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Deckers Brands, Shopify and Hewlett Packard as Zacks Bull and Bear of the Day

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For Immediate Release         

Chicago, IL – February 23, 2018 – Zacks Equity Research highlights Deckers Brands (DECK - Free Report) as the Bull of the Day and Shopify Inc. (SHOP - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onHewlett Packard Enterprise Company (HPE - Free Report) .

Here is a synopsis of all three stocks:

Bull of the Day:

Deckers Brands recently crushed quarterly earnings and raised full year guidance. This Zacks Rank #1 (Strong Buy) is expected to grow earnings in fiscal 2018 by the double digits.

Deckers makes footwear, apparel and accessories and is best known for owning the UGG brand. But it also designs Koolabburra, HOKA ONE ONE, Teva and Sanuk brands.

It sells in department stores, online and in Company-owned and operated retail stores.

Big Holiday Quarter

On Feb 1, Deckers reported its fiscal third quarter 2018 results which included the all-important holiday quarter and it crushed the Zacks Consensus Estimate by 29.4%.

Earnings were $4.97 versus the Zacks Consensus of just $3.84.

Sales rose 6.6% to $810.5 million from $760.3 million in the year ago quarter.

Gross margin also rose to 52.2% from 50.5% in the year ago period.

It saw stronger full price selling during the key holiday season. Favorable weather, i.e. cold and snowy, also contributed to the year-over-year improvement.

UGG is still it's largest brand and those sales rose 4.3% to $734.7 million. HOKA ONE ONE, however, saw significant growth in the quarter, as sales rose 65.7% to $31.8 million from $19.2 million.

Teva sales also jumped nicely, rising 33.4% to $19.5 million from $14.6 million a year ago.

Sanuk was the laggard as sales managed to finish flat at $13.9 million.

International Sales Were Hot

While domestic US business remains the driving force, international sales challenged in the third quarter.

Domestic sales rose 2.5% to $501.7 million while international sales jumped 14% to $308.8 million, up from $270.8 million in the year ago period.

Raised Full Year Guidance

Given the strong holiday quarter, which was better than the company had expected, it's not surprising that it raised its fiscal 2018 full year guidance.

Earnings are expected to be in the range of $5.37 to $5.42.

As a result, the analysts have raised their estimates with 6 estimates rising in the last 30 days.

The Zacks Consensus for Fiscal 2018 jumped to $5.27 from $4.30 just 90 days ago. Deckers made $3.82 just a year ago, so that is earnings growth of 38%.

Bear of the Day:

Shopify Inc. has been growing at a breathtaking pace and just beat earnings again. Then why is it a Zacks Rank #5 (Strong Sell)?

Shopify is a Canadian-based commerce platform designed for small and medium-sized businesses. Merchants use the software to sell their products online, including on the web, mobile, social media, marketplaces and brick-and-mortar locations.

It currently serves about 600,000 businesses in 175 countries including such brands as Nestle, Red Bull, Rebecca Minkoff and Kylie Cosmetics.

Shopify Beat in Q4

On Feb 15, Shopify reported its fourth quarter results and beat the Zacks Consensus by 10 cents. Earnings were $0.15 versus the Zacks Consensus of $0.05.

Revenue in the fourth quarter soared 71% to $222.8 million. For the year, revenue was $673.3 million.

Gross Merchant Volume (GMV), which is a key metric for the company, jumped 65%, or $3.6 billion, to $9.1 billion.

During the holiday season, Black Friday to Cyber Monday resulted in $1 billion of GMV with a peak of $1 million of orders processed per minute.

Most shoppers are still buying from their phones as mobile devices accounted for 73% of traffic and 61% of orders for the quarter. That was up from 55% in the year ago period.

Guides Revenue Above Consensus

Shopify provided full year revenue guidance of between $970 million to $990 million above the then consensus.

The consensus has since risen to $994 million which is revenue growth of 48%.

The growth is expected to continue in 2019 with revenue expected to rise another 37%.

Why Is it a Zacks Rank #5 (Strong Sell)?

If everything is looking solid, why is it a Strong Sell?

Remember, the Zacks Rank is based on the analyst estimates and those are being cut for 2018.

13 have cut for the full year in the last 30 days with 5 being lowered in the last week. The Zacks Consensus Estimate has dropped to $0.13 from $0.30 in the last month.

That's a decline in earnings of 18% as the company made $0.16 in 2017.

Estimates were also cut for 2019, with 3 lower and 1 higher in the last week. The 2019 Zacks Consensus Estimate fell to $0.50 from $0.72 over the last 30 days.

Additional content:

Hewlett Packard Enterprise Posts Earnings Beat, Upbeat Guidance

Hewlett Packard Enterprise Company just released its latest quarterly financial results, posting adjusted earnings of 34 cents per share and revenues of $7.7 billion.

Currently, HPE is a Zacks Rank #4 (Hold), but that could change based on today’s results. The stock is currently down 14.26% to $18.75 per share in after-hours trading shortly after its earnings report was released.

Hewlett Packard:

Beat earnings estimates. The company posted non-GAAP earnings of $0.34 per share, beating the Zacks Consensus Estimate of $0.23. HPE reported GAAP diluted net earnings per share of $0.89, lifted primarily due to the benefits of U.S. tax reform.

Beat revenue estimates. The company saw revenue figures of $7.67 billion, beating our consensus estimate of $7.03 billion.

Total revenue was up 11.2% from the prior-year quarter. Non-GAAP adjusted earnings gained 21.4%. On a GAAP basis, earnings per share soared about 500%, thanks in large part to tax reform.

“Our strong Q1 performance is proof that we have the right strategy and improved execution,” said CEO Antonio Neri. “We had good revenue growth across every business segment, continued to execute HPE Next with no disruption to the business, and delivered strong shareholder return in the form of share repurchases and dividends.”

For the fiscal 2018 second quarter, HPE expects non-GAAP diluted net EPS to be in the range of $0.29 to $0.33. Our current consensus estimate is calling for earnings of $0.26 per share.

Here’s a graph that looks at HPE’s recent earnings performance:

Hewlett Packard Enterprise Company Price, Consensus and EPS Surprise | Hewlett Packard Enterprise Company Quote

Hewlett Packard Enterprise Company was spun-off from the Hewlett-Packard Company in November 2015. The company operates in four segments: Enterprise Services, Enterprise Group, Software and Financial Services.

Check back later for our full analysis on HPE’s earnings report!

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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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.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

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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