For Immediate Release
Chicago, IL – February 28, 2019 – Zacks Equity Research Zebra Technologies Corporation (ZBRA - Free Report) as the Bull of the Day, Kraft Heinz Company (KHC - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Five9, Inc. (FIVN - Free Report) , eGain Corp. (EGAN - Free Report) and Digital Turbine, Inc. (APPS - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Shares of Zebra Technologies Corporation have surged 27% this year, and the company’s tracking technology looks poised to grow as part of the broader Internet of Things expansion.
Overview & Recent News
Zebra Technologies sells tablets, barcode scanners, RFID products, location-tracking tech, and many other hardware offerings to a variety of industries, including healthcare, retail, transportation, and manufacturing. The Lincolnshire, Illinois-based firm refers to itself as an enterprise asset intelligence company and aims to help its customers track and manage inventory, streamline supply chains, and much more.
The firm boasts over 10,000 clients around the globe and seems set to expand as more and more firms and industries dive headfirst into IoT and cloud computing, in our increasingly mobile world. Zebra Technologies last week completed its purchase of Temptime Corporation for an undisclosed amount. The privately held firm sells temperature-tracking devices, offering on-demand mobile solutions that help companies monitor pharmaceuticals, medical devices, vaccines, and more.
Zebra Technologies stock closed regular trading Wednesday down slightly to $202.48 a share. Still, as we mentioned at the top, shares of ZBRA have surged roughly 27% in 2019 and currently sit just below their recently reached 52-week high of $207.88 per share.
Outlook & Earnings Trends
Zebra Technologies is coming off a fourth quarter that saw its revenues pop 10.8% to reach $1.14 billion, which topped our estimate. More specifically, the company’s larger “Enterprise Visibility & Mobility” unit jumped over 14%, while its smaller “Asset Intelligence & Tracking” segment climbed roughly 4.5% to reach $367 million.
Looking ahead, the company’s Q1 fiscal 2019 revenues are projected to climb 7.61% to reach $1.05 billion, based on our current Zacks Consensus Estimate. Meanwhile, the company’s top-line is projected to expand by 6% in 2019 to come in at $4.47 billion. This would represent slower growth than Q4 and fiscal 2018’s 13.3% overall revenue jump. But the current projections could change based on its Temptime Corporation acquisition and no matter what they mark solid growth on top of an impressive year for the firm that was founded in 1969.
At the bottom end of the income statement, Zebra Technologies’ growth is expected to come in at a higher clip. ZBRA’s current quarter EPS figure is projected to jump over 12.1% to touch $2.87 a share. Plus, the company’s adjusted Q2 earnings are expected to surge nearly 17%, with its full-year earnings projected to climb 13.35%. We should note that the company’s expected double-digit fiscal 2019 EPS growth would come on top of 2018’s 56% bottom-line expansion.
Furthermore, Zebra Technologies’ earnings estimate revision activity has trended completely in the right direction recently, as the chart below shows. This is important because it has been proven that earnings growth leads to positive stock price movement over the long haul, and clearly at least some analysts are more bullish on the company’s earnings outlook. Zebra Technologies has also surpassed our EPS estimates in the trailing four quarters.
Bear of the Day:
The Kraft Heinz Company saw its stock price plummet last week after it reported dismal fourth quarter financial results. Now, the packaged food giant’s future looks less than bright as it tries to navigate shifting consumer habits and move beyond some self-inflicted wounds.
Kraft Heinz saw its stock price tumbled 27% last Friday after its reported worrisome Q4 results Thursday. The firm reported lower-than-expected earnings and revenue. Worse still, KHC wrote-down $15.4 billion on the value of some of its most famous brands, including Kraft and Oscar Mayer. Plus, the company said that the Securities and Exchange Commission is investigating its accounting practices.
The company also provided weak 2019 guidance and lowered its dividend. Many analysts have said that Brazilian private-equity firm 3G Capital’s—which is a KHC baker along with Warren Buffett’s Berkshire Hathaway —cost-cutting measures have hurt Kraft Heinz. The two food giants completed their merger in July 2015 in order to better compete in the rapidly changing consumer habits.
Since then, Kraft Heinz has seemingly failed to evolve with the more health-conscious shopper. In fact, the firm’s organic U.S. sales fell for six straight periods, beginning in Q1 2017. The company officially posted a $12.6 billion loss in Q4 and is expected to have to raise more cash to help pay down nearly $31 billion in long-term debt.
KHC stock closed regular trading Wednesday down 2.78% at $32.20 a share, which marked a 53% downturn from the company’s 52-week high of $68.59 per share.
Outlook & Earnings Trends
Moving onto 2019, our current Zacks Consensus Estimate calls for the company’s Q1 revenues to climb roughly 0.52% to reach $6.34 billion. Meanwhile, KHC’s full-year revenues are projected to pop just 0.39%. It is important to stress the challenges that Kraft Heinz faces in the packaged-food industry in an age when Amazon was willing buy Whole Foods for $14 billion and the likes of Walmart and others have tried to roll out more organic offerings.
Even Buffett noted that the packaged-food market rests at a potential crossroads. “It’s very hard to offer a significant premium for a packaged-goods company and have it make financial sense,” he told CNBC last August. “Branded packaged goods are a very, very, very good business in terms of return on tangible assets. But they’re not a sensational business in terms of where you could be five or 10 years from now.”
Meanwhile, KHC’s adjusted quarterly earnings are projected to slip 6.7% in Q1 and 2% in the second quarter. Furthermore, the company’s earnings estimate revision activity has turned negative recently and the chart below shows how much its first-quarter consensus EPS estimate has fallen in the last seven days.
3 Tech Stocks for Investors to Buy Right Now
Growth investors are often focused on finding companies whose earnings and revenue are expected to outpace the market. This investment strategy comes with its share of risks. Yet it also brings the exciting possibility of outsized returns.
For years, many of Wall Street’s most exciting growth stocks have emerged from the technology sector. Despite some volatility, strong earnings and impressive sales remain the story for many companies in the technology sector.
With that said, let’s pair the proven Zacks Rank with our Style Scores system.
This system includes a “Growth” category that helps us find tech stocks poised for solid growth. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements, including strong cash flows and solid return on equity.
Now it’s time to check out three tech stocks that came through our screen today that growth investors might want to consider at the moment:
1. Five9, Inc.
Five9 is one of the largest providers of cloud software for contact centers and has worked to shake up on-premise operations. The firm’s cloud-based virtual contact centers offer clients a suite of apps that allow them to manage customer interactions across everything from social media and email to voice. The company reported its Q4 financial results on February 19 and posted record full-year revenue of $257.7 million, which marked a 29% climb from the year-ago period.
Looking ahead, Five9 is projected to see its Q1 revenues jump 20%. More impressively, the firm’s quarterly earnings are expected to skyrocket 62.5%. Five9 has also experienced a ton of positive earnings estimate revision activity over the last seven days for the current quarter, as well as the full year and the following fiscal year. This positivity helps Five9 sport a Zacks Rank #2 (Buy) right now. The company also has an “A” grade for Growth and FIVN stock has been on an impressive run over the last three years, with its stock price up from less than $8 a share to its current $53.52 price point.
2. eGain Corp.
Shares of eGain have soared over 65% to start the year and hover at around $11 a share. The software-as-a-service provider of customer engagement solutions in the U.S., U.K., India, and beyond, saw its total revenues jump 15% in its recently-reported quarter. More specifically, its SaaS revenues surged 53% year over year.
EGain is projected to see its current-year—which ends on June 30—revenue pop over 10%, with fiscal 2020’s top-line expected to come in 14.4% above our 2019 estimate. On top of that, the company’s adjusted quarterly earnings are projected to surge 50%, while its full-year EPS figure is expected to skyrocket 216.7%. And our Zacks Consensus Estimate for the current year has improved by 137.5% over the last 30 days. EGain’s positive earnings trends help it earn a Zacks Rank #1 (Strong Buy) and the company also boasts an “A” grade for Growth.
3. Digital Turbine, Inc.
Right off the bat, investors should note that Digital Turbine trades for under $5 a share, which makes it inherently volatile. But APPS is coming off a third quarter that saw it top earnings and revenue estimates. The firm operates in our Internet – Software industry, which currently ranks in the top 14% of our 256 industries. Digital Turbine’s business tries to connect OEMs, mobile operators, and publishers with advertisers and app developers, and its positive longer-term earnings revision activity helps it earn a Ranks Rank #1 (Strong Buy).
The Austin, Texas-based company also rocks an “A” grade for Growth and is expected to swing from an adjusted loss of $0.01 per share to post earnings of $0.02 a share in the current quarter, for a 300% expansion. Digital Turbine’s revenue is also expected to surge approximately 26% in the next two quarters. Furthermore, the firm’s full-year EPS figure is projected to soar 240%, with 67% growth projected in the following year.
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