For Immediate Release
Chicago, IL – June 17, 2020 – Zacks Equity Research Shares of Baozun BZUN as the Bull of the Day, AMC Entertainment AMC asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Zoom Video Communications, Inc. ZM, Amazon.com, Inc. AMZN and Netflix, Inc. NFLX.
Here is a synopsis of all five stocks:
Bull of the Day:
The spread of COVID-19 and the ensuing global shutdown caused a seismic shift in the economy. Old school, brick-and-mortar businesses which were already on their last legs, were put out of their misery. That same death knell was the dinner bell for other industries which are positioned to benefit from the shift in behavior. Anything that ties into cloud-based connections or e-commerce has seen an incredible tailwind. The increase in activity has been enough to lift all boats in the harbor, not just giants like Amazon.
Today’s Bull of the Day is one company benefiting from the increase in e-Commerce business. It’s Zacks Rank #1 (Strong Buy) Baozun. Baozun Inc. provides brand e-commerce service to brand partners in the People's Republic of China. It offers end-to-end e-commerce solutions, including IT infrastructure setup and integration, sale of apparel, home and electronic products, online store design and setup, visual merchandising and marketing, online store operations, customer services, warehousing, and order fulfillment.
The reason for the favorable Zacks Rank is the upwards movement in earnings estimates coming from analysts. Over the last thirty days, the Zacks Consensus Estimate for the current year is up from $1.06 to $1.13 while next year’s number is up from $1.64 to $1.75. Those numbers would represent year-over-year earnings growth of 31.4% and 55.31% respectively. Revenues are estimated to grow dramatically as well with current year growth calling for 22.18% growth and next year at 22.3%.
Over the last few years, the company has gotten into the bad habit of over-promising and under-delivering when it comes to earnings. Taking a look at the Price, Consensus and EPS Chart above, the multicolored lines represent our Zacks Consensus Estimates over time while the black line represents price. That upper-left to lower-right action across several years illustrates estimates coming down over time. This behavior continued on up until earlier this year. There is a chance that this disturbing trend has finally come to an end. That would be great for long-term investors here with the stock well shy of all-time highs which sit up over $60.
Bear of the Day:
You probably don’t need me to point out the fact that nobody goes to the movies anymore. It’s sort of a shame. I remember taking my first dates there, spilling popcorn on myself and dropping the soft drink. At least my Mom said I looked nice when she dropped me off at Old Orchard Mall, while a crowd of my friends clowned me for wearing slacks and a sweater. Those were the glory days of the movie theater before Netflix took over and COVID delivered the knockout blow.
Today’s Bear of the Day is the struggling AMC Entertainment. AMC Entertainment Holdings, Inc., through its subsidiaries, involved in the theatrical exhibition business. The company owns, operates, or has interests in theatres. As of March 17, 2020, it operated approximately 1,000 theatres and 11,000 screens in the United States and internationally.
AMC Entertainment is in rare air as far as our Zacks Rank is concerned. It is currently a Zacks Rank #5 (Strong Sell), a function of earnings estimates continuing to tumble. However, it also features the rare combination of Fs on our Style Scores. That’s an F for Value, F for Growth, F for Momentum, and a VGM Composite Score of, you guessed it, F.
Five analysts have slashed their earnings estimates for the current year while three have done so for next year. The results are absolutely disheartening. Our current year Zacks Consensus Estimate has plummeted from a $1.17 loss ninety days ago to a $27.75 loss. That’s the single largest earnings loss I have ever seen for any stock. Next year’s number is down from a 75-cent loss to $2.26. Revenues are estimated to tumble by 52.4% this year to $2.6 billion versus $5.47 billion last year.
The Leisure and Recreation Services industry ranks in the Bottom 41% of our Zacks Industry Rank.
3 Shelter-in-Place Stocks to Play for a 2nd Wave of Coronavirus
As governments across the world are gradually relaxing shelter-in-place measures, aimed at curbing the spread of coronavirus infection, fears of a rise in infection cases are spreading. The fears might not be unwarranted as over the past three days, a record number of new coronavirus cases have been reported in the United States.
Alaska, Arizona, Arkansas, California, Florida, North Carolina, Oklahoma and South Carolina are some of the states that have witnessed a resurgence of new COVID-19 cases.
Similarly, China on Jun 13 registered the highest uptick in coronavirus cases since mid-April, according to Bloomberg News citing National Health Commission data. And Beijing recently shut down its largest wholesale food market amid a sudden spike in coronavirus cases. Nearly 49 new coronavirus cases were confirmed recently, tracing to a wholesale market known for supplying meat and vegetables.
And with new cases on the rise, most are no doubt willing to spend a lot more time at home. The stay-at-home trend is a blessing in disguise for video streaming services, videoconferencing platforms and dominant cloud players, to say the least. In fact, shelter-in-place stocks rallied on Jun 15, with majority of them outperforming the broader market. Given the bullish trend, keeping an eye on some of them won’t be a bad proposition. Take a look –
Videoconferencing Pioneer Zoom Video
Shares of Zoom Video Communications, Inc. rose 8.9% to close at a record high of $239.02 on Jun 15 after touching an all-time intra-day high of $239.59. In comparison, the broader S&P 500 closed up 0.8%.
The stock moved upward on expectations of increased Zoom’s video conferencing services and products due to the renewed spread of coronavirus, compelling a large number of people to stay connected with friends and family, and work from home.
In recent times, the company’s paid subscriber growth for the video conferencing service already improved, and CEO Eric Yuan said that the Zoom platform has been able to provide “an incredibly valuable service to our beloved users” amid the coronavirus-induced stay-at-home scenario.
Going forward, the company’s efforts to eradicate security and privacy flaws are expected to help Zoom Video further expand user base. The Zacks Consensus Estimate for its current-year earnings has risen more than 100% over the past 60 days.The company’s expected earnings growth rate for the current quarter and year is 462.5% and 237.1%, respectively. In fact, the Zacks Rank #1 (Strong Buy) flaunts a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dominant Cloud Player – Amazon
A majority of people are expected to remotely work or learn, most of the companies need to move a bulk portion of their workloads to the cloud. Thus, any consumer-oriented business needs to have a digital presence built on the cloud in order to survive.
Hence, Amazon.com, Inc. is certainly under the spotlight as it is currently one of the biggest players in the cloud infrastructure market. The Seattle-based company has a solid presence throughout the Internet via Amazon Web Services (“AWS”). And some of big names, including General Motors, Baidu, Spotify, McDonald’s, Twitter and Johnson & Johnson, use AWS.
AWS has more than a 30% market share in cloud infrastructure and easily dwarfs rivals Azure (17% share) and Google Cloud (6% share). By the way, Amazon in itself is benefiting from its Prime program, delivery and logistic system in the e-commerce space. The Zacks Consensus Estimate for its current-quarter earnings has advanced 4.8% over the past 30 days. The company’s expected earnings growth rate for the next quarter is 18.9%. Amazon currently possesses a Zacks Rank #3 (Hold).
Streaming Giant – Netflix
Netflix, Inc. is well poised to add millions of subscribers owing to more people confined to their homes. The provider of streaming services, in fact, has been expanding its subscriber growth for a while now, mostly driven by content strength, focus on originals across various genres and languages, rapid international expansion and partnerships with telcos.
To top it, Netflix entered this year’s Oscars with 24 nominations, and walked away with two. Such wins certainly help lure and retain subscribers in the face of challenges from rival services like Disney+ and Apple TV+.
Netflix currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved 6.3% north over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 205% and 55%, respectively.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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