For Immediate Release
Chicago, IL – October 12, 2018 – Zacks Equity Research ANGI Homeservices Inc. (ANGI - Free Report) as the Bull of the Day, J.C. Penney Company, Inc. (JCP - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Semtech Corporation (SMTC - Free Report) , Mellanox Technologies (MLNX - Free Report) and Vishay Intertechnology (VSH - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
ANGI Homeservices Inc. is the biggest brand in online home services. This Zacks Rank #1 (Strong Buy) is expected to see big growth over the next two years.
ANGI Homeservices connects homeowners to home service professionals through its digital brands including HomeAdvisor and Angie's List. It operates in 8 countries.
Smooth CEO Transition
On Oct 9, ANGI announced its current CEO, Chris Terrill, was stepping down one year after the merger of Angie's List with HomeAdvisor. He had been CEO for 7 1/2 years.
The company already announced his successor, the current chief product officer, Brandon Ridenour.
The CEO change will not occur until the end of the year.
Ridenour has worked with Terrill for 10 years so this transition will be a smooth one. Analysts applauded the move, noting that the chief products officer has intimate knowledge of the business' workings.
ANGI has been actively acquiring smaller competitors.
On Oct 11, it announced it agreed to acquire New York-based Handy Technologies, an on-demand platform and gig marketplace which connects those looking for household services with pre-screened, independent professionals at a fixed price.
These are smaller types of jobs like hanging pictures on the wall, assembling furniture and the like. They aren't the bigger home renovations that ANGI has been focusing on. This is a whole new market it hasn't yet entered.
Terms of the deal were not disclosed.
Handy's brand resonates with educated, high-income millennials which is a growing market.
The deal is expected to close at the end of October.
Revenue Up Double Digits in Q2
On August 8, ANGI reported its second quarter results and beat the Zacks Consensus by 4 cents reporting earnings of $0.05 versus the consensus of $0.01.
Revenue jumped 17%, if you include Angie's List, to $296.6 million from $253.3 million. It was driven by 31% growth in Marketplace and 14% growth in Europe.
Bear of the Day:
J.C. Penney Company, Inc. has finally found a new CEO. But is it too late for the Zacks Rank #5 (Strong Sell)?
JCPenney is an apparel and home retailer with over 860 stores in the United States and Puerto Rico.
It also sells online at jcp.com.
JCPenney Gets a New CEO
After having an empty CEO position for several months, JCPenney finally announced a new leader in Jill Soltau who was CEO of JOANN Stores, the fabric retailer.
She starts Oct 15.
JCPenney's troubles really began, not with Amazon and online shopping, but with former Apple executive Ron Johnson's hire as CEO in 2011. He abruptly changed the style of retailing the company did, moving away from sales and bargains as well as eliminating coupons.
Sales plunged as loyal customers didn't understand the branding. They never really came back even though the old pricing and sales model was brought back.
The damage was done.
Soltau is the fourth CEO since the 2011 fiasco. In addition to JOANN Stores, she has also worked at Sears and Kohl's. Initially, there was some criticism that she didn't have apparel experience, which was wrong.
But even if she didn't, JOANN Stores customer is very similar to JCPenney. She knows that customer. It's the middle-aged woman. JOANN Stores and JCPenney's are often located near each other in the same shopping malls.
Is It Too Late?
JCPenney had seemed to turn it around.
By 2017, it was again seeing positive earnings as it made $0.22.
But a big miss last quarter sent the estimates spiraling lower for this fiscal year. 7 estimates were cut pushing the Zacks Consensus Estimate down to a loss of $0.71. That's an earnings decline of 422%.
Analysts are pessimistic about fiscal 2020 too but their cuts for that year were made before the CEO announcement. Still, the Zacks Consensus Estimate is calling for a loss of $0.21.
It has left many wondering if its too late to turn around the company.
Loyalty Credit Card Program to Continue
In better news, on Oct 10, JCPenney and Synchrony announced a multi-year extension of their private label credit card program and the JCPenney Mastercard Dual Card. They have leveraged the data analytics from the program for over 20 years.
Synchrony has helped JCPenney integrate credit payments into the JCPenney mobile app.
Synchrony also manages the payments for the cards for JCPenney customers.
The credit cards are an essential part of the loyalty program. Cardholders are automatically enrolled in JCPenney Rewards where they earn points faster and receive $10 rewards for future purchases. The JCPenney Mastercard holders can also earn points anywhere they use the card.
Loyalty programs are important. Retailers that have programs report that customers spend more and shop more frequently than non-reward customers. Loyalty programs keep customers, well, loyal.
JCPenney needs this now more than ever so it's a positive that this agreement was extended.
Shares Sink to Multi-Decade Lows
Shares have been weak for several years but they've taken another dive in 2018, falling 48% year-to-date.
However, since the CEO announcement, shares have rebounded off the worst of the lows.
It will take time for the new CEO to make changes. Miracles won't happen overnight. The good news is that the US economy is hot and the consumer is spending. She is taking the helm with the best possible retail conditions.
This holiday season will likely be one of the best for American retailers since the financial crisis.
The plan for the holidays was laid out by the old regime however, as holiday buying and advertising decisions are done many months in advance.
Buy Semis on the Dip? 3 Stocks to Consider
Semiconductor stocks have been battered by recent market-wide volatility and concerns that the industry’s strong cycle is nearing its end. The business is historically cyclical, so these concerns make some sense, but buying opportunities are still present as valuations become more attractive and secular growth trends remain.
We certainly hear a lot about how consumer-facing companies like Tesla, Apple and Microsoft plan to revolutionize their industries by harnessing the Internet of Things and artificial intelligence, but we should also remember that semiconductor manufacturers also have the opportunity to grow as they provide the chips which power these technologies.
The aforementioned emerging tech trends have created new consumer demand, and the semiconductor makers are delivering.
Luckily, the proven Zacks stock picking methods are effective across all industries. Check out these Zacks buy-ranked semiconductor stocks right now:
1. Semtech Corporation
Semtech is a supplier of analog and mixed-signal semiconductors for high-end consumer, enterprise, industrial, and communications computing. Thinking about the aforementioned growth trends, Semtech has exposure to the right businesses in order to capitalize. This explains why the stock is one of the highest-flying chipmakers of 2018, adding nearly 42% on the year.
SMTC is currently sporting a Zacks Rank #1 (Strong Buy) and a “B” grade in the Growth category of our Style Scores system. The firm recently topped earnings estimates for the 11th consecutive quarter and is now projected to see full-year EPS growth of 19%.
Semtech also sports a long-term projected earnings growth rate of 5%. The stock is trading with a P/E of 22.2 right now, and although that is a bit stretched, investors might be willing to pay more for its growth and momentum characteristics.
2. Mellanox Technologies
Mellanox Technologies is a leading supplier of semiconductor-based computer networking products to world-class server, storage, and infrastructure OEMs. The company's VPI enables standard communication protocols to operate over any converged network with the same software solution. MLNX has a Zacks Rank #1 (Strong Buy) right now.
MLNX is a pick for exposure to new tech trends, especially in the server space, without buying just a chipmaker. This could shield from cyclical volatility. The stock is also an explosive growth pick, with earnings and revenue expected to improve by 104% and 25%, respectively, this year. Plus, considering the company’s P/E of 15.1 and PEG of 0.8, the valuation looks pretty attractive here.
3. Vishay Intertechnology
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.
On top of its solid Zacks Rank, Vishay is holding an “A” grade in the Value category of our Style Scores system. The stock is trading at just 9x earnings and sports a PEG of 1.0 as well as a P/S of 0.9. Plus, it is generating strong earnings estimate revision momentum, as Vishay has watched its full-year EPS estimates improve by 12% within the past 90 days.
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