For Immediate Release
Chicago, IL – January 27, 2014– Zacks Equity Research highlights Conn's ( CONN- Free Report) as the Bull of the Day and Coach ( COH- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc. ( AAPL - Free Report ), China Mobile ( CHL - Free Report ) and Google ( GOOG - Free Report ).
Here is a synopsis of all five stocks:
Bull of the Day:
After Best Buy did another face plant because it can't compete with Amazon "show-rooming" trends, the "little big box" from Texas that does things differently bounced hard off of a breakout level in the low $60's.
What does Conn's ( CONN- Free Report) do that's so different from the other big box electronic and appliance retailers?
Conn's earnings growth story is not tethered to just big screen TVs and refrigerators. With their HomePlus concept, this "everything for the home" retailer carries everything from high- margin furniture and bedding to lawnmowers and vacuum cleaners.
The 75-year old company built a solid reputation throughout Texas on customer service, even before it pioneered consumer credit financing in the 1960's.
While critics talk about their credit offerings as "predatory" because they help lower income people buy durable home goods, the facts are that the company takes risks it wants to get paid on.
In other words, they build relationships with customers who seem more than likely to pay their bills and continue to be repeat customers. To put some hard numbers on this, the average FICO score for Conn's credit customers is 600 and their average monthly balance is $1600.
Bear of the Day:
It's getting to be a quarterly habit for Coach ( COH- Free Report). The EPS-miss-and-gap-down that is.
I last wrote about the decline and fall of this once great luxury fashion retailer in August after their Fiscal Year 2013 fourth-quarter report disappointed the Street and sent shares gapping lower 8% from $58 to $53.
Then in October, my colleague Eric Dutram described the company's 1QFY14 report that tanked shares 15% from $54 to $46.
And for the hat-trick, last week Coach posted 2QFY14 earnings of $1.06 per share that missed the Zacks Consensus Estimate of $1.11, and tumbled 13.8% from $1.23 delivered in the prior-year quarter.
This time, shares gapped down "only" 6% from $52 to $49, as it appears the sell-off from $57 since the beginning of the year was investors getting ready for the inevitable disappointment.
Net sales for the quarter came in at about $1.42 billion, down 6% from the year-ago quarter and also fell short of the Zacks Consensus Estimate of $1.5 billion due to softness in North American market.
Will Apple Launch Large Screen iPhones?
Reportedly, Apple Inc. ( AAPL - Free Report ) is planning to launch iPhones with larger screens in 2014. According to The Wall Street Journal, Apple will launch two iPhones, one with 4.5-inch screen while the other one will sport a screen of more than 5 inches.
Per the report, Apple will also stop selling its mid-priced plastic based iPhone 5C, which has failed to gain any traction compared to iPhone 5S in the U.S. and rest of the World. The company is also rumored to build curved iPhones. However, Apple is not expected to launch this type of device in 2014.
The increase in screen size will help Apple to fight competition in the markets of Asia-Pacific, where large screen smartphones are much more popular than in the U.S. Current iPhones feature 4-inch screens, which was increased from 3.5 inches in 2012.
Meanwhile, activist investor Carl Icahn continues to put pressure on Apple’s management to approve a new $50.0 billion (over $100.0 billion existing program) share buyback program. Most recently, Carl Icahn bought another $500.0 million Apple share, which took his investment to $3.6 billion.
In a letter to Apple shareholders, Mr. Icahn argued against Apple’s policy of preserving cash. He urged shareholders to vote in favor of his share buyback proposal, which in his opinion will boost the company’s overall value.
Apple’s ongoing share buyback and dividend program will return $100.0 billion to shareholders. However, management under Chief Executive Officer ( CEO) Tim Cook has vehemently protested against Carl Icahn’s proposal.
As per management, cash preservation is of utmost importance to fund Apple’s research and development in order to compete in the fast-evolving mobile market. However, this policy is attracting increasing criticism from investors as Apple has failed to launch any new product, for a considerable length of time.
In such a scenario, Mr. Icahn’s aggressive demands will further increase pressure on Apple’s management in the near term. We believe that successful launch of new large screen iPhones as well as the much anticipated wearable devices in the near future will provide management some room, going forward.
Apple is set report first-quarter fiscal 2014 results on Jan 27. We believe that strong holiday season sales and the deal with China Mobile ( CHL - Free Report ) will help Apple to post solid results.
However, Apple’s iOS continues to face significant competition from Google’s ( GOOG - Free Report ) Android operating system in most of the other markets.
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