For Immediate Release
Chicago, IL – September 8, 2017 – Zacks Equity Research Crocs, Inc. (Nasdaq:(CROX - Free Report) – Free Report) as the Bull of the Day, Tractor Supply Company (Nasdaq:(TSCO - Free Report) – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on GoPro Inc. (Nasdaq:(GPRO - Free Report) – Free Report), Garmin (Nasdaq:(GRMN - Free Report) – Free Report) and Sony (NYSE:(SNE - Free Report) – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Is Crocs, Inc. (Nasdaq:(CROX - Free Report) – Free Report) making a comeback? This Zacks Rank #1 (Strong Buy) is expected to see positive earnings in 2018 for the first time in 4 years.
Crocs makes casual footwear for men, women and children. Everyone knows their Croslite material, a proprietary technology which gives each pair of shoes a soft, lightweight feel. Crocs became famous for its clogs, which went out of fashion, but, recently started to make a comeback.
It also operates retail stores.
Beat in the Second Quarter
Crocs reported second quarter results on Aug 10 and beat the Zacks Consensus for the second quarter in a row. Earnings were $0.27 versus the Zacks Consensus of $0.15.
Revenues fell 2.7% to $313.2 million, but it was at the high end of the company's guidance.
Gross margin rose 180 basis points to 54.2% compared to the year ago quarter due to improved product and better management of inventory.
It also saw a favorable response to its Spring/Summer 2017 collection, especially its clogs and sandals.
Even men's fashion bible, GQ Magazine, highlighted that men were wearing Crocs clogs again this summer.
Turnaround Still Ongoing
In March 2017, Crocs announced it was closing about 25% of its stores.
By the end of 2018, it expects to have about 400 stores versus 558 at the end of 2016.
This is part of its turnaround plan which also includes focusing on its core molded products and reducing inventory.
Estimates for 2017 and 2018 Rise
Analysts are liking what they are seeing and getting more bullish on the company.
Although sales are expected to drop by about 2.2% this year, they expect a rebound of 3% in 2018.
The estimates are now on the rise. The 2017 Zacks Consensus Estimate has jumped to a loss of $0.03 from a loss of $0.07 over the last 30 days. That's still an improvement from 2016 where the company lost $0.36.
By 2018, analysts expect the company to be back in the green as far as earnings, with the Zacks Consensus jumping to $0.30 from $0.22 over the last month.
Bear of the Day:
Tractor Supply Company (Nasdaq:(TSCO - Free Report) – Free Report) is feeling the pinch of a changing retail environment. This Zacks Rank #5 (Strong Sell) is expected to see a decline in earnings in 2017.
Tractor Supply is the largest rural lifestyle retail chain in the United States with 1,630 stores in 49 states and a web site.
Founded in 1938, it focuses on the needs of the rural lifestyle which includes recreational farmers and ranchers as well as tradesmen and small businesses. Their stores are located outside large metropolitan areas and in rural communities.
Despite its name, it sells more than just tractors, including lawn and garden items, toys, work/recreational clothing and footwear, pet and small animal products, hardware, truck towing and tool products and seasonal products.
It also operates Petsense, a small-box pet specialty supply retailer servicing pet owners in small and mid-sized communities. As of July 1, 2017, it operated 160 Petsense stores in 26 states.
Missed in the Second Quarter
On July 26, Tractor Supply reported second quarter results and missed on the Zacks Consensus by 2 cents. It reported earnings of $1.25 versus the consensus of $1.27.
Revenue rose 8.9% to $2 billion from $1.85 billion a year ago.
Comparable sales rebounded off last year's weak results, rising 2.2% compared to just 0.5% in the second quarter of 2016 due to continued strength in year-round products, with the Livestock and Pet categories leading the performance.
Gross margin fell 10 basis points to 34.9% from 35% last year due to higher freight expense from increased diesel fuel prices and a mix shift to more freight intensive products.
It's not throwing in the towel against Amazon, as it has a robust online sales presence and has been strengthening the connection between its stores and its online presence.
Lowered Full Year Guidance
However, in spite of all the good news, the company still lowered its comparable store sales guidance for the full fiscal year to the range of 1.1%-1.7% from 2%-3%.
Earnings guidance was also lowered to a range of $3.22-$3.27 from $3.44-$3.52.
As a result, the analysts slashed full year estimates for 2017. 12 estimates were lowered in the last 60 days pushing the Zacks Consensus down to $3.26 from $3.41.
That's an earnings decline of 0.4% as Tractor Supply made $3.27 last year.
But analysts were also bearish on 2018 as 11 estimates were also cut for that year, pushing the Zacks Consensus Estimate down to $3.58 from $3.81.
Here's Why GoPro (GPRO - Free Report) Soared on Thursday
On Thursday, shares of wearable action camera maker GoPro Inc. (Nasdaq:(GPRO - Free Report) – Free Report)are soaring, up over 14% in morning trading after the company updated its third quarter guidance.
GoPro said that it now expects revenue and gross margin to be at the high end of its previously expected ranges, with Q3 revenues coming in between $290 million to $310 million and gross margin between 36% to 38%. GoPro also forecasts adjusted profitability for the quarter.
In an interview with CNBC’s “Squawk Box,” GoPro Chief Operating Officer CJ Porber said that "We set some stretch forecasts at the beginning of the year to be profitable on a non-GAAP basis for all of 2017 and post double-digit revenue growth. And we expect to do that.”
“The bigger picture even beyond this quarter is that we’re seeing really strong consumer demand for our products and were successfully turning the business around,” he continued.
Since October, GPRO has fallen almost 50% due to investor skepticism and broad concerns that the company is losing ground to smartphones and similar devices from competitors like Garmin (Nasdaq:GRMN– Free Report) and Sony (NYSE:SNE– Free Report). On top of this, the delay in the launch of its much-hyped Karma drone and production issues with its Hero 5 camera negatively affected sales and put unwanted pressure on GoPro’s stock.
However, GoPro did say it is still on track to launch the Hero 6, which is the latest edition of its flagship action cameras, in addition to the company’s new Fusion 360 camera, by the upcoming holiday season.
Since its June 2014 IPO, GoPro has undoubtedly struggled. While the stock jumped nearly 31% on its first day of trading, and soon hit an all-time high of almost $94 per share just a few months after, GoPro shares have lost roughly 90% of its value since then (as of Wednesday’s close).
GPRO is currently a Zacks Rank #3 (Hold). Along with its updated third quarter guidance, GoPro expects earnings growth for current year of over 97% and sales growth of 12.6% in the same time frame. From a growth perspective, the company looks promising, though perhaps it’s because GoPro has finally worked out some major production issues.
GoPro’s valuation, however, is tricky, and because it has suffered a long bout of losses, it currently has no price-to-earnings. Looking at the camera maker’s price-to-sales ratio, GoPro sits at 0.97, which matches the Audio Video Production industry’s P/S.
Based on P/S, GoPro’s value has significantly cheapened, steadily decreasing since it hit its all-time high about three years ago. Its guidance announcement today is a step in the right direction, especially after its smaller-than-expected second-quarter loss, to boosting profits, increasing sales, and regaining some of its value back.
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