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Funko, GTT, Netflix, Microsoft and Skyworks as Zacks Bull and Bear of the Day

Zacks Equity Research
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For Immediate Release         

Chicago, IL – July 16, 2018 – Zacks Equity Research highlights Funko FNKO as the Bull of the Day and GTT Communications GTT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix, Inc. NFLX, Microsoft Corp. MSFT and Skyworks Solutions, Inc. SWKS.

Here is a synopsis of all three stocks:

Bull of the Day:                                              

Funkois a Zacks Rank #2 (Buy) and the stock has been nothing short of a runaway winner over the last few months.  In this Bull of the Day article, we will take a look at the recent move in earnings estimates, the earnings history, and the valuation.

Description

Funko is a pop culture consumer products company, designs, sources, and distributes licensed pop culture products in the United States, China, Vietnam, and the United Kingdom. The company offers vinyl, bobble head, blind-packed miniature, and action figures; and plush products, accessories, apparels, and homewares, as well as bags, purses, and wallets.  Funko, Inc. was founded in 2017 and is headquartered in Everett, Washington.

Earnings Estimates

The foundation of the Zacks Rank is the movement in earnings estimates.  When estimates are moving up, the stock gets a better Zacks Rank. We have just that happening with FNKO.

Estimates have been moving up... but other stocks have seen even greater estimates.  Those stocks are Zacks Rank #1 (Strong Buy) stocks, but with a Zacks Rank #2 (Buy) FNKO is also looking good.

THe 2018 Zacks Consensus Estimate has moved up a penny from where it was 90 days ago.  The number for 2019 is up 3 cents over the same time horizon.

Earnings History

I see only two earnings reports Zacks has data for.  There have been a total of three reports and importantly the year over year revenue rate has been higher for each report.  That fact alone tells me that the company is growing.

In the two quarters that Zacks had estimates for, I see two monster beats.  That should give investors confidence that the next report that could come in early August could be another beat.

At present, the Zacks Consensus Estimate stands at $123M in revenue and EPS of $0.02 for the Fiscal second quarter of 2018.

Valuation

FNKO sports an A for Growth and an A for Value and that isn't something that I always like to see.  I am all about growth, so I like to see a strong growth style score and a weak value score because value investors and growth investors are inherently looking for different things.  That said, a 21x forward earnings multiple is really low for a company that is seeing revenue growth north of 35% on an annual basis. The price to book of 2.4x is also well below the industry average.  Zacks doesn't have a price to sales multiple, but I calculated a 0.6x number and that is seriously low for a company showing the growth in sales and margins that FNKO is seeing.

Bear of the Day:

GTT Communicationsis a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.  Let's take a look at why it fell to the lowest Zacks Rank and if there are still some good qualities to this stock.  Spoiler alert, there are some good things ahead for GTT.

Description

GTT Communications provides cloud networking services to multinational enterprises, carriers, and government customers worldwide. The company was formerly known as Global Telecom & Technology, Inc. and changed its name to GTT Communications, Inc. in January 2014. GTT Communications, Inc. was founded in 2005 and is headquartered in McLean, Virginia.

Recent Earnings

On May 3 of this year, the company missed the Zacks Consensus Estimate of a loss of 7 cents when they reported a loss of 12 cents.  That 5-cent miss translates to negative earnings surprise of 71%.  

An earnings miss like that will force analysts to incorporate that difference into their earnings models and it will often take down the annual estimate.  That five-cent miss, however, isn't enough to explain what happened to the 2018 Zacks Consensus Estimate.

Estimates

90 days ago, the Zacks Consensus Estimate was looking for a loss of 30 cents for the 2018 calendar year.  60 days ago, that number sank to a loss of $1.62, a huge negative revision to estimate for the current quarter and the next quarter were the main culprits.

That said, I see the estimate for next year is at $0.05.  So these losses are temporary and that is the silver lining to the Zacks Rank #5 (Strong Sell).  We know there is some pessimism on this stocks right now, but it won't last forever.

This will be a good stock to revisit in a few months when the estimate revisions that have hampered the stock are about to turn around.

Upcoming Tech Earnings to Watch: NFLX, MSFT & SWKS

Earnings season unofficially kicked off with the reports of big financials coming in before Friday’s opening bell. Those reports were a mixed bag, with industry headwinds weighing down each stock more than anything else, and investors will now look ahead to one of first busy weeks of another key reporting period.

Earnings growth was certainly there for the bank giants—as one would expect in our rising rate environment—but today’s reports did little to inspire investors. A flattening yield curve will likely continue to subdue bank stocks for the time being.

Elsewhere, earnings growth is expected to be aplenty this season—although it will take a strong batch of marquee reports for investors to overlook global economic uncertainty in the face of ongoing trade disputes. One important battleground will be in the technology sector, which will see a number of major reports next week.

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.

In this piece, we will be taking a look at three of the most-important reports from the tech sector to watch over the coming days. Make sure to keep an eye on these companies as they prepare to report during the week of July 16.

1. Netflix, Inc.

Video streaming giant Netflix is scheduled release its latest quarterly earnings report after the closing bell on July 16. Netflix has largely been able to shake off market-wide volatility in 2018, posting more than 100% year-to-date gains en route to becoming one of Wall Street’s hottest tech stocks.

However, a few bearish analyst reports in recent days have questioned whether the hot streak can continue, and the stock looks poised to carry a rare downtrend into its report date. Still, investors will be looking for impressive growth.

According to our Zacks Consensus Estimates, analysts are expecting adjusted earnings of $0.80 per share and revenue of $3.94 billion. These results would represent year-over-year growth of 433% and 41%, respectively. Investors should note, however, that this consensus EPS projection has shed a penny in the past month.

2. Microsoft Corp.

Tech behemoth Microsoft is scheduled to announce its latest quarterly financial results after the market closes on July 19. Cloud computing has helped Microsoft pick up steam in the past year, with shares gaining more than 42% in that time—including a decent 3.3% surge over the last month. Still, MSFT is holding just a Zacks Rank #3 (Hold) right now, and recent estimate revisions trends have been apathetic.

In fact, for the soon-to-be-reported quarter, Microsoft has actually seen a negative estimate revision since last week, bringing our consensus projection down a penny. We are now looking for Microsoft to report adjusted earnings of $1.07 per share and revenue of $29.17 billion, which would mark growth rates of 9% and 18%.

3. Skyworks Solutions, Inc.

Popular chipmaker Skyworks Solutions is slated to release its most recent quarterly results after the closing bell on July 19. Skyworks is an American manufacturer of RF chips, which every cellphone needs to operate. This means Skyworks deals directly with companies like Apple and is a great bellwether for the smartphone industry.

SWKS is currently holding a Zacks Rank #3 (Hold). Our latest Zacks Consensus Estimates are calling for adjusted earnings of $1.59 per share and revenue of $887.7 million. This would represent minimal EPS growth of 1.3% and a revenue slump of 1.5%.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
GTT Communications, Inc. (GTT) : Free Stock Analysis Report
 
Skyworks Solutions, Inc. (SWKS) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Funko, Inc. (FNKO) : Free Stock Analysis Report
 
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