Belmond, Gap, ExxonMobil, Statoil and EniSpA highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – May 25, 2016 – Zacks Equity Research highlights Belmond Ltd. (BEL) as the Bull of the Day and Gap Inc. (GPS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on ExxonMobil Corp. (XOM),Statoil ASA (STO) and EniSpA (E).
Here is a synopsis of all five stocks:
Bull of the Day :
Belmond Ltd. (BEL) is cashing in on the demand for "experiences." This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in 2016.
Belmond is a luxury travel and hotel company. It operates 46 hotels worldwide including in destination cities like Venice, St. Petersburg and Santa Barbara. It also operates 7 luxury tourist trains, including the Venice Simplon Orient Express, three river cruises, safaris and the "21" Club restaurant in New York City.
Big Beat in the First Quarter
The first quarter of the year is historically a seasonally slow one for Belmond but it beat the Zacks Consensus by 9 cents. Earnings were a loss of 3 cents compared to the Zacks Consensus Estimate of a loss of 12 cents.
It has surprised 3 out of the last 4 quarters.
First quarter constant currency RevPAR growth exceeded the company's own guidance, rising 9% year over year on a constant currency basis. The quarter was boosted by a 5% increase in average daily rate ("ADR") and a 3 percentage point increase in occupancy.
Europe was a highlight in the quarter with revenue rising 13% year over year. In particular, it saw revenue growth of $1 million, or 31%, at Belmond Reid's Palace in Madeira Portugal due to increased demand for that destination.
It's river cruises, however, saw declining revenue in the quarter as one of its two cruise ships in Myanmar, the Belmond Road to Mandalay, saw a 32% revenue decline due to increasing competition in the country. Up until this year, Belmond mostly had river cruising in Myanmar to itself.
Analysts Are Bullish
The company said it was encouraged by the strong start to the year in what is historically its slow period.
The analysts are encouraged too as estimates have risen since the earnings report.
2 estimates have moved higher in the last 30 days pushing up the 2016 Zacks Consensus Estimate to 22 cents from 16 cents.
That is earnings growth of 22.2%.
Earnings are expected to move higher in 2017, albeit not quite as strongly. But analysts see another 4.5% earnings growth in 2017.
Bear of the Day:
Gap Inc. (GPS) continues to struggle as it can't find it's way in the ever changing apparel landscape. This Zacks Rank #5 (Strong Sell) has again had its estimates cut for this year and next.
Gap is a global specialty retailer with more than 3300 company-operated stores and 400 franchised stores in 90 countries along with e-commerce sites. It operates the well-known brands Gap, Banana Republic, Old Navy, Athleta and Intermix brands.
Another Bad Quarter
Gap has been struggling since 2015 as it found itself off trend with its flagship brand Banana Republic and came up against steep competition on the low end where its Old Navy brand had thrived.
Comparable store sales were down across its three largest brands, and the only ones which it breaks out sales comps for.
Gap global comparables fell 3%, Old Navy declined 6% while Banana Republic slid 11%.
This was the quarter where we were supposed to see improvement in Banana's numbers as it was rolling out, what it believed, would be a popular spring line. But the shoppers haven't yet returned.
Many former Banana customers, myself included, are leery. We will pay for quality. If I want to shop at the cheaper level like H&M, I'll shop there. Give me something that won't fall apart in 2 months.
Additional content:
Oil Discoveries Lowest Since 1952: Is This Bottom?
Per a report by research firm IHS, the year 2015 marks the least amount of oil and gas discovered in over the last 64 years.
New oil discovered outside North America in 2015 totaled 2.8 billion barrels, the lowest amount since the industry actively started its worldwide oil exploration after World War II. The year also represented the fourth straight year of declining oil volumes – something that had never happened before.
Notably, about 9 billion barrels of oil equivalent (BOE) was added through gas discoveries in the year. This signifies the fifth consecutive year wherein gas volumes discovered surpassed oil volumes discovered.
Factors Behind the Decline in Volumes
Per Morgan Stanley, major oil players have been forced to make substantial budget cuts to combat the freefall in oil prices. This is particularly true with respect to exploration, where spending was reduced to a meager $95 billion in 2015 from $168 billion two years earlier. ExxonMobil Corp. ( XOM) is among the long list of companies that have slashed their capital budget.
Moreover, the industry-wide pullback of drillships from international waters as companies began to shift focus to shale formations in Texas, North Dakota and Oklahoma resulted in decline in discoveries. Given that investments in shales are both cheaper and less risky than drilling in international waters, the move was an expected one in the lackluster commodity price scenario.
However, analysts are of the opinion that the unconventional oil in North America is not sufficient to resolve the lack of discoveries. Tight oil production is estimated to account for about 15% of global output by 2040.
At the start of the decade, when oil demand rose rapidly, explorers were seen splurging astronomically on exploration. However, the outcome was poor with only a few notable hydrocarbon discoveries, such as Statoil ASA's (STO) Johan Sverdrup field off Norway's coast or EniSpA's (E) giant Zohr gas field off Egypt.
In 2015, companies drilled about 4,300 conventional exploration and appraisal wells compared with 5,200 in 2014 and 5,300 in 2012. Deep-water drilling, which means drilling in 1,000 to 5,000 feet of water, decreased by more than 20% and the ultra-deepwater well count plunged more than 40% from 2014.
However, a surge in new oil fields in recent years and the increase of Iran's production on the back of international sanctions raises optimism about exploration in the short term.
Over the longer run we feel to avoid any supply gap in the future, we believe that exploration companies should continue to focus on exploring instead of waiting for the commodity price to improve. In case the companies do not take immediate action, the challenges may be difficult to overcome. After all oil discoveries are essential to substitute resources, meet an ever-growing demand and offset the depletion of existing fields.
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BELMOND LTD (BEL): Free Stock Analysis Report
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