For Immediate Release
Chicago, IL – September 6, 2018 – Zacks Equity Research highlights Fortinet Inc. (FTNT - Free Report) as the Bull of the Day, Red Robin Gourmet Burgers Inc. (RRGB - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Caterpillar (CAT - Free Report) , Deutsche Bank (DB - Free Report) and Boeing Co. (BA - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Headquartered in Sunnyvale, CA, Fortinet Inc. provides network security appliances and its flagship Unified Threat Management (UTM) network security solutions to enterprises, service providers, and government entities worldwide. Its solutions are designed to integrate multiple levels of security protection, including firewall, virtual private networking, antivirus, intrusion prevention, Web filtering, antispam, and wide area network acceleration.
Fortinet’s Q2 earnings marked its eighth consecutive bottom line beat, and overall, it was a strong quarter. Revenues of $441.3 million jumped over 21% year-over-year, while net income skyrocketed 114.3% from the prior-year period, both driven higher thanks to solid product sales and increased demand for the company’s hardware.
Product revenue grew 17% year-over-year, and service revenue was up 25% to $275 million. Total billings rose 20% to $513.4 million, while deferred revenue popped 27% to $1.47 billion compared to $1.16 billion at the end of Q2 2017.
As a result, Fortinet’s full-year guidance was increased to reflect these solid numbers, as well as the expectation that its product refresh cycle at the moment will continue to propel growth.
Full-year revenue is projected between $1.77 billion and $1.79 billion, with billings between $2.085 billion and $2.110 billion. Fortinet had previously guided for revenue between $1.715 billion and $1.735 billion. Non-GAAP EPS is now expected in the range of $1.63 and $1.67 compared to the previous range of $1.51 and $1.55.
During the conference call with analysts, CEO Ken Xie said “The competitive advantage of our Security Fabric architecture coupled with our cloud offering and customer FortiASIC technology are contributing to market share gains. We expect to continue to deliver above-market growth, balanced with profitability.”
Bear of the Day:
Red Robin Gourmet Burgers Inc. is a casual dining restaurant chain. Operating more than 500 Red Robin restaurants across the U.S. and Canada, Red Robin’s popular menu items include over two dozen burger options and their signature Bottomless Steak Fries. RRGB is headquartered in Greenwood Village, CO.
Shares of RRGB have experienced a rocky stretch lately, falling almost 27% year-to-date, and mixed results in Red Robin’s second-quarter earnings report didn’t much help the stock.
Looking at Red Robin’s Q2 report a little deeper, the company posted earnings of 46 cents per share, which came in-line with the Zacks Consensus Estimate but declined 24.6% year-over-year. Revenues of $315.4 million, lagging behind our consensus estimate. Both its top and bottom line matched preliminary results it had released a few weeks prior.
Lower revenues were a result of a 2.6% year-over-year decrease in comparable restaurant revenue, while Red Robin’s restaurant guest counts fell 0.7% year-over-year. But, restaurant labor costs as a percentage of restaurant revenue improved 40 basis points.
CEO Denny Marie Post said that "We did not execute as well as we know we are capable of, particularly at critical peak demand hours when we must be prepared to serve dine-in Guests and our rapidly growing off-premise demand."
Buy Caterpillar Because It's Cheap and Ready to Grow
Caterpillar saw its stock price pop Wednesday on the back of a positive Deutsche Bank analyst note. Shares of CAT and other giants, such as Boeing Co. have sunk over the last few months as trade war concerns mount. But Caterpillar’s growth projections look strong, and CAT stock might be too cheap to pass up.
Deutsche Bank analyst Chad Dillard resumed coverage of Caterpillar with a “buy” rating, citing the need for mining and oil companies to renew and replace old equipment. Dillard told clients that CAT is likely to see its revenues and share price climb on increased demand. “Caterpillar is earlier in its cycle than the market gives credit and our preferred way to play the early stage equipment replacement cycle," Dillard wrote in a note Tuesday.
“Mining and oil & gas producers have systematically underinvested in equipment and are in the early stages of replacing the equipment bought during the height of the commodity super cycle.”
The Deutsche analyst went on to say that he estimates that mining sales could jump by 30%, while oil and gas sales might grow by 10% each of the next couple of years. Plus, he said that the Deerfield, Illinois-based company is currently trading at its largest discount compared to the S&P 500 in almost 20 years
CAT stock is currently trading at 11.1X forward 12-month Zacks Consensus EPS estimates, which represents a significant discount compared to its industry’s 15.5X average, as well as the S&P’s 17.5X.
Better still, Caterpillar has traded as high as 24.7X over the last year, with a one-year median of 16.5X. CAT is also trading near both its one-year and three-year low of 10.7X. Add all of this up and CAT stock looks pretty cheap.
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.