For Immediate Release
Chicago, IL – November 28, 2018 – Zacks Equity Research highlights TripAdvisor, Inc. (TRIP - Free Report) as the Bull of the Day, Beazer Homes USA, Inc. (BZH - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Turtle Beach (HEAR - Free Report) , Take-Two Interaction (TTWO - Free Report) and Activision Blizzard (ATVI - Free Report) .
Here is a synopsis of all the five stocks:
Bull of the Day:
TripAdvisor, Inc. has revamped its travel site for the first time in years to get in on the social media craze. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in 2018.
TripAdvisor is one of the world's largest travel sites with 702 million reviews. Its sites are available in 49 markets and sees over 490 million average monthly unique visitors.
It also operates 20 other travel media brands including airfarewatchdog.com, flipkey.com, thefork.com, cruisecritic.com, gateguru.com, housetrip.com, jetsetter.com, oyster.com and viator.com, among others.
Big Earnings Beat in Q3
On Nov 7, TripAdvisor reported its third quarter results and blew by the Zacks Consensus Estimate by $0.25. Earnings were $0.72 versus the consensus of $0.47.
Revenue rose 4% to $458 million although Hotel, its largest segment, fell 2% year-over-year to $305 million, while non-Hotel, which includes Experiences and Restaurants, rose 20% 50 $153 million.
It's Experiences and Restaurants segments saw accelerating growth out of the second quarter.
Revenue per hotel shopper also gained, rising 5%.
New Immersive Site Experience
TripAdvisor is finally recognizing just how valuable and loyal its audience is. In Nov 2018, it announced a new social feature which allows users to post their own experiences in an interactive social media feed.
This type of feed allows for links back to sites and articles created by users. It should encourage content generation on the site by those in the travel industry, including Instagram influencers and travel bloggers.
As of the third quarter, users had uploaded 153 million photos with over 700 million reviews. Why not upload other content like travel articles?
Other than the Forums section, there's little else interactive on the TripAdvisor site that might keep people coming back for more. This new social feature could do the trick.
Analysts also believe it could be a money generator a few years from now with sponsored posts fit into the feed.
It's too soon to know its full impact, however.
Estimates Revised Higher
The analysts like the changes they are seeing in the site and with the growth.
13 estimates have been revised higher for both 2018 and 2019 in the last 30 days. None have been lowered.
The 2018 Zacks Consensus Estimate has jumped to $1.73 from $1.44 in that time. That's earnings growth of 69.6% compared to 2017.
For 2019, the Zacks Consensus Estimate has also soared, up to $1.82 from $1.58, however, that's just another 5% growth.
Shares Soar in 2018
After a tough 2017, the shares have finally turned around and are up 76% year-to-date.
They aren't cheap. TripAdvisor trades with a forward P/E of 33.8. That's pretty pricey.
Bear of the Day:
Beazer Homes USA is facing rising mortgage rates and high home prices in 2019. This Zacks Rank #5 (Strong Sell) has seen its stock plunge in 2018 and is now trading for just 5x forward earnings.
Is the worst over?
Beazer Homes is one of the largest single family homebuilders in the United States. It offers homes in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas and Virginia.
With a market cap of $352 million, Beazer is headquartered in Atlanta.
Another Beat in the Fiscal Fourth Quarter
On Nov 13, Beazer reported its fiscal fourth quarter results and beat the Zacks Consensus by $0.21. Earnings were $1.15 versus the consensus of $0.94.
It was the 7th consecutive earnings beat in a row.
Revenue was up 14.4% to $761.5 million as the average selling price rose 6.6% year-over-year to $372,600.
It delivered 2,044 homes, up 7.4%.
Gross margin fell 40 basis points, however, to 21.6%. And unit orders were down 0.8% to 1,305 but that was impacted by Hurricane Florence.
It's marketing itself as a first-time and active adult home builder, which it hopes should help it weather the higher mortgage rates. This is about 80% of its total sales.
First-time homes are in strong demand. Additionally, many older adults buying in an active adult community pay with cash so the impact of rate increases may be muted.
Debt Reduction and Share Repurchases
With the solid cash flow over the last year, the company retired the remaining $96.4 million of outstanding 5.75% unsecured Senior Notes due 2019. This was part of its 3-year $250 million debt reduction plan.
It has no debt maturities until 2022.
It's putting more money to work in fiscal 2019, however. It intends another $50 million in debt repurchase and $50 million in share repurchases.
With flat order growth expected in fiscal first quarter and worries remaining over next year, it's not surprising that the analysts have adjusted their estimates in the past month.
2 estimates were cut for fiscal 2019 and one was cut for fiscal 2020 over the last 30 days. Zacks only has 2 estimates for fiscal 2019 so the analysts are in agreement.
Beazer made $1.99 in fiscal 2018. It's expected to make $1.95 in fiscal 2019 which is an earnings decline of 2%.
Analysts are a little more bullish about a recovery in fiscal 2020, though, as the Zacks Consensus is at $2.37, up 21% from 2019.
Here’s Why Turtle Beach (HEAR - Free Report) Soared on Tuesday
Shares of Turtle Beach were up more than 10.5% in afternoon trading hours Tuesday, as investors once again appear excited about the gaming headset maker amid the busy holiday shopping period.
Turtle Beach’s latest bout of momentum comes on the same day that one of the year’s hottest games, Red Dead Redemption 2, is beginning to roll out its online mode. This multiplayer launch is being labeled as a beta because there are more features and modes to be released, including a battle royale option, according to leaks published today.
Red Dead Redemption 2, which is published by Take-Two Interaction subsidiary Rockstar Games, would join a growing list of online shooters to feature the battle royale mode popularized by Epic Games’ free-to-play phenomenon Fortnite: Battle Royale. Activision Blizzard recently included a battle royale mode in the latest update to the Call of Duty franchise.
Turtle Beach captivated investors earlier this year when it began reporting staggering growth thanks, in large part, to Fortnite. The company’s headsets give gamers a competitive advantage, enabling them to hear nearby foes moving around within the game. Players who take their Fortnite seriously love to use headsets, and there are not a ton of high-end options except for Turtle Beach.
Earlier this year, HEAR skyrocketed from just $2.00 to over $32.00 when investors started to fall in love with the Fortnite-powered growth story. The stock has since pulled back more than 50% from those highs, but growth estimates are still staggering. Analysts expect Turtle Beach to finish its fiscal year with EPS growth of 1,200% on 81% higher sales, according to our Zacks Consensus Estimates.
Investors are hopeful that online gamers will also look Turtle Beach’s way as they dive into the battle royale modes of Red Dead Redemption 2 and Call of Duty.
But even if Fortnite remains the primary growth driver for Turtle Beach, investors today heard positive news on that front, as Epic Games confirmed that the game has reached 200 million registered players around the world.
Impressive activity from some of the world’s largest games is another hint that Turtle Beach’s headsets are still selling like hotcakes. Wall Street has also rewarded a number of gadget makers and retailers on the back of what was likely a historic stretch for the Thanksgiving shopping holidays.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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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.
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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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