For Immediate Release
Chicago, IL – July 14, 2017 –Zacks Equity Research Constellium (NYSE: (CSTM - Free Report) – Free Report ) as the Bull of the Day, Amazon.com (NASDAQ: (AMZN - Free Report) – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Yandex NV (NASDAQ: (YNDX - Free Report) – Free Report ).
Here is a synopsis of all three stocks:
Bull of the Day :
Sometimes a stock will get on my radar screen just based on the volume traded. That is the case with Constellium (NYSE: (CSTM - Free Report) – Free Report ) which jumped out at my one day when it traded over 1 million shares, which at the time, was around double the normal amount. Since that time, the stock has seen several more big volume days with the stock price climbing higher. It is also a Zacks Rank #2 (Buy) which is why it is the Bull of the Day.
When a stock normally trades around 300K – 500K shares a day a big volume day will trigger some alerts. I happen to have one alert like that, but what interests me is the fact that the big volume day happened with the stock not moving much. That told me that some big players were building a position and doing their best to keep the stock flat. That was the first 1M trading day on June 30.
By July 7, the stock traded 1.5M shares, easily triple the normal volume and was a summer Friday to boot. Summer Friday’s generally carry significantly less volume. Another 1M+ day started the following week, then a huge boost of 4.2M shares on July 11. Since then volume has remained strong and the whole time has seen the price steadily increase.
The earnings history isn’t exactly the best, with three misses and two beats in the last five reports. Normally I like to see a better track record, but the thing that stuck with me is the last two reports saw beats on the top line.
The most recent report that came on April 27 was a beat of $0.04 or 44% better than the Zacks Consensus Estimate. The 3.2% positive revenue surprise was music to investor's ears and the stock soared by 11% following the report.
Earnings Estimate Revisions
A stock with a Zacks Rank #2 (Buy) has to have a decent recent history of earnings estimate revisions. CSTM has just that as the Zacks Consensus Estimate has moved up from $0.62 in March to $0.68 in April and then to $0.71 in May. The estimate has remained at that level since then.
The 2018 Zacks Consensus Estimate has also seen some positive revisions. The number stood at $0.88 in March and then kicked higher to $0.91 in April. By May the estimate reached $0.94 and that is where it has remained.
The value style score for CSTM is “A” and most of the reason for that is the 10x forward earnings multiple. That is well below the 34x industry average. The stock also trades at 0.1x price to sales multiple, and that is well below the 2.2x industry average.
The topline is growing for CSTM, 11.5% is the expected growth rate for 2017 and then another 3.1% for next year. The earnings growth is huge, but that is coming off a low base. That said, next year is showing EPS growth of 33%, which is well above the 25% industry average.
Bear of the Day :
The world’s most powerful retailer is just coming off a super strong “Prime Day” yet analysts were trimming estimates. The lower estimates forAmazon (NASDAQ: (AMZN - Free Report) – Free Report ) has made the stock a Zacks Rank #5 (Strong Sell) and I thought it would be a good idea to show why this stock is a “Strong Sell” in this Bear of the Day article.
I’m A Customer And A Fan
I love Amazon. I made a somewhat "life changing" trade off the stock a few years back (34 Million Reasons Amazon Will Beat Earnings) where I bought some calls that were at least 10% out of the money with three weeks to go before earnings. I crushed it that time and played the next two earnings in a similar fashion. The gain on the next trade wasn’t even close to the first one. The third trade was a 100% loser as those options expired worthless.
I am also a fan of Amazon, I have an Echo and a Dot and I have been a Prime member for a few years now. I order everything but food (and I have tried pantry) from AMZN, so I am a fan of the service.
So Why the Bear
Amazon is the Bear of the Day because it is a Zacks Rank #5 (Strong Sell) – and that basically means that the sell-side analysts that cover the stock have been lowering their estimates on the stock.
The Zacks Consensus Estimate for the current quarter has been falling. The number was $1.66 90 days ago, but it fell to $1.40 60 days ago and is now at $1.36. That is a big drop, and it is reflected in the 2017 estimate which fell from $7.03 to $6.49 over the same time period.
Uber Merges with "Google of Russia" for $3.7 Billion
On Thursday, ride-sharing giant Uber Technologies announced that it has agreed to merge its Russia business with tech companyYandex NV (NASDAQ: (YNDX - Free Report) – Free Report ), better known as the “Google of Russia."
The deal will see Uber and Yandex.Taxi join forces in Russia, Armenia, Azerbaijan, Belarus, Georgia, and Kazakhstan, creating a new company that will operate ride-hailing cars in 127 cities. Uber will invest $255 million, taking a 36.6% stake in the new venture that is set to have a valuation at $3.73 billion. Yandex will invest $100 million and own 59.3% of the company; its shares, which trade on the New York Stock Exchange, are up over 16% in midday trading, and were up as much as 19% earlier today.
Yandex.Taxi’s Russian head Tigran Khudaverdyan will become CEO of the newly combined company, and together, the businesses handle around 35 million rides a month. Uber’s food delivery service, UberEATS, will also become part of the new venture. The deal is expected to close in the fourth quarter.
This move marks Uber’s second retreat from a major market, following its full departure from China last year. The company left the country in exchange for a 17.5% stake in its biggest Chinese rival Didi Chuxing; Uber lost over $2 billion in China battling Didi for dominance.
“This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business,” Pierre-Dimitri Gore-Coty, Uber’s chief for Europe, Middle East and Africa, said in the statement.
The merger with Yandex is part of Uber’s broader efforts to both cut losses and reshape its image after multiple scandals led to the resignation of co-founder Travis Kalanick as chief executive officer. In the first three months of this year, Uber reported a loss of $708 million, though this was an improvement from the $991 million loss in the prior year quarter.
According to Bloomberg , investors are also wondering if the Yandex.Taxi merger will lead to other ride-hailing market deals in the future. While Uber undoubtedly remains the number one operator in the U.S., it faces intense competition overseas, especially in India and Southeast Asia where Ola and Grab are preferred (also read: Who are Uber’s Biggest Competitors? ).
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About the Bull and Bear of the Day
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