For Immediate Release
Chicago, IL – June 8, 2018 – Zacks Equity Research highlights Micron Technology (MU - Free Report) as the Bull of the Day, L Brands (LB - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Zumiez Inc. (ZUMZ - Free Report) .
Here is a synopsis of all three stocks:
Bull of the Day:
Founded in 1978 and headquartered in Boise, Idaho, Micron Technology is a leading provider of semiconductor memory and storage solutions.
The company manufactures and markets Dynamic Random Access Memory (DRAM), NAND flash memory, CMOS image sensors, other semiconductor components and memory modules used in computing, consumer, networking and mobile products.
Stock Surges on Improved Guidance, Buyback Plan and Intel Partnership
The company held its analyst day on May 21. There was a lot of good news for investors.
They announced $10 billion share repurchase program and plans to return at least 50% of free cash flow to stockholders beginning in fiscal 2019.
The company also announced a deal with Intel to make the next generation of 3D NAND flash memory chips.
They raised their guidance for their fiscal third quarter significantly. Revenue is expected to be in the range of $7.70 billion to $7.80 billion compared to prior guidance of $7.20 billion to $7.60 billion.
Earnings are expected to be in the range of $3.12 to $3.16 per share compared to prior guidance of $2.76 to $2.90 per share.
Key Markets Driving Growth
"The data-driven economy will transform nearly every industry and drive secular growth in demand for memory and storage. Micron is exceptionally well positioned to capitalize on these opportunities and deliver strong business performance and robust free cash flow," said the CEO.
In the analyst day presentation, the management highlighted potential growth opportunities from its key markets--data center, automotive, client compute, mobile and the Internet of Things.
Further, the AI growth story is just getting started. The CEO said recently “we’re barely seeing the tip of the ice berg there.”
Analysts have been raising estimates and price targets after the analyst day. Zacks Consensus Estimates for the current and next year have surged to $11.53 per share and $10.75 per share from $10.99 and $9.86 respectively.
Per CNBC, 23 analysts have strong buy or buy ratings on the stock and just four have hold ratings. There are no sell ratings. The average target price is $76.79 currently, which is up ~30% from the current price.
Micron is still trading at an attractive valuation of 5.2 times forward earnings, even though the stock has surged as its earnings estimates continue to rise.
With its strong portfolio of high performance memory technologies, market leading position and solid focus on profitability, the stock is expected to continue its uptrend in the coming months.
In addition to a Zacks Rank #1 (Strong Buy), the stock has excellent Style Scores—A for Value as well as VGM. Further, Zacks Industry Rank for “Semiconductor Memory” is in the top 1%.
Bear of the Day:
Founded in 1963 and headquartered in Columbus, Ohio, L Brands is a specialty retailer of women's intimate and other apparel, personal care, home fragrance and beauty products. They own Victoria’s Secret, PINK, Bath & Body Works, La Senza and Henri Bendel brands.
The company operates more than 3,000 owned specialty stores in the US, Canada, the UK and China, and its brands are sold in more than 800 additional franchised locations worldwide. Their products are also available online.
Weak Guidance Reflects Rising Challenges
The company posted quarterly earnings of 17 cents per share beating the Zacks Consensus Estimate of 15 cents. However, the earnings were down 48.5% year over year. Revenues were in-line with our estimate.
The management cut their FY 2018 guidance. They now expect earnings per share in the range of $2.70 to $3.00 from $2.95 to $3.25 previously.
Shares plunged about 7% in the after-hours trading and are now down about 37% this year even though they have rebounded a bit in the last couple days after better-than-expected May sales data.
Analysts have slashed their estimates for the company after weak guidance. Zacks Consensus Estimates for the current and next fiscal year have fallen to $2.82 per share and $2.94 per share from $3.11 and $3.27 respectively, before the report.
The Bottom Line
In addition to disappointing mall traffic, this retailer has been struggling with increased competition, and changing consumer preferences. With tightening labor markets, wage pressure has also started hurting retailers.
It would be better for investors to stay away from this stock for the time being.
Zumiez (ZUMZ - Free Report) Tops Q1 earnings & Revenues, Comps Up 8.3%
Zumiez Inc. just released its first-quarter financial results, posting an adjusted loss of $0.10 per share and revenues of $206.29 million.
Shares of Zumiez are up 108.20% during the last year and have popped 12.69% in the last 4 weeks. The company’s stock price climbed 1.31% on Thursday to hit $27.00 per share prior to the release of its quarterly earnings results.
Zumiez stock is currently up 8.33% to $29.25 per share in after-hours trading shortly after its earnings report was released.
Beat earnings estimates. The company posted an adjusted loss of $0.10 per share, topping the Zacks Consensus Estimate that called for a loss of $0.12 per share.
Beat revenue estimates. The company saw revenue figures of $206.29 million, beating our consensus estimate of $199.34 million.
Zumiez saw its quarterly revenues climb by roughly 14% from $181.16 million in year-ago period. Meanwhile, the retailer’s comparable sales popped 8.3%, which looks strong compared to its 1.8% comp increase in the period-year quarter.
The footwear and clothing retailer’s adjusted quarterly loss also improved from $0.18 per share during the same period of 2017.
Here’s a graph that looks at ZUMZ Price, Consensus and EPS Surprise history:
Zumiez is a specialty retailer of apparel, footwear, equipment, and accessories for young men and women.
Check back later for our full analysis on ZUMZ earnings report!
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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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