For Immediate Release
Chicago, IL – November 04, 2016 – Zacks Equity Research highlights Domino's Pizza, Inc. (NYSE:DPZ- Free Report) as the Bull of the Day and CF Industries Holdings, Inc. (NYSE:CF- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Electronic Arts (NASDAQ:(EA - Free Report) -Free Report), isTencent Holdings (OTCMKTS:(TCEHY - Free Report) -Free Report) and Activision Blizzard (NASDAQ:(ATVI - Free Report) - Free Report).
Here is a synopsis of all the five stocks:
Bull of the Day :
Domino's Pizza, Inc. (NYSE:DPZ- Free Report) is proving that not all is doom and gloom with the consumer. This Zacks Rank #1 (Strong Buy) is crushing the competition as pizza and the ease of its app for ordering remain popular.
Domino's Pizza is one of the world's largest pizza restaurant chains with 13,200 stores in over 80 markets. Independent franchise owners accounted for over 97% of Domino's stores.
By the end of 2015, its digital sales reached $4.7 billion annually thanks to its clever apps and ordering through text messaging using a pizza emoji.
In late 2015, it also launched its first digital customer loyalty program called Piece of the Pie Rewards.
Domino's Crushed it in the Third Quarter
On Oct 18, Domino's reported its third quarter earnings and easily beat the Zacks Consensus Estimate by $0.06.
Earnings were $0.96 versus the consensus of $0.90.
But even more amazing was the continued growth of its comparable store sales. Domestic same-store-sales rose 13%, the 22nd straight quarter of growth, while international same-store-sales grew 6.6%.
It is one of the few restaurant chains that is growing US sales in the double digits right now.
How's it doing it?
Its mobile app is driving sales, along with its new loyalty program. The pizza industry is very diluted. No one chain has ever dominated the market because there are so many mom-and-pop restaurants. That gives Domino's an opportunity to continue to grow by taking sales away from the mom-and-pops and even bake-at-home or frozen pizza.
Internationally, Domino's is often the only game in town and in some areas it's a well known, trusted brand. If you're vacationing in Cancun and get the pizza urge, who are you going to order from? And the app is right there on your phone.
Domino's opened up 316 new stores in the third quarter as growth is still out there. It recently opened its 1,000th store in India, which is its largest international market. But it also opened its first store in the epicenter of Pizza: in Italy.
Nothing is off limits.
Analysts Love What They See
The story is still really bullish for Domino's. 8 estimates were raised for 2016 after the earnings report which has pushed the 2016 Zacks Consensus up to $4.24 from $4.13 just 30 days ago.
That is earnings growth of 23%.
2017 is looking equally hot. 6 estimates have been revised higher in the last 30 days pushing the Zacks Consensus higher to $5.11 from $4.93. That's another 21% earnings growth.
Bear of the Day:
CF Industries Holdings, Inc. (NYSE:CF- Free Report) recently posted its first quarterly loss in 6 years. This Zacks Rank #5 (Strong Sell) is still getting hit by declining fertilizer prices.
CF Industries is one of the largest producers of nitrogen fertilizer products in the world. It has manufacturing facilities in the US, Canada and the United Kingdom. It also owns a 50% interest in an ammonia facility in the The Republic of Trinidad and Tobago.
Earnings Plunge Year Over Year
On Nov 2, CF Industries reported its third quarter results and beat on the Zacks Consensus Estimate by 8 cents. Adjusted earnings were $0.13 compared to the Zacks Consensus of $0.05.
The company made $0.54 in the year ago quarter.
Net sales fell 27% to $680 million from $928 million a year ago. The company got hit by lower nitrogen prices. The average selling price for CF products in the quarter was $185 per ton compared to $289 per ton for the same quarter a year ago. That's a decline of 36%.
It's no surprise, then, that the company's earnings estimates are in a steep decline.
Estimates Still Being Cut
The earnings estimates haven't yet bottomed in the fertilizer industry.
CF Industries made $3.88 last year. The 2016 Zacks Consensus Estimate has fallen to $0.97 and may be cut further. That's an earnings decline of 75%.
Right now, the analysts are hoping that this is the worst of it. The 2017 Zacks Consensus Estimate shows a small rebound to $1.12. But will that even hold?
CF Industries said that the third quarter prices were impacted by the "continuing global oversupply of nitrogen fertilizer and the overall lower industrial demand." It said that customers were unwilling to take inventory risks in the third quarter and implied in its outlook that the beginning of 2017 still looked tough.
The Balance Sheet
It wouldn't be unusual for investors to start to wonder about the company's balance sheet with these horrible industry conditions.
But as of Sep 30, 2016, CF Industries still had cash and cash equivalents of $1.55 billion and had no borrowings outstanding under its revolving credit facility. It was also in compliance with all applicable covenant requirements under its debt instruments.
E-sports Are the Next Billion-Dollar Industry: 3 Stocks to Watch
Video games have been a staple of consumer entertainment since their earliest days, and people have always been obsessed with playing the latest games and systems. However, the advent of smartphones pushed many away from traditional gaming platforms until the latest trend, e-sports, brought people back in a hurry.
What Are E-sports?
E-sports are defined as any form of competition facilitated by electronic systems, and that typically refers to competitive video game playing. While most gamers play their favorite games as a form of leisure, professional gamers enter international tournaments, rack up sponsorships, and compete for multi-million dollar prize pools.
Competitive gaming at a professional level is a relatively new concept, but it’s already compiling a rabid fan base that looks very similar to those of regular sports. For the average gamer, e-sports offer a variety of new ways to interact with their favorite games, and following specific leagues and players passionately is becoming a regular thing.
Money to Make
Of course, when there’s this level of interest in something, there’s also going to be money to be made. Between the companies that develop the games and leagues, the corporate sponsors that use e-sports as a marketing tool, and the millions of viewers watching ad-supported livestreams of events, e-sports is becoming a cash-heavy business.
According to research from Newzoo, worldwide e-sports-related revenue was already up to $325 million in 2015, and this year’s expected total was $463 million, which would represent year-over-year growth of 43%. The same research suggests that the e-sports business could cross the $1 billion threshold by 2019, when total revenue is expected to be $1.1 billion.
Stocks to Watch
With all this in mind, our investor brains will remind us that we need to look out for the companies that stand to benefit the most from the e-sports boom.
One of these has to be Electronic Arts (NASDAQ:(EA - Free Report) - Free Report). In December 2015, Electronic Arts launched its “EA Competitive Gaming Division,” which promised to set up leagues for its biggest titles, such as FIFA,Madden NFL, and Battlefield. In its latest earnings report, EA noted that this division is off to a hot start.
Another company to look out for is Tencent Holdings (OTCMKTS:(TCEHY - Free Report) - Free Report). Tencent owns Riot Games, the developer of one of the world’s most popular games, League of Legends. At the latest world championship tournament for League of Legends, worldwide viewership peaked at 14 million people, with well over 30 million people tuning in over the course of the event.
Finally, investors need to look out for Activision Blizzard (NASDAQ:(ATVI - Free Report) - Free Report). Activision recently purchased a major e-sports company, Major League Gaming, for $46 million, and the company is looking for new ways to continue cashing in on its massive Call of Duty and Overwatch titles. ATVI announced last week that it will eventually launch its own league for Overwatch, which currently has over 20 million active users.
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