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General Mills, Potbelly???s and Twitter highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – May 30, 2019 – Zacks Equity Research General Mills GIS as the Bull of the Day, Potbelly’s PBPB as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Twitter TWTR.

Here is a synopsis of all three stocks:

Bull of the Day:

Sometimes, being really boring can lead to exciting profits. You don’t have to take my word for it, just take a look at Berskhire Hathaway’s portfolio. Insurance companies, consumer staples, consistency. While everyone loves to talk about the hot new tech stock or cannabis stock hitting the market, there’s something to be said about the old, very profitable, guard. One way to find companies like this is to lean on the time-tested power of the Zacks Rank. Stocks with favorable ranks have solid earnings trends that have a tendency to continue quarter after quarter.

One such stock is today’s Bull of the Day, General Mills. General Mills, Inc. manufactures and markets branded consumer foods worldwide. The company operates in five segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. It offers ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit, and savory snacks, as well as organic products, including refrigerated yogurt, nutrition bars, meal kits, salty snacks, ready-to-eat cereal, and grain snacks.

Despite Goldman Sachs’ downgrade, General Mills is a Zacks Rank #1 (Strong Buy). The reason for the favorable rank comes from the recent trend in earnings estimates coming from analysts across the board. Over the last sixty days, two analysts have increased their earnings estimates for next year. That bullish sentiment pushed up our Zacks Consensus Estimate from $3.34 to $3.28.

General Mills, Inc. Price and Consensus

It’s that sort of strong earnings trend which has helped underpin a move from the $36 level on Christmas Even to over $53 just last week. Today’s Goldman downgrade, coupled with a rough day for the market, saw shares dip to $48.25. Should the underlying earnings trend remain intact over the long run, today’s selling could be seen in retrospect as a great entry point.

Bear of the Day:

I remember the good old days of the “Sandwich Wars.” Everywhere you looked, new, delicious sandwich shops were opening up to challenge a space formerly dominated by Subway. Fresh names like Quizno’s and Jersey Mike’s popped up, giving lunch-time folks on a time crunch plenty of choices. One of these sandwich shops is today’s Bear of the Day. Not because I think it’s in danger of going the way of Quizno’s, just because its earnings trend has taken a turn for the negative.

I’m talking about Zacks Rank #5 (Strong Sell) Potbelly’s. Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly Sandwich Works sandwich shops in the United States. The company offers toasty warm sandwiches, salads, soups, chili, sides, desserts, breakfast sandwiches, and steel cut oatmeal. As of February 25, 2019, the company operated approximately 400 shops in the United States; and approximately 50 franchisees operated shops in the United States, the Middle East, Canada, and India. 

The reason for the unfavorable Zacks Rank stems from a series of earnings estimate revisions to the downside coming from analysts. Over the last thirty days, three analysts have cut their earnings estimate for the company’s current year and next year. The bearish sentiment has smashed the current year Zacks Consensus Estimate down from 29 cents to a 3-cent loss. Next year’s number has come down from 33 cents to only 15 cents.

Can the 2020 Election Be Expected to Boost Twitter (TWTR)?

Twitter has established itself as the contemporary platform for up-to-date news, whether it be on entertainment, sports, politics, or business, etc. People all over the world turn to the social media platform for updates on daily events and any other significant occurrences.

The company’s IPO in November of 2013 was received eagerly by investors; their shares opened at $26 and closed at nearly $45. This initial burst landed the company a valuation of around $31 billion.

Despite this strong start in the stock market, Twitter eventually started to experience growth problems. The fiscal year of 2015 proved to be Twitter’s biggest test, as the company’s growth became stagnant and many publications confirmed this public sentiment. These tough times brought upon many doubts about the company’s future and rumors spread about a potential takeover by other tech industry giants.

The end of 2016 provided the company a chance for rebirth from an unlikely source. Donald Trump’s involvement in the 2016 presidential race caused people to flock to Twitter to read what the candidate had to say. The presidential election that year, as well as Donald Trump’s frequent activity on the platform, drastically increased traffic on the website. This Donald Trump boost turned the tide for the company as more prominent figures have joined Twitter, trampolining the company into a popular news source and completely reconfiguring its demographic landscape.

This trend has helped the company expand its appeal, reach various demographics, and finally escape the perception of being a gossip website for younger people. Additionally, Twitter’s emergence as a public daily news forum has helped drive shares to more than double their value from a near all-time low in 2016. Thanks to this newly obtained public perception, Twitter’s been able to reemerge successfully and earn a Zacks Rank #2 (Buy).

After becoming a hotbed for breaking news, the company has been able to silence doubts about its future. Analysts expect earnings to see solid growth through this year and next. And, Twitter’s increased social media presence has helped it earn a B rating in Growth for the Zacks Rank Style Scores.

Twitter is a company that can appeal to investors who are looking for a stock that has big growth potential. Including this stock in a portfolio could potentially have a strong payoff, especially as another presidential election is just around the corner.

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