Monthly Archives: October 2016

Assurant: Zacks’ Bear of the Day Play

As a huge Cubs fan I’ve had baseball on the brain. Some days you’re out here cranking out home runs. Other days, you’re striking out. It looks like today’s Bear of the Day has been striking out recently. If you’re invested in the company, you may want to assess your timeframe because the short term doesn’t look so fantastic right now.

Assurant (AIZAnalyst Report) through its subsidiaries, provides risk management solutions worldwide. It operates through Assurant Solutions and Assurant Specialty Property segments. The company offers mobile device protection and related services; vehicle protection; pre-funded funeral insurance; credit insurance; renters insurance; lender-placed homeowners insurance; mortgage valuation and field services; and manufactured housing insurance. It also provides title and valuation services for home equity lenders. The company was formerly known as Fortis, Inc. and changed its name to Assurant, Inc. in February 2004. Assurant, Inc. was founded in 1969 and is headquartered in New York, New York.

With Hurricane Matthew and other recent events, business has seen some challenges. Obviously as an insurance company you’d like to see things go smoothly. Assurant showed us the downside of being an insurer in their last earnings report. The company reported third-quarter 2016 net operating income of $1.00 per share that missed the Zacks Consensus Estimate by 12.3%. Moreover, the bottom line plunged 34.6% from $1.53 per share earned in the year-ago quarter. Higher reportable catastrophe losses, ongoing normalization of lender-placed insurance business, and declines in mobile and legacy extended service contracts and credit insurance led to the year-over-year deterioration. However, lower Corporate net operating loss partially offset the downside.

The company is a Zacks Rank #5 (Strong Sell) right now. A big reason for the rank is five analysts have dropped their earnings estimates for the current year and next year. The bearish sentiment has forced the consensus estimate down from $5.86 to $4.44 for the current year and brought down next year’s number from $7.10 to $6.58.

Investors looking for other stocks in the same industry should check out Zacks Rank #2 (Buy) stocks Ageas (AGESYSnapshot Report) and AXA (AXAHYSnapshot 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 >>.

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TAL Education: Zacks’ Bull of the Day Play

When I first found this company, I’ll admit I was a little more excited than I should have been. At the time, it was the perfect mix of what I was looking for. Steady revenue with exposure to China. That’s not a combo you see every day. China was a wild card for such a long period of time but I still wanted to put some money there. Finding a steady revenue stream was key to my decision.

Then I found today’s Bull of the Day, TAL Education Group (XRSSnapshot Report) . TAL Education Group provides K-12 after-school tutoring service in China. It offers tutoring services to K-12 students covering academic subjects, including mathematics, English, Chinese, physics, chemistry and biology. The Company delivers its tutoring services through small classes, personalized premium services i.e. one-on-one tutoring and online course offerings. Its extensive network consists of learning centers and service centers in Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin and Wuhan, as well as the Company’s online platform.

The stock is a Zacks Rank #1 (Strong Buy) right now. The reason why is an analyst has recently increased their earnings estimates for the current year and next year. The bullish attitude has pushed up the Zacks Consensus Estimate from $1.02 to $1.04 for the current year and from $1.56 to $1.70 for next year.

//CG

If you take a look at the Price, Consensus and EPS Surprise chart on Zacks you can see why shares have rallied so much. Dating back to 2012 the company had several earnings estimate revisions. You can see the evolution of our Zacks Consensus Estimates by looking at the mulit-colored lines here on our chart. Each year has a different color that clearly shows the change in consensus over the years. The gaps between the lines represent EPS growth. The big gap from last year to this year hammer home the reasons for the rally in the stock. Even in the face of a couple of disappointing earnings reports the stock has done very well as it’s commanded a healthy growth premium over the last several years.

Confidential from Zacks

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La-Z-Boy: Zacks’ Bear of the Day Play

As concerns start to creep up for the housing market, it is beginning to have some knock-on effects for the tangentially-related sectors. One such market is the furniture world, as this area tends to do well when consumers are buying more homes and thus need to furnish them with new products. However, as questions start to pop up over the health of the housing market, concerns are starting to build in the furniture world too.

That is part of the reason why the segment currently has a bottom 10% industry rank, and why there isn’t a single stock in the group that has a ‘buy’ rank. One stock in this group that should be especially concerning to investors right now though, is La-Z-Boy (LZBSnapshot Report) , as this company is arguably one of the worst positioned for today’s market environment.

Why You May Want to Avoid LZB

LZB is obviously best known for its recliners, but the company makes a variety of other furnishings as well. And while the company has definitely participated in the recovery over the past few years, cracks are starting to appear in the story.

This is best evidenced by a nearly 25% slump in LZB stock over the past three months, and a double digit percentage slide in the past month alone. Clearly, investors are concerned about LZB’s health in the current environment, and there are worries over the long-haul too. This can be seen if we look to recent earnings estimates for LZB stock, which have all been decidedly negative.

In fact, in just the past week, we have seen two earnings estimates go lower for both the current year and the current quarter, while the company is now expected to see an earnings decline for both time periods when compared to the year ago time frame. Additionally, the Earnings ESP for both of these time periods is negative, suggesting that the consensus estimate is likely to trend lower in the weeks ahead.

If that wasn’t enough for investors, you should also consider LZB’s most recent earnings report, as the company posted an earnings miss for the first time since February 2015. No wonder LZB currently has a Zacks Rank #5 (Strong Sell) and why we are looking for more sluggishness from the company in the weeks ahead.

LA-Z-BOY INC Price, Consensus and EPS Surprise

LA-Z-BOY INC Price, Consensus and EPS Surprise | LA-Z-BOY INC Quote

Other Picks

While you may want to avoid LZB, where should you look instead? Well, one option is to look more towards the diversified/miscellaneous retail world, as this space has a top 30% industry rank. There are actually several ‘buy’ ranked stocks in this group right now, but a focus on the sporting good space seems ideal.

That is because Big 5 Sporting (BGFVAnalyst Report) , Dick’s Sporting Goods ( (DKSAnalyst Report) , and Hibbett Sports (HIBBAnalyst Report) all have a Zacks Rank #2 (Buy) or better, and all three saw a positive earnings surprise last quarter as well. So, if you are looking for a different consumer-focused play, consider any of the three above instead of the still sluggish and likely-to-be-volatile LZB in the near term.
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, you should consider removing them 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 >>

Charles Schwab: Zacks’ Bull of the Day Play

With the prospect of higher interest rates increasing each day, investors are slowly starting to position their portfolios in order to benefit from the likely trend. This results in a focus on the financial sector, since many banks benefit from a higher interest rate differential, as they make money off of the spread between the long and short term rates.

However, one area that investors often forget to think about as a rising rate beneficiary is that of the investment broker space. Investment brokers take uninvested capital in client accounts and use it to purchase a variety of ultra short-term securities. Right now, these securities earn a very low yield, but obviously as rates increase the income goes up as well. This can actually make a substantial portion of a broker’s income, so higher rates are often seen as crucial to better earnings for companies in this sector.

But with rates slowly on the rise, optimism is definitely in the air for this corner of the market. That is part of the reason why the sector has a top 20% industry rank, and why just one of nearly two dozen companies has a ‘strong sell’ rank right now. On the other side of the coin, there are about 10 companies in the segment that have a Zacks Rank of ‘buy’ or better, so how do you decide where to place your bets in this promising corner of the market?

Talk to Chuck

Well, one company that should definitely be on your radar in this market is Charles Schwab (SCHWFree Report) . The company was actually just upgraded into ‘Strong Buy’ territory within the past week so it could be an excellent time to jump in to this top stock.

This is especially true given the recent earnings estimate revision activity for SCHW, as analysts have been racing to upgrade their estimates for the company. In just the past thirty days, we have seen five estimates go higher for the current quarter, compared to zero lower. And for the current year, we have seen ten estimates go higher in the past month, and three higher in just the past week. Once again, this is compared to zero lower.

These rising estimates are now baking in an EPS growth rate of over 33% for both the current quarter and the current year, which is pretty substantial given SCHW’s size. Meanwhile analysts are also anticipating a double digit percentage increase in revenues as well so it appears as though Schwab is on a nice momentum path.

But before you start to worry about SCHW living up to analyst expectations, consider their recent performances in earnings season. The company has only missed estimates once since the summer of 2013, and it is riding a streak of six straight beats.

SCHWAB(CHAS) Price, Consensus and EPS Surprise

SCHWAB(CHAS) Price, Consensus and EPS Surprise | SCHWAB(CHAS) Quote

Bottom Line

Clearly, this is a top-notch company that deserves your consideration heading into 2017. The overall sector is promising, the rate environment favors brokers, and we have seen some M&A activity as well.

So, trust in the rising earnings estimates—as well as the unanimous positon among analysts that the picture is getting better—and consider this stock for your portfolio. It just rose to strong buy territory and is coming off another earnings beat, so now could definitely be the time to give it a closer look.

Confidential from Zacks

This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today’s Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here >>.

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SCHWAB(CHAS) (SCHW) – FREE report >>

Southwest Airlines: Zacks’ Bear of the Day Play

Southwest shares plunged more than 8% yesterday after Q3 results, as the airline provided a downbeat guidance for unit revenue, which is an important metric in the industry. What lies ahead for this low cost carrier?

About the Company

Dallas-based Southwest Airlines (LUV) is the nation’s largest carrier in terms of originating domestic passengers boarded. They operate more than 3,900 flights a day, focusing primarily on short-haul, high frequency, point-to-point and low-fare services.

Third Quarter Results

The airline beat both on the top and bottom lines. Adjusted earnings of $0.93 per share were above the Zacks Consensus Estimate of $0.88 per share. Revenues of $5,139 million were also ahead of the Zacks Consensus Estimate of $5,132 million.

However, unit revenue fell 4.1% during the quarter and the management expects this trend to continue with unit revenue expected to decline between 4% 5% during the current quarter.

Results were also hurt by a computer outage in July which had resulted in cancellation of more than 2,000 flights.

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.

Southwest had expanded capacity by 5% to 6% this year. It faces stiff competition from other low-cost airlines, which have aggressively boosted capacity for the same routes. As a result, average one way fare fell 4.8% during the quarter.

Further, the fuel costs have started rising now and are expected to be $2.10 per gallon in the current quarter, up from $2.02 per gallon in the reported quarter.

Falling Estimates

Analysts have been quite bearish on the stock and slashing their estimates in the past few weeks. Zacks Consensus Estimates for the current and the next year had fallen to $3.77 per share and $3.83 per share, down from $3.90 and $4.04 respectively, 90 days ago.

The Bottom-Line

After two years of impressive profitability, thanks mainly to record low fuel prices, US airlines are facing rough weather now. Airlines industry is currently ranked 242 out of 265 Zacks industries (bottom 9%). Investors looking to play this industry could look at Copa Holdings (CPA) which 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

SOUTHWEST AIR (LUV) – FREE report >>

Analog Devices: Zacks’ Bull of the Day Play

Based in Norwood, Massachusetts, Analog Devices (ADI) is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed signal and digital signal processing (DSP) integrated circuits. They are the second largest producer of analog chips after Texas Instruments.

Analog chips are used primarily in smartphones for managing radio signals and other purposes. These chips convert real world signals into digital signals. Apple is Analog’s one of the biggest customers.

Solid Quarterly Results and Upgraded Guidance

The company reported excellent results for its third quarter fiscal 2016, beating on both the top and bottom lines, and also raising its guidance for the current quarter.

Adjusted earnings for the quarter were $0.82 per share, ahead of the Zacks Consensus Estimate of $0.76 per share, thanks to strong growth in its automotive and communications businesses.

The management expects EPS of $0.84 to $0.94 and revenue of $910 million to $970 million for Q4.

Acquisition of Linear Technologies

In August, the company announced the acquisition of another analog chipmaker Linear Technology for about $14.8 billion. Linear Technology produces power management, data conversion, signal conditioning, RF and interface ICs, uModule(R) subsystems, and wireless sensor network products.

Recently the two companies announced that they had obtained antitrust clearances in the US and Germany and expect the deal to completed in the first half of 2017, subject to receipt of remaining regulatory approvals.

The merger is expected to reduce Analog’s reliance on Apple while adding product categories like power-management chips for handsets, which are one of the market’s fastest-growing areas per RBC Capital. It will create a stronger rival to Texas Instruments.

Rising Estimates

Analysts have raised their estimates for the company after strong earnings and upgraded guidance. Zacks Consensus Estimates for the current and next year are now $2.91 per share and $3.33 per share, up from $2.90 and $3.31, 30 days ago.

The company has a pretty good record at beating estimates. They have beaten consistently for the last 13 quarters; the average quarterly beat for the last four quarters was 10.22%.

Returning Cash to Shareholders

Their dividend yield is 2.62% currently.  Over the past 12 months, they returned approximately $1 billion to shareholders via dividends and buybacks. They have been raising their dividend consistently and their plan is to grow the dividend by 5% to 10%.

Positive Industry Outlook

“Semiconductor-Analog” industry is currently ranked 52 out of 265 Zacks industries (top 20%). While some of the traditional businesses for chips have slowed down, many newer growth areas have emerged, leading to rising demand for better and faster chips.

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 >>.

Disclosure: I own shares of ADI in the Income Investor portfolio.

In-Depth Zacks Research for the Tickers Above

ANALOG DEVICES (ADI) – FREE report >>

Illumina: Zacks’ Bear of the Day Play

Illumina (ILMNFree Report) , a leading developer of next-generation tools for the large-scale analysis of genetic variation and function, saw its shares plunge over 25% in the after-hours session on October 10 when the company warned that Q3 revenue would be $18-23 million lower than expected as its sequencing instruments sales down were down 26%.

This was the second such pre-announcement of weaker numbers this year and investors responded quickly by dropping the stock from $185 to $135. Analysts took a little more time to respond with revisions to their estimate models, causing the stock to become a Zacks #5 Rank (Strong Sell) the following week.

The downward EPS revisions took the 2016 consensus down 4.8% from $3.53 to $3.36, representing only 1% growth for the full year.

And while 2017 estimates only dropped 4.6% from $4.11 to $3.92, maintaining double-digit EPS growth, the uncertainty about future sales and profits spreading out to next year could increase with only 8 analysts providing revisions thus far.

“Sell” With Margin Pressure Ahead

One investment bank analyst in particular was actually very quick to announce their new stance. On October 11, Paul Knight, CFA, of Janney Montgomery Scott dropped ILMN to a “Sell” rating with a $125 price target. Here’s what he had to say…

Lack of visibility in whole genome sequencing sales and the continuing investment in diagnostics with Helix and Grail will constrain profitability. Our Fair Value of $125 is based on a 21x multiple of 2017 EBITDA per share $5.95. With diminishing revenue and operating visibility, we believe the multiple paid compared to historical (28x) and LS Peers (14x) will continue to converge.

Knight explained further that in addition to the deceleration in revenue, “the diagnostics businesses take 6-9 years to develop significant commercial traction and the consequent investment in Helix and Grail will limit margin expansion at the company.”

Bright Century, Cloudy Decade

Illumina provides proprietary life science tools like microarrays to support genetic analysis for genomic research centers, academic institutions, pharmaceutical and biotech companies, and clinical labs.

The company’s tools will provide information that could be used to improve drugs and therapies, customize diagnoses and treatment, and cure disease. Illumina is developing a comprehensive line of products that can address the scale of experimentation and the breadth of functional analysis required to achieve the goals of molecular medicine. In this sense, they have big, long-term goals.

With many life sciences and genetics “tools” companies, the future seems bright. But the payoffs are often distant, or at least choppy. Illumina shares are now over 40% off their all-time high of $240 from July 2015.

And after warning twice this year, investors may be less likely to give third chances to management guidance. Until the estimates start turning back up, its time to let ILMM shares settle into a new value area. The Zacks Rank will let you know.

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

ILLUMINA INC (ILMN) – FREE report >>

Vail Resorts: Zacks’ Bull of the Day Play

I last wrote about Vail Resorts (MTNSnapshot Report) as a Zacks #1 Rank Strong Buy in December as analysts continued to raise earnings-per-share (EPS) estimates and price targets, and the stock climbed to new highs above $130 on excitement about the newly renovated Park City asset.

What’s changed about this story in the past 3 quarters? It’s only gotten better.

For a base of comparison, here’s what I wrote back then…

For the current fiscal year ending in July, the full-year EPS consensus rose over 15% from $3.33 to $3.85 in the past 90 days. And next year’s projections went from $4.18 to $4.45, representing 15.5% annual growth.

Well, Vail Resorts finished its 2016 fiscal year in July with EPS of $4.01, better than the $3.85 consensus almost a year ago. And the current fiscal year (ending July 2017) is now projected to hit EPS of $5.24 — nearly 18% better than the $4.45 projected in December — for over 30% growth this year.

Analysts and investors love that kind of growth, and its visible in share prices which hit all-time highs over $160 last month. And the Zacks Rank, driven by analyst estimate revisions, guided investors the whole way by consistently keeping MTN shares a #1 (Strong Buy) or #2 (Buy) for the past year.

Last winter was clearly very good to Vail’s business, especially as they capitalized on an acquisition that gave them the largest ski resort in the US. Here’s how I described the start of an exciting season right after the company reported a strong Q1 FY 2016…

Early Snow + Park City = Lifting Revenues

November snowstorms in the West allowed Vail Resorts to open its Colorado, Utah and California ski resorts prior to schedule. The pre-Thanksgiving opening of these resorts is expected to boost Vail’s top line in the coming quarter as the company cashes in on the demand for skiing early in the season, especially for those eager to schedule holiday trips.

This includes the newly renovated Park City resort in Utah. Vail bought Park City in Sep 2014 and took over the Canyons resort the year earlier. Later, it joined both through a gondola to form the biggest ski resort in the U.S. Here’s how management proudly spoke of their newest achievement in a December 18 press release at the grand opening of the Quicksilver Gondola…

“Park City is one of the most spectacular places on Earth and now, for the first time ever, our guests will have unprecedented access to over 300 trails, 41 lifts and 7,300 acres of skiable terrain across one Park City,” said Bill Rock, chief operating officer of Park City. “Quicksilver, Miners Camp and the $50 million in capital improvements across the resort will completely transform the guest experience at Park City. We are thrilled to debut these projects in time for the Christmas holiday.”

Further, the company’s two biggest season passes — the Epic and the Epic Local — would give guests access to the both the resorts. This would bring in a large number of guests, which would in turn boost the company’s revenues in the crucial winter months. Vail has been able to raise ticket prices as they watch the volume of ticket sales increase.

(end of December excerpt)

It Has Only Become More Epic

On August 8, Vail Resorts announced a “strategic combination” with Whistler Blackcomb whereby the former would buy all outstanding shares of the latter. That move launched MTN shares from a summer base around $145 to new all-time highs above $150 and they’ve never looked down since.

Rob Katz, chairman and chief executive officer of Vail Resorts, described the partnership thus…

“Whistler Blackcomb is one of the most iconic mountain resorts in the world with an incredible history, passionate employees and a strong community. With our combined experience and expertise, together we will build upon the guest experience at Whistler Blackcomb while preserving the unique brand and character of the resort as an iconic Canadian destination for guests around the world. We are delighted to add such a renowned resort to Vail Resorts and look forward to expanding our relationships in the Sea-to-Sky community, British Columbia and Canada,” said

Then on September 1, Vail Resorts announced the addition of European ski resorts in France, Italy, Switzerland and Austria to its industry-leading season pass. Here were the bullet highlights from the company press release…

– The Epic Pass Is The ONLY Multi-Resort Pass To Offer Significant Access To European Resorts

– The Epic Pass Also Features Unlimited, Unrestricted Access To World-Class Resorts In Colorado, Utah And Tahoe For Just $809

– Epic Pass Holders Now Have Access To The Best Skiing In Six Countries

– The Deadline For The Lowest Price Is Monday, Sept. 5, 2016

Analysts will be looking forward to Q1 fiscal year 2017 earnings in early December to see how many of those truly Epic passes were snatched up.

Analysts Happy to Wait in this Lift Line

Speaking of the analysts, I want to give credit where it’s due to those who praised this company, its management team, and its growth path last year. Here’s who got it right last year when I wrote my December report…

On December 8, 2016, Goldman Sachs upgraded Vail Resorts from Neutral to Buy with a price target of $144.

And the analysts at Janney Montgomery Scott took the opportunity to visit one of their favorite leisure companies [that month], concluding that the $50 million in capital improvements at Park City was an investment well spent. They rated shares a Buy with a fair value of $142 and here’s what they had to say…

“Given the FCF outlook and numerous opportunities for growth, we believe the stock is undervalued. We also think MTN is well positioned to benefit from several secular drivers within the ski industry, including the lack of new supply, which allows for pricing power.”

The Path to a $200 Stock

Now, let’s hear from a humble group of analysts at Wells Fargo who finally get it and aren’t afraid to say so. They were basically neutral on MTN shares, rating them Market Perform last winter, but steadily increasing estimates as the story grew. By June, they had increased their valuation range from $120-130 to $150-160, though keeping the rating at MP.

But last week, they finally upgraded MTN to Outperform after they updated their model following this month’s closing of the Whistler Blackcomb acquisition. Their FY17 EPS estimate jumped to $5.68 from $4.90.

According to the StreetInsider.com story on October 20, the Wells Fargo valuation range for MTN increased to $165-180 per share and analyst Cameron McKnight said he saw “a path to $200 in an upside scenario.”

In the report titled “Better Late Than Never,” the analysts spoke of the potential upside from a strong management team and strong industry fundamentals.

The top, and the bottom, of this world-class lift line just keeps getting better.

And the next quarterly report for Vail Resorts should continue to break top and bottom line records. This could easily shoot the stock to new all-time highs above $170. Grabbing some shares now under $160 seems like a good risk/reward idea to me.

Want to see all of today’s Strong Buys?

Today’s Bull of the Day is just one of 220 Zacks Rank #1 stocks. Right now the full, up-to-the-minute list is available to you free of charge. There is no better place to start your own stock search. Plus you can access the full list of Zacks Strong Sells and a lot more of our private research. See the stocks free >>.

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Boston Beer: Zacks’ Bear of the Day Play

Boston Beer (SAMFree Report) has only missed the Zacks Consensus Estimates in two of the last seven quarters. It is now a Zacks Rank #5 (Strong Sell) and is the Bear of the Day. Let’s take a look at why this is the case.

Description

Boston Beer is the maker of the Same Adams beer that is solid throughout the world. There are approximately 60 different beer that carry the Samuel or Sam Adams name but the company also makes and sells ciders and other beverages.

Recent Earnings

SAM missed the Zacks Consensus Estimate of $2.54 by $0.06 for a negative earnings surprise of 2.4%. Revenue came in at $271M while the Zacks Consensus Estimate was looking for $291M.

Estimates

The Zacks Consensus Estimate has been falling over the last few months. The FY16 estimate stood at $7.84 in March and then fell to $6.45 in September. The estimate currently states at $6.37.

Next year has also seen a move lower in estimates with the 2017 Zacks Consensus Estimate moving from $8.50 to $6.76 over the same time period.

The decline in estimates is the main reason this is a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

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 #5 (Strong Sell) we see that estimates are moving higher.

BOSTON BEER INC Price and Consensus

BOSTON BEER INC Price and Consensus | BOSTON BEER INC Quote

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 >>.

Follow Brian Bolan on twitter at @BBolan1

In-Depth Zacks Research for the Tickers Above

BOSTON BEER INC (SAM) – FREE report >>

Amazon: Zacks’ Bull of the Day Play

Amazon (AMZNFree Report) is just about to report earnings. It was a little more than a year ago that I played some calls for a huge gain following the first prime day, this year I bought even more stuff. Let’s take a look at the fundamentals of this stock and explore why it is a Zacks Rank #1 (Strong Buy) and the Bull of the Day.

Why I Like It

This is a large-cap stock is a market leader.

A good earnings history when compared to the Zacks Consensus Estimate.

From March to October there were consistent monthly increases in the Zacks Consensus Estimate for 2016 and 2017.

Revenue diversification from AWS bolsters the retailing business and the company looks to attack other verticals as well.

Follow Brian Bolan on twitter at @BBolan1 and on StockTwits at the same address.

The Recent Numbers

I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. AMZN reported the June 2016 quarter back in late July, so we are only weeks away from the company reporting the September quarter.

The most recent quarter was a beat on bottom. The company posted EPS of $1.78 when the Zacks Consensus Estimate was calling for $1.14. That translates into a positive earnings surprise of 56%.

Revenue came in $670M ahead of expectations for a 2.25% positive revenue surprise. As a result, the stock was bid up by more than 3% in the session following the report.

Description

Amazon.com sells consumer products and Web Services worldwide. The company was founded in 1994 and is headquartered in Seattle, Washington.

Earnings History

The company has a strong history of beating the Zacks Consensus Estimate. There has only been one miss in the last six reports. The rest of the reports were all beats.

Estimates

The estimate picture looks really good, with the Zacks Consensus Estimate for 2016 moving from $4.50 in March to $5.86 in October.

The 2017 number moved from $8.07 in March to the current reading of $10.72.

Valuation

The value investors hate this stock. The growth oriented investors love this stock. The metrics always seem high for AMZN, as trailing twelve months PE was 203x compared to an industry average of 32x. The forward multiple of 140x is many multiples of the 26.5x industry average. Price to book comes in at 23x while the industry average comes it at 6x. Price to sales is almost in line, with a multiple of 3.2x for the AMZN vs the 2x industry average.

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 line 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.

AMAZON.COM INC Price and Consensus

AMAZON.COM INC Price and Consensus | AMAZON.COM INC Quot
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