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Habit Restaurants, Western Digital, Walt Disney, Roku and Etsy highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – May 9, 2019 – Zacks Equity Research The Habit Restaurants, Inc. HABT as the Bull of the Day, Western Digital Corp. WDC as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Walt Disney Company DIS, Roku ROKU and Etsy ETSY.

Here is a synopsis of all five stocks:

Bull of the Day:

The Habit Restaurants, Inc. surprised the Street with strong comparable sales in the first quarter. This Zacks Rank #1 (Strong Buy) is expected to grow revenue by double digits in 2019.

Habit Restaurants operates 255 Habit Burger Grills in 11 states and 5 international locations. Founded in Santa Barbara, California in 1969, it specializes in made-to-order chargrilled burgers and sandwiches featuring USDA choice tri-tip steak, grilled chicken and sushi-grade tuna cooked over an open flame.

An Earnings Beat in Q1

On May 1, Habit reported its first quarter results and beat the Zacks Consensus Estimate by 3 cents. Earnings were a loss of $0.01 compared to the Zacks Consensus of a loss of $0.04.

Revenue jumped 17.6% to $108.2 million from $91.9 million in the year ago quarter.

Company-operated comparable restaurant sales rose 3.2% as compared to the first quarter of 2018. 230 restaurants, out of the total of 255, are company-operated.

The increase in comparable restaurant sales was driven mostly by a 7.4% increase in average transaction amount partially offset by a 4.2% decrease in transactions.

Raised Full Year Guidance

Given that the first quarter was stronger than expected, the company raised its full year revenue and comparable restaurant sales guidance.

Revenue is now expected in the range of $460.5 million to $464.5 million up from the prior guidance of $458 million to $462 million.

The Sales Consensus is currently calling for $462 million, which is a gain of 15% from 2018 which saw sales come in at $402.1 million.

Comparable restaurant sales are now forecast to be 2.5% to 3.5%, up from prior guidance of 2% to 3%.

Analysts Raise Estimates

The analysts like what they heard and are bullish on the company.

3 estimates were revised for 2019 since the earnings report which has pushed the 2019 Zacks Consensus Estimate up to $0.13 from the prior consensus of $0.10.

However, this is still below the $0.17 the company made in 2018.

1 estimate was also raised for 2020 but the Zacks Consensus remains unchanged at $0.11.

Shares Jump on the News

Habit went IPO in 2015 as many restaurant chains were going IPO, but the shares, while hot in the beginning, have sold off by 65%.

However, this quarter's better-than-expected comparable restaurant growth boosted the shares, which have jumped 21% year-to-date.

Bear of the Day:

Western Digital Corp. is dealing with soft market conditions. This Zacks #5 (Strong Sell) as sales are expected to be down 19.4% year-over-year.

Western Digital provides storage solutions for data, including data centers and mobile sensors to personal devices. It's brands included Western Digital, G-Technology, SanDisk and WD.

A Miss in the Fiscal Third Quarter

On Apr 29, Western Digital reported its fiscal third quarter earnings report and missed on the Zacks Consensus Estimate by 32 cents. Earnings were $0.17 versus the consensus of $0.49.

“Market conditions have generally been consistent with our expectations, and while the business environment remains soft, there are initial indications of improving trends,” said Steve Milligan, chief executive officer, Western Digital.

“Our expectation for the demand environment to further improve for both flash and hard drive products for the balance of calendar 2019 is largely unchanged. We are executing well on enhancing our product portfolio, driving technology advancements, rightsizing our factory production levels and lowering our cost and expense structure, all of which position us to emerge stronger as market conditions improve.”

Analysts Cut Estimates

The analysts cut estimates after this miss.

9 estimates were cut in the last month, which has pushed the Zacks Consensus down to $4.88 from $5.55.

That's a decline of 67% from the $14.73 it made last year.

8 estimates were also slashed in the prior 30 days on fiscal 2020. The consensus has sunk to $3.72 from $5.18, that's another 23% decline.

Shares Rebound Off Lows

Shares have been under pressure over the last year. They've fallen 40%.

But they've rebounded in 2019 and are now up 26%.

Western Digital is still cheap, with a forward P/E of 9.7. But it's unclear if the earnings slide is over.

Additional content:

 

New Earnings Results for Disney, Roku and Etsy

 

The Walt Disney Company has produced its fiscal Q2 earnings results after the closing bell Wednesday, with better-than-expected numbers on both top and bottom lines. Earnings of $1.61 per share outpaced the Zacks consensus by 2 cents, while revenues of $14.92 billion surpassed expectations of $14.64 billion, and 3% higher year over year. Gains in Parks, Experience and Consumer Products and its Studios segment both outperformed estimates.

With the record-breaking success of Disney's "Avengers: Endgame" -- at $2.189 billion total box office, it is already the highest-grossing film of all-time -- it was expected the Studio unit would perform well in the quarter. And expectations are big for its coming streaming service, Disney+, which CEO Bob Iger has already announced will carry "Endgame" exclusively on Disney+ this December (presumably the film will be out of theaters by then).

The only drawback was in Media Networks, where Operating Income in Cable and Broadcasting were shy of estimates. The company cited costs in its ESPN unit and declines in ad revenues behind the miss in this segment. Shares are up another 1% in after-hours trading, after a big move up on the Disney+ announcement four weeks ago.

Roku also beat forecasts on its top and bottom lines for the streaming platform service company's Q1 report, with a loss of 9 cents per share far better than the -24 cents expected, while revenues in the quarter of $206.7 million surpassed the $189.06 million in the Zacks consensus. Platform revenue grew 79% year over year, which Active Users grew by 2 million to 18.2 million overall. Average Revenue per User (ARPU) also outperformed, to $19.06 versus the expected $18.74 per user.

Zacks Rank #4 (Sell)-rated Etsy came in mixed for its Q1 results -- putting up 24 cents per share which outpaced estimates by a solid dime, while revenues of $169.3 million came in slightly under expectations. Gross Merchandise Sales were in-line with estimates, but shares fell 7% in after-market trading on the news on tepid guidance.

 

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