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Conn's, Titan International and PayPal Holdings highlighted as Zacks Bull and Bear of the Day

Vanda (VNDA) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

For Immediate Release

Chicago, IL – October 20, 2017 – Zacks Equity Research Conn's, Inc. (Nasdaq:CONN – Free Report) as the Bull of the Day, Titan International, Inc. (NYSE:TWI – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PayPal Holdings, Inc.(Nasdaq:PYPL– Free Report).

Here is a synopsis of all three stocks:

Bull of the Day:

Conn's, Inc. (Nasdaq:CONN – Free Report) is a specialty retailer currently operating retail locations in Texas and Louisiana. It sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma and LCD televisions, camcorders, VCRs, DVD players and home theater products.

It also sells home office equipment, lawn and garden products and bedding, and continue to introduce additional product categories for the home to help increase same store sales and to respond to their customers' product needs.

Recent Earnings Report

The company reported Q2 18 earnings where they crushed the Zacks consensus earnings estimate ($0.26 actual vs. -$0.02 estimate), but came in just short of the Zacks consensus revenue estimate.  Net income improved to $4.3 million compared to the year ago quarter where net income was -$11.9 million. 

On a non-GAAP adjusted net income basis Q2 18 was $8.2 million verse -$1.2 million in the year ago quarter. The Credit Services segment was the big driver behind the positive earnings report where credit revenues were $80.1 million compared to $65.7 million in Q2 17 (+21.9% gain).  Further the portfolio yield rate jumped up to +18.7% from +14%.  

The company also opened two new stores in North Carolina, and one in Virginia.  This brings their total store count to 116.

Management’s Take

According to Norm Miller, Chairman and CEO, “I am pleased to announce that Conn’s returned to profitability during the second quarter of fiscal year 2018. This achievement is the direct result of Conn’s differentiated and highly profitable retail model, the initiatives implemented to turn around our credit business, and the talented and experienced team we have assembled."

Conn’s credit business continues to improve as recent originations become a larger percentage of the portfolio balance, and benefit from tighter underwriting standards and higher yields. The Company achieved a credit spread of 390 basis points during the second quarter of fiscal year 2018, which was the largest spread in seven quarters. We continue to make significant progress towards our goal of improving the profitability of the credit segment and achieving a credit spread of at least 1,000 basis points.”

Bear of the Day:

Titan International, Inc. (NYSE:TWI – Free Report), a Zacks Rank #5 (Strong Sell) is a global manufacturer of off-highway steel wheels and tires in the agricultural, earthmoving/construction and consumer markets. Titan generally manufactures both wheels and tires for these markets and provides the value-added service of assembling the completed wheel-tire system. They offer a broad range of different products that are manufactured in relatively short production runs to meet original equipment manufacturers' specifications and/or aftermarket customer requirements.

Recent Earnings Data

In TWI’s most recent earnings report, they significantly missed the Zacks consensus earnings estimate ($0.11 estimate vs. -$0.09 actual), but did beat the Zacks consensus revenue estimate.  The company posted a +10% increase in net sales, but the net loss applicable to shareholders increased from -$5.2 million in Q2 16 to a net loss of -$10.3 million in Q2 17.  

Issues Facing the Company

Declining gross margins due to increasing raw material costs (costs increased in all geographical areas) negatively impacted EPS in the second quarter.  To combat the increase in raw material costs, management increased prices for their aftermarket original equipment manufacturer (OEM) contracts, which should contain some of the raw material costs. 

Also, the slowdown and lack of an overall recovery in agriculture is acting as a further headwind.  Lastly, the second half of the year typically has a seasonal slowdown which will put further pressure on both the top and bottom lines.  

Management’s Take

According to Paul Reitz, President and CEO, “The current quarter saw sequential gross margin improvement, up from 11.1 percent in the first quarter to 12.0 percent in the second.  This improvement was in spite of significant raw material pricing headwinds that negatively impacted gross profit by approximately $11 million during the second quarter. 

"Although we believe that raw material pricing has now stabilized, our OEM contracts in North America did not allow us to fully pass through these higher costs during the quarter. Because of these headwinds, we did not reach the gross margin level we experienced this quarter last year; however, with the increased pricing that has now taken place with the OEMs and the raw material price stabilization, we do not anticipate further negative impacts from raw material prices in the second half of this year.”

Additional content:

PayPal Stock Soars on Massive Q3 Beats

PayPal Holdings, Inc. (Nasdaq:PYPL – Free Report) just released its third-quarter 2017 financial results, posting earnings of $0.46 per share and revenues of $3.24 billion. Currently, PYPL is a Zacks Rank #1 (Strong Buy) and is up 3.79% to $69.80 per share in after-hours trading shortly after its earnings report was released.

PYPL:

Beat earnings estimates. The company posted earnings of $0.46 per share, beating the Zacks Consensus Estimate of $0.44 per share.

Beat revenue estimates. The company saw revenue figures of $3.24 billion, topping our consensus estimate of $3.17 billion.

PayPal’s revenue grew 21% in its third-quarter, while earnings jumped 31%. The company processed a total of $114 billion worth of payments in the quarter, and nearly 35% of the volume came from mobile—which rose 54% year-over-year to $40 billion.

The company’s person-to-person payment volume soared 47% to reach $24 billion. The company’s popular P2P app, Venmo, processed roughly $9 billion in payments, which marked a massive 93% increase.

For its current quarter, PayPal now expects to post earnings between $0.50 per share and $0.52 per share. The company projects full-year EPS to range between $1.86 and $1.88.

"PayPal delivered one of its strongest quarters since becoming an independent company. Putting our customers first in everything we do, enhancing our suite of products and services, and partnering with some of the world's most popular brands are delivering tangible results," PayPal President and CEO Dan Schulman said in a statement.

"In addition to our solid financial performance, we also reported record customer growth with the addition of 8.2 million net new actives. As the world rapidly accelerates to digital payments, we have a tremendous opportunity in front of us."

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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 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.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

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