For Immediate Release
Chicago, IL – August 07, 2017 – Zacks Equity Research highlights E*TRADE Financial Corporation (NASDAQ:ETFC – Free Report) as the Bull of the Day Big Five Sporting Goods (NASDAQ:BGFV – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Micron Technology (NASDAQ:MU – Free Report), Electrolux AB (OTCMKTS:ELUXY – Free Report) and Fresenius SE & Co. (OTCMKTS:FSNUY – Free Report).
Here is a synopsis of all four stocks:
Bull of the Day:
Founded in 1982 and headquartered in New York City, E*TRADE Financial Corporation (NASDAQ:(ETFC - Free Report) – Free Report) provides online brokerage and related products and services primarily to individual retail investors.
The company IPO’d in 1996 and currently has 30 retail branches across the US and approximately 3,400 employees. They also operate a bank primary for maximizing the value of deposits generated through brokerage business.
The company reported Q2 adjusted earnings of 52 cents per share, beating the Zacks Consensus Estimate of 48 cents. Net revenue for the reported quarter came in at $577 million, also ahead of the Zacks Consensus Estimate of $554.3 million, and up 21.7% from the year-ago quarter.
“First, customer activity held strong, while derivatives increased to a record portion of customer trades during the quarter. Margin balances reached 3-year highs and net new brokerage assets represented our strongest second quarter on record,” said the CEO.
The brokerage also announced a $1 billion share repurchase program, which they expect to complete by the end of 2018.
Excellent Industry Outlook
Investors and traders now increasing prefer digital platforms for trading. Per ETFC, the direct space now represents more than 20% of the total brokerage industry. With cutting edge technology and continued innovation, digital brokerages may continue to gain market share.
E*TRADE’s digital platform is further complemented by professional advice and support provided by 24/7 customer service and over 300 financial consultants available via phone or at branches.
Analysts have been raising their estimates for the company after better-than-expected results. Zacks Consensus Estimates for the current and next year have increased to $2.19 per share and $2.42 per share from $1.95 and $2.27 respectively.
The company has beaten in 17 out of last twenty quarters. Over the past four quarters, the average surprise was 17%.
Big Five Sporting Goods (NASDAQ:(BGFV - Free Report) – Free Report) is a sporting goods retailer in the western US, operating 433 stores in 11 states. They product lines include athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment.
The retailer reported much worse-than-expected results for Q2. Adjusted earnings of 13 cents per share were significantly short of the Zacks Consensus Estimate of 19 cents. Sales also missed our estimates.
“After a solid start to the period, sales for our second quarter came in below expectations,” said the CEO. “During the third quarter, we expect sales comparisons to be pressured as we continue to cycle the lift in sales that we experienced last year as a result of the competitor store closures, while also operating in a challenging retail environment.”
Analysts have lowered their estimates significantly after disappointing results and guidance. Zacks Consensus Estimates for the current and next fiscal year have plunged to $1.03 per share and $1.05 per share from $1.23 and $1.34 respectively, before the results.
The Bottom Line
Most retailers are going through a lot of pain thanks to the rising trend for online shopping, particularly on Amazon. While this retailer was doing quite well earlier this year as they seem to have also benefited from liquidation of Sports Authority and Sport Chalet, their latest quarter reveals rising challenges.
The stock is now down more than 45% year-to-date but a rebound doesn’t appear likely anytime soon given Zacks stock rank of #5 (Strong Sell) and industry and sector ranks in the bottom 11% and 6% respectively.
Get Critical About Earnings Season: Zacks August Strategy Report
Note: The following is an excerpt from Zacks Chief Strategist John Blank’s full Market Strategy report To access the full PDF, click here.
In Zacks August Market Strategy report, I get critical about the second quarter earnings season.
Is 9.4% annualized earnings growth out of line? Is the present S&P 500 forward 12-month valuation of 17.7 out of line?
There are many ways to answer these two questions. What if I just focus on the prior 2 business cycles, 1992 to 2000 and 2001 to 2007? That makes for 16 years of the most recent data.
That most-recent business cycle comparison offers up this relative perspective--
- Earnings Per Share (EPS) growth looks very similar to the average of that 16-year period (+10.9% annually over the 16 years vs. +9.4% now).
- The average P/E was a sky-high 24.1, vs. the current valuation of 17.7.
In summary, this short analysis doesn’t make me fear current S&P 500 circumstances. It makes it appear reasonable, instead.
Zacks Sector/Industry/Company -- August Telescope
Strength — across the board -- in the earnings reports in the second quarter is evident in the high number of Very Attractive Sectors in the month of August.
Info Tech, Consumer Discretionary and Consumer Staples, Industrials, Health Care (5 of 10 sectors) -- all of these are Very Attractive. And Materials is Attractive. This is remarkable, and something I haven’t seen in some time.
But reading broadly, it is confirmed. This is the story of this earnings season. The earnings beats are coming in very strong. They are falling into every sector we separate out and look at.
(1) Info Tech maintains its Very Attractive rating. It is the Semis (no surprise) and Computer-Software-Services leading the charge now. Misc. Tech also helps the sector.
Zacks #1 Rank (STRONG BUY) Stock Pick: Micron Technology (NASDAQ:MU – Free Report)
Micron Technology, Inc. has established itself as one of the leading worldwide providers of semiconductor memory solutions.
(2) Consumer Discretionary stays Very Attractive. The industry leaders are Home Furnishing-Appliance (very best of all), Autos/Tires/Trucks and Other Consumer Discretionary.
Zacks #1 Rank (STRONG BUY) Stock Pick: Electrolux AB (OTCMKTS:ELUXY – Free Report)
Electrolux AB manufactures appliances and outdoor and industrial products: vacuum cleaners and other floor care machines, sewing machines, chain saws, lawn mowers, weed eaters, aluminum extrusions, conveyor systems and archive systems, and recycles scrap metals and waste paper. Products are sold in Europe, North America and Asia.
(3) Health Care is back to a traditional Very Attractive rating. The leader is Medical Care again.
Zacks #1 Rank (STRONG BUY) Stock Pick: Fresenius SE & Co. (OTCMKTS:FSNUY – Free Report)
Fresenius SE & Co is a Bad Homburg, Germany health care company. It offers products and services for dialysis, hospitals and outpatient treatment.
The company's business segments consist of:
- Fresenius Medical Care is engaged in treating with chronic kidney failure
- Fresenius Helios is a hospital operator
- Fresenius Kabi supplies essential drugs, clinical nutrition products, medical devices and services and
- Fresenius Vamed plans, develops and manages healthcare facilities.
(4) Industrials have risen convincingly to Very Attractive. The strongest plays: Machinery, Machinery-Electrical, Airlines, Railroads, Business Services & Aerospace-Defense.
(5) Consumer Staples is a new Very Attractive call. Soaps & Cosmetics and Food lead the way, but Beverages and Consumer Products-Misc. Staples looks good too.
(6) Materials stay Attractive. Chemicals and Paper are spots to play. Metals-Non-ferrous looks terrible again, but iron ore prices started rising, so Steel is up.
(7) Financials keep a Market Weight. Banks-Major and Investment Banking & Brokering looks very solid now.
(8) Telco Services stay a Market Weight.
(9) Utilities get to a Market Weight. Utilities-Gas Distribution is a new strength.
(10) Energy stays Very Unattractive. Coal, Exploration & Production, and the big Integrated Companies are all in the tank.
A Closing Note: In July, the FOMC also provided additional details concerning the process to normalize the Federal Reserve’s balance sheet.
The Committee intends to gradually reduce Federal Reserve securities holdings by decreasing its reinvestment of principal and proceeds from its System Open Market Account securities, only reinvesting proceeds when they exceed specific monthly caps.
These caps will be set initially at low levels then gradually raised in a predictable manner, in order to limit the increased supply of assets to the private sector each month.
About the Bull and Bear of the Day
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