For Immediate Release
Chicago, IL – September 1, 2017 – Zacks Equity Research H&E Equipment Services(NASDAQ: (HEES - Free Report) – Free Report)as the Bull of the Day, Brookdale Senior Living(NYSE: (BKD - Free Report) – Free Report)as the Bear of the Day. In addition, Zacks Equity Research provides analysis onto Michael Kors (NYSE: (KORS - Free Report) – Free Report) and Coach (NYSE: (COH - Free Report) – Free Report).
Here is a synopsis of all four stocks:
Bull of the Day:
H&E Equipment Services(NASDAQ: HEES– Free Report) announced the acquisition of Neff Corporation on July 27 and at the same time released news of a solid beat of the Zacks Consensus Estimate. The company topped forecasts by 33% but most of the attention was paid to the $1.2B deal.
The Zacks Rank is focused on the movement of earnings estimates. The Zacks Consensus Estimate only has a number for FY2018, and that estimate has been moving up. Roughly 90 days ago the number stood at $1.12 but following the big earnings beat, the number moved higher to $1.36.
H&E Equipment Services, Inc. is one of the largest integrated equipment services companies in the United States with full-service facilities throughout the Intermountain, Southwest, Gulf Coast & Southeast regions of the United States. The Company is focused on heavy construction & industrial equipment and rents, sells & provides parts & service support for four core categories of specialized equipment they are hi-lift or aerial platform equipment, cranes, earthmoving equipment & industrial lift trucks. By providing equipment rental, sales, & on-site parts, repair & maintenance functions under one roof, the Company is a one-stop provider for its customers' varied equipment needs. This full service approach provides the Company with multiple points of customer contact, enabling it to maintain a high quality rental fleet, as well as an effective distribution channel for fleet disposal & provides cross-selling opportunities among its new & used equipment sales, rental, parts sales & service operations.
Over the last four reports, there were two beats and two misses of the Zacks Consensus Estimate. The most recent beat was the huge 33% positive earnings surprise posted in July. That followed a negative earnings surprise of 6%.
The quarter prior to that saw a beat of the Zacks Consensus Estimate of $0.05 and that translated into a positive earnings surprise of 16%. If you are any good at math you see that I have present three of the four recent reports with two beats and one only miss. That means the last report was also a miss.
I see a forward earnings multiple of only 20x and that is slightly below the 21x trailing multiple. The price to book multiple of 6x will keep most of the value minded investors out of the stock. The price to sales multiple of about 1x is pretty low, so management might want to focus on where they can find some more revenue growth (outside of the pending acquisition).
Bear of the Day:
Brookdale Senior Living(NYSE: BKD– Free Report) recently saw its Zacks Rank slip to the lowest level it can go. The stock is now a Zack Rank #5 (Strong Sell) and today it is the Bear of the Day. Let's take a look at why this stock is the Bear of the Day.
Brookdale Senior Living Inc. is a leading owner and operator of senior living facilities throughout the United States. The Company is committed to providing an exceptional living experience through properties that are designed, purpose-built and operated to provide the highest-quality service, care and living accommodations for residents. The Company owns and operates independent, assisted and dementia-care facilities.
One of the factors that determine the Zacks Rank is the earnings history. It isn't the biggest factor, but it is in the mix. The earnings history for BKD is not good, with the company missing the Zacks Consensus Estimate in each of the last four reports.
The biggest factor that determines the Zacks Rank is the move in earnings estimates. The analysts that cover the stock have been lowering their estimates as reflected in the move of the Zacks Consensus Estimate. Analysts were looking for a gain of $0.59 for 2017 just 90 days ago, but that has changed and it has done so in a big way. The current consensus estimate is calling for a loss of $1.33. That is a huge reversal for this year.
The 2018 number also saw a huge reversal. It moved from a gain of $0.66 90 days ago to the current level of a loss of $0.51.
With the earnings estimates now a negative number the forward PE is not a number we can use. The price to book has dropped down to 1.1x and that should interest the value investors that are reading this. Price to sales is only at 0.4x, but that often happens when a stock sees a significant drop in price.
Jimmy Choo Posts Insane Profit Growth: What It Means for Michael Kors
On Thursday, stiletto icon Jimmy Choo, which trades on the London Stock Exchange under the ticker “CHOO,” reported a huge year-over-year rise in pretax profit for the first half of 2017.
Before tax, Jimmy Choo said that profits came in at £18.1 million in the six months to June 30, jumping 174% from the prior-year period and surpassing the total profit the company reported for the whole of 2016. However, last year’s figures were affected by foreign exchange losses and higher financing expenses, notes Financial Times.
Taking into account interest, tax, depreciation, and amortization, adjusted earnings grew 19.5% year-over-year.
The luxury shoemaker’s revenues surged 16.5% to £201.6 million thanks to foreign-exchange movements; on a constant-currency basis, sales rose 4.5%. Jimmy Choo said its sales have continued to grow ahead of the market, despite a challenging operating environment.
Retail and wholesale revenue increased 19% and 10%, respectively, while licensing was another standout segment. Jimmy Choo’s licensing business includes its fragrance and sunglasses lines, and it grew 40% to £8.7 million.
“Our long-term growth strategy is to nurture the brand’s unique DNA, to strive for excellence in business execution and to enhance client experience, in order to deliver superior growth and profitability, as well as leveraging the significant investments we have made in the business to date. We have continued to make good progress through the first half and are well positioned to deliver over the remainder of the year,’ said Pierre Denis, CEO of Jimmy Choo.
Despite these strong numbers, Jimmy Choo still remain cautious in regards to the overall retail and economic environment. But, the company’s chairman, Peter Harf, said it is confident and excited about Jimmy Choo’s upcoming sale to Michael Kors (NYSE: KORS – Free Report).
Earlier this summer, the “affordable” luxury retailer announced that it agreed to buy the shoemaker for £896 million, or about $1.2 billion. The deal is expected to close in the fourth quarter of this year.
It’ll be interesting to see how Michael Kors utilizes the Jimmy Choo brand. While the purchase had been a long-rumored one, their customer bases do not go hand in hand. Michael Kors has completely saturated the handbag market—the company is the top handbag maker in the U.S.—with the MK logo seemingly appearing everywhere when you walk down the street. On the other hand, Jimmy Choo is the epitome of luxe. Like its peers Manolo Blahnik and Christian Louboutin, a Jimmy Choo stiletto can easily sell for over $1,000.
Kors is likely hoping to use its own massive global infrastructure to expand Jimmy Choo’s footprint. Similar to what Coach (NYSE: COH – Free Report) did when the company acquired Stuart Weitzman—Coach also bought fellow handbag maker Kate Spade this year—the company will probably open Jimmy Choo retail stores and further develop the brand's online presence. And with the shoemaker’s surge in profits, it looks like Kors made a smart choice in scooping up the iconic footwear brand.
Looking ahead, Jimmy Choo hopes to implement new logistics improvements to “facilitate improves sell through if collections” during the second half of 2017.
Jimmy Choo closed the day up just 0.17%, while shares of KORS are currently trading up over 1% in late-morning trading.
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