For Immediate Release
Chicago, IL – May 19, 2017 –Zacks Equity Research Kelly Services (NASDAQ: (KELYA - Free Report) – Free Report ) as the Bull of the Day, Investar Holding Corporation (NASDAQ:(ISTR - Free Report) – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walmart (NYSE: (WMT - Free Report) – Free Report ), Target (NYSE: (TGT - Free Report) – Free Report ) and Amazon.com (NASDAQ: (AMZN - Free Report) – Free Report ).
Here is a synopsis of all five stocks:
Bull of the Day :
Good news everyone, the stock market didn’t crash Thursday. Even better, it rebounded a bit, rallying off Wednesday’s lows. So instead of ducking underneath the desk expecting a thousand aftershocks, it’s time to really dig in and look for stocks to buy for the next leg higher. Here I found one I’m naming my Bull of the Day, Kelly Services (NASDAQ:(KELYA - Free Report) – Free Report ).
Kelly Services, Inc., together with its subsidiaries, provides workforce solutions to various industries worldwide. The company operates through seven segments: Americas Commercial; Americas Professional and Technical; Europe, Middle East and Africa Commercial; Europe, Middle East and Africa Professional and Technical; Asia Pacific Commercial; Asia Pacific Professional and Technical; and Outsourcing and Consulting Group.
Kelly is topping our ranks as a Zacks Rank #1 (Strong Buy) right now because of recent earnings estimate revisions coming from analysts. Bullish revisions to current year, next year and current quarter estimates have been made over the last week. The increased EPS estimates have pushed our Zacks Consensus Estimates for the current quarter up from 15 cents to 23 cents. Our current year numbers have gone from $1.52 to $1.72, while next year’s consensus has shifted from $1.65 to $1.87.
The stock is in an industry that ranks in the Top 21% of our Zacks Industry Rank. This year, the staffing industry is up 2.2% while shares of Kelly Services are up 5%. Most of this relative outperformance has happened since mid-April. KELYA shares have rallied 17.5% off the mid-April lows while the rest of the industry is up 1.6% over that same time period.
Bear of the Day :
During the initial stages of the market’s reaction to Donald Trump’s surprise Election Day victory small cap stocks were on fire. The Russell 2000 small cap index added 20% in a little over a month. Helping to fuel that rally were regional banks. These banks were at the perfect intersection of expectations for rate hikes and hopes of a reinvigorated US economy. As a result, several regional bank stocks became darlings of the stock market. With the MAGA Trade well in our rearview mirror, it may be time to reconsider a few of these stocks. Or, at the very least, take a look under the hood and perhaps even take some risk off the table.
Today’s Bear of the Day is one of these regional bank stocks,Investar Holding Corporation (NASDAQ: (ISTR - Free Report) – Free Report ) operates as the bank holding company for Investar Bank that provides a range of commercial banking products for individuals and small to medium-sized businesses in South Louisiana. It accepts various deposit products and services, such as savings, checking, money market, NOW, and individual retirement accounts, as well as various certificates of deposit; debit cards; and mobile banking services. The company also offers multifamily, farmland, and commercial real estate loans; loans for the construction of commercial projects, and single family residential and multifamily properties; commercial and industrial loans, including working capital lines of credit and equipment loans; consumer loans comprising secured and unsecured installment and term loans, second mortgages, and home equity loans and lines of credit, as well as auto loans; and one-to-four family residential real estate loans consisting of second and other mortgage loans.
Earnings estimates have dropped for the current quarter, next quarter and the current year. Quietly we’ve seen our Zacks Consensus Estimate come down from 29 cents to 23 cents for the current quarter. Next quarter’s estimates have dipped from 33 cents to 29 cents. The current year Zacks Consensus Estimate has gone from $1.25 to $1.12. This quarter, EPS is expected to contract 10% from last year’s number.
Walmart vs. Target: Who Performed Better in Q1?
Big-box favorites Walmart (NYSE: (WMT - Free Report) – Free Report ) and Target (NYSE:(TGT - Free Report) – Free Report ) had surprisingly good quarters as well, with shares of both companies rising as a result. Who performed better in Q1? And who is better-positioned in the long-term? Let’s break down Walmart’s and Target’s results to find out.
Still America’s largest brick-and-mortar retailer, Walmart reported better-than-expected earnings of $1.00 per share, beating the Zacks Consensus Estimate of 96 cents. Total revenues came in at $117.5 billion, falling just short of our consensus estimate but increasing 1.4% year-over-year.
U.S. same-store sales rose 1.4%, beating analyst estimates and marking the 11th-consecutive period of positive sales in the Walmart’s home market; comp traffic improved 1.5%, though average ticket declined 0.1% in Q1. The impact of rising consumer spending was seen in improved traffic during the quarter.
Operating income declined 0.7% to $5.24 billion, though this was due to Walmart’s continued investments in e-commerce initiatives as it takes on Amazon.com (NASDAQ: (AMZN - Free Report) – Free Report ). Speaking of online, Walmart noted that its e-commerce business saw gross merchandise volume soar 69%, a sign that last year’s $3.3 billion acquisition of Jet.com may finally be paying off. Walmart now boasts 50 million items on its website, up from 35 million in the last quarter.
While not the country’s biggest retailer, Target may be one of Americans’ most preferred. The company reported adjusted earnings of $1.21 per share, comfortably surpassing the Zacks Consensus Estimate of 89 cents. Net revenues came in at $16.02 billion, also beating our consensus estimate but decreasing 1.1% year-over-year.
Net income rose to $681 million, while Target said that its same-store sales fell 1.3%, a much narrower decline than the 3.7% analysts were forecasting. The company attributes this to a decline in customer visits and shoppers picking up fewer items on average; sales in its struggling food and beverage business were also down.
Target continues to expand its online presence, and Q1 was no exception: comparable digital channel sales grew 22% and contributed 0.8 percentage points to overall same-store sales growth. Target is trying to replicate the kind of shopping experience customers know and love in its stores on its website. We all know these memes about walking into a Target and when getting to the check out, not knowing how you just spent so much money. Target’s management is looking to mimic that kind of “impulse purchasing power” in its online store.
Who did it better?
While Target beat analyst expectations across the board, giving investors renewed hope that its turnaround efforts might be starting to take effect, the company’s CEO, Brad Cornell, knows Target can perform better. "We're not doing any high-fives in the room here today," he told analysts and investors on the company’s earnings call. "Our first-quarter performance is not what we expect to deliver over time."
But Target is taking big steps to improve short- and long-term growth. The company is planning on rolling out 12 original brands over the next two years in hopes of getting more customers back in its stores; the first, called Cloud Island, will debut later in May and features home décor, bedding, and bath items.
Target also plans on expanding its smaller-format stores that populate larger metropolitan areas. Target COO John Mulligan said that for the company’s 10 most “mature small-format stores, we are seeing double-digit comp increases on average so far this year."
The clear winner in this particular match-up, however, is Walmart. Most strikingly, of course, is the retailer’s insane online growth. Not only is it giving Amazon a run for its money through its website sales, but Walmart has also been boosting its online acquisition portfolio, scooping up Moosejaw, Modcloth, Shoebuy, and potentially Bonobos, in addition to Jet.com.
At the same time, Walmart is taking steps to improve its many brick-and-mortar stores, implementing cleaner aisles and faster checkouts, for example. The company is also doubling down on pricing in its grocery division, making sure its prices are best in comparison to rivals like Kroger and Aldi.
Both giants have plans to expand their store count this year, and each of these companies’ earnings report is a sign that the Retail sector has some life left in it. Walmart, especially, is impressive, and while its online expansion hasn’t come cheap—its expenses grew faster that its sales in Q1—the retail giant is a consistently great example of a company taking on Amazon…and winning?
Stocks that Aren't in the News…Yet
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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.
About Zacks Equity Research
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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