Lennar, Barracuda Networks, Ashford Hospitality Trust, Boston Properties and Hersha Hospitality Trust highlighted as Zacks Bull and Bear of the Day - Press Releases
For Immediate Release
Chicago, IL – July 23, 2015– Zacks Equity Research highlights Lennar Corporation (LEN) as the Bull of the Day and Barracuda Networks (CUDA) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ashford Hospitality Trust, Inc. (AHT),Boston Properties Inc. (BXP) and Hersha Hospitality Trust (HT).
Here is a synopsis of all five stocks:
Bull of the Day:
Earnings estimates have risen sharply for Lennar Corporation (LEN) after the company delivered strong second quarter results on June 24. A recovering housing market is helping to drive solid revenue and earnings growth for the homebuilder.
Lennar is a Zacks Rank #1 (Strong Buy) stock.
Lennar Corporation is a homebuilder that operates across the United States. It was founded in 1954 and is headquartered in Miami.
Lennar reported its second quarter results on June 24. Earnings per share came in at $0.79, beating the Zacks Consensus Estimate of $0.65. It was 30% increase over the same quarter last year.
Revenues jumped 32% year-over-year to $2.393 billion, well ahead of the consensus of $2.041 billion. Revenue in its homebuilding segment, which accounted for 88% of total revenues, rose 29%. Revenues from home sales rose 30%, driven by a 20% increase in the number of home deliveries, excluding unconsolidated entities, and an 8% increase in the average sales price of homes delivered to $348,000.
Through the first two quarters of 2015, the average sales price of homes delivered from 5.9% year-over-year, from $320,000 to $339,000.
CEO Stuart Miller stated that "[t]he homebuilding market continued its steady improvement throughout our second quarter. Driven by higher wages and employment, reasonable affordability levels, supply shortages and favorable monthly payment comparisons to rentals, the homebuilding market is well positioned for multi-year growth ahead."
Bear of the Day :
Barracuda Networks (CUDA) recently delivered disappointing fiscal 2016 first quarter results, prompting analysts to revise their estimates lower for both this year and next. This sent the stock to a Zacks Rank #5 (Strong Sell).
Despite shares of Barracuda selling off, it still does not look like a value at more than 200x forward earnings.
Since I last warned about Barracuda Networks in the 'Bear of the Day' on January 30, shares have fallen -19%.
Barracuda Networks, Inc. provides storage and security solutions. Its products address security threats, enhance network performance, and protect and store data. The company is headquartered in Campbell, California and was founded in 2003. It has a market cap of $1.5 billion.
First Quarter Results
Barracuda Networks reported its fiscal 2016 first quarter results on July 9. Adjusted earnings per share (but including stock-based compensation expense) came in at -$0.03, missing the Zacks Consensus Estimate of +$0.04.
Revenue rose 18% year-over-year to $77.97 million, which was ahead of the consensus of $77.0 million.
Adjusted EBITDA (but once again included stock-based compensation) plunged 43% year-over-year. However, operating cash flow increased 17% to $6.3 million.
Research and development costs increased from 19.6% to 23.1% of total revenue. The company recorded total stock-based compensation expense of $6.5 million in the quarter, which was more than double the amount in the same quarter last year.
Additional content:
Will REITs Keep the Q2 Earnings Boat Afloat?
The Q2 earnings season is in full gear and drum beats of success can be heard across the broader Finance sector, of which the real estate investment trusts (REITs) are part. Banking behemoths came up with better-than-expected results, thanks to lesser litigation charges and cost control amid moderate improvement in core business.
However, since the majority of REITs are yet to report, the time is right to size up the industry fundamentals and the past-quarter performance to figure their chances of beating. This is important because usually an earnings beat raises investors’ confidence in a stock, leading to rapid price appreciation and ensuring more gains from one’s investments.
Its common knowledge that REIT stock prices have been subject to volatility in the recent past, thanks to the speculations tied to the rate hike and treasury yield moves. But the fundamentals, on the other hand, reveal stability and continued strength.
REIT Fundamentals Remains Stable
And why not? After all, despite global issues, the domestic economy has steadily been gaining ground. The labor market is showing strength and consumer confidence is upbeat. The spending level of consumers is picking up amid better job prospects and higher business momentum while housing recovery and cheaper fuel are boosting their purchasing power. And all these are leading to renewed optimism in the market.
With real estate catering to all basic essentials and even luxuries, the REIT sector too is well leveraging on this recovery as higher economic activity translates into more occupancy for assets and scope for growth in rents. This is quite evident from the recent study of the commercial real estate services firm CBRE Group Inc. (CBG) that reveals solid momentum across all property types.
The Study
Per the CBRE Group study, the vacancy rate in the office sector declined 40 basis points (bps) to 13.5% during Q2 of 2015, nearing the lowest point since the Q3 of 2008 level of 13.2%. With anticipations of better growth in this second half of 2015, hiring is expected to gather pace, leading to a sustained recovery of the office market fundamentals.
Further, the Industrial market is on its lengthiest stretch of recovery with industrial availability rates remaining flat or falling for 21 consecutive quarters. Last quarter saw a decline of 30 bps in industrial availability rates from the prior quarter to 9.8%, in line with the cyclical low seen in Q4 of 2007. Increase in consumer spending and e-commerce growth as well as the revival of the manufacturing sector amid low energy prices is not only helping in the buoyancy of the domestic economy but is also fueling the sector’s growth.
And with the economy looking upbeat, apartments are in demand, with Q2 multifamily housing vacancy rate falling 30 bps year over year to 4.3%. The retail sector was not far behind with a 10 bps drop in availability rate from Q1 of 2015 to 11.4%. Essentially, a fat wallet courtesy of economic recovery translates into higher retail goods sales.
How to Select Favorable Stocks?
The above-mentioned REIT sub-sectors may have experienced continued strength, but not all the stocks in these sectors are equally poised to benefit. Hence, choosing the right stocks could be quite difficult unless one knows the right method.
One way of doing so is by selecting stocks that have the combination of a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have the best chance to surprise with their upcoming earnings announcements. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for the stocks with this combination, chances of a positive earnings surprise are as high as 70%.
Here are 3 REIT stocks that have the right combination of elements to deliver an earnings beat when they release their second-quarter results:
Ashford Hospitality Trust, Inc. (AHT) carries a Zacks Rank #1 and has an Earnings ESP of +4.76%. The Zacks Consensus Estimate for the second quarter is pegged at 42 cents per share. The company delivered positive earnings surprises in all the last four quarters, with an average beat of 18.45%.
Dallas, TX-based Ashford Hospitality Trust is a lodging REIT that is engaged in opportunistic investments in upper upscale, full-service hotels. Its dividend yield is 5.47%.
- Ashford Hospitality Trust is scheduled to report second-quarter results after the market closes on Aug 6 .
Boston Properties Inc. (BXP) has a Zacks Rank #2 and an Earnings ESP of + 1.49%. The Zacks Consensus Estimate for the quarter is $1.34 per share. The company delivered positive earnings surprises in three out of last four quarters, with an average beat of 3.23%.
Massachusetts-based Boston Properties Inc. is a REIT that primarily owns and develops Class A office real estates in the U.S. The company’s properties are concentrated in four core markets: Boston, New York, San Francisco and Washington, DC.
- Boston Properties is slated to report second-quarter results after the market closes on Jul 29 .
Hersha Hospitality Trust (HT) has a Zacks Rank #1 and an Earnings ESP of +4.29%. The Zacks Consensus Estimate for the second quarter is pegged at 70 cents per share. The company has a decent track with respect to earnings. It delivered positive earnings surprises in each of the last four quarters, with an average beat of 15.41 %.
This Maryland REIT in the hospitality sector owns and operates high quality upscale hotels in urban gateway markets including New York, Washington DC, Boston, Philadelphia, South Florida and select markets on the West Coast.
- Hersha Hospitality is slated to release second-quarter results after market close on Jul 28 .
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LENNAR CORP -A (LEN): Free Stock Analysis Report
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ASHFORD HOSPTLY (AHT): Free Stock Analysis Report
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HERSHA HOSPTLY (HT): Free Stock Analysis Report
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