For Immediate Release
Chicago, IL – June 25, 2019 – Zacks Equity Research Columbia Sportswear Company (COLM - Free Report) as the Bull of the Day, SINA Corporation (SINA - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Trade Desk (TTD - Free Report) , Roku (ROKU - Free Report) and Square (SQ - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Columbia Sportswear Companycontinues to post record quarters as athleisure remains hot. This Zacks Rank #1 (Strong Buy) beat again in Q1 and raised full year guidance.
Columbia Sportswear is a specialty retailer in apparel, footwear, accessories and equipment. Its brands are sold in 90 countries through its own stores and web sites.
It isn't just the Columbia brand, however, as its three other main brands also includes Mountain Hardwear, SOREL and prAna.
Another Big Beat in the First Quarter
On Apr 25, Columbia reported its first quarter results and again posted a big earnings beat. Earnings were $1.07 versus the Zacks Consensus Estimate of $0.84. That's a 27.4% beat.
Sales were up another 8% to a record $654.6 million.
Gross margin expanded 210 basis points, also to a record of 51.4%, compared to just 49.3% in the first quarter of 2018.
The momentum of the prior year extended in the first quarter as it finished strong in its Fall 2018 sales season and had a good early season sell-through of its Spring 2019 assortment.
SOREL continued to be a hot brand, rising 28% worldwide.
The large namesake brand, Columbia, also saw double-digit growth in the US across both direct-to-consumer and wholesale distribution channels.
Raised Full Year Guidance
The strong first quarter coupled by strong advance orders of its Fall 2019 product line, gave the company enough confidence to raise its full year guidance.
Full year sales are now expected to be between the range of $2.98 to $3.04 billion up from prior guidance of $2.97 to $3.03 billion. That's sales growth of 6.5% to 8.5%, up from the prior guidance of 6% to 8%.
Additionally, earnings per share are now expected in the range of $4.40 to $4.55, up from the prior forecast of $4.30 to $4.45.
It's no surprise, then, that the analysts raised estimates to come in line with the company's new guidance.
Over the last 60 days, 5 estimates have been raised for 2019 which has pushed the Zacks Consensus Estimate up to $4.55 from $4.38. That's at the very top of the company's range and would be earnings growth of 13.5% as the company made $4.01 last year.
It would also be a new company record as 2018 was already a record year.
Analysts are bullish on 2020 as well as 5 estimates were raised for next year in the last 2 months. The 2020 Zacks Consensus Estimate rose to $5.04 from $4.96 in that time. That's another 10.9% earnings growth.
Best Balance Sheet in Retail
Who says all retailers are debt-ridden and struggling?
Columbia has over $700 million in cash and short-term investments with no long-term debt.
It pays a dividend, currently yielding about 1%.
Bear of the Day:
SINA Corporationis facing a slowing Chinese economy. This Zacks Rank #5 (Strong Sell) is expected to grow revenue in the single digits in 2019.
SINA is a Chinese online media company. It operates a digital media network under SINA.com, SINA mobile including the app and Weibo, which is a Chinese online social media site akin to Twitter.
Second Miss in a Row in Q1
On May 23, SINA reported its first quarter results and missed on the Zacks Consensus Estimate for the second quarter in a row.
Earnings were $0.40 versus the consensus of $0.44.
Revenue rose 8% to $472.5 million from $438.1 million a year ago.
Advertising revenue rose just 6% to $388 million, driven by 13% growth in Weibo advertising and marketing revenue but which was partially offset by a decrease in portal advertising revenue.
Gross margin remained elevated at 76%, compared with 75% in the year ago quarter.
SINA still has a lot of cash on hand, with cash, cash equivalents and short-term investments totaling $2.1 billion as of the end of March 31, 2019. But that was down from $2.3 billion at the end of Dec 2018.
The decline was the result of continued investment activities.
Analysts Cut Estimates
Analysts didn't like what they saw in the report with revenue now rising only in the single-digits.
3 estimates were cut for 2019 since the results which pushed the Zacks Consensus Estimate down to $2.91 from $3.66 just 90 days ago.
That's an earnings decline of 5.2% in 2019 as the company made $3.07 in 2018.
Analysts are also bearish on 2020 as 2 estimates were cut for next year after the results.
3 Tech Stocks for Growth Investors to Buy
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 high-performing 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.
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. The Trade Desk
The Trade Desk is a programmatic advertising firm that looks set to grow as algorithmic, real-time bidding proliferates. TTD’s cloud-based platform helps create, manage, and optimize data-driven digital ad campaigns across multiple channels, apps, and websites on a range of devices such as connected TVs and mobile. The Ventura, California-headquarter company allows customers to pay a market-driven price and reach their target audience on the ideal devices. The firm’s offerings have been bolstered by its AI tech, and TTD recently launched its ad buying platform in China. Shares of TTD have skyrocketed over 100% in 2019 and 160% in the past 12 months. TTD stock opened at $242 per share Monday, down 6% off its 52-week highs.
Looking ahead, our current Zacks Consensus Estimate calls for the company’s adjusted Q2 earnings to pop 13.3% on 38% revenue growth. TTD’s full-year revenue is projected to surge 36% to reach $649.96 million, with fiscal 2020’s revenue expected to climb 28.5% higher than our current-year estimate. Plus, the firm has earned a ton of longer-term upward earnings estimate revisions and has crushed quarterly estimates by an average of 50% over the trailing four quarters.
On top of that, The Trade Desk said last quarter that its newer connected TV and audio channels “grew multiples faster” than its more mature units, which is a good sign as smart TVs and digital audio continue to expand. TTD also boasted that its customer retention rate remained over 95% during Q1, “as it has for the previous 21 quarters.” The Trade Desk is currently a Zacks Rank #1 (Strong Buy).
Roku is a pure-play video streaming firm that looks set to grow as part of the broader expansion of industry giants such as Netflix, Amazon Prime and soon enough Disney and others. The Los Gatos, California-based firm’s streaming devices currently boast a larger market share than rivals like Apple TV, Amazon Fire TV, and Google’s Chromecast, according to eMarketer. Roku also estimated that more than one-in-three smart TVs sold in the U.S. during the first quarter of 2019 were Roku TVs. Furthermore, the Roku Channel, which allows users to watch free streaming movies and TV shows, could become more popular and highly attractive to advertisers.
Roku stock opened at $102.99 on Monday, not too far off the firm’s 52-week intraday trading high of $108.32 per share. Overall, Roku stock has skyrocketed 230% in 2019. Roku’s Q2 2019 revenue is projected to jump 43.3% to $224.8 million, with full-year revenue expected to climb 39.7% from $742.5 million in 2018 to $1.04 billion.
At the bottom end of the income statement, Roku is projected to post an adjusted full-year loss of -$0.60 per share, which would represent a massive downturn from 2018. But investors should note that Roku posted a much lower-than-projected loss in Q1 and has topped estimates by an average of 86% over the trailing four periods. Peeking further ahead, Roku’s adjusted earnings are projected to climb by 19% over the next three to five years on an annualized basis. Roku is currently a Zacks Rank #1 (Strong Buy) that has seen its fiscal 2019 and 2020 earnings estimate revisions trend upward recently.
Shares of Square are up 30% this year despite a somewhat prolonged downturn. With that said, SQ stock has climbed over 13% in the past month and opened at $72.98 per share on Monday, down roughly 27% from its 52-week highs. Square, which is run by Twitter CEO Jack Dorsey, has transformed from a credit card processor for the mobile age into a more complete financial services firm.
Today, SQ’s portfolio includes business loans, peer-to-peer payment platforms, debit cards, and much more. It is also important to note that SQ has become more attractive to larger businesses and its P2P payment offering, the Cash App, stands out against rivals PayPal in a world where digital payments continue to grow.
Look ahead, Square’s adjusted full-year EPS figure is expected to soar 61.7% to reach $0.76 per share on 36% revenue expansion—that would see its reach $4.48 billion. Meanwhile, Square’s fiscal 2020 revenue is expected jump 28.5% above our 2019 estimate to reach $5.75 billion, with its 2020 earnings projected to jump 47% higher than our current-year estimate. And Square’s longer-term earnings revisions activity helps it earn a Zacks Rank #2 (Buy) at the moment.
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