Control4 Corp: Zacks’ Bull of the Day Play

Control4 Corp (CTRLSnapshot Report) is one of those story stocks that is just about to take off. The connected home is an idea that is coming… trust me, I know it. I personally own the Google Nest as my thermostat and also recently bought the Google Nest Cam, so I can see and hear and control what is going on in my home. The next level for this is a home that has remote control lighting and other features, and that is what CTRL does. Analysts have recently increased their earnings estimates and that has helped push the stock to a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.Personal Anecdote

I love the idea of a thermostat that learns what you like as you go, and for the past two years, I have enjoyed the capabilities of my Google Nest Thermostat. I can monitor the temperature of the house when I am away and set it to cool down or heat up as I arrive. I can also change the settings when on the couch by using the Nest App.

I added the Nest Cam as a wanted it to have a dual use of being able to listen in on the family room and look out on the front yard. I want to think that living in the Windy City was the reason a flag was ripped from my house a few months, back, but I thought there might have been a different culprit. The Google Nest Cam was my mousetrap… and so far, it looks like it was the wind. My paranoia aside, I also get some nice video’s of me watering the lawn.

https://video.nest.com/clip/37cd724769aa491c9eba2997757c209d.mp4

Here is the flag that found its way to the ground… but since the camera was put in place, it just flaps in the breeze.

https://video.nest.com/clip/a2011f0da30545c7868f1edbaf3f0615.mp4

Description

Control4 Corp provides automation and control solutions for the connected home. The company offers Control4 solution that functions as the operating system of the home, integrating music, video, lighting, temperature, security, communications, and other devices in the home automation market. Control4 Corporation was founded in 2003 and is headquartered in Salt Lake City, Utah.

Earnings History

I like the earnings history for CTRL as the company has topped the Zacks Consensus Estimate in 7 of the last 8 quarters. The most recent miss was a big one, it came on the March 2015 quarter as the company reported a loss of $0.12 per share when the Zacks Consensus Estimate was looking for a loss of $0.07. That miss of five cents was a -71% negative earnings surprise and the stock fell by more than 23% in the session following the report.

Those times see to be over, as the company swung from a loss to a gain in the next quarter. The $0.10 reported for the June quarter was fully $0.04 ahead of the Zacks Consensus Estimate for a 66% positive earnings surprise. The company also beat on top, something that had not been achieved since the March 2014 quarter was reported back in May of last year.

Earnings Estimates

The Zacks Consensus for 2015 had been sliding for much of the year for CTRL. The number was as high at $0.54 at the start of the year, but then slipped to $0.40 in February and then all the way down to $0.02 in May. After the most recent report, the Zacks Consensus vaulted higher to $0.10 so the number is starting to look back up.

The 2016 number hasn’t seen quite the same rebound just yet, as it moved higher by only 1 cent in August. It should be noted that the earnings report in May of this year didn’t crush the 2016 number – at least not as bad as the 2015 number was hit. The 2016 number fell from $0.65 to $0.20, so a big smack, but not quite as large as the hit applied to the current year.

Wall Street Research

The most recent quarter was not really met with much excitement despite the big beat. The focus was still on the previous quarter and the slew of downgrades that the stock received. Only Needham maintained their buy rating, while Raymond James, Canaccord, Dougherty and Imperial Capital all downgraded the stock.

This sets up a host of analysts that are very familiar with the story and some solid execution could drive multiple recommendation upgrades. Right now the highest target price on the street is from Needham who has a $15 target, with Canaccord the second highest at $13.

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s