For Immediate Release
Chicago, IL – June 4, 2018 – Zacks Equity Research highlights Groupon (GRPN - Free Report) as the Bull of the Day, The Container Store Group, Inc. (TCS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Palo Alto Networks (PANW - Free Report) , Ambarella, Inc. (AMBA - Free Report) and Broadcom Limited (AVGO - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Groupon hasn't gone away, just the opposite. The coupon service has re-invented itself. This Zacks Rank #1 (Strong Buy) recently raised its full year outlook.
Groupon operates a mobile app and online marketplace where customers can save on things to do, eat, see and buy. That includes deals on local businesses, travel, consumer products and live events.
A Beat in the First Quarter
On May 9, Groupon reported its first quarter results and beat the Zacks Consensus by 3 cents. Earnings were 3 cents versus the Consensus of zero.
Revenue actually fell 7% to $626.5 million but this was in line with the company's strategy to maximize gross profit.
Gross profit rose 5% in the quarter to $324.9 million, led by growth in International.
In North America, it has 32.6 million active customers and the trailing 12 month gross profit per active customer rose 1%.
It has over 4.2 million cards linked in Groupon+, its voucherless initiative that is linked to credit cards. Additionally, it launched American Express with the program to increase customer choices of cards.
In International, active customers rose to 17 million as of Mar 31. The trailing 12 month gross profit per active customer increased 9%.
Share Repurchase Program
The company is shareholder friendly as it just completed a share buyback program and the Board of Directors approved a new $300 million program.
Groupon is also cash rich. It still has $725.9 million in cash and has no outstanding borrowings on its $250 million revolving credit facility.
Raised Full Year Guidance
Given the strong first quarter, the company raised its full year outlook.
The analysts all raised their estimates too, with 9 rising and just 1 being cut for 2018 in the last month.
The 2018 Zacks Consensus Estimate jumped to $0.23 from $0.20 in that time period. That's earnings growth of 109% as the company only made $0.11 in 2017.
The analysts are also bullish on 2019 with 8 estimates higher and 1 lower over the last month. Earnings are expected to grow another 14.6%.
Shares Still Weak- A Buying Opportunity?
The shares spiked higher on the earnings report but couldn't hold the gains. They're still down 9.2% year-to-date.
Is this a buying opportunity?
Groupon now trades with a forward P/E of 20.5. While that's not cheap, it has a P/S ratio of 1.0 which is low.
Groupon is changing its business model with the times and that's showing up in its improved earnings and profits.
For investors looking for a hidden social media company with growth, Groupon is one to keep on the short list.
Bear of the Day:
The Container Store Group, Inc. recently missed earnings for the second quarter in a row. This Zacks Rank #5 (Strong Sell) is still in a turnaround.
The Container Store operates stores across the United States that specialize in storage and organization products.
The Container Store Missed on Fiscal Fourth Quarter
On May 22, The Container Store reported fiscal fourth quarter results which came up shy compared to the Zacks Consensus.
Earnings were $0.18 versus the consensus of $0.24, or a miss of $0.06.
Comparable stores sales, the key metric for retailers, was actually up 2.7% but for the full Fiscal Year 2017, they only rose 0.9%.
Consolidated gross margin was 58.6%, an increase of 100 basis points compared to the year ago quarter.
Analysts Adjust Their Estimates
The company issued full year fiscal 2018 guidance which includes comparable store sales ranging from flat to up just 1%.
Earnings are expected to be in the range of $0.35 to $0.45.
Analysts like to be in the middle of a company's guidance range, so 2 estimates were cut over the last month, pushing the Zacks Consensus down to $0.40 from $0.43. The new consensus of $0.40 is right in the middle of the company's range.
However, that's still an amazing 42.8% increase compared to fiscal 2017 earnings which were just $0.28.
Stock Up Big: Too Hot to Handle?
The Container Store was left for dead by investors.
Since its 2014 IPO, shares are down 79%.
But if you took a chance and bought to star the year, you'd be up 51.2%.
The shares are no longer cheap either. They trade with a forward P/E of 19.
Upcoming Earnings Reports to Watch: PANW, AMBA and AVGO
Earnings season quietly wrapped up this week, with the latest reports easily overshadowed by political tensions in the European Union, heightened trade drama between the U.S. and its allies, and another solid jobs reports. Now, as we enter a slow period for earnings announcements, investors will likely have to search harder for compelling new results.
With that said, investors can always use the Zacks Earnings Calendar to plan out their schedules for earnings, dividend announcements, and other important financial releases. This handy tool is your perfect one-stop-shop to properly prepare for the market events that will have an impact on your own portfolio.
There are not a ton of marquee reports to watch for in the upcoming week, but investors with an eye on the tech sector might be interested in a few names, including one of the world’s largest semiconductor companies.
Using the Earnings Calendar, we looked ahead to next week and selected the top reports to watch. Make sure to keep an eye on these companies as they prepare to report during the week of June 4.
1. Palo Alto Networks
Shares of cybersecurity player Palo Alto Networks have surged more than 90% since rebounding from a multi-year stretch of volatility in April of last year, and with the stock now near its all-time highs, investors will be hoping for another great report from the firm. PANW is sporting a Zacks Rank #3 (Hold) ahead of its announcement on June 4.
According to our latest Zacks Consensus Estimates, analysts are expecting PANW to report earnings of $0.96 per share and revenue of $545.7 million. These results would represent growth about 57% and 26%, respectively, from the year-ago period.
2. Ambarella, Inc.
The high-growth days of Ambarella and GoPro have long since passed, but this imaging tech expert still attracts plenty of attention—especially considering its efforts to capture the self-driving car industry. Still, the stock is down more than 15% over the past year and does not present the most exciting growth prospects.
Consensus estimates are calling for earnings of $0.09 per share and revenue of $56.2 million, which would represent year-over-year slumps of 77% and 12%, respectively. AMBA is currently holding a Zacks Rank #3 (Hold) just a few days before its report date.
3. Broadcom Limited
Semiconductor behemoth Broadcom is scheduled to report its latest quarterly financial results after the market closes on June 7. The stock has had an up-and-down year, but shares have popped nearly 10% in the past year and are entering the earnings week with solid momentum. However, AVGO is currently sporting a Zacks Rank #4 (Sell).
Based on our most recent Zacks Consensus Estimates, we expect AVGO to post adjusted earnings of $4.76 per share and revenue of $5.0 billion. These figures would represent year-over-year growth of 29% and 19%, respectively.
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.
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