Monthly Archives: August 2016

Fogo de Chao: Zacks’ Bear of the Day Play

Fogo de Chao (FOGOSnapshot Report)  owns and operates full-service Brazilian steakhouses in the United States and Brazil. It operates 31 restaurants in the United States, 10 restaurants in Brazil, and 1 joint venture restaurant in Mexico. The stock is the Bear of the Day after being downgraded to a Zacks Rank #5 (Strong Sell) and after poor earnings results last week.

Fogo has a market cap of $350 Million and a Forward PE of 14.74 The stock sports pretty good Zacks Style Scores, with an “B” in Value “B” in Growth, but a “D” in Momentum. However, a miss on EPS and a guidance cut to fiscal year 2016 has the stock trending lower.

Q2 results

The company reported Q2 EPS on August 9thth, with the numbers coming in at $0.22 versus the $0.25 expected. Revenue came in lower than expected at $69.6 Million against the $73.3 Million expected. The company also cut their fiscal year 2016 outlook to $0.85-0.89 verse the $0.94 expected. In addition, revenue and same store sales were guided lower.

CEO Lawrence Johnson had some comments on the quarter: “In today’s softening sales environment, guests are placing greater emphasis on value, customization, variety and speed of service and we believe that our strategies are designed to deliver on these needs.

Investors weren’t buying the comment that strategies are delivering and have sold the stock down 10% since the report. Analysts aren’t buying the story either and have been cutting estimates.

Estimate Revisions

Over the last 30 days, estimates have been revised lower for all time frames. For fiscal year 2016, the numbers have been taken down 8%, from $0.94 to $0.86. For 2017, estimates are now seen at $0.97, down from $1.11 or 13%.

A Better Option

Denny Corp (DENNSnapshot Report) is a Zacks Rank #2 (Buy) that operates Denny’s, Hardee’s, Quincy’s and other moderately priced restaurants. The company was founded in 1953, has 8,500 employees and is headquartered in Spartanburg, South Carolina.

Denny’s has a market cap of $800 Million and a Forward PE of 21. The stock sports Zacks Style Scores of “B” in Value, “A” in Growth, and “C” in Momentum.

On August 3rd the company raised adjusted EBITDA for the year, despite the challenging full-service dining environment. Estimates for the company in 2016 have been pretty steady, but are ticking 1.7% higher for fiscal year 2017.

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So Where Are the Profitable Trades?

Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks’ recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we’ve called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>

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Urban Outfitters: Zacks’ Bull of the Day Play

Urban Outfitters (URBNAnalyst Report) is a specialty retail company that engages in the retail and wholesale of general consumer products. The company retails women’s and men’s fashion apparel, intimates, footwear, beauty and accessories, home goods, active wear and gear, and electronics that cater to the 18 to 28-year-old age group under the Urban Outfitters brand. Items featured under the Anthropology brand include women’s casual apparel and accessories, intimates, shoes, beauty, home furnishings, and various gifts and decorative items for women aged 28 to 45. Other brands include Free People, Terrain and BHLDN. The company was founded in 1970, employs over 9,000 and is headquartered in Philadelphia, Pa. The stockis Zacks Rank #1 (Strong Buy) and todays Bull of the Day after an impressive earnings beat and multiple price upgrades.

Urban Outfitters has a market cap of $4.3 Billion with a Forward PE of 18. The stock sports Zacks Style Scores of “A” in Value and “B” in both Growth and Momentum. In addition, the company also sits in an industry that is ranked 95 out of 265 (Top 36%) in the Zacks Industry Rank.

Q2 Earnings

Q2 was reported on August 16th with the company seeing $0.66 versus the $0.56 expected. Revenue came above expectations at $890.6 Million verse $889 Million. Total retail sales were up 1% year over year, with Free People flat, Anthropologies down 3% and Urban Outfitter stores up 5%. Gross margins were up to 38.5% verse 36.7% a year ago.

CEO Richard Hayne had some comments on the quarter: “I am pleased to announce our teams delivered record second quarter sales and earnings per share. These results were driven by a positive Retail segment ‘comp’ and substantial improvement in merchandise margins.”

Surprise History

Last week’s beat was the fifth straight and the seventh over the last ten quarters. Price hasn’t always followed earnings beats, but this quarter the stock surged over 20% in just a few days. This confidence in earnings numbers have investors looking at the long-term story.

Estimates

Since the company reported estimates have been revised higher across all timeframes. Over the last 7 days, estimates for the current year are up 5%, from $1.94 to $2.04. For fiscal year 2018, estimates have gone 4% higher, from $2.15 to $2.24.

Upgrades

Since earnings, we have seen a number of analysts raising price targets for the stock:

-Evercore raised to Buy from Hold.

-UBS ups Price Target to $36 from $30, reiterates Neutral rating.

-Telsey Advisory Group ups PT to $39 from $31, reiterates Market Perform.

-Mizuho raised PT to $32 from $28, reiterates Neutral rating.

Stifel raised PT to $40 from $35, reiterates Buy rating.

-Buckingham raised to Buy from Neutral, PT now $42.

In Summary

Urban outfitters specialty brands have become popular among the younger generation and this is being proven in the numbers. Improving margins on top of record sales will bring investors into the stock on any dips. If the earnings momentum continues into the end of the year, the stock might make a push for 2015 highs of $47.25.

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Zacks’ best stocks under $10

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Advance Auto: Zacks’ Bear of the Day Play

As the momentum strategist at Zacks I would never make the argument that a stock has simply gone too far too fast as my primary reason for selling a stock. In fact, I go out of my way to look for stocks that have been on long term runs and usually add them to my portfolio on pullbacks. I’m certainly a “Buy high, sell higher” type of guy.

So don’t think that my argument for being cautious on today’s Bear of the Day is based on the fact that it’s been on such a great run. My reason for naming Advance Auto Parts (AAPAnalyst Report) theBear of the Day is in the action of analysts at other firms and AAP’s own earnings struggles.

Advance Auto Parts, Inc., through its subsidiaries, provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. It offers automotive parts, including alternators, batteries, belts and hoses, brakes and brake pads, chassis parts, climate control parts, clutches, driveshafts, engines and engine parts, ignition parts, lighting products, radiators, starters, spark plugs and wires, steering and alignment parts, transmissions, water pumps, and windshield wiper blades; and accessories, such as air fresheners, automotive paints, anti-theft devices, emergency road kits, floor mats, ice scrapers, mirrors, seat and steering wheel covers, and vent shades.

It’s nothing personal against AAP here. Heck, I’m a card carrying member of their loyalty program and often shop for car parts there. But analysts have been increasing bearish on shares of Advance Auto. Over the last week, eight analysts have dropped their estimates for the current quarter while ten have done so for the current year. This has cut our Zacks Consensus Estimate for the current quarter from $1.97 to $1.81 and sank the current year number from $7.91 to $7.44. The revisions came on the heels of another disappointing quarter where the auto parts retailer missed earnings by 4 cents, coming in at $1.71 versus estimates calling for $1.81.

Investors looking for other stocks in the same sector should check out Zacks Rank #1 (Strong Buy) US Auto Parts (PRTSSnapshot Report) .

More Stocks to Sell. Now.

Beyond our Bear Stock of the Day, today’s list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.

See today’s Zacks “Strong Sells” absolutely free >>.

Paylocity: Zacks’ Bull of the Day Play

It’s no secret that the job market has been pretty good over the last several months. It’s also no secret that cloud-based stocks have done very well this earnings season. So for today’s Bull of the Day I’ve decided to talk about a stock that’s standing right there at the intersection of jobs and the cloud. How about a cloud-based payroll company? That’s exactly what we have here in Paylocity (PCTYSnapshot Report) .

Paylocity Holding Corporation provides cloud-based payroll and human capital management software solutions for medium-sized organizations in the United States. The company is coming off a solid quarter where revenue growth was 50%. EPS came in at a 10 cent loss versus expectations for a 12 cent loss. That’s coming off last quarter’s 7 cent beat.

The Zacks Rank #1 (Strong Buy) rating is due to two analysts increasing their earnings estimates for the current quarter and the current year. The bullish sentiment has pushed up our Zacks Consensus Estimate from a 1 cent loss to 2 cents of profits for the current year. Next year’s numbers call for 18 cents EPS. It’s part of an internet software industry that we rank in the Top 24% of our Zacks Industry Rank.

Looking at the stock chart, shares of Paylocity have sold off a bit since failing to get to $50 earlier this month. The retreat from the highs pushed down the commodity channel index to -184 before a two day rally saw it rebound to -110. If the rebound continues, it would likely push the CCI back above the zero line and give a “Buy” signal for the indicator. The stock has already broken down through the 23.6% retracement of the February to August move and sits below the 21-day moving average near 45. If the buying can continue in the short term for Paylocity, technical traders would likely come in and support a rally above the moving average and help shares of PCTY re-establish their long term bullish trend.

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Vitamin Shoppe: Zacks’ Bear of the Day Play

This earnings season marked a bit of a turnaround for a number of companies in the retail world. Several firms here seem to have finally hit bottom and saw their share prices jump in the past few weeks.

However, not every retail name has been able to turn things around, as several still face an uncertain outlook thanks to intense competition and uncertain growth opportunities. Some have even struggled to beat subdued earnings estimates, and shareholders have paid the price. A great example of this trend is with Vitamin Shoppe (VSISnapshot Report) .

VSI in Focus

Like many retail stocks lately, VSI has been in trouble. A more competitive market and intense online pressures have made for some serious headwinds for investors in this stock lately. And if that wasn’t enough, VSI also struggled in its most recent earnings report too.

The company posted earnings of 55 cents per share compared to expectations of 59 cents, a miss of nearly seven percent. While an earnings miss is always bad, it is especially awful news in this environment, as numerous retail companies have made this the quarter to surge back, leaving VSI in the dust. And what is even worse, is that analysts have been ratcheting down expectations for VSI’s future quarters, slashing the consensus estimate in the process.

Recent Estimates

In just the past month, six estimates have gone lower for the current quarter compared to zero higher, while we have seen eight go lower for the full year compared to, once again, zero higher. But it hasn’t just the been the agreement among analysts that is worrisome, as the magnitude of the adjustments has also been pretty intense.

In fact, the current quarter consensus estimate has fallen by over 14% in the last month, while the full year and next year figures are down more than 6.5% each in the same time period too. Clearly, analysts believe that more pain could be ahead for VSI, and that at least in the earnings picture, things aren’t expected to turn around any time soon.

VITAMIN SHOPPE Price, Consensus and EPS Surprise

VITAMIN SHOPPE Price, Consensus and EPS Surprise | VITAMIN SHOPPE Quote

No wonder shares of VSI currently have a Zacks Rank #5 (Strong Sell) and why we are looking for this company to continue its bearish run in the months ahead.

Other Choices

Clearly, VSI is a stock that you want to stay far away from in the near future, but what are some ones you should put in your portfolio instead? Well these days, it might be a good idea to take a closer look at thedepartment store space, and in particular, J.C. Penney ( (JCPAnalyst Report) or Macy’s (MAnalyst Report) .

Both of these companies were recently upgraded into ‘Buy’ territory from hold, while their fundamental scores are impressive too. So, consider this corner of the market for continued gains, and stay away from VSI until it is finally able to turn things around and get out of this slump.

If anything, VSI may be an interesting short candidate. To learn more about shorting stocks, make sure to check out our podcast below on the topic:

So Where Are the Profitable Trades?

Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks’ recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we’ve called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>

Tempur Sealy: Zacks’ Bull of the Day Play

The housing market is definitely back on track these days. Prices are jumping in many key markets, while pent up demand and high rent prices bode well for continued housing market growth in the near term too.

In this type of environment, many people look to homebuilders and construction materials companies as top ways to play the trend. However, other companies can definitely benefit too, and particularly in the home furnishing market. After all, when someone buys a new home they often upgrade various things around the house, acting as a nice boost for companies in this market.

For a great example of this, we can look to Tempur Sealy (TPXSnapshot Report) , a major player in the mattress world. In the company’s most recent earnings report, the company thoroughly crushed estimates, and the CEO cited the strong housing market as a primary reason for the earnings beat. No wonder shares of TPX are up 30% in the past month, and why shares are posting a double digit percentage gain for 2016 as well.

Can This Continue?

With such an epic move, some investors might be worried about the continuation of this trend for the long term. However, if we look to longer term trading activity, we can see that TPX is actually only up 6% in the past year and is even underperforming the S&P 500 from this time frame.

So based on that and the fact that TPX still has a forward PE below 20, there should be little concern that the stock is overbought right now. But more than anything, investors should be looking to fresh earnings estimates as these could signal, more than anything, TPX’s solid potential.

New Estimates

Analysts covering TPX stock have been moving to raise their estimates over the past month, as six have gone higher for the current quarter compared to one lower, while we see an 8:0 ratio for the current year and next year when it comes to estimates going up vs. down.

But it hasn’t just been the amount of recent revisions, as the magnitude has also been impressive as well. The current quarter estimate has gone higher by 6% in the past month, while the full year estimate has increased by nearly 8% in the same time frame. Full year EPS growth is now projected to be over 30%, and with a strong housing market there is plenty of reason to think these recent positive trends can continue.

TEMPUR SEALY Price and Consensus

TEMPUR SEALY Price and Consensus | TEMPUR SEALY Quote

That is a big reason why we have recently upgraded TPX to a Zacks Rank #1 (Strong Buy), and why we are looking for the solid run of outperformance to continue in this name.

Bottom Line

The housing market is running on all cylinders and this is benefiting a multitude of companies tied to the broader industry. While most investors think of the homebuilders and construction companies first, another key area to watch is the home furnishing market too.

This area has seen nice growth lately, and TPX has been a star performer of the group following its most recent earnings release. And while shares have definitely surged as of late, the strong fundamentals and economic tailwinds make this a company you need to keep on your watch list for the long term.

Now, which stocks should you sell?

As a Zacks Rank #1 Strong Buy, this Bull of the Day deserves consideration. But today there are 220 Zacks Rank #5 Strong Sells that demand even more urgent attention. If any of these are lurking in your portfolio, they should be removed immediately. Since 1988, such stocks have actually performed more than 11X worse than the S&P 500. See all Zacks Strong Sells and Strong Buys absolutely free >>.

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LATAM Airlines: Zacks’ Bear of the Day Play

Low fuel prices had lifted airlines’ stocks last year but the outlook has turned negative this year thanks to overcapacity, terrorist attacks, Zika outbreak currency headwinds and plunging fares. Most airlines have reported disappointing earnings for the recent quarter.

About the Company

Headquartered in Santiago, Chile, LATAM Airlines Group (LFL) is Latin America’s largest airline. They provide passenger services to about 136 destinations in 24 countries and cargo services to about 140 destinations in 29 countries. They have about 50,000 employees and a fleet of 328 aircraft.

The Company’s shares are traded in Santiago as well as on the NYSE in the form of ADRs.

Weak Second Quarter Results

The company reported a net loss of $92 million for the second quarter. Net operating loss of $0.17 per share was much worse than the Zacks Consensus Estimate of a loss of $0.03 per share.

Total revenues plunged by 12.5% due to a 13.7% decline in passenger revenues and a 22.3% decline in cargo revenues. Per management, the revenue decrease continues to reflect a weak macroeconomic environment in South America, particularly in Brazil. They continue to adjust capacity in Brazil to bring it in-line with demand conditions.

The management made no changes to their guidance for this quarter and expect passenger capacity to be relatively flat this year with respect to 2015.

Falling Estimates

Zacks Consensus Estimates for the current and the next year have fallen to $0.17 per share and $0.47 per share, from $0.26 and $0.34 respectively, before the earnings release. The company missed in two out of last four quarters, with an average negative quarterly surprise of 104%.

Settlement of Bribery Charges

In July, the airline agreed to pay more than $22 million in fines to the SEC related to an old bribery case.

The Bottom Line

While low fuel prices benefit airlines’ earnings, they also put pressure on pricing, particularly due to heavy discounting mainly by low-cost carriers. Many airlines expanded capacity in the wake of lower fuel prices which has now led to a fare war,

In addition to Zacks Rank #5 (Strong Sell), the stock has poor Style Scores—“F” for Growth and Momentum and “C” for Value–resulting in a VGM Score of “F”. Further, the Airlines industry is currently ranked 241 out of 265 Zacks industries (bottom 9%). Investors looking to play this industry could look at Copa Holdings (CPA) which currently carries a Zacks Rank #1 (Strong Buy).

More Stocks to Sell. Now.

Beyond our Bear Stock of the Day, today’s list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.

See today’s Zacks “Strong Sells” absolutely free >>.

In-Depth Zacks Research for the Tickers Above

Get the latest report on LFL – FREE

Potlatch: Zacks’Bull of the Day Play

The US housing market continues to strengthen this year thanks mainly to improvement in the labor market and record low interest rates. This Zacks Rank #1 (Strong Buy) timber REIT is well positioned to capitalize on the housing market recovery.

About the Company

Structured as a REIT, Potlatch (PCH) owns approximately 1.6 million acres of forestland in Alabama, Arkansas, Idaho, Minnesota and Mississippi. The company also operates five manufacturing facilities that produce lumber and panel products.  Additionally, the company conducts a real estate sales and development business through its subsidiary.

Better-than-expected Results

The company reported Q2 operating earnings of $5.4 million or $0.13 per share, compared with $200,000 or $0.00 per share reported in the first quarter. Earnings were substantially ahead of the Zacks Consensus Estimate of $0.07 per share. The company has beaten in all of last four quarters with an average quarterly surprise of 59%.

Lumber Demand and Price Surging

Per FT, after touching a four-year low in October, lumber future has surged more than 50%.  The rise is mainly a result of increasing demand from the housing market.

We have seen steady growth in housing starts of late, thanks to improving labor markets, rising consumer confidence and record low mortgage rates. Through the first half of the year, housing starts are up about 8% year-over-year and single family starts, that use about three times the amount of lumber as multifamily units, are up almost 15% year-over-year.

Ongoing trade dispute between the US and Canada over softwood lumber imports is likely to keep prices high. US lumber producers allege that the Canadian government subsidizes its lumber producers thereby giving them an unfair advantage in the US lumber market. Rising exports from Canada have raised the possibility that the US government may impose a tariff on Canadian lumber.

Rising Estimates

Zacks Consensus Estimates for the current and next year have increased to $1.12 and $1.46 respectively, from $1.02 and $1.35, before the results. The following chart shows earnings and price momentum for PCH:

Returning Capital to Shareholders

The company has been returning a lot of cash to shareholders via dividends and buybacks. They have increased their dividend 20% in the last three years. The dividend yield is 3.9% as of now.

The Bottom Line

PCH is a Zacks Rank#1 (Strong Buy) stock. Additionally, a Zacks Industry rank of 4 out of 265 (top 2%) indicates very strong likelihood of continued strength in the short to medium term.

Want to see all of today’s Strong Buys

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DaVita HealthCare Partners: Zacks’ Bear of the Day Play

DaVita HealthCare Partners (DVAAnalyst Report) became a Zacks #4 Rank Sell in mid-July as analysts began lowering estimates before the company’s Q2 report.

On August 8 the company delivered a 3% EPS beat but disappointed with lowered guidance for the year due to difficulties with a recent acquisition.

Since the report, shares have tumbled 13% and most analysts have moved their estimates down again, pushing the stock into the cellar of the Zacks Rank.

The Business of Dialysis

DaVita HealthCare Partners is the second-largest US provider of dialysis services to patients with chronic kidney failure and end stage renal disease. They serve roughly 180,000 patients through a network of 2,179 owned and managed dialysis facilities.

The company offers outpatient, home-based, and hospital inpatient hemodialysis services, ESRD laboratory services and provides management and administrative services to outpatient dialysis centers.

DaVita had revenues of $13.78 billion in 2015 and trailing 12-month (TTM) sales are at $14.36 billion as of June 30. DaVita HealthCare Partners Inc., formerly known as DaVita Inc., is headquartered in Denver, Colorado. With the acquisition of HealthCare Partners (HCP), the company became the largest operator of medical groups and physician networks in the US.

The Quarter Analysts Saw Coming… Mostly

Total revenue increased 8.8% year over year to approximately $3.72 billion and narrowly surpassed the Zacks Consensus Estimate by 1.2%. The year-over-year improvement was mainly attributable to a rise in patient service revenues.

Analysts knew that the HealthCare Partners acquisition was not going according to management’s plans. That’s why they were lowering estimates in July. But they weren’t expecting a $70 million drop in segment guidance.

Here’s how analysts at Raymond James broke down the news…

Drivers behind HCP’s lowered 2016 guidance include: 1) fee for service revenue growth of 3% vs. management 6% target, 2) an overestimation of Medicare Advantage reconciliation payments; 3) Medicare Advantage mentorship growth lower than expected and; 4) an acceleration in the re-branding of HCP to the DaVita Medical Group – $5/$10 million more than expected.

And here was the fallout for EPS estimates…

In the last 30 days, the 2016 full-year consensus fell from $3.95 to $3.77, representing negative annual growth of -1.7%.

2017 consensus profit projections dropped from $4.42 to $4.18, for 11% growth if all goes well.

DaVita is a strong business and clear leader in its industry. But until the estimates picture turns around, it’s probably best to stay on the sidelines.

The Zacks Rank warned you in July before the drop and it will let you know when it’s safe again.

So Where Are the Profitable Trades?

Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks’ recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we’ve called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>

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NVIDIA: Zacks’ Bull of the Day Play

NVIDIA (NVDAAnalyst Report) became a Zacks #1 Rank Strong Buy in January when shares were trading under $30. Since then, the stock has more than doubled and rising earnings estimates have the name back to a #1 again after a strong Q2 earnings report on August 11.

NVIDIA designs, develops and markets a top-to-bottom family of award-winning 3D graphics processors, graphics processing units and related software that set the standard for performance, quality and features for every type of desktop personal computer user, from professional workstations to low-cost computers.

NVIDIA’s 3D graphics processors are well known in the video game industry, but the company has been steadily making inroads into virtual reality, education applications and machine learning technology like that for autonomous driving.

I last wrote about NVDA as our Bull of the Day on January 4 and here’s what I said…

NVIDIA was the top performing large-cap semiconductor stock of the fourth quarter, with a stunning 60%+ move higher since their Q2 earnings report in early August.

And tonight at the International Consumer Electronics Show (CES) in Las Vegas, the company is likely to reveal further insights into their plans to stay hot on technology investor radars in 2016. In fact, they announced on New Year’s Eve that they plan to unveil new technology for self-driving cars.

Firing On All Frontiers

NVIDIA reported revenue for the second quarter ended July 31 of $1.43 billion, up 9% sequentially and up 24% from $1.15 billion a year earlier. This was above the company’s original guidance range of $1.35 billion +/- 2%.

GAAP earnings per diluted share for the quarter were $0.40, compared with $0.05 a year ago and up 21% from $0.33 in the previous quarter.

The company saw growth across all platforms and noted the strong launch of Pascal-based GPUs and growing demand for deep learning applications. Gaming and professional graphics were the leaders, while datacenter and automotive also contributed to growth in the July quarter.

“Our strategy to focus on creating the future where graphics, computer vision and artificial intelligence converge is fueling growth across our specialized platforms — Gaming, Pro Visualization, Datacenter and Automotive,” said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA.

“We are more excited than ever about the impact of deep learning and AI, which will touch every industry and market. We have made significant investments over the past five years to evolve our entire GPU computing stack for deep learning. Now, we are well positioned to partner with researchers and developers all over the world to democratize this powerful technology and invent its future.”

Great Quarter Launches Estimates Higher

NVIDIA gave forward guidance for revenue to be $1.68 billion +/- 2%. The midpoint here would be up 18% sequentially and up 29% yr/yr.

Based on the top and bottom line beats and company guidance, analysts moved quickly in the last week to raise EPS estimates for this year and next.

For the current fiscal year ending in January of 2017, the Zacks consensus jumped 17% from $1.56 to $1.83 as 11 analysts chimed in with fresh projections.

That equates to 69% annual EPS growth.

And for next year, 10 analysts boosted the consensus 24% from $1.54 to $1.91. The growth drops off here to only 4% and that might explain why the stock hasn’t surged higher after the beat and raise for this year.

While there are some concerns among analysts that the company will face increasing competition in datacenters and gaming, NVIDIA continues to lead innovation in many areas.

If virtual reality is going to become foster viable entertainment and education platforms — as Facebook (FBAnalyst Report) must believe with their $2 billion purchase of Oculus VR in 2014 — NVIDIA’s top technologies will be involved because the 3D graphic processing expertise required for VR is so demanding and specialized.

It’s probably not something a startup or even giants Intel (INTCAnalyst Report) or Qualcomm (QCOMAnalyst Report) will overtake them on any time soon.

NVDA looks like one to buy on any dips into the $50s.

Confidential from Zacks

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