Tiffany, Mattel, Facebook, Google and Twitter highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 28, 2014– Zacks Equity Research highlights Tiffany & Co. (TIF-Free Report) as the Bull of the Day and Mattel (MAT-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook Inc. (FB-Free Report), Google (GOOGL-Free Report) and Twitter (TWTR-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
2014 has been an interesting year for retailers to say the least. Several clothing stores have had horrendous first half results as changing tastes have hit many companies hard. Meanwhile, in the restaurant side of the retail space, a similar trend has taken place as ‘higher quality’ companies are leaving their value-oriented counterparts in the dust.
This trend of high end outperforming lower end or value in the retail world is one of the bigger stories in this sector so far this year. And for a classic stock example of this that may still have more room to run as we close out the year, investors have to look no further than Tiffany & Co. (TIF-Free Report).
Tiffany & Co is a New York City-based jewelry retailer, specializing in fine and solitary jewelry, though the company also sells watches, perfumes, and accessories as well. The company is obviously operating in the high end corner of the market, and like many of its high end peers across the retail world (no matter the industry), it is really turning up the heat as of late in terms of stock price appreciation, including a 20% move higher in the past six months alone.
A big reason for this jump is the recent earnings picture for the company, and TIF’s beats at earnings season. TIF posted EPS of 97 cents, easily crushing the consensus estimate of 77 cents a share.
The beat was thanks to strong sales, which were up 13% from the year ago quarter, while comparable-store sales also saw a double digit increase as well.
Bear of the Day:
It has been extremely rough as of late for some toymakers as the world goes increasingly digital. Companies are now forced to find tie-ins to movie or TV franchises in order to keep their brands in the public eye and boost sales.
Some companies in this space have been successful lately with this strategy, such as Hasbro and their Transformers brand. Others, however, have struggled to do this and are also seeing their more ‘traditional’ toys fall by the wayside too. This is especially the case for a classic toy company which is going through an extremely bad rough patch, Mattel (MAT-Free Report).
Mattel was founded in 1945 and is headquartered in Segundo, California. The company has a ton of world famous brands including Fisher-Price, Hot Wheels, and of course, Barbie. While the stock was a strong performer in years past, consumers seem to be tiring of many of the firm’s all-star brands in recent years, leading to many questions about how Mattel can revive interest in its products.
These worries are especially prevalent following the company’s most recent earnings report. The company saw extremely weak revenue figures across a number of segments, leading to a huge earnings miss of over 84%.
Additional content:
Facebook to Collaborate with Uber
Facebook Inc. (FB-Free Report) and taxi-summoning mobile app Uber are reportedly discussing plans to collaborate. Although the details of the negotiations are few, Uber is likely to be integrated within Facebook’s messenger app.
The collaboration will benefit both Facebook and Uber in the long run. The partnership will significantly expand Uber’s customer base. Facebook, on the other hand, will get access to a huge amount of data related to users’ payment behavior, frequency of taxi usage and traveling information.
Based on this data, Facebook will be able to build customer profiles, which will help advertisers to post relevant ads. Moreover, data about users’ payment behavior will help Facebook to develop the nuances of its e-Commerce operations. The integration with Uber will eventually help Facebook to offer payment options through its Messenger app that will further boost its top line over the long term.
Facebook is gearing up to expand its e-Commerce offerings. The social network is testing a ‘Buy’ button that will allow users to purchase goods from merchants without leaving the core app. The company currently will not charge any fees on the transactions done over the network.
Facebook is testing the new button with a selected few small and medium-sized merchants in the United States. Once satisfied, it will be available to both mobile and desktop users, who can use their credit cards (registered with Facebook) to purchase goods.
Earlier, Facebook had tried several options to expand its e-Commerce offerings without much success. The simplicity of the current payment process will boost conversion rate, which is the primary aim of every merchant. We believe that a higher conversion rate will enable Facebook to charge merchants in the long run.
Per eMarketer, global business-to-consumer (B2C) e-Commerce sales will increase 20.1% to $1.5 trillion in 2014. This is expected to hit $2.4 trillion by 2017, which presents a significant growth opportunity for both Facebook particularly due to its massive user base.
Amid growing competition from Google (GOOGL-Free Report) and Twitter (TWTR-Free Report) for attracting ad dollars, e-Commerce offerings will diversify Facebook’s revenue source over the long haul. In the recently ended second-quarter 2014, advertising contributed approximately 92.0% of Facebook’s top line, which is a concern.
Moreover, higher investments on product and infrastructure development will hurt profitability in the near term.
Currently, Facebook has a Zacks Rank #4 (Sell).
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