For Immediate Release
Chicago, IL – March 7, 2019 – Zacks Equity Research Fortinet (FTNT - Free Report) as the Bull of the Day, Marine Products (MPX - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Walmart (WMT - Free Report) , Nike (NKE - Free Report) and Facebook (FB - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Fortinet is a company that provides network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities around the world. Its solutions are designed to integrate multiple levels of security protection, including firewall, virtual private networking, antivirus, intrusion prevention, Web filtering, antispam and wide area network acceleration. Fortinet is headquartered in Sunnyvale, CA.
Strong Q4 Results
Last month, Fortinet reported better-than-expected results for its fourth quarter.
Non-GAAP earnings of 59 cents surged 84.4% year-over-year, while revenues of $507 million grew 20% from the prior-year period.
Product revenue was $200.8 million, up 23.9% year-over-year, and service revenue jumped 20.3% year-over-year to $306.2 million.
Total billings increased 22% to almost $649.2 million.
In the earnings release, CEO Keith Jensen said that “[Fortinet is] well-positioned to achieve another year of better than industry growth in 2019, driven by business momentum and strong customer demand for our broad, integrated, and automated security solutions across their entire network infrastructure.”
Jensen also commented on how certain global developments thankfully bypassed the company in Q4. In the earnings call, he said "As our strong revenue growth illustrates, the partial U.S. federal government shutdown as well as concerns raised by Brexit and a slowing Chinese economy had no noticeable impact on our fourth-quarter performance."
FTNT on the Rise
Year-to-date, shares of Fortinet are up almost 18%. And in the past year, the stock has gained around 63%.
Estimates have been rising lately too, pushing the stocks towards a Zacks Rank #1 (Strong Buy).
For the current fiscal year, the cybersecurity firm’s earnings are expected to grow over 11% year-over-year. Three analysts have revised their estimates upwards in the past 60 days, and the Zacks Consensus Estimate has moved 10 cents higher from $1.15 to $1.25 during the same time frame.
2020 looks pretty strong as well, and earnings are expected to grow around 16.7%; next year’s consensus estimate sits at $1.46 per share, with one upward revision in the last 60 days.
Even though Fortinet’s revenue growth is projected to slow this year compared to last, its guidance still calls for a nice double-digit increase to more than $2 billion. For Q1, revenue is expected to fall between $465 million and $475 million, up 17.8% at the midpoint.
Billings should hit between $515 million and $535 million for the quarter, while non-GAAP earnings are expected between $0.37 and $0.39 per share.
The cybersecurity market could see annual growth of over 10% through 2023, and Fortinet is certainly gearing up for the growth opportunities that lie ahead. If you’re an investor looking for a cybersecurity stock to add to your portfolio, make sure to keep FTNT on your shortlist.
Bear of the Day:
Marine Products is the third-largest distributor of sterndrive powerboats in the U.S. The company designs, manufactures and distributes premium-branded Chaparral sterndrive pleasure boats and Robalo outboard offshore fishing boats, and continues to diversify its product line through product innovation and strategic acquisition. MPX is based in Atlanta, GA.
Q4 Results Disappoint
Back in January, Marine Products reported weaker-than-expected results in its fiscal 2018 fourth quarter.
Earnings of 14 cents missed the Zacks Consensus Estimate and also fell year-over-year. Revenues of $62.1 million lagged behind our consensus as well, and declined 5.4% from the prior-year period.
International sales fell by more than 50% year-over-year to 3.2% of total sales, mostly due to the impact of tariffs enacted last year.
Gross profit for Q4 was about $13 million, and gross margin as a percentage of sales came in at 21% compared to 21.9% in Q4 2017.
However, President and CEO Richard A. Hubbell did note that even though U.S. sales dropped slightly in Q4 compared to the prior year, the U.S. recreational boat market was strong all throughout 2018, which helped benefit Marine Products throughout the year.
Analysts have since turned bearish on Marine Products, with two cutting estimates in the last 60 days for the current fiscal year. Earnings are expected to decline 9%, and the Zacks Consensus Estimate has dropped 14 cents during that same time period from $0.89 to $0.75 per share.
This sentiment has stretched into 2020, and our consensus estimate has dropped 15 cents in the past two months.
MPX is now a Zacks Rank #5 (Strong Sell).
Shares of the boat maker are falling too, down about 17% since January. In comparison, the S&P 500 is up 10.5% year-to-date.
3 Blue-Chip Stocks to Buy Right Now
The S&P 500 has surged over 11% to start the year, driven by growth from the likes of Netflix and other giants. Still, no matter how long the comeback lasts, it is always a good idea to search for strong companies that are poised to run impressive businesses for years to come. With that said, we have highlighted three blue-chip powers that look like buys at the moment.
Walmart is coming off a stronger-than-projected Q4 of fiscal 2019. The retailer posted 40% full-year e-commerce growth and 3.6% full-year U.S. comps expansion, which highlighted its online grocery pickup business, digital initiatives, and other newer offerings. Looking ahead, Walmart projects that its e-commerce sales will climb around 35% as it adds 1,000 new grocery pickup locations in fiscal 2020 to end the year with 3,100. The company also expects to double its grocery delivery locations to 1,600.
Walmart, like competitors Costco and Target, has pushed into the future of retail to better compete against Amazon. The company’s earnings are projected to slip this year, weighed down by its Flipkart investment, which could prove vital down the line as India’s economy grows. Meanwhile, our current Zacks Consensus Estimate calls for Walmart’s top-line to climb 2.7% this year, with fiscal 2021 revenues projected to come in 3.2% above our current-year estimate.
Walmart is a Zacks Rank #2 (Buy) at the moment that sports a “B” grade for Growth in our Style Scores system. WMT stock is trading at 20.6X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to its three-year high of 23.8X. And Walmart is a dividend payer that has raised its quarterly cash payout every year since first declaring one in March 1974.
Nike’s North American revenues surged 9% last quarter to help its fiscal second quarter 2019 revenues jump 10% to $9.37 billion. The sportswear behemoth has returned to growth in its key home market—unlike Under Armour—with the help of its successful direct-to-consumer push. The Oregon-headquartered company has rolled out multiple e-commerce apps and its sportswear and athleisure offerings have helped it remain an industry standout against the likes of Adidas and Lululemon.
Last quarter, NKE’s digital revenues surged 41%, with mobile accounting for over 50% of its digital commerce revenue. CFO Andy Campion expects its digital division will comprise 30% of Nike’s total business by 2023, compared to roughly 15% last quarter. Nike’s fiscal 2019 revenue is projected to pop 7.5%, with 8% growth expected in fiscal 2020. Meanwhile, the company’s EPS figure is expected to jump 8.6% this year. Better yet, Nike’s adjusted 2020 earnings are projected to climb 18% above our current-year estimate.
Nike looks poised to expands its digital and DTC business, remain strong in North America, and continue to expand in China. Nike is currently a Zacks Rank #2 (Buy) and has seen its stock price climb 15% this year to hit new highs. Nike is also a dividend payer that boasts a beta of 0.7, which means it is less volatile than the market average.
Facebook’s 2018 setbacks are well known. Yet, in spite of all its user data worries, the social media firm’s global monthly active user total climbed 9% in Q4 to reach 2.32 billion. FB stock has also regained momentum recently, with shares up over 31% in 2019. Looking ahead, Mark Zuckerberg’s company expects Instagram to become more popular, as its Stories feature helps make Snapchat less relevant.
Facebook has also invested in its Marketplace platform, augmented reality, and its dedicated video offering known as Facebook Watch. Facebook’s revenue growth is projected to slow down as the law of large numbers catches up the firm. Still, FB’s Q1 revenues are projected to jump 25% to reach $14.96 billion, with fiscal 2019’s top-line expected to expand by 23.3% to hit $68.89 billion. At the bottom end of the income statement, Facebook’s earnings estimate revision activity has trended significantly upward recently to help it earn a Zacks Rank #2 (Buy).
In the end, Facebook, like Google, will remain highly attractive to marketers as non-ad supported platforms such as Netflix and Amazon Prime make consumers more difficult to reach. FB stock is trading at just 22X forward Zacks earnings estimates, which marks a discount compared to its industry’s 25.8X average and its own three-year high of 44.3X. On top of its impressive valuation picture, Facebook stock sits 22% below its 52-week high, to give FB shares plenty of room to run.
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