For Immediate Release
Chicago, IL – June 13, 2018 – Zacks Equity Research highlights Lululemon Athletica Inc. (LULU - Free Report) as the Bull of the Day, Hain Celestial Group Inc. (HAIN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AT&T (T - Free Report) and Time Warner .
Here is a synopsis of all four stocks:
Bull of the Day:
Sitting at a #1 (Strong Buy) on the Zacks Rank, Lululemon Athletica Inc. is a retail giant that specializes in athleisure and yogawear for women and men. Its product ranges from pants, shorts, tops, and jackets to accessories like bags, socks, and yoga mats, and are designed for activities like running, spinning, general fitness, and of course, yoga.
Lululemon is based in Vancouver, Canada, and currently operates over 400 stores as well as its popular website and digital app.
Shares Pop on Strong Q1 Earnings
A few weeks ago, Lulu reported impressive Q1 numbers across the board, and shares popped well over 15% as a result.
Both its top and bottom line easily beat the Zacks Consensus. In particular, revenues increased 25% year-over-year.
Total comparable sales surged 20% from the prior-year period, while comparable store sales notched an increase of 8%. Most notably, Lulu’s direct to consumer net revenues skyrocketed 62%.
The company also saw its gross margin expand 370 basis points, and it ended Q1 with $966.6 million in cash and cash equivalents compared to $698.3 million at the end of Q1 fiscal 2017.
Strong Earnings Outlook
For LULU, its bottom line is trending upward for the foreseeable future.
Earnings are expected to grow over 23% for the current quarter, with 12 analysts revising their outlook upwards recently.
Current fiscal year figures are looking pretty great, with 14 upwards estimates in the last 60 days (though one has cut their outlook during this time frame). The Zacks consensus estimate trend has jumped from $3.08 per share to $3.20 per share.
Next year is looking pretty great as well, with earnings expected to grow about 16%; the consensus has increased 20 cents in the past two months.
LULU has an average earnings surprise of almost 11%.
LULU: What’s Next for the Stock?
Shares of Lululemon have gained almost 57% since the start of the year and nearly 140% in the past one-year period. In comparison, the S&P 500 has gained 4.2% and over 14%, respectively.
Bear of the Day:
A leading name in the organic and natural products space, Hain Celestial Group Inc. operates primarily in North America, Europe, and India. Its mission is to be the leading marketer, manufacturer and seller of organic and natural, better-for-you products. Hain is headquartered in Boulder, CO.
The company is present in many natural categories, with well-known brands like Earth’s Best, Ella’s Kitchen, Terra, Healthy Valley, Almond Dream, Plainville Farms, Hain Pure Foods, Rudi’s, Arrowhead Mills, and many others.
Hain’s recent third quarter was a disappointing one, with earnings and revenues falling short of expectations. The stock is currently sitting at a #5 (Strong Sell) on the Zacks Rank. What’s next for this organic food conglomerate?
Disappointing Q3 Results
Last month, Hain reported third quarter fiscal 2018 results where both its top and bottom line missed consensus estimates. However, both metrics managed to improve year-over-year, with revenues up 8% year-over-year.
Net sales in the U.S. fell 3%, but its U.K. and Rest of World divisions outperformed, increasing 19% and 15%, respectively.
Gross profits were down 4.4% to $133 million.
Additionally, adjusted operating income dropped almost 5%, while adjusted operating margin decreased 110 bps to 8.9%.
Estimates took a hit in the days following the report.
For the current quarter, six analysts cut their outlook in the last 60 days, and the consensus has dipped 29 cents from $0.55 to $0.26 per share. Earnings are expected to decline around 39% for the period.
Six analysts have revised their estimates downward for fiscal 2018 as well, and earnings are projected to fall about 5%. The consensus has decreased from $1.66 to $1.16 per share.
Looking at the next fiscal year, earnings could grow 15%, but the current consensus sits at $1.33 per share, having fallen 53 cents in the past 60 days.
Can HAIN Stock Turn Things Around?
Shares of Hain Celestial are down nearly 32% so far this year and have slipped over 17% in the past one year. Compared to the S&P 500, the index has gained 4.2% and 14%, respectively.
AT&T-Time Warner Deal Gets Approved – What Next?
A federal judge has approved AT&T’s $85 billion merger with Time Warner, handing the telecom giant a massive victory in what has been the most intense antitrust case in decades.
Shares of AT&T sunk in after-hours trading shortly after the news, while Time Warner stock added as much as 4.5%. The judge’s decision will apparently allow AT&T to buy Time Warner without any significant conditions.
Analysts have said that such a decision might limit the government’s power to restrict mergers in the future, with many pointing to potential tie-ups between CVS and Aetna, or Disney and 21st Century Fox, as deals that could be affected by this precedent.
Judge Richard Leon filed the decision, which will ignite AT&T’s content ambitions and put the company in a better position to battle tech-media hybrids like Netflix, Amazon and Alphabet.
Government prosecutors attempted to argue that a combination of AT&T’s distribution network—its cellular and wired broadband infrastructure—and Time Warner’s original content—HBO, Warner Bros., and Turner Broadcasting—would create an anticompetitive environment in today’s evolving communications and media sector.
Now, AT&T will leverage those new properties to create a new telecom-media behemoth.
Initial investor reaction likely reflects hesitation toward the costs associated with the deal, but it is hard to think that the merger does not present exciting potential for AT&T.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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