For Immediate Release
Chicago, IL – February 7, 2018 – Zacks Equity Research Salesforce (CRM - Free Report) as the Bull of the Day, Nvidia (NVDA - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Chipotle Mexican Grill (CMG - Free Report) , FireEye (FEYE - Free Report) and Fortinet (FTNT - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Salesforce rose to prominence in the tech world for its ability to empower businesses, big and small, to operate in an ever more digital world. The software as a service company currently boasts over 150,000 clients and has expanded into new growth areas such as artificial intelligence.
Salesforce seems like an attractive buy at the moment for many reasons that we will dive into. The key takeaway, however, is that Salesforce enables its customers to run modern, cloud-focused businesses that would otherwise require a ton of in-house talent, infrastructure, maintenance, and more. This means that Salesforce’s clients are likely to continue to spend money on subscription-focused customer relationship management services in order to remain competitive in today’s business environment.
So as long as the San Francisco-based firm can please its current customers, attract new ones, and innovate, Salesforce should be able to grow for years to come.
Marc Benioff’s company is already one of the largest players in the quickly-expanding customer relationship management industry. Salesforce offers its business clients a wide range of sophisticated web-based platforms to help run sales, marketing, e-commerce, analytics, and much more.
Q4 Outlook & Earnings Trends
Looking ahead, our current Zacks Consensus Estimate calls for Salesforce’s Q4 fiscal 2019 revenues to climb 24.9% to reach $3.56 billion. This would fall roughly in line with last quarter’s 26% top-line surge—which beat estimates—and top the year-ago period’s 24% expansion. Plus, CRM’s full-year revenues are projected to climb over 26% from $10.48 billion to reach $13.24 billion and top fiscal 2018’s 25% climb.
At the bottom end of the income statement, Salesforce’s adjusted Q4 earnings are projected to soar 60% to reach $0.56 per share. Last quarter, the company posted adjusted earnings of $0.61 a share, which crushed our $0.50 EPS estimate that would have marked a 28% jump.
Meanwhile, Salesforce’s adjusted full-year earnings are expected to skyrocket by over 93%. Investors should also note that CRM’s fiscal 2019 earnings estimate has come up by 4% over the last 90 days. The company’s fiscal 2020 EPS picture has also turned more positive, which is often a good sign since at least some analysts are higher on Salesforce’s bottom-line.
Bear of the Day:
Nvidia stock skyrocketed from the summer of 2015 until it dropped quickly in the fall of 2018 as investors grew more concerned about the company and the larger semiconductor industry. Now, the chip firm looks to be headed in the wrong direction for its upcoming fourth-quarter and the following fiscal year.
News spread quickly Wednesday that SoftBank’s roughly $100 billion Vision Fund sold all of its NVDA shares. The Japanese firm locked in returns of $3.3 billion on its nearly 5% stake in Nvidia. The announcement highlighted Nvidia’s precarious position as the broader chip market suffers from US-China trade war worries.
The company has been a leader in gaming-focused graphics chips. Nvidia has in recent years expanded into data centers, cloud computing, artificial intelligence, and machine learning. Nvidia also last year launched new GPUs based on its much-anticipated Turing architecture.
Nvidia said that Turing had received the fastest adoption of any server GPU in history. But none of this has seemed to matter for Nvidia lately because, like other chipmakers, it has taken a hit from the downturn in cryptocurrency-related demand. Plus, the chip industry is historically cyclical.
More importantly, Nvidia on January 28 added to the list of Wall Street standouts that dramatically lowed their holiday quarter guidance. The company dropped its Q4 revenue projection by roughly 19% from $2.70 billion to $2.20 billion and said it expects its gaming and datacenter revenues to come in below its previous expectations.
Stock Price Movement
Shares of the graphics chip designer have lost nearly half their value since their October 2018 peak. This massive downturn to close the year hasn’t been followed by a post-Christmas rally. NVDA stock has now plummeted 33% over the last year and hovered at around $153 share Wednesday.
Nvidia’s 12-month performance is actually slightly better than its peer group’s average decline. We can also see that NVDA stock has destroyed its industry over the last 25 years, which makes it plausible that this downturn ends up looking more like a small drop in the long-run.
Outlook & Earnings Trends
Moving on, our current Zacks Consensus Estimate calls for NVDA’s fourth-quarter fiscal 2019 revenues to fall 18.6% from the year-ago period to hit $2.36 billion. This would mark Nvidia’s first revenue decline in more than five years and stand in stark contrast to Q3’s 21% top-line expansion, Q2’s 40% climb, and Q1 66% jump.
Meanwhile, Nvidia is expected to see its adjusted quarterly earnings plummet over 56% to touch $0.75 a share. Peaking a bit further ahead, Nvidia’s fiscal 2020 EPS figure is projected to come in 20% below our 2019 estimate. The big downturn comes on the back of Nvidia’s subdued guidance, which sparked a ton of downward earnings estimates revisions from analysts.
Chipotle (CMG - Free Report) Sizzles in Q4, Plus FEYE & FTNT
New Q4 earnings results have hit the tape this afternoon after the closing trading bell, with Chipotle Mexican Grill, FireEye and Fortinet among them. Overall results seem very much what we’ve come to expect this earnings season, including bottom-line beats but sometimes lower guidance bringing out stock sellers in the late market.
Chipotleperformed very strongly on its bottom line, with $1.72 per share well beyond the expected $1.38, with $1.23 billion solidly above the $1.20 billion in the Zacks consensus. Although earnings beats are nothing new for the company — each of the past 4 quarters were beats, at an average of +12.8% — but this quarter was even more impressive.
Comps were particularly impressive at 6.1% year over year; expectations had been for roughly 4.5% growth. Digital orders rose 65.6% in the quarter, and now account for 12.9% of overall sales. Transaction growth in the quarter ratcheted up 2%. As a result, shares are trading up 10% in today’s after-market. For more on CMG’s earnings, click here.
FireEye’s Q4 was not quite so successful, however: though 6 cents per share beat estimates by a penny on $218 million in sales which topped the $216.5 million we had expected, Q1 revenue and earnings guidance was disappointing. After gains of roughly 20% year to date, late trading Wednesday is selling this news, down 7.5% from the closing bell. For more on FEYE’s earnings, click here.
Fellow growth cybersecurity firm Fortinet had a much better time of it for its Q4 results, bringing 59 cents per share on $507 million in sales in comparison to the 51 cents and $495.5 million expected. Earnings represent 22% growth year over year, with Revenues +20%. Fortinet has beaten earnings estimates every quarter going back to Q2 2015. Shares are up 2.4% in late trading.
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