For Immediate Release
Chicago, IL – March 28, 2019 – Zacks Equity Research Columbia Sportswear Company COLM as the Bull of the Day, Nutrien Ltd. NTR asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Chipotle CMG, Yum Brands YUM and Starbucks SBUX.
Here is a synopsis of all five stocks:
Bull of the Day:
Columbia Sportswear Companyis cashing in on the athleisure and active wear bonanza. This Zacks Rank #1 (Strong Buy) had a record 2018 with more earnings growth to come in 2019.
Columbia Sportswear is a specialty retailer in apparel, footwear, accessories and equipment. Its brands are sold in 90 countries through its own stores and web sites.
It isn't just the Columbia brand, however, as it also owns Mountain Hardwear, SOREL and prAna.
Big Beat in the Fourth Quarter
On Feb 7, Columbia reported its fourth quarter 2018 results and blew by the Zacks Consensus Estimate. It reported earnings of $1.68 versus the consensus of $1.27, a beat of 41 cents.
It has a fantastic earnings surprise track record. It hasn't missed since Zacks data began in 2015.
In the fourth quarter, sales rose 18% to a record $917.6 million as the major brands and geographic locations gave the quarter a boost.
It's largest brand, Columbia, saw sales rise 21% to $727.8 million.
SOREL jumped 11% to $126.9 million.
PrAna rose 21% to $36.7 million.
Only Mountain Headwear saw a decline, losing 8% to $26.1 million but it was the smallest brand, by revenue, in the quarter.
Another Record Year Expected in 2019?
Columbia guided to full year 2019 sales of $2.97 to $3.03 billion, up from its 2018 sales of $2.8 billion. That's 6% to 8% sales growth.
2018 was a record year for sales, so if it meets the guidance, 2019 will be another record year.
Earnings guidance was projected between $4.30 and $4.45.
The company gave a lot of disclaimers on the guidance, however, as it has said in the past that it would be hit hard if the Trump Administration put on 25% tariffs in the trade dispute with China.
Analyst Estimates Pop
Given the bullish guidance and strong 2018, it's not surprising that the analysts are bullish on 2019 as well.
7 estimates were revised higher for 2019 in the last 60 days, pushing the Zacks Consensus Estimate up to $4.34 from $4.07. That's earnings growth of 8.2%.
2 estimates were also revised for 2020 in the last 2 months, with the Zacks Consensus jumping to $4.87 from $4.54. That's another 12.4% earnings growth.
Increased the Share Buyback Program
In 2018, Columbia bought back $201.6 million worth of shares under its existing share buyback program. There remains $130 million under that plan.
In February 2019, the board authorized an additional $200 million to the plan.
The company also pays a dividend, which is currently yielding 0.9%.
Shares Soar on the News
Shares jumped to new 5-year highs on the earnings report and are up 147% during that time period.
Year-to-date, they've added another 22.6%.
They're no longer as cheap as they were as they sport a forward P/E of 23.7.
Bear of the Day:
Nutrien Ltd. is seeing a rebound in 2019 as fertilizer prices improve. However, it's now a Zacks Rank #5 (Strong Sell) as earnings estimates have been cut in the last 3 months.
Nutrien is a Canadian-based provider of crop inputs and services. It distributes potash, nitrogen and phosphate products world-wide. The company also runs an extensive agriculture retail network.
Expanding Its Retail Business in 2019
On Feb 19, Nutrien announced it was buying Ruralco Holdings, an Australian agriservices business with over 500 locations.
This is expected to enhance the company's business in Australia through its Landmark operations and is projected to be immediately accretive to Nutrien.
On Feb 28, it bought Van Horn, a central Illinois retailer with 11 locations that services 18 counties. This was also expected to increase its retail reach.
Outlook for 2019
On Feb 6, Nutrien reported fourth quarter and 2018 results. It met on the Zacks Consensus Estimate of $0.54.
However, one of the wettest falls in 100 years in the United States caused a challenge to the farming industry.
In February, it was too early to know how the spring weather conditions would shape up. But the Nebraska flooding and heavy rainfall in the Midwest can't be helping.
With normal spring conditions, Nutrien expected strong potash consumption in the first half of 2019, as growers were replenishing the soil after elevated potash removal in 2018.
Nutrien's CEO Chuck Magro also commented in the earnings release, "For 2019, we expect strong crop input demand in the first half of the year due to the limited application window in the fall of 2018, a recent improvement in crop prices and higher corn acres in the US."
Why the Strong Sell Recommendation?
The analysts have been cutting the earnings estimates over the last 30 days.
For 2019, 2 were cut, but one was raised, but the Zacks Consensus Estimate fell to $3.02 from $3.36.
That's still a gain of 12.3% as the company made only $2.69 in 2018.
But the cuts were enough to send the Rank to a #5 (Strong Sell).
Remember, the Zacks Rank is a short term recommendation of 1-3 months. It can change daily, depending on changes in analyst estimates.
Chipotle’s (CMG) Up 60% in 2019: Should You Buy?
Chipotle shares have skyrocketed over 60% this year to crush the market’s roughly 13% climb. The fast-casual restaurant chain’s jump has its stock price racing back toward its 2015 highs. So, let’s see if investors should consider buying high-flying Chipotle stock as it continues to ride a wave of positivity following its blowout Q4 earnings.
Chipotle’s Q4 revenue surged 10.4% to hit $1.23 billion, which surpassed our Zacks Consensus Estimate and easily topped Q3’s 8.6% top-line growth. At the bottom end of the income statement, CMG posted adjusted earnings of $1.72 per share to beat our estimate by 23.7%. Aside from the burrito chain’s impressive quarterly top and bottom-line performances, the firm’s full-year 2018 revenue jumped 8.7%. Plus, comparable restaurant sales popped 4.0%, while digital sales soared over 42%.
Going forward, investors and Wall Street will continue to pay close attention to Chipotle’s ability to grow its digital business. Digital sales accounted for roughly 11% of total sales in 2018. In the fourth quarter, digital revenue soared 65.6% and made up 12.9% of overall revenue. Chipotle’s e-commerce efforts have been a big part of new CEO Brian Niccol’s growth initiatives.
Since Niccol’s arrival from Yum Brands’ Taco Bell last spring, he has focused on digital ordering and delivery. The moves are part of a larger industry trend in the Amazon age that has seen giants such as Starbucks and others dive into mobile ordering, online pick-up and delivery.
In terms of its physical expansion, CMG opened 40 new restaurants last quarter, while closing or relocating just 12. Chipotle owned and operated all of its 2,491 restaurants as of the end of the year, across the U.S., Canada, the UK, France, and Germany. Some investors might remember that Chipotle rose to prominence on the back of its healthy and fresh ingredients and helped popularize the larger fast-casual movement that includes Shake Shack and others.
It is also worth remembering that Chipotle has fought hard to shake off multiple food safety incidents over the past serval years, which helped spark the massive decline. The chart below helps put CMG’s recent run of success into context. Shares of Chipotle have soared nearly 120% over the last 12 months to destroy its industry’s roughly 11% climb and the S&P 500. CMG stock also touched another new 52-week high of $701.96 per share on Wednesday.
Chipotle’s recent run will be difficult to maintain and at least some investors are likely to start to take some profits sooner than later. Nonetheless, some analysts see more upside in CMG stock over the next year. Baird analysts just raised their price target for Chipotle from $650 a share to $760. This marks just over 8% upside to the stock’s current price point.
Looking ahead, CMG’s adjusted first quarter fiscal 2019 earnings are projected to surge over 36% on the back of 9.6% revenue growth, based on our current Zacks Consensus Estimates. The firm’s full-year projections look similarly strong. Chipotle’s 2019 revenue is projected to pop 8.7% from $4.86 billion last year to $5.29 billion, with its EPS figure expected to soar over 35%.
Maybe more importantly, especially for investors who haven’t taken advantage of CMG’s recent climb, the burrito power’s full-year 2020 revenue is projected to jump nearly 11% above our current year estimates. Along with what could be impressive longer-term top-line growth, Chipotle’s 2020 earnings are expected to climb 27% above our 2019 estimate.
Chipotle is a Zacks Rank #2 (Buy) at the moment based in large part on its positive 2019 and 2020 earnings estimate revisions picture. CMG also sports an “A” grade for Growth and “B” for Momentum in our Style Scores system.
The company is about a month away from its first quarter 2019 earnings release, which is due out on April 24. And it would seem that Chipotle stock is at least worth keeping an eye on despite its massive climb, as the once might fast-casual giant looks poised for steady top and bottom-line growth.
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Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
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Potash Corporation of Saskatchewan Inc. (NTR) : Free Stock Analysis Report
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