For Immediate Release
Chicago, IL –July 31, 2017 – Zacks Equity Research highlightsCanadian National Railway (NYSE:CNI – Free Report) as the Bull of the Day Buffalo Wild Wings (NASDAQ:BWLD – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Starbucks (NASDAQ:SBUX – Free Report) and DavidsTea (NASDAQ:DTEA – Free Report).
Here is a synopsis of all four stocks:
Bull of the Day:
Things were looking pretty good for the railroad industry heading into earnings season. The global economy seems to be picking up steam, and the industry has a great rank too.
However, many companies haven’t seen great price action in the aftermath of their reports, while several have just managed to meet expectations. But is this just a temporary setback or should railroad investors be worried about these trends? Well, if you are looking at Canadian National Railway (NYSE:(CNI - Free Report) – Free Report), the near-term could actually be pretty promising, and especially if we look to recent earnings estimates.
Estimates and the Recent Report
In CNI’s most recent report, the company just met expectations of $1/share in profits, though revenues did beat expectations. And while initial reaction to the release wasn’t inspiring—despite solid year-over-year numbers—analysts seem pretty upbeat on the company’s prospects.
This is evident by looking to recent analyst estimate changes, including six increases in the past week to the current quarter estimate compared to zero lower, and then eight estimates higher compared to one lower for the current year projections.
We have also seen a sizable increase in the consensus estimate thanks to these moves, including a roughly 6.9% increase to the full year figures, and an 8% increase to the following year EPS projections.
The restaurant boom is clearly over.
No longer are investors excited about any and every food stock, and you really can’t blame them when you look to recent price activity either. The space has been absolutely destroyed, and competition is taking its toll on a number of companies that used to be darlings of the market.
Take Buffalo Wild Wings (NASDAQ: – Free Report) as a great example of this trend. After an incredible run that saw shares of BWLD rise over $200/share, investors have seen an equally incredible trend in the past two years which has basically seen the company’s share price take a 50% haircut.
But with such a big drop, investors have to be wondering if the worst is over for BWLD, and if a turnaround could be at hand. Well, unfortunately for BWLD investors, the recent estimate trend suggests that more pain could be ahead for this restaurant company in the near-term.
Recent Earnings & Outlook
This prediction of sluggishness isn’t really that bold of a statement if we taking the starting point of the last earnings report for BWLD. The company wasn’t anywhere close to meeting earnings expectations, posting EPS of just 66 cents which is a far cry from the $1.01/share consensus estimate.
But if that wasn’t enough, analysts appear to be pretty bearish on the company’s near term prospects, as they have been slashing estimates for the coming quarter and year. In fact, in just the past two months, we have seen a double digit percentage decline in the consensus estimate for both the current quarter and the current year.
Starbucks (SBUX - Free Report) to Close All 379 Teavana Stores
Starbucks (NASDAQ:SBUX – Free Report) has decided to close all 379 stores of its Teavana chain over the coming year. Shares of Starbucks were falling 9% in morning trading on Friday.
CEO Kevin Johnson cited declining foot traffic in malls as the reason for the closure, which are the main location for Teavana stores. “We felt it was an appropriate time to take the decision and begin shutting down those stores,” he said.
The coffee giant acquired the U.S. tea chain in 2012 for $620 million, when then-CEO Howard Schultz cited the expanding tea market as an appealing place for growth. However, Starbucks reported disappointing revenue and comparable sales growth on Thursday in its third quarter earnings report with the Teavana chain partially to blame.
“Following a strategic review of the Teavana store business, the company concluded that despite efforts to reverse the trend through creative merchandising and new store designs, the underperformance was likely to continue,” Starbucks said in a press release.
The popular tea retailer DavidsTea (NASDAQ:DTEA – Free Report) is up 9% in morning trading following Teavana closures. The Canadian company has come out strong since its IPO two years ago, with a total of 232 stores in the U.S. and Canada.
While DavidsTea does have mall-based locations, the company doesn’t restrict itself like Teavana does. This versatile strategy may have helped the company increase its sales by 9.4% during its first quarter of 2017.
Teavana has also had little success competing with Argo Tea for the last few years. Since 2003, when the company opened its first store in Chicago, Argo Tea has operated dozens of tea cafes across the U.S. When Starbucks bought Teavana, the company planned to open similar tea bars across the country.
While Argo Tea initially worried, Starbucks’ experiment failed. It opened its first of five Teavana tea bars in 2013. However, by early 2016, Starbucks gave up on developing its smaller brand stores, deciding to focus its tea products into its existing Starbucks locations.
The Teavana store closures follow news that Starbucks will purchase the remaining 50% stake in its East China joint venture for about $1.3 billion. The company is committed to operating 5,000 Starbucks stores in Mainland China by 2021, cementing Starbucks’ future as a mainly coffee-based business.
Most Teavana stores will close by spring 2018. Starbucks will continue to sell Teavana drinks in its Starbucks stores as well as bottled Teavana drinks in grocery stores. The 3,300 employees affected by the closures have been encouraged to apply for positions at Starbucks stores.
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About the Bull and Bear of the Day
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