For Immediate Release
Chicago, IL – March 20, 2017 –Zacks Equity Research highlights Analog Devices (NASDAQ: (ADI - Free Report) – Free Report ) as the Bull of the Day, Build-A-Bear Workshop (NYSE: (BBW - Free Report) – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Canada Goose Holdings Inc. (NYSE: – Free Report ) and Lululemon Athletica (NASDAQ: (LULU - Free Report) – Free Report ).
Here is a synopsis of all four stocks:
Bull of the Day :
Headquartered in Norwood, Massachusetts, Analog Devices (NASDAQ:(ADI - Free Report) – Free Report ) is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed signal and digital signal processing (DSP) integrated circuits.
Analog chips are used primarily in smartphones for managing radio signals and other purposes. These chips convert real world signals into digital signals. Apple is Analog's one of the biggest customers.
Solid Quarterly Results and Upgraded Guidance
The chip maker reported excellent results for Q4, beating both the Zacks Consensus Estimates and their own guidance. Adjusted earnings of 94 cents per share were significantly ahead of the Zacks Consensus Estimate of 73 cents.
Revenues were up 27.9% year over year and beat the estimates. Free cash flow margins to were up 520 basis points year-over-year to 33.7%.
Improved performance across all the markets--industrial, automotive, consumer and communications—drove the results.
Shares rose almost 5% after the results.
Returning Cash to Shareholders
The company has retuned approximately $7 billion to shareholders in the past 10 years. After strong results, they raised quarterly dividend to 45 cents from 42 cents.
They aim to increase their dividend by 5% to 10% annually.
Acquisition of Linear Technologies
Last week, the company completed the acquisition of another analog chipmaker Linear Technology for about $14.8 billion. The merger is expected to reduce Analog’s reliance on Apple while adding products in other fast growing categories.
“The combination of Analog Devices and Linear Technology creates an analog industry powerhouse,” said the CEO. “Together, we are capable of solving more of our customers' biggest and most complex challenges at the intersection of the physical and digital domains. We expect that this combination will create tremendous value for our customers, our employees, and our shareholders for many years to come.”
Bear of the Day :
Founded in 1997 and headquartered in St. Louis,Build-A-Bear Workshop (NYSE: (BBW - Free Report) – Free Report ) is the only global company that provides an interactive make-your-own stuffed animal entertainment experience.
The company IPO’d in 2004 and currently operates more than 400 stores worldwide, including company-owned stores in the US, Canada, the UK, Ireland and Denmark and franchisees operated 86 stores in 14 countries.
Disappointing Quarterly Results
The company reported very disappointing results for Q4. Adjusted net income was $5.0 million, or $0.31 per share, down from $10.6 million, or $0.64 per share, in the same quarter a year ago. Earnings significantly lagged the Zacks Consensus Estimate of $0.69 per share.
Consolidated comparable sales were down 8.3%.
“After reporting three consecutive years of comparable sales increases and improved profitability, these results are clearly disappointing. Through November, consolidated comparable sales were positive despite slightly negative traffic levels. However, similar to industry reported retail trends, our December traffic levels abruptly reversed, which adversely impacted both sales and profit for the quarter and the year,” said the CEO.
Analysts have slashed their estimates significantly after poor results. Zacks Consensus Estimates for the current and next year are down to $0.48 per share and $0.52 per share respectively, down more than 60% from $1.07 and $1.28, before the results.
After IPO, Canada Goose Keeps on Flying
On Friday, shares of luxury parka maker Canada Goose Holdings Inc. (NYSE: – Free Report ) are gaining, up around 5.5% in midday trading the day after its successful IPO. The stock opened yesterday at $18 per share on the New York Stock Exchange, and is also trading on the Toronto Stock Exchange.
Canada Goose initially priced its IPO of 20 million shares at CA$17, or roughly US$12.78 per share, above the expected range of between CA$14 and CA$16 per share. GOOS stock closed the day up more than 25%, slightly higher than US$16, raising about $255 million and marking the second biggest IPO of 2017, behind Snap Inc. .
While its IPO was a huge win for the company, Canada Goose will need to prove to investors that it can grow. In 2016, it reported revenues of $291 million, and $103 million of that number can from U.S. consumers. Canada Goose also reported gross profit of $146 million and net income of $27 million for the same year.
A particular growth hurdle—and a risk the company even listed in its prospectus to potential investors—are protestors. Canada Goose, known for its $1,000 parkas with fur-trimmed hoods, was confronted with protesters from People for the Ethical Treatment of Animals (PETA) on Thursday, who stood outside both the NYSE and the TSX wearing coyote masks and waving signs that read, among other things, “Indecent Public Offering” and “Trading in Lives is Bad for Business.”
"We have been the target of activists in the past, and may continue to be in the future. Our products include certain animal products, including goose and duck feathers in all of our down-filled parkas and coyote fur on the hoods of some of our parkas, which has drawn the attention of animal welfare activists,” the company said in its prospectus with the SEC.
Canada Goose created a program that traces where its materials are sourced from, with a lengthy page on its website dedicated to its decision to use both ethically sourced fur and down.
But PETA is using one of its “classic activist tactics” : buying the minimum amount of shares required to take part in a company’s shareholder meetings. The group has done this before with companies like Lululemon Athletica (NASDAQ: (LULU - Free Report) – Free Report ) and Prada, which use exotic animal skins in their products.
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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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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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