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Drive Shack, Farmer Brothers, Booking, Google and Expedia highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – May 13, 2019 – Zacks Equity Research Drive Shack DS as the Bull of the Day, Farmer Brothers Company FARM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Booking Holdings BKNG, Google GOOGL and Expedia EXPE.

Here is a synopsis of all five stocks:

Bull of the Day:

Drive Shack is a Zacks Rank #2 (Buy) and it is in the spotlight as the weather starts to improve.  The idea is that this driving range is the competitor to Top Golf, and if Calloway's (ELY) earnings tell us anything, it is that this concept works.  Today, Drive Shack is the Bull of the Day.

Description

Drive Shack Inc.is the owner and operator of golf-related leisure and entertainment businesses. The services offered by the company comprise Drive Shack which is engaged in developing innovative golf entertainment venues, American Golf and Real Asset related assets.

Earnings History

As I look at the Zacks website and the detailed estimates page, I see that there have been 2 misses in a row and that was preceded by a beat.  Earnings are coming again soon, but my calendar said that it should have happened on Friday.  Just something to be aware of.

Estimate Revisions

So there isn't a whole lot of movement here, but what I do see is a reduction of the loss of 2019 moving from 40 cents to 28 cents over the last 60 days.  That is enough to get this stock to a Zacks Rank #2 (Buy).

Tiger And Better Weather

Tiger Woods won the Masters a few weeks back and that has been the driving force behind a lot more golfers hitting the links again.  At least some of those golfer are serious about it and they will hit the driving range first, and the more interactive the better.

The weather was bad in many parts of the country following the Masters, but that seems to be over as we head into summer.  Just going to any driving range will not translate into revenue for DS, but as we see Top Golf continue to do well, it stands to reason that this property should follow along.

Bear of the Day:

Farmer Brothers Company is a Zacks Rank #5 (Strong Sell) and it has F's for the Value and Growth Style Scores.  That alone should give you pause, but now, this stock is the bear of the day. Let's take a look at why this stock fell to the lowest Zacks Rank.

Description

Farmer Bros. Co. is in the business of roasting, packaging and distributing coffee and allied products to restaurants, hotels, hospitals, convenience stores and fast food outlets. The company's primary raw material is green coffee. Green coffee is purchased through domestic commodity brokers. Coffee is an agricultural commodity, and is subject to fluctuations of both price and supply.

Recent Earnings

FARM recently reported earnings and missed the Zacks Consensus Estimate.  I see a loss of 27 cents for the quarter when a gain of 9 cents was expected. That is a huge miss and good for a negative 400% earnings surprise.

Estimate Revisions

That recent loss was just the tip of the iceberg, as analysts not only cut the full year number, but also reduced expectations for next quarter to be another money-losing quarter.

Booking.com Rallies Amid Negative Growth

Booking Holdings released earnings after market close yesterday evening and missed on both revenue and earnings. The stock proceeds to rally over 4% in morning trading, even as the broader market breaks down. The firm showed year-over-year decreases in both sales and EPS.

The rationalization for why BKNG is rallying in the midst of earnings misses and negative growth lies with its accounting methodology. Revenues aren’t recognized when reservations are made, they are accounted for when the reservation comes to fruition. Expenses, on the other hand, are recognized immediately when they are accrued. Q1 is when Booking Holdings receives the most reservations because individuals are planning their vacations for the year, but the majority of these reservations won’t be executed until Q3 (meanings revenue won’t be recognized until then). Expenses associated with these revenues are immediately recognized, as I mentioned. This pushes earnings way down for Q1, making it the worst quarter for the firm annually. Having a worse than expected first quarter isn’t necessarily a bad sign for BKNG, it could mean the firm is anticipating a big year.

Booking Holdings analysts would assess the balance sheet line item, “deferred merchant booking”, to determine the cash that has been received for reservations but not recognized as revenue yet. This line item is reporting roughly $1.8 billion in locked in revenue yet to be recognized this year, up almost $800 million from the previous quarter. This is illustrating a significant amount of future revenue that the income statement will disclose throughout the year.

Booking Holdings Story

Booking Holdings, previously known as The Priceline Group, went public in the wake of the “dot com” bubble immediately prior to the burst. The stock lost 98.5% of its value from April of 1999 through the end of 2000. Since then Booking Holdings has established themselves as an industry leader, with the stock rallying from less than $10 in 2000 to over $1800 that we see today (almost 12,000% gain).

They have revolutionized the way people look for hotels taking advantage of Google’s advertising platforms more effectively than competitors like Expedia, “turning lookers into bookers.” They spend a significantly higher percentage of their revenue on marketing and advertising than top competitor Expedia, which materializes on their bottom-line.

Booking Holdings acquired European online booking site ActiveHotel.com in 2005 for just $133 million. This deal was called “the best acquisition in internet history” by social media because no other acquisition in this field had been profitable, turning a company that lost millions a year to one that makes billions in less than 10 years.

This firm went from a second rate travel booking site to best in class in a short period of time.

Booking holding owns an extensive portfolio of online booking sites and apps with services ranging from travel reservations to catering reservations. Its current holdings include Booking.com, KAYAK, Priceline, Agoda, Rentalcars.com, and OpenTable.

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Expedia Group, Inc. (EXPE) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Farmer Brothers Company (FARM) : Free Stock Analysis Report
 
Booking Holdings Inc. (BKNG) : Free Stock Analysis Report
 
Drive Shack Inc. (DS) : Free Stock Analysis Report
 
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