For Immediate Release
Chicago, IL – April 22, 2016– Zacks Equity Research highlights Daqo New Energy (DQ) as the Bull of the Day and Lions Gate Entertainment (LGF) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Alphabet (GOOGL) and Microsoft (MSFT).
Here is a synopsis of all four stocks:
Bull of the Day :
Energy has been front and center for investors over the past several months as oil prices gyrate up and down like two kids on a teeter totter playset. At the same time ordinary citizens and governments are moving to renewable energy sources like solar power. This shift in energy policy has brought several wind and solar companies into the forefront. One such company, is a leading manufacturer of high-quality polysilicon (initial building block the process of manufacturing silicon based Solar Photovoltaic devices), who has seen revenues rise while decreasing costs. This company, Daqo New Energy (DQ), is the Zacks Bull of the Day.
This Zacks Rank #1 (Strong Buy) is engaged in the manufacture and sale of high-quality polysilicon to photovoltaic product manufacturers. The polysilicon is further processed into ingots, wafers, cells and modules for solar power solutions. Daqo New Energy Corp., formerly known as Mega Stand International Limited, is headquartered in Wanzhou, The People's Republic of China.
In their most recent earnings report the company saw quarter over quarter growth in Polysilicon production (+31.9%), Polysilicon external sales volume (+35.8%), Solar wafer sales volume (+9.9%), Revenues (+27.3%), Non-GAAP gross margin (+23.4%), EBITDA (+56.3%), Income from operations (+113.4%), Net Income (+209%), and Adjusted Net Income (88.9%). Further, management was also able to decrease costs during the quarter as well, with Polysilicon average total production cost (down -12.7%), and Polysilicon average cash cost (down 11.7%).
According to Dr. Gongda Yao, CEO, “In the fourth quarter of 2015, we delivered strong operating and financial results that were beyond our internal expectations. Our polysilicon facilities were running successfully at full capacity for the entire quarter, and we are excited to report that both our external sales volume and cost structure exceeded our prior guidance. We achieved record-high quarterly polysilicon production volume of 3,547 MT, an increase of 31.9% from 2,689 MT in the third quarter of 2015 and 12% above our name plate capacity. Thanks to our technology and operations team, we made solid progress on our cost reduction efforts, and reduced our polysilicon average total production cost and cash cost even further to $9.74/kg and $7.69/kg, respectively, which is our lowest-ever cost and ahead of our cost reduction roadmap.”
Bear of the Day:
The glitz and glamor of Hollywood sells dreams and fantasy, but what happens when you lift the veil and look at the inner workings of maintaining those images? You will see that it costs a ton to make a film, and then promote the movie. While people see box office hits make billions of dollars, those unicorn films are rare. To wit, many movies bomb, and cost the studios millions of dollars. One such studio, who has produced a few recent bombs is Lions Gate Entertainment (LGF), which is the Zacks Bear of the Day.
This Zacks Rank #5 (Strong Sell) company is an entertainment company with a presence in motion picture production and distribution, television programming and syndication, home entertainment, digital distribution and new channel platforms. It is engaged in the development and production of feature films, North American theatrical, home entertainment, and television distribution of feature films and worldwide licensing of distribution rights to feature films.
In their most recent earnings announcement, the company posted year over year declines in adjusted net income, revenues, adjusted EBITDA, and EPS as the last installment of their Hunger Games series performed below the previous installments.
After the final installment of the world-wide franchise hit the Hunger Games, the company has struggled as Gods of Egypt, and the Divergent Series: Allegiant have posted much weaker results than expected. While the company has seen better than expected results in their television and library businesses, it does not outweigh the poor performances by their new releases. According to CEO Jon Feltherimer, “While the performance of our theatrical film slate resulted in softer than anticipated results, our other businesses performed strongly in the quarter.”
Alphabet (GOOGL) and Microsoft (MSFT) Shares Fall on Earnings Misses
After the bell Thursday, top technology firms Alphabet (GOOGL), Google's parent company, and Microsoft (MSFT) reported Q1 and Q3 earnings results, respectively. Late trading is treating neither of these stocks kindly at this hour, so let's see what's inside...
Alphabet reported earnings of $6.02 per share (accounting for stock-based compensation and other BNRI) on $16.47 billion in revenues (minus traffic acquisition costs [TAC]), amounting to a miss on the earnings side -- $6.36 per share had been expected -- but a beat on revenues, easily topping our expected $15.51 billion. Yet the stock has fallen precipitously in the after-market, down 5 percent as of this writing.
On first glance, we see plenty for GOOGL investors to be happy with -- 17 percent year-over-year revenue growth, aggregate paid clicks up 29 percent and aggregate cost-per-click down 9 percent. But paid clicks missed the 31 percent growth expected and fell 3 percent quarter over quarter. Q4 2015 for Alphabet was, you'll recall, a real blowout quarter; perhaps investors were expecting another massive beat?
Perhaps, and one might say GOOGL shares, up 46.4 percent in the past year prior to the Q1 earnings report, was priced for near-perfection. That the company is still putting up growth numbers strongly in double-digits -- and its better-than-expected revenues point toward margins being squeezed -- is apparently not enough, although GOOGL shares have buoyed off the lows this after-market at this stage.
The margin squeezing may be a result of Alphabet's "Other Bets" segment, where the company R&D's myriad projects under the sun. Spending on Other Bets reached $166 million in the quarter, more than doubling the $80 million spent a year ago on this venture segment. Perhaps investors are insisting CFO Ruth Poirot and the rest of the team grab a firmer hold on earnings results going forward.
Microsoft missed fiscal Q3 earnings expectations by a penny at 62 cents per share. But revenues of $22.1 billion beat the Zacks consensus estimate of $21.6 billion. CFO Amy Hood remarked on Microsoft's "solid results this quarter," and its cloud-computing platform Azure grew more than 100 percent in constant currency year over year. Yet it, too, has traded down 5 percent in the late market -- perhaps also a victim of its +34 percent year-over-year share growth.
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