For Immediate Release
Chicago, IL – September 6, 2017 – Zacks Equity Research Texas Instruments (Nasdaq:(TXN - Free Report) – Free Report) as the Bull of the Day, Foot Locker (NYSE:(FL - Free Report) – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tencent Holding (OTCMKTS:(TCEHY - Free Report) – Free Report), Royal Bank of Canada (NYSE:(RY - Free Report) – Free Report) and Unilever (NYSE:(UN - Free Report) – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Headquartered in Dallas, Texas, Texas Instruments (Nasdaq:(TXN - Free Report) – Free Report) is a global semiconductor company and an original equipment manufacturer of analog, mixed signal and digital signal processing (DSP) integrated circuits.
Their chips are used in everything from mobile phones to industrial equipment and many smart products.
The company has about 30,000 employees in more than 30 countries and 15 manufacturing sites in 9 countries. More than 85% of their revenue comes from Analog and Embedded Processing segments.
Solid Quarterly Results
The company reported excellent results for the second quarter, exceeding Zacks Consensus Estimates for both earnings and revenues. Net earnings of $1.03 per share exceeded our estimate by eight cents. Revenues of $3.7 billion beat the consensus by $139 million.
Strong results were driven by growth in auto, industrial, communications and personal electronics markets. The company also upgraded its guidance for the third quarter.
"Revenue increased 13% from the same quarter a year ago. Demand for our products continued to be strong in the automotive market and continued to strengthen in the industrial market. In our core businesses, Analog revenue grew 18% and Embedded Processing revenue grew 15% from the same quarter a year ago. Operating margin increased in both businesses,” said the CEO.
Analysts have been raising their estimates for the company after stronger than expected results and updated guidance. Zacks Consensus Estimates for the current and next year are now $5.09 per share and $5.30 per share, up from $5.06 and $4.95 respectively, before the results.
Bear of the Day:
Headquartered in New York City, Foot Locker (NYSE:(FL - Free Report) – Free Report) is a retailer of athletic shoes and apparel. They operate 3,363 retail stores in 23 countries in North America, Australia, New Zealand and Europe.
Weak Results and Guidance Reflect Rising Challenges
The company reported disappointing results for the second straight quarter. Their earnings of 62 cents per share were substantially below the Zacks Consensus Estimate of 90 cents and down 34% year over year. Total sales were down 4.4% year over year and also short of the Zacks Consensus Estimate.
“While we believe our position in the market for premium sneakers remains very strong and our customers continue to look to us for compelling new athletic footwear and apparel styles,” said the CEO, “sales of some recent top styles fell well short of our expectations and impacted this quarter’s results.
“We believe these industry dynamics will persist through 2017, and we expect comparable sales to be down three to four percent over the remainder of the year.”
Shares plunged almost 28% after the report and are now down about 49% this year.
Analysts have slashed their estimates for the company after weak guidance. Zacks Consensus Estimates for the current and next fiscal year have fallen to $3.95 per share and $3.77 per share from $5.09 and $5.41 respectively, before the report.
Mario Draghi Makes Headlines: Global Week Ahead
In the holiday shortened Global Week Ahead, the key event on tap — and likely until the FOMC meeting on September 21st — will be Thursday’s European Central Bank (ECB) meeting.
Euro area economists put out a call for further stimulus measures to be announced. They also expect a further downgrade of macro forecasts, specifically to consumer inflation.
The day before the key ECB meeting, Sweden’s Riksbank issues its rate decision. If the ECB’s deposit rate (at a negative -0.4% now) undercuts the Riksbank’s repo rate (-0.5%) via a possible ECB cut, don’t slam the door shut on possible future Riksbank actions too.
In North America, on Wednesday, the Bank of Canada (BoC) makes its latest pronouncements. At the end the week, there will be a fresh Canadian sounding on their unemployment rate and capacity utilization.
In Latin America, on Thursday, Banco Central de Reserva del Peru should leave its policy rate unchanged at 4.25%.
In Asia, a trio of central bank meetings happen this week. Neither the Reserve Bank of Australia, the Bank of Korea, and the Bank Negara Malaysia should not alter monetary policies.
Finally, political leaders from leading industrial nations — and a few others — were in China at Hangzhou City last weekend and into the start of this week for G-20 meetings.
Ahead of the arrival of presidents, prime ministers, central bank heads and their staffers, a fortune was spent to prepare Hangzhou for the world.
The theme of the G20 meeting is “Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy.” Tellingly, U.S. President Donald Trump is not invited.
Now, let’s talk stocks.
Top Zacks #1 Rank (STRONG BUY) Stocks—
Tencent Holding(OTCMKTS:(TCEHY - Free Report) – Free Report): This is a bellwether $400 billion in market cap, China large cap tech stock. It is currently ranked as a long-term Zacks VGM of B too, based on an A in the Growth score. These types of stocks are on a big momentum run. Keep your eyes on China this week, including its big stocks.
Royal Bank of Canada(NYSE:(RY - Free Report) – Free Report): With a rate meeting in play in Canada, and plenty of key macro data this week, key an eye on this major Canada bank. The stock is a long-term Zacks VGM of F, though. All good news is fully priced in.
Unilever(NYSE:(UN - Free Report) – Free Report): This is a big $102 billion in market cap multi-national consumer staples player based in Europe. If Mario Draghi does juice the money machine in Europe this week, watch stocks like this.
Key Global Macro Events—
On Wednesday, Brazil’s SELIC monetary policy rate is expected to go from 9.25% to 8.25%.
There is a Riksbank monetary policy meeting held in Sweden. The Riksbank rate is a -0.5% now, and it is not expected to change.
The ISM non-manufacturing index for the USA is expected to move up from 53.9 to 5.5.
On Thursday, the European Central Bank (ECB) announces its rate decision. It is at 0.0% on the main refi rate now. It is not expected to change that. President Draghi will give a press announcement after the meeting.
U.S. initial claims for unemployment look great at 236K.
The Fed’s George, Mester and Dudley speak.
On Friday, Canada’s capacity utilization rate comes out. It has been a high 83.3%.
Canada’s unemployment rate comes out too. It is 6.3% to 6.4%.
The Fed’s Harker speaks.
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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.
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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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