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DSW, L Brands, Vishay Intertechnology, Cypress Semiconductor and ON Semiconductor highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – September 20, 2018 – Zacks Equity Research highlights DSW Inc. as the Bull of the Day, L Brands, Inc. as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vishay Intertechnology, Inc. (VSH - Free Report) , Cypress Semiconductor Corporation and ON Semiconductor Corporation (ON - Free Report) .
DSW Inc. is finding its footing as it reported a record second quarter. This Zacks Rank #1 (Strong Buy) raised guidance and earnings are expected to jump by the double digits this year.
DSW sells footwear and accessories through several retail concepts including DSW Designer Shoe Warehouse, Shoe Company, Shoe Warehouse and Town Shoes.
It sells in over 1,000 retail stores as well as via e-commerce sites and its mobile app.
Big Beat in the Second Quarter of 2018
On Aug 28, DSW reported second quarter results and easily blew by the Zacks Consensus Estimate. Earnings were $0.63 versus the consensus of $0.47, for a 34% beat.
It was a record quarter for sales and earnings.
Total revenue jumped 16.4% to $795 million.
Comparable sales rose 9.7%, which was one of the best quarters in years and one of the best in the retail industry during the quarter.
It wasn't just shoes that were strong sellers but accessories were also solid.
The company is also building the brand through its VIP loyalty program, which is free to join and provides perks and free shipping.
Raised Full Year Outlook
Given the strong quarter and the momentum it has heading into the holiday season, DSW raised its full year earnings guidance to a range of $1.60 to $1.75 from the prior range of $1.52 to $1.67.
The analysts rushed to raise their estimates to be in line, with the Zacks Consensus Estimate jumping to $1.74 from $1.62 in the last month. That would be earnings growth of 14.5% over fiscal 2017.
They also raised fiscal 2019 estimates, pushing the 2019 Zacks Consensus Estimate up to $1.91 from $1.72. That's earnings growth of 9.7%.
L Brands, Inc. continues to struggle as its brands are off trend. This Zacks Rank #5 (Strong Sell) is near 5-year lows.
L Brands operates 3,084 stores in the United States, Canada, the United Kingdom and Greater China. Its brands include Victoria's Secret, PINK, Bath & Body Works, La Senza and Henri Bendel.
It also operates e-commerce sites for most of those brands and has 800 additional franchised locations worldwide.
Closing of Henri Bendel
On Sep 13, the company announced it was closing all 23 of its Henri Bendel stores as of January 2019, including its e-commerce site.
Henri Bendel has a long history. It has operated 123 years and sells luxury handbags and accessories.
The flagship store was in New York City with smaller stores in 11 states.
L Brands, which bought the chain in 1985, announced that revenue for the full year would be approximately $85 million with an operating loss of $45 million.
In 2017, L Brands had revenue of $12.6 billion, so you can see that Henri Bendel was really a small portion of the business.
With the stock slumping, this closure was expected to enhance shareholder value but it doesn't address the other problems at the flagship brands of Victoria's Secret and PINK.
Will shareholders even notice it is gone?
Another Beat in the Second Quarter
On Aug 22, L Brands reported its second quarter results and it beat the Zacks Consensus Estimate again, reporting $0.36 versus the consensus of $0.34.
It has an amazing earnings beat record. It hasn't missed in over 5 years.
Comparable sales rose 3% compared to the year ago period.
Cuts Full Year Guidance Again
Why did the shares fall after the earnings beat?
Because L Brands cut full year guidance to $2.45 to $2.70 from its previous guide of $2.70 to $3.00. It was the second guidance cut of the year.
The CEO of PINK also announced her retirement at the end of the year. PINK had been one of the company's most successful brands.
It's hiring for the job internally and she's staying on for the transition, but Wall Street often doesn't like senior management changes.
Analysts Slash Estimates
The analysts have been cutting most of the year and they continued to do so after the second quarter earnings report.
The fiscal 2018 Zacks Consensus Estimate fell to $2.51 from $2.79 over the last 90 days. That's an earnings decline of 21.6% as the company earnings $3.20 in 2017.
2019 estimates have been cut too, with the Zacks Consensus falling to $2.57 from $2.90 over the prior 3 months, but that's at least positive earnings growth of 2.4%.
Additional content:
3 “Internet of Things” Stocks to Buy Now
Semiconductor stocks have been struggling to generate positive momentum recently, but there are a number of new secular trends which investors are looking to remain exposed to in the long-term. Of these, easily the most exciting for certain niche chipmakers is the Internet of Things.
For those that don’t know, the Internet of Things is the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
For example, consumer-level IoT products include things like Amazon’s (AMZN) Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.
As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. The volatility we are seeing in chipmakers right now comes from Wall Street’s efforts to call an end to an extended cycle of strength for the cycle, but over time, we could see IoT-focused semiconductor firms maintain their growth as the number of connected devices worldwide continues to expand rapidly.
With that said, we’ve found three stocks which have been flagged by the Zacks Rank that could be poised for further IoT growth soon.
1. Vishay Intertechnology, Inc.
Vishay Intertechnology is a global manufacturer and supplier of discrete semiconductors. The company has a broad portfolio of unique passive and active solutions that are tailored to the “things” being controlled in the IoT. Vishay markets its portfolio to manufacturers of everything from biometric monitoring systems to fitbands and smart appliances.
VSH is currently a Zacks Rank #1 (Strong Buy). The stock is solid growth option, with earnings and revenue expected to improve by 40% and 16%, respectively, this year. But VSH is also reasonably priced, and the stock’s P/E of 10.6 and PEG of 1.2 show that investors are getting a great bargain on its current outlook.
The stock has been sluggish in the wake of the aforementioned industry volatility, but investors should keep an eye on the $20 level as a key point of support. The fundamentals look good here, so if that line can hold, there’s definitely potential for a rebound.
2. Cypress Semiconductor Corporation
Cypress Semiconductor is a leading provider of high-performance digital and mixed-signal integrated circuits. The company has also emerged as a leader in the Internet of Things industry after shelling out $550 million for Broadcom’s IoT business in 2016. Cypress’ “WICED” IoT platform is part of one of the largest such portfolios in the industry.
Cypress has been an up-and-down stock throughout 2018, but we are looking for shares to start reacting to the company’s improving earnings outlook soon. The firm has witnessed eight positive revisions to its full-year EPS estimates within the past 60 days, and that type of sentiment is normally met with share price momentum.
Other reasons to like Cypress include its Zacks Rank #1 (Strong Buy) and “A” grade for Growth in our Style Scores system. The company also pays out a healthy 2.8% dividend yield.
3. ON Semiconductor Corporation
ON Semiconductor has traditionally been known as a power management and commodity chip maker, but the company has started to carve out a budding IoT division. ON is now heavily involved with automotive solutions, and its IoT offerings also include products catered to wearables, smart city development, and industrial automation.
ON is currently a Zacks Rank #2 (Buy) and has emerged as an interesting earnings growth pick, with EPS totals expected to improve by 26% this year and over 13% on a long-term, annualized basis. Meanwhile, the stock is trading at just 10.3x forward 12-month earnings and sports a PEG ratio of just 0.8.
Bottom Line
The Internet of Things is one of the most exciting emerging tech markets in the world. And while these specific products are interesting, the real moneymakers in these situations are the companies that are building the tech that powers these products.
The best way for investors to cash in on this growing trend is to identify companies that are not only investing in the Internet of Things, but are also displaying solid fundamentals and impressive Zacks metrics.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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 >>.
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.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.
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DSW, L Brands, Vishay Intertechnology, Cypress Semiconductor and ON Semiconductor highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 20, 2018 – Zacks Equity Research highlights DSW Inc. as the Bull of the Day, L Brands, Inc. as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Vishay Intertechnology, Inc. (VSH - Free Report) , Cypress Semiconductor Corporation and ON Semiconductor Corporation (ON - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
DSW Inc. is finding its footing as it reported a record second quarter. This Zacks Rank #1 (Strong Buy) raised guidance and earnings are expected to jump by the double digits this year.
DSW sells footwear and accessories through several retail concepts including DSW Designer Shoe Warehouse, Shoe Company, Shoe Warehouse and Town Shoes.
It sells in over 1,000 retail stores as well as via e-commerce sites and its mobile app.
Big Beat in the Second Quarter of 2018
On Aug 28, DSW reported second quarter results and easily blew by the Zacks Consensus Estimate. Earnings were $0.63 versus the consensus of $0.47, for a 34% beat.
It was a record quarter for sales and earnings.
Total revenue jumped 16.4% to $795 million.
Comparable sales rose 9.7%, which was one of the best quarters in years and one of the best in the retail industry during the quarter.
It wasn't just shoes that were strong sellers but accessories were also solid.
The company is also building the brand through its VIP loyalty program, which is free to join and provides perks and free shipping.
Raised Full Year Outlook
Given the strong quarter and the momentum it has heading into the holiday season, DSW raised its full year earnings guidance to a range of $1.60 to $1.75 from the prior range of $1.52 to $1.67.
The analysts rushed to raise their estimates to be in line, with the Zacks Consensus Estimate jumping to $1.74 from $1.62 in the last month. That would be earnings growth of 14.5% over fiscal 2017.
They also raised fiscal 2019 estimates, pushing the 2019 Zacks Consensus Estimate up to $1.91 from $1.72. That's earnings growth of 9.7%.
Bear of the Day:
L Brands, Inc. continues to struggle as its brands are off trend. This Zacks Rank #5 (Strong Sell) is near 5-year lows.
L Brands operates 3,084 stores in the United States, Canada, the United Kingdom and Greater China. Its brands include Victoria's Secret, PINK, Bath & Body Works, La Senza and Henri Bendel.
It also operates e-commerce sites for most of those brands and has 800 additional franchised locations worldwide.
Closing of Henri Bendel
On Sep 13, the company announced it was closing all 23 of its Henri Bendel stores as of January 2019, including its e-commerce site.
Henri Bendel has a long history. It has operated 123 years and sells luxury handbags and accessories.
The flagship store was in New York City with smaller stores in 11 states.
L Brands, which bought the chain in 1985, announced that revenue for the full year would be approximately $85 million with an operating loss of $45 million.
In 2017, L Brands had revenue of $12.6 billion, so you can see that Henri Bendel was really a small portion of the business.
With the stock slumping, this closure was expected to enhance shareholder value but it doesn't address the other problems at the flagship brands of Victoria's Secret and PINK.
Will shareholders even notice it is gone?
Another Beat in the Second Quarter
On Aug 22, L Brands reported its second quarter results and it beat the Zacks Consensus Estimate again, reporting $0.36 versus the consensus of $0.34.
It has an amazing earnings beat record. It hasn't missed in over 5 years.
Comparable sales rose 3% compared to the year ago period.
Cuts Full Year Guidance Again
Why did the shares fall after the earnings beat?
Because L Brands cut full year guidance to $2.45 to $2.70 from its previous guide of $2.70 to $3.00. It was the second guidance cut of the year.
The CEO of PINK also announced her retirement at the end of the year. PINK had been one of the company's most successful brands.
It's hiring for the job internally and she's staying on for the transition, but Wall Street often doesn't like senior management changes.
Analysts Slash Estimates
The analysts have been cutting most of the year and they continued to do so after the second quarter earnings report.
The fiscal 2018 Zacks Consensus Estimate fell to $2.51 from $2.79 over the last 90 days. That's an earnings decline of 21.6% as the company earnings $3.20 in 2017.
2019 estimates have been cut too, with the Zacks Consensus falling to $2.57 from $2.90 over the prior 3 months, but that's at least positive earnings growth of 2.4%.
Additional content:
3 “Internet of Things” Stocks to Buy Now
Semiconductor stocks have been struggling to generate positive momentum recently, but there are a number of new secular trends which investors are looking to remain exposed to in the long-term. Of these, easily the most exciting for certain niche chipmakers is the Internet of Things.
For those that don’t know, the Internet of Things is the growing world of interconnected household and industrial devices. Everyday products and machines can now be embedded with sensor technology to process data or interact with other electronic devices.
For example, consumer-level IoT products include things like Amazon’s (AMZN) Echo “smart speaker,” wearable motion and activity tracking products, and advanced in-car technology. On the commercial side of the IoT market, industrial manufacturers have begun implementing sensors into machines to track performance and efficiency.
(Also Read: How to Invest in the "Internet of Things")
As demand for the microchips that power these IoT devices continues to grow, semiconductor manufacturers with a focus on IoT products will continue to benefit. The volatility we are seeing in chipmakers right now comes from Wall Street’s efforts to call an end to an extended cycle of strength for the cycle, but over time, we could see IoT-focused semiconductor firms maintain their growth as the number of connected devices worldwide continues to expand rapidly.
With that said, we’ve found three stocks which have been flagged by the Zacks Rank that could be poised for further IoT growth soon.
1. Vishay Intertechnology, Inc.
Vishay Intertechnology is a global manufacturer and supplier of discrete semiconductors. The company has a broad portfolio of unique passive and active solutions that are tailored to the “things” being controlled in the IoT. Vishay markets its portfolio to manufacturers of everything from biometric monitoring systems to fitbands and smart appliances.
VSH is currently a Zacks Rank #1 (Strong Buy). The stock is solid growth option, with earnings and revenue expected to improve by 40% and 16%, respectively, this year. But VSH is also reasonably priced, and the stock’s P/E of 10.6 and PEG of 1.2 show that investors are getting a great bargain on its current outlook.
The stock has been sluggish in the wake of the aforementioned industry volatility, but investors should keep an eye on the $20 level as a key point of support. The fundamentals look good here, so if that line can hold, there’s definitely potential for a rebound.
2. Cypress Semiconductor Corporation
Cypress Semiconductor is a leading provider of high-performance digital and mixed-signal integrated circuits. The company has also emerged as a leader in the Internet of Things industry after shelling out $550 million for Broadcom’s IoT business in 2016. Cypress’ “WICED” IoT platform is part of one of the largest such portfolios in the industry.
Cypress has been an up-and-down stock throughout 2018, but we are looking for shares to start reacting to the company’s improving earnings outlook soon. The firm has witnessed eight positive revisions to its full-year EPS estimates within the past 60 days, and that type of sentiment is normally met with share price momentum.
Other reasons to like Cypress include its Zacks Rank #1 (Strong Buy) and “A” grade for Growth in our Style Scores system. The company also pays out a healthy 2.8% dividend yield.
3. ON Semiconductor Corporation
ON Semiconductor has traditionally been known as a power management and commodity chip maker, but the company has started to carve out a budding IoT division. ON is now heavily involved with automotive solutions, and its IoT offerings also include products catered to wearables, smart city development, and industrial automation.
ON is currently a Zacks Rank #2 (Buy) and has emerged as an interesting earnings growth pick, with EPS totals expected to improve by 26% this year and over 13% on a long-term, annualized basis. Meanwhile, the stock is trading at just 10.3x forward 12-month earnings and sports a PEG ratio of just 0.8.
Bottom Line
The Internet of Things is one of the most exciting emerging tech markets in the world. And while these specific products are interesting, the real moneymakers in these situations are the companies that are building the tech that powers these products.
The best way for investors to cash in on this growing trend is to identify companies that are not only investing in the Internet of Things, but are also displaying solid fundamentals and impressive Zacks metrics.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
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 >>.
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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.