For Immediate Release
Chicago, IL – April 23, 2018 – Zacks Equity Research highlights Nine Energy Service, Inc. (NINE - Free Report) as the Bull of the Day and Tupperware Brands Corporation (TUP - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Alphabet Inc. (GOOGL - Free Report) .
Here is a synopsis of all three stocks:
Bull of the Day:
Nine Energy Service, Inc., a Zacks Rank #1 (Strong Buy), provides onshore completion and production services to unconventional oil and gas resource development. The Company's operating segment consists of Completion Solutions and Production Solutions. Completion Solutions segment provides services integral to the completion of unconventional wells. Production Solutions segment provides production enhancement and well work over services. It also offers auxiliary services including casing jacks with hydraulic power source and oil field equipment hauling.
Recent Earnings Results
The company reported Q4 results in late March where revenues came in at $154.3 million, a +93% increase from its Q4 16 revenues of $80 million. Further, Q4 adjusted EBITDA improved by +258% when compared to the year ago quarter and was the fourth sequential quarterly increase for the company.
On a segment basis, Completion Solutions (cementing, wireline, coiled tubing, and completion tools) saw revenues improve by +108% from $64.7 million to $134.7 million. Also adjusted growth profits jumped up by +153% when compared to the year ago quarter. Production Solutions (well services) posted YoY revenue gain of +28%, and adjusted gross profit growth of +23%.
Drivers Going Forward
Since April of 2017, producers have added 161 new active oil and gas rigs in the U.S., and the trend has continued to move upwards over the past several weeks. The big driver behind the uptick in rigs is mostly due to oil prices being over $60 per barrel. At these levels it is profitable for U.S. companies to continue to activate more and more rigs. Further, the Energy Information Administration recently increased its 2019 U.S. oil production estimates to just above 11 million barrels per day; the largest amount since the EIA has been estimating production levels since it began in 1983. This indicates the continued need for service companies for the foreseeable future.
According to Ann Fox, President and CEO, “We realized tremendous growth in 2017 by remaining focused on providing our customers with excellent service execution and cutting-edge technology. Despite a decrease in U.S. rig count quarter-over-quarter, we were able to grow revenue and adjusted EBITDA for the fourth sequential quarter in a row, beating the midpoint of our adjusted EBITDA expectations by approximately 19%. Working for the most efficient customers and completing the most complex and technical wells enables us to differentiate ourselves in the market from a technology and tool conveyance perspective.
“We benefit directly from the secular trends in the completions space and we anticipate the high-level of completion intensity to continue as lateral lengths extend helping to drive top-line growth and margin, while also creating unique operating efficiencies within Nine. These efficiencies will provide a competitive advantage as labor and equipment remains extremely tight.”
Bear of the Day:
Tupperware Brands Corporation, a Zacks Rank #5 (Strong Sell) is the leading global marketer of innovative, premium products across multiple brands utilizing a social selling method through an independent sales. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics and Nuvo brands.
Recent Earnings Report
In the company’s most recent earnings release they beat the Zacks consensus earnings estimate but came in short of the revenue estimate. On a year over year basis, the company posted earnings growth of +9.7% while revenues fell by -2%. On a regional segment sales basis the company reported declines in Europe -3%, Asia Pacific -2%, North America -7%, but South America grew by +6%
According to Rick Goings, Chairman and CEO, "Our local currency sales came in 1-point under our October guidance range. Overall, our top-line did accelerate on a sequential basis after adjusting for calendar shifts, in connection with having an additional week in the fourth quarter of 2016, and the closure of Beauticontrol. China's significant growth trajectory continued, while Brazil and Tupperware Mexico grew nicely, demonstrating resilience in the face of tough externals coming out of the third quarter of 2017. Adjusted earnings per share was 6-cents above the high-end of our range in local currency after a 1-cent drag from foreign exchange rates versus October guidance."
Mr. Goings continued, "Our re-engineering program to revitalize operations and improve the cost structure, primarily in Europe, continues to progress. Globally, we continue efforts to evolve our relationship-selling business model to include greater access to our powerful brands and innovative products through the use of digital tools, branded contact points and a relevant earning opportunity for our growing sales force of 3.2 million.”
Management Lowers Q1 18 Guidance
A few months after the decent Q4 17 earnings report (in the early part of April), management preannounced Q1 18 results (the company is expected to release Q1 earnings before the opening bell on April 25th) as they lowered both sales and EPS guidance due to macro and micro challenges. Further, management stated that organic sales would be down -6%, double of the previous expectation. The company cited its France facility shutdown for customer service issues, the underperformance of its recent initiatives in Indonesia, and a customs strike in Brazil as factors in the lower than expected results for Q1. Unfortunately, these issues are not expected to be fixed in the near term as analysts are seeing these problems lingering for the next few quarters.
3 Key Estimates for Google’s Q1 Earnings Report
Shares of Google parent Alphabet Inc. climbed on Thursday as we inch closer to the release of the internet giant’s first-quarter earnings results on Monday afternoon. Alphabet is one of the most influential tech companies in the world, which means investors will want to pay particularly close attention to its Q1 financial report.
There was a time, not so long ago, when investors feared that the shift to mobile could harm Google’s bread and butter search business. Those worries have been subdued and Alphabet’s management team has diversified the company’s offerings.
Google is now one of multiple Alphabet subsidiaries, with the company currently embedded across an array of tech fields that are set to explode, from mobile payments and e-commerce to cloud computing and artificial intelligence.
Alphabet still clearly relies heavily on Google’s search business and the advertising dollars that pour in from it, but there is also much more for investors to be excited about.
Just a few days out from Alphabet’s Q1 report date, our current consensus estimates are calling for the company to post earnings of $9.21 per share, which would mark a 19.2% jump from the year-ago period.
Meanwhile, Alphabet is expected to see its Q1 revenues surge by 20.7% to hit $24.29 billion. Investors should note that our revenue estimate excludes Google Network Members revenues.
Key Report Items
With that said, earnings and revenue are just two of the many things investors will be looking at when Alphabet reports after the closing bell on Monday, April 23. In fact, it is very plausible that any post-earnings momentum might be inspired by Alphabet’s performance in specific business segments.
To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.
Based on our current consensus estimates, we expect Google’s advertising revenues to come in at $25.79 billion for the quarter, which would represent growth of roughly 20.5% from the year-ago period. In the fourth quarter, Alphabet’s advertising revenues jump about 21.6% to hit $27.23 billion.
Moving on, the “Google other revenues” category, which is comprised of the Google Play Store, Google Cloud offerings, and its hardware initiatives, is one of Alphabet’s most exciting growth units.
Our consensus estimate file is calling for Google other revenues to hit $4.32 billion, which would mark about 39.5% growth from the year-ago period. Last quarter, Google other revenues expanded by roughly 37.9% to reach $4.69 billion. Investors should note that the expected sequential downturn is likely due to increased sales from things like Google Home and the Pixel during the holiday period.
Lastly, investors should also expect to see massive growth in Alphabet’s “Other Bets” unit. Alphabet joins together smaller projects in this business segment that, for the most part, don’t generate much revenue.
With that said, some of Alphabet’s Other Bets subsidiaries—including Google Fiber and Nest—are adding to Alphabet’s top line. Based on our consensus estimates, Other Bets revenues are projected to reach $362 million, which would represent 48.4% year-over-year growth. Other Bets revenues surged 56.1% to touch $409 million in the fourth quarter.
Make sure to check back here for our full analysis of Alphabet’s actual results on Monday, April 23!
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