For Immediate Release
Chicago, IL – June 23, 2017 –Zacks Equity Research Alibaba Holding Group (NYSE: (BABA - Free Report) – Free Report ) as the Bull of the Day, CF Industries (NYSE: (CF - Free Report) – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Potash Corp (NYSE: – Free Report ) and Sociedad Quimica Minera (NYSE: (SQM - Free Report) – Free Report ).
Here is a synopsis of all four stocks:
Bull of the Day :
E-commerce is one of the hottest business segments in the world, and China’s biggest player is our Zacks Bull of the Day,Alibaba Holding Group (NYSE: (BABA - Free Report) – Free Report ). In their most recent reported quarter, the company saw sales of $5.605 billion, which was an increase of +60% year over year. And this amazing sales growth is expected to continue to grow for the foreseeable future.
This Zacks Ranked #1 (Strong Buy) operates online and mobile marketplaces in retail and wholesale trade, as well as cloud computing and other services. It provides technology and services to enable consumers, merchants, and other participants to conduct commerce in its ecosystem. The Company operates Taobao Marketplace, an online shopping destination; Tmall, a third-party platform for brands and retailers; Juhuasuan, a group buying marketplace; Alibaba.com, an online business-to-business marketplace; 1688.com, an online wholesale marketplace; and AliExpress, a consumer marketplace. Alibaba Group Holding Limited is headquartered in Hangzhou, the People's Republic of China.
During Alibaba’s recent Investors Day, Chief Financial Officer Maggie Wu stated that the company expects sales to rise between 45% to 49% during fiscal year 2018 (ending in March of 2019). This was well above the previous expectation of +35% sales growth. This would suggest that BABA is now expecting sales of $34.3 billion for the fiscal year. Outside of their online shopping, their Alipay (digital payment division), and the Alicloud (cloud computing business) segments are expected to be positive growth drivers going forward. Lastly, the company currently has 454 million annual active buyers, an increase of 11% from the previous year.
Increasing Future Earnings Estimates
Over the past 60 days earnings estimates for Q1 18, Q2 18, FY 18 and FY 19; Q1 18 improved from $0.64 to $0.71, Q2 18 rose from $0.66 to $0.76, FY 18 jumped up from $3.18 to $3.66, and FY 19 was lifted from $4.16 to $5.04.
Alibaba continues to cement itself as the dominate e-commerce company in China, and with their expansion into other segments like digital payments, and cloud computing the company is increasing their footprint in the digital marketplace.
Bear of the Day :
Global surpluses in your core competency dampens growth levels, and puts pressure on a company’s pricing power as well. This is the situation facing our Zacks Bear of the Day, CF Industries (NYSE: (CF - Free Report) – Free Report ) who is dealing with global nitrogen supply surpluses due high stockpiles of the commodity in China, India, and Pakistan. Further, this supply glut is not expected to be reduced as a wetter and colder than expected spring has delayed ammonia applications in the Midwest United States.
This Zacks Ranked #5 (Strong Sell) is the holding company for the operations of CF Industries, Inc. CF Industries, Inc. is a major producer and distributor of nitrogen and phosphate fertilizer products. CF Industries operates world-scale nitrogen fertilizer plants in Louisiana and Alberta, Canada; conducts phosphate mining and manufacturing operations in Central Florida; and distributes fertilizer products through a system of terminals, warehouses, and associated transportation equipment located primarily in the Midwestern United States.
Recent Earnings Data
In early May, CF announced Q1 17 earnings where they missed the Zacks consensus earnings estimate, but beat the Zacks consensus revenue estimate. On a year over year basis, the company saw several negative trends; cost of sales increased by +18.3%, gross margins fell -11.4%, Net earnings declined from +$26 million to a net loss of $23 million, and adjusted net earnings per diluted share diminished from $0.43 to $0.05.
Declining Earnings Estimates
Over the past 60 days, earnings estimates for Q2 17, Q3 17, FY 17 and FY 18 have all seen significant downgrades; Q2 17 fell from $0.23 to $0.02, Q3 17 dropped from -$0.10 to -$0.31, FY 17 plummeted from $0.25 to $-0.37, and FY 18 was cut by more than half as it fell from $0.90 to $0.39.
Unfortunately, this global surplus is not expected to decline in the near term. Therefore, the next quarter or two will be challenging for CF Industries.
If you are inclined to invest the Basic Materials-Fertilizers segment you would be best served by looking into either Potash Corp (NYSE: – Free Report ) who currently carries a Zacks Rank #1 (Strong Buy), and orSociedad Quimica Minera (NYSE: (SQM - Free Report) – Free Report ) who currently has a Zacks Rank of #2 (Buy).
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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.
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