For Immediate Release
Chicago, IL – November 23, 2016 – Zacks Equity Research highlights Children’s Place (Nasdaq:(PLCE - Free Report) – Free Report) as the Bull of the Day and Tempur Sealy (NYSE:(TPX - Free Report) – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Lockheed Martin (NYSE:(LMT - Free Report) –Free Report) and Big Five Sporting Goods (Nasdaq:(BGFV - Free Report) – Free Report).
Here is a synopsis of all four stocks:
Bull of the Day:
Children’s Place (Nasdaq: (PLCE - Free Report) – Free Report) operates as a children's specialty apparel retailer for children from newborn to twelve years of age.The company sells apparel, accessories, footwear, and other items for children; and designs, contracts to manufacture, and sells merchandise under the proprietary The Children's Place, Place, and Baby Place brand names. The company was founded in 1969, is based in Secaucus, New Jersey and has 3,500 employees. The stock is Zacks Rank #1 (Strong Buy) and todays Bull of the Day.
Children’s Place has a market cap of $2 billion with a forward PE of 20. The stock sports Zacks Style Scores of “A” in both Momentum and Growth, but “B” in Value. The company resides in an industry that is ranked 100 out of 265 (Top 38%) in the Zacks Industry Rank.
The company reported Q3 earnings last week, sending the stock soaring higher. Investors must now ask themselves if there is more room for the stock to continue higher.
Q1 Earnings and Guidance
On November 17th PLCE released its third quarter earnings with a 14% beat. The company reported $2.29 verse the $2.03 expected. Revenue came in at $473.8 million verse the $460 million expected. Gross margins year over year ticked higher to 41% from 39.6%, while same store sales came in at 4.6%.
In addition to the earnings beat, the company raised guidance for the fourth quarter. They now see a range of $1.43-1.48 verse the $1.40 expected. They also raised fiscal year 2016 to $5.00-5.05 verse the $4.73 expected.
Headed into earnings the stock was already in full blown bounce mode. After the election, the stock ran from $75 to $90 in just over a week. After the numbers came out, it jumped another 14 points to $104. A total move of 38% just since the election. While some investors have missed a lot of the move already, any pullbacks should be considered, as estimates for the company continue to rise higher.
Since earnings, estimates have ticked higher across all time frames. For fiscal 2017, estimates have come up over 8% over the last 7 days, going from $4.70 to $5.08. For the 2018, there has been an 8% jump as well, from $5.62 to $5.19. Earnings will next be reported in March, where the company will go for its twentieth straight beat.
Bear of the Day :
Tempur Sealy (NYSE: (TPX - Free Report) – Free Report) develops, manufactures, markets, and distributes bedding products worldwide. The company provides mattresses, foundations, and adjustable bases, as well as other products comprising pillows, mattress covers, sheets, cushions, and various comfort products. It offers its products under the TEMPUR, Tempur-Pedic, Sealy, Sealy Posturepedic, Optimum, and Stearns & Foster brand names. The company was founded in 1989 in Lexington, Kentucky and currently employs over 7,000. Tempur Sealy is the Bear of the Day after falling to a Zacks Rank #5 (Strong Sell).
The company has a market cap of $3.5 Billion with a PE of 16. The stock has Zacks Style Scores of “B” in both Value and Growth and pays no dividend. While the Style Scores are decent, the company resides in an industry ranked 238 out of 265 (Bottom 10%) of the Zacks Industry Rank.
A recent guidance cut has scarred off investors and the stock has been under severe pressure. Investors would be best off selling the stock and perhaps might find better opportunity on the short side.
On September 27th Tempur issued 2016 revenue guidance of -3% to -1% year over year. This implied revenue would be at $3.06-3.12 billion verse the $3.23 billion expected.
The stock plummeted over 25% to test 2016 lows. CEO Scott Thompson had some comments on the quarter to try to calm investors:
"While our net sales are below expectations, our operational initiatives are going well and are continuing to drive considerable margin expansion. The net impact of the revenue shortfall and our continued margin expansion is that we felt it was appropriate to lower the midpoint of our adjusted EBITDA guidance by 5%. The midpoint of this updated guidance implies an increase in adjusted EBITDA of approximately 12% and approximately 20% growth in adjusted earnings per share compared to 2015."
While the stock has bounced off the lows since the company release earnings on October 27th, estimates don’t look great for the long-term.
Estimates revisions are headed lower
Looking at company’s revisions, investors can see how another move lower might happen. In just the last 60 days, estimates for 2016 have been taken 6% lower. While estimates for 2017 have been taken 7% lower. While there is a recent uptick, the overall trend is lower and the stock should follow the trend.
This Week’s Top Growth and Income Stocks
Defense stocks have been soaring since Trump’s victory and republican sweep of the Congress. On the campaign trail, Trump had promised to boost military spending and now with republican control of the Congress, we’ll probably see that soon as also some much-needed reforms in that area.
Lockheed Martin (NYSE: (LMT - Free Report) – Free Report) is the largest defense contractor in the world. They reported excellent earnings, beating the Zacks Consensus Estimate. Revenues also beat the Zacks Consensus Estimate and were up 2.9% from the year-ago quarter.
The management was very optimistic about the outlook for 2017 and after election that outlook has improved further.
If you look at their “Price & EPS Surprise” chart, you see they have missed only once in the past five years.
The stock is currently Zacks Rank #2 (Buy), with a VGM score of “.B. Its dividend yield exceeds 2.5% as of now.
Big Five Sporting Goods (Nasdaq: (BGFV - Free Report) – Free Report) is a sporting goods retailer in the western U.S., offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment.
They also reported excellent results beating on both the top and bottom lines. They seem to have benefited from liquidation of Sports Authority and Sport Chalet.
The retailer continues to return a lot of capital via dividends and buybacks. Along with the results, they announced a 20% dividend increase. This was their second dividend increase this year and a 50% increase in their dividend from the beginning of the year. Their current dividend yield is 2.5%.
The stock has a Zacks Rank of 2 (Buy) and it looks very good on style scores with “A” for Value, Growth as well as Momentum.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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