For Immediate Release
Chicago, IL – July 25, 2014– Zacks Equity Research highlights Chipotle Mexican Grill Inc. (CMG-Free Report) as the Bull of the Day and Guess? Inc. (GES-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon (AMZN-Free Report), Pandora (P-Free Report) and Wyndham Worldwide Corporation (WYN-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Chipotle had increased its menu prices during the second quarter, for the first time in three years, in response to rising food costs but its customers did not care. Same-store sales jumped 17.3% for the quarter, driven primarily by increased traffic. Analysts loved the quarterly results and have increased their estimates and price target for the company.
Rising estimates sent CMG to Zacks Rank # 1 (Strong Buy) yesterday.
Founded in 1993 and based in Denver, CO, Chipotle Mexican Grill Inc. (CMG-Free Report) operates fast-casual Mexican food restaurant chains in 35 states throughout the United States, the District of Columbia and Ontario, Canada and the U.K.
The company increased its menu prices by about 6.25% to 6.5% on average, starting in late April and finishing in late June, with the increase varying by market and by menu item. For example, steak prices were raised by about 9% on average, while chicken prices were raised about 5%.
According to the management, apart from the slight shift from steak to chicken—which was expected by them—their customers have generally responded well so far to the price increases.
Chipotle reported its Q2 results on July 21. Revenues grew 28.6% year-over-year to $1.1 billion and beat the Zacks Consensus Estimate of $980.0 million by 7.1%. The upside was driven by higher comps growth and opening of 45 new restaurants.
Bear of the Day:
Started in 1981 as a family business Guess? Inc. (GES-Free Report) designs, markets, distributes and licenses fashion apparel and accessories. Its products are sold through retail, wholesale, e-Commerce and licensing distribution channels.
GES directly operates 491 retail stores in the US and Canada and 350 retail stores in Europe, Asia and Latin America. Additionally, 856 retail stores outside of the US and Canada are operated by company's licensees and distributors.
On May 29, Guess? Inc. reported financial results for first quarter of its fiscal 2015. The apparel retailer posted a loss of $0.03 per share, which compared unfavorably with earnings of 14 cents mainly a year ago.
However, the loss was narrower than the Zacks Consensus Estimate of a loss of $0.06 per share as well as management’s expected range of a loss of $0.09–$0.05 per share. Tighter expense control contributed was the main factor behind better-than-expected results.
Revenues for the quarter were $523 million, 5% lower than the prior year and down 6% in constant currency terms. Comps fell 3.8% in the quarter due to lower mall traffic, but were better than 5% shortfall in the previous quarter.
According to the company, though the first two months of the quarter were affected by the change in Easter timing and adverse weather conditions, the business rebounded strongly in April.
However, the company provided a downbeat outlook for the upcoming quarter. They now expect both revenues and earnings to be lower than the prior year level. The management does not expect any notable improvement in Europe this year. They also expect economic conditions to continue to be challenging especially in Korea .
Amazon, Pandora Disappoint, Shares Tank
Both Amazon (AMZN-Free Report) and Pandora (P-Free Report) reported earnings after the bell Thursday, and both innovative tech firms disappointed so badly that after-market trading is taking a big chunk out of both AMZN and P shares: Amazon is trading 7.5% lower as of now, Pandora down 12%. Amazon beat the Zacks consensus estimate on the revenue side, but missed badly on the bottom line. Pandora reported in-line earnings and sales, but guidance for Q3 was below expectations.
Amazon CEO Jeff Bezos' methods of growing his company have literally nothing to do with quarterly earnings results, of course; his goal, as always, is larger and larger volume in more and more industries. Thus, 23% year-over-year growth in sales depicts the Amazon ship steady as she goes, and the company's operating cash flow reached $5.33 billion in the quarter, up 18%. However, favorable foreign exchange rates may have tweaked Amazon's revenue number higher, and analysts had been looking for 24-25% growth from Q2-13.
Beyond this, Amazon now has a plethora of tools and gadgets it's working into the marketplace, not the least of which is the Fire smartphone, which begins shipping today. It contains a host of other proprietary sensor systems like Firefly and Dynamic Perspective. If the Fire phone "gets hot" in Q3 and beyond (apologies), then perhaps Amazon might demonstrate a turnaround from its current hemorrhaging on its bottom line.
Amazon seems to be trying investors' patience right now, in fact. This earnings miss was likely the biggest we'll see this entire earnings season from one of the top stocks in the market. Currently, Amazon carries a Zacks Rank #5 (Strong Sell) on downwardly revised analyst estimates for 2014 and 2015.
Pandora upped its mobile ad revenue to 76%, but this was not enough to keep the stock from giving away all of its 4.25% gain at the close of regular Thursday trading, and then some. The company has plenty of competition in streaming music, and finding ways to more efficiently monetize has proven tough sledding for the company.
Wyndham Beats on RevPar Growth, Ups Guidance
Leading hospitality company, Wyndham Worldwide Corporation’s (WYN-Free Report), second-quarter adjusted earnings of $1.17 per share beat the Zacks Consensus Estimate of $1.13 by 3.5% which, we believe, was due to better-than-expected revenues.
Further, quarterly earnings were up 19.4% year over year led by strong performance by the company’s Lodging as well as Vacation Ownership businesses and share repurchase activities.
Net revenue grew 7.2% year over year to $1.34 billion in the quarter, beating the Zacks Consensus Estimate of $1.33 billion by 0.8%. Solid revenue growth in all the three operating segments aided quarterly sales.
Inside the Headline Numbers
Wyndham has three operating segments — Lodging, Vacation Exchange and Rentals and Vacation Ownership. All the segments have both domestic and international operations.
Wyndham’s Lodging segment revenues grew 8.0% year over year to $283.0 million in the quarter, driven by 8.8% rise in domestic revenue per available room (RevPAR).
Systemwide RevPAR grew 5.6% in the quarter. The increase reflects an 8.8% domestic increase, partially offset by 4.3% decline in international RevPAR, which primarily reflects unfavorable currency movements.
Adjusted EBITDA for the second quarter of 2014 was $87 million, a 12% increase from the prior-year quarter, primarily due to higher RevPAR.
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on CMG - FREE
Get the full Report on GES - FREE
Get the full Report on AMZN - FREE
Get the full Report on P - FREE
Get the full Report on WYN - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.