 million in revenues we had been expecting. Also, the cyber-attack-preventer for enterprises and governments lowered Q2 guidance to a range of $178-185 million, beneath our consensus of $194 million prior to the report.
Shares plummeted 7.5 percent immediately following the Q1 earnings release, which further sinks the company's fortunes in a year that had already seen FEYE shares fall 23 percent year to date. FireEye carried a Zacks Rank #2 (Buy) into the earnings release, with a Growth Style Score of A and a Value Score of F (VGM: C). We expect analysts to get busy ratcheting down estimates in the days to come, likely sending Zacks Rank and Style Scores down from here.
Meanwhile, Israel-based CyberArk had a tremendous Q1, reporting 15 cents per share (accounting for BNRI) on $47 million in revenues for the quarter, easily topping the 10 cents per share and $33 million in sales Zacks had been expecting. The enterprise-oriented IT security firm saw revenues grow 43 percent year over year, and Q2 revenue guidance is now $47.5 million - 48.5 million, higher than the prior Zacks consensus of $47 million.
CyberArk has beaten earnings estimates over the last 4 quarters by an average of 186.6 percent, and it looks as if the company is continuing to do what it needs to grow a successful cybersecurity business. Yet shares are trading 4 percent lower in the after-market, perhaps feeling the gravitational pull of the much-larger FireEye.
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