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Deere & Company, Expedia, Oracle, Nike and Micron as Zacks Bull and Bear of the Day

Zacks Equity Research
Steel Dynamics (STLD) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

For Immediate Release         

Chicago, IL – March 19, 2018 – Zacks Equity Research highlights Deere & Company DE as the Bull of the Day and Expedia EXPE as the Bear of the Day. In addition, Zacks Equity Research provides analysis onOracle Corporation ORCL, Nike, Inc. NKE and Micron Technology, Inc. MU.

Here is a synopsis of all five stocks:

Bull of the Day:

Concerns about rising volatility were quickly replaced by fears of an impending trade war this week, making it clear that investors are hesitant to become over confident in the current economic landscape. Still, there is clearly plenty of strength in many core areas of the economy, including agriculture and industrials, and investors searching for a great pick in these segments should look no further than Deere & Company.

Through its John Deere brand, Deere & Company is a leading manufacturer of agricultural, construction, and forestry machinery. The company was founded in 1837 and is one of the most historic American corporations around, but management’s commitment to investment and innovation has kept it on the cutting edge through the years.

Deere & Company shares have surged about 45% over the past year, significantly outpacing its industry peers. And after another strong quarter, the company has witnessed a tidal wave of positive estimate revisions, earning it a Zacks Rank #1 (Strong Buy).

Latest Earnings Report

Deere reported its first-quarter fiscal 2018 results on Feb. 16. The company posted adjusted earnings of $1.31 per share, crushing the Zacks Consensus Estimate of $1.16 and improving a staggering 11% year over year. Total equipment revenues totaled $5.97 billion, up 27% from the year-ago period.

Region wise, equipment net sales increased 24% in the United States and Canada, and 33% in the rest of the world. Total net sales (including financial services) came in at $6.9 billion, up 23% year over year.

Looking at the company’s specific segments, Agriculture & Turf sales increased 18% to $4.3 billion, while operating profit at the segment climbed 78% to $387 million. Construction & Forestry sales surged 57% to $1.73 billion, mainly as a result of the Wirtgen acquisition—which added 5% to total net sales.

Deere also detailed its upbeat outlook for the remainder of the fiscal year. Management raised its total equipment sales growth outlook for fiscal 2018 to around 29%, up from prior guidance of about 22%. For fiscal 2018, Deere expects net sales to increase about 25% year over year and projects net income of about $2.1 billion.

Bear of the Day:

There have been plenty of winners to choose from in the tech sector recently, even over the past two months of increased volatility. However, we have started to see investors punish underperforming companies with slightly stretched valuations. Online travel booking giant Expedia is one such stock.

Expedia is a U.S.-based travel company that operates about 200 travel websites in about 75 countries. Its portfolio includes recognizable names like Expedia.com, Hotels.com, Hotwire.com, trivago, Travelocity, and Orbitz.

After a disappointing Q4 earnings report, Expedia witnessed a plethora of negative earnings estimate revisions, and the stock has failed to generate any positive momentum. This Zacks Rank #5 (Strong Sell) might be due for a recovery eventually, but for now, investors should look to avoid it.

Latest Earnings Report

Expedia reported its fourth-quarter results on Feb. 8. The company posted adjusted earnings per share of 84 cents, missing the Zacks Consensus Estimate by 32 cents and sliding more than 28% year over year. This was Expedia’s six-consecutive earnings miss. Quarterly revenues of $2.32 billion also lagged our consensus estimate of $2.37 billion.

Adjusted EBITDA plunged 9% to $402 million. Notably, trivago, Egencia and Home Away EBITDA decreased 164.3%, 9.5% and 26.2%, respectively, on a year-over-year basis. Adjusted gross margin contracted 80 basis points from the year-ago period. Operating expenses as percentage of revenues were 65.1% compared with 62.5% in the prior-year period.

This increase in marketing expenses can be attributed to higher adjusted selling and marketing expenses. This is concerning for investors and indicates that Expedia is being forced to spend more to fend off increased competition.

In the report, Expedia said that it expects cost of revenues to grow slightly faster than revenues. Management also expects that technology and content expenses will grow significantly faster than revenues this year.

Additional content:

Upcoming Earnings Reports to Watch: ORCL, NKE, MU

We have hit a lull as far as earnings reports go, and Wall Street’s attention has shifted from tax benefits and strong guidance to international trade debates and continued turnover at the White House. Still, Q4 earnings season was strong across the board, and as several major companies with non-traditional calendars report in the coming days, investors will hope that this trend continues.

With that said, investors can always use the Zacks Earnings Calendar to plan out their schedules for earnings, dividend announcements, and other important financial releases. This handy tool is your perfect one-stop-shop to properly prepare for the market events that will have an impact on your own portfolio.

And today, we’ve made that task even easier for you. Using the Earnings Calendar, we looked ahead to next week and selected the biggest reports to watch. Make sure to keep an eye on these companies as they prepare to report during the week of March 19.

1. Oracle Corporation

Software giant Oracle is scheduled to release its latest quarterly financial results after the closing bell on March 19. Continued adoption of cloud infrastructure has been a growth catalyst for Oracle, but the company’s stock has proven to be much more volatile than many of its tech peers. Shares of ORCL are up just 15% over the past year, and patient investors have endured significant up-and-down swings over that time.

Based on our current Zacks Consensus Estimates, we expect Oracle to report revenues of $9.8 billion and adjusted earnings of 72 cents per share. These results would represent year-over-year growth rates of 5.5% and 4.4%, respectively. Last quarter, cloud revenues surged 44%, so investors will want to pay close attention to this segment when Oracle reports.

2. Nike, Inc.

Athletic apparel behemoth Nike is slated to announce its latest quarterly earnings details after the market closes on March 22. Headwinds at major retail partners and shifting consumer habits have put pressure on companies like Nike, but the company’s remarkable brand portfolio and market share should support results. NKE is carrying a Zacks Rank #3 (Hold) into its report date.

According our latest Zacks Consensus Estimates, Nike is projected to report adjusted earnings per share of 52 cents, down more than 23% from the year-ago period. However, expected revenues of $8.8 billion would mark an improvement of 4.7% year over year.

3. Micron Technology, Inc.

Red-hot semiconductor memory solutions company Micron is scheduled to release its latest quarterly earnings report after the closing bell on March 22. Micron has skyrocketed on the back of rising demand for its memory chips, as well as improvements to its own operations. The stock has gained more than 130% over the past year and is holding a Zacks Rank #2 (Buy) ahead of its report.

Our Zacks Consensus Estimates are calling for Micron to report adjusted earnings of $2.76 per share and total revenues of $7.23 billion, which would represent year-over-year growth of 206.7% and 55.5%, respectively.

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Expedia, Inc. (EXPE) : Free Stock Analysis Report
 
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