For Immediate Release
Chicago, IL – June 13, 2017 –Zacks Equity Research Dave & Buster’s (NASDAQ: PLAY – Free Report ) as the Bull of the Day, Ebix (NASDAQ: EBIX – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Siemens (OTCMKTS: SIEGY – Free Report ), Applied Materials (NASDAQ: AMAT – Free Report ) and Intuitive Surgical (NASDAQ: ISRG – Free Report ).
Here is a synopsis of all five stocks:
Bull of the Day :
One of the best stories in the restaurant sector over the past few years has definitely been that of Dave & Buster’s (NASDAQ: PLAY – Free Report ). The company has seen its stock price surge, and it has largely fought through an environment that has taken down many of its top competitors.
But after the most recent earnings report, shares have struggled, even though the company beat earnings yet again. Comps growth was slowing down, and investors focused in on this issue to sell shares of the company. So, now that we have seen a dip in the shares, many have to be asking; is this the end of the road for the dream run in Dave & Buster’s stock?
Why PLAY Could Have Room to Run
In the company’s most recent earnings report, earnings easily beat the consensus estimate as the company posted EPS of 87 cents compared to 81 cents per share for the expectation. Revenues were also higher by double digit percentage levels when compared to the year ago period.
The firm also increased the bottom end of its earnings guidance range, looks to grow comps in the range of 2%-3%, and is continuing with its expansion plans as they seek to develop another dozen locations. So, guidance for the company wasn’t bad by any stretch, meaning that investors are selling off the partial slowdown in the company’s growth trajectory.
However, PLAY remains an incredible growth story, even if things are slowing down just a tad. This is especially true when you compare some of PLAY’s key growth metrics to the industry at large.
PLAY currently has cash flow growth that is roughly four times the industry average, projected EPS growth that is roughly three times the industry average, and an ROE in excess of 20%. Add in industry-crushing projected sales growth and a sales to asset ratio below 1.0, and you start to question why anyone is worried about this stock from a growth perspective at all. No wonder PLAY has an ‘A’ growth score right now and is one of the best growth stories out there in the market today.
Strength is further confirmed when we look to recent earnings estimate revisions for PLAY stock. While estimates have slumped for the current quarter, the next quarter and then full year period remain pretty bright.
In fact, we have seen six estimates go higher in the past sixty days for the current year compared to zero lower, and the same level for the next year time frame too. But it isn’t just the number of increases, as the magnitude has been impressive as well. We have seen the consensus estimate increase by over 7% in the past sixty days for the full year, and a full four percent for the next year time frame.
And while the current quarter estimate has declined by about 3.6% in the past two months, it is more than made up for by the 7.4% increase in the next quarter period. Overall, the stock has a great earnings estimate picture to go along with an incredible history in earnings season—including a lack of misses since its debut on the market—making PLAY a Zacks Rank #1 (Strong Buy) stock, and one that is a good candidate to persevere through its recent malaise, and power back to new highs.
Bear of the Day :
Recent trading in the tech world is giving investors pause about more picks in the sector, forcing many to refocus on only the most promising names in the field. This strategy looks to leave many companies in the dust, and could put a premium on stocks that are actually growing revenues too.
This is bad news for stocks like Ebix (NASDAQ: EBIX – Free Report ), as this software supplier to the insurance industry has seen weakness leading into recent trading, and has some sluggish fundamentals too. Such underlying trends may prove to be a rough environment for EBIX investors no matter what is happening in the broad tech sector. Let’s take a closer look at why we are so bearish on this struggling stock right now.
Ebix currently has a VGM Score of ‘F,’ putting it in the very bottom from a fundamental look. The company actually doesn’t receive a component grade—value, growth, momentum—above ‘C,’ so the poor fundamentals are pretty widespread for this name.
From a value look, EBIX struggles with its P/CF that is far higher than the industry average, and a PEG ratio that is quickly approaching two. In terms of growth, the company’s EPS track record isn’t exactly inspiring, as it has a historical EPS growth rate of under 2%, and a projected EPS growth rate less than 0.5% for the future too. Add in a ‘D’ Grade for momentum, and it is easy to see why the fundamental picture is so poor for this company right now.
Sluggish Estimate Trend
Though Ebix has a solid history when it comes to beating earnings estimates, the company does not have a great trend when we look to the most recent analyst estimates. We haven’t seen any analysts increase their estimates for Ebix stock in the past two months for either the current year or the current quarter time frames.
The magnitude of these declines has also been troubling, as we see a double-digit percentage decline in the consensus estimate for both the current quarter and the following quarter, over just the past two months. Add in a nearly six percent decline in the consensus estimate for the full year over the past two months, and it shouldn’t be a surprise that EBIX has a Zacks Rank #5 (Strong Sell) right now.
The Fed in the Main Circus Tent
In the Global Week Ahead, stock markets and central bankers the world over brace for a rate hike from the USA.
After last Friday’s sudden tech-stock sell-off, will momentum traders — in NY and London alike — keep selling pressure on the risk markets going into this meeting?
Or will bargain hunters overwhelm them? Buy the dip, right?
On Wednesday, a two-day United States Federal Open Market Committee (FOMC) meeting produces a 2 pm ET statement. This will be accompanied by fresh forecasts.
Consensus expects a 25 basis point rate hike. Expect further FOMC detail surrounding its reinvestment plans -- on a huge QE-inflated balance sheet.
Chair Janet Yellen’s presser should be the main trader event.
Regarding the FOMC summary outlook, expect a cautious tone. The ‘dot plots’ of all the individual contributors will be watched for internal dynamics. Realize the Fed members are mostly trained economists. They will remain data-dependent.
Recent U.S. macro prints foretell dovish guidance.
1. Consumer Inflation is feeling downward pressure of late. Ditto for wages.
2. Job growth averaged just +121K the past three months.
3. U.S. GDP grew by +1.2% in Q1. GDPNow for Q2 is +2.8%. Average quarterly first-half growth sums to a ‘muddle through’ +1.5% rate.
After this mid-June meeting, the FOMC should shift to the sidelines. Coming meetings can steadily evaluate second half U.S. and global risks, growth rates, jobs and the dollar — and monitor the waning pressure underlying recent inflation data.
The September meeting should give up a third and final 25 bps rate hike this year.
On Thursday and Friday, traders get follow-on money policy from abroad.
1. United Kingdom: Don’t expect policy changes from the Bank of England (BoE). The BoE should state it is looking at any upside risks to inflation as transitory. Watch for any statements that concern the recent parliamentary election.
2. Japan: The Bank of Japan’s (BoJ) policy and guidance should center on whether the central bank lessens bond purchases -- in a mini-taper of sorts.
3. Indonesia: Expect the Bank Indonesia to leave its 7-day reverse repo rate unchanged at 4.75%. That country’s all-important inflation rate is running at +4.3% y/y. This is close to their +3% inflation target. Growth this year should be similar to last year, at +5.0% y/y.
4. Russia: Expect the Bank of Russia to deliver another rate cut of 25 to 50 basis points.
5. Switzerland: Expect the Swiss National Bank to leave its policies intact. This small nation’s monetary policy outlook relies heavily on the European Central Bank.
This sums up to a monetary policy pile-up. It should make for a packed end to the Global Week Ahead.
Top Zacks #1 Rank (STRONG BUY) stocks—
Siemens (OTCMKTS:SIEGY – Free Report ): This is the $122 billion market cap Germany electronics giant. The Zacks long-term VGM score is a D, but that comes with a B in Value.
Applied Materials (NASDAQ:AMAT – Free Report ): Yes, the long-term Zacks VGM score is B. But do the tech stock short-sellers care? Watch the price dynamics on stocks like this all week long.
Intuitive Surgical (NASDAQ:ISRG – Free Report ): Much has been made of overpriced stocks. This one is priced at a cool $916 a share when I looked. That comes with an easily-won Zacks VGM score of F, with a conclusive F in Value.
This Medical instruments stock has a terrific surgery room robot, but how many surgery rooms are left to implement it?
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 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 >>.
Get the full Report on PLAY - FREE
Get the full Report on EBIX - FREE
Get the full Report on SIEGY - FREE
Get the full Report on AMAT - FREE
Get the full Report on ISRG - 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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Click for Free Dave & Buster's Entertainment, Inc. (PLAY) Stock Analysis Report >>
Click for Free Ebix, Inc. (EBIX) Stock Analysis Report >>
Click for Free Siemens AG (SIEGY) Stock Analysis Report >>
Click for Free Applied Materials, Inc. (AMAT) Stock Analysis Report >>
Click for Free Intuitive Surgical, Inc. (ISRG) Stock Analysis Report >>
To read this article on Zacks.com click here.
Zacks Investment Research