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HollyFrontier, Culp, CME Group, Riot Blockchain and Bitcoin Investment Trust highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
URI vs. SSD: Which Stock Is the Better Value Option?
URI vs. SSD: Which Stock Is the Better Value Option?

For Immediate Release

Chicago, IL – June 25, 2018 – Zacks Equity Research highlights HollyFrontier Corporation HFC as the Bull of the Day, Culp Inc. CULP as the Bear of the Day. In addition, Zacks Equity Research provides analysis on CME Group CME, Riot Blockchain RIOT and Bitcoin Investment Trust GBTC.

Here is a synopsis of all five stocks:

Bull of the Day:

HollyFrontier Corporation, a Zacks Rank #1 (Strong Buy) is engaged in refining petroleum. It produces and markets gasoline, diesel, jet fuel, asphalt, heavy products and specialty lubricant products. HollyFrontier Corporation, formerly known as Holly Corporation, is headquartered in Dallas, Texas.

Recent Earnings Data

In its Q1 earnings report HFC crushed both the Zacks consensus earnings and revenue estimates as all segments beat expectations. Earnings grew to $0.77 from -$0.19 in the year ago quarter while revenues improved by +34%. The company’s impressive results were due to expanding margins, lower operating expenses, and higher throughput.  Also, the Logistics, and Lubricants and Specialty segments performed better than anticipated.  Further, the company refined more barrels of oil per day than expected (466 million barrels per day vs the expected 444 million), and reduced its overall cost to produce each barrel ($5.69 vs expected $5.98).

Management’s Take

According to George Damiris, President and CEO, “HollyFrontier's strong financial results reflect our ability to capitalize on the refining margins and crude spreads available during the first quarter. To date, crude spreads have been consistent, and we are optimistic about refining and lubricant margins going into the summer.”

Bear of the Day:

Culp Inc., a Zacks Rank #5 (Strong Sell), manufactures, sources, markets, and sells mattress fabrics and upholstery fabrics. The Company's fabrics are used in the production of residential and commercial furniture and bedding products, including sofas, recliners, chairs, loveseats, sectionals, sofa-beds, office seating, panel systems, and mattress sets. It operates in two segments, Mattress Fabrics and Upholstery Fabrics. Culp, Inc. is headquartered in High Point, North Carolina.

Recent Earnings Data

The company reported Q4 18 results where they missed both the Zacks consensus earnings and revenue estimates. On a year over year basis, earnings fell by -25%, while revenues grew by +1.3%.  For FY 18 net sales improved by +4.6%, mattress fabric sales grew by +1.0%, and upholstery fabric sales improved by +10.4%. On the down side, return on capital fell from 31.6% to 25.4%, and cash flows from operations declined from $34.1 million to $27.5 million.

Future Headwinds

Lower priced imported mattress from China have grown much more than expected in FY 17 and FY 18, but Culp did not materially feel the impact until last quarter. Currently, management expects this headwind to remain for at least the next two quarters. The company has significant exposure to the $1,000 and under market which is the area where there have been the most imports. Management admitted that these imports have and are expected to have a negative impact on sales performances over the near to mid-term. The import issue is not expected to its impact high end customers as much, but this segment only accounts for a very small portion of its sales. 

Management’s Take

According to Frank Saxon, President and CEO, “As we look ahead to fiscal 2019, we are facing a significant challenge with the growth in imported Chinese mattresses and its effect on fabric demand from many of our customers. We are aware of actions being considered by the industry to address this situation in the near term, and we are optimistic that such actions will be successful.”

Additional content:

Here’s Why Bitcoin Is Tumbling Once Again

The price of bitcoin and most other major cryptocurrencies dropped sharply on Friday after financial regulators in Japan ordered several crypto exchanges to improve their anti-money laundering practices, adding to long-standing fears that government crackdowns could hurt the market.

In response to the mandate from Japan’s Financial Services Agency, bitFlyer—the largest cryptocurrency exchange in the country—suspended the creation of new accounts while it improves its practices.

“Our management and all employees are united in our understanding of how serious these issues are, as well as how serious we are in responding to them going forward,” bitFlyer said in a statement.

Japanese regulators gave the same order to five other exchanges after reportedly noticing weaknesses in how they combatted money laundering.

To some, the move might seem like a minor setback that should be expected as users and governments continue to adapt to new technologies. But Friday’s selling stems from a few legitimate concerns about what Japan’s regulatory move could mean in the near- and long-term future.

For starters, bitFlyer’s response interrupts the flow of new capital to one of the largest cryptocurrency exchanges in the world. The Japanese yen accounts for a majority of bitcoin’s daily volume, so it is obvious that any interruption in this market will cause headwinds.

Moreover, the regulatory order speaks to a greater concern for crypto enthusiasts—one which threatens the potential long-term impact of digital currencies. Widespread government crackdowns and new laws could very well diminish the overarching point of cryptocurrencies, which—for many users—is to circumvent traditional financial sector barriers.

Japan has led the way in terms of regulation so far, although other countries have joined in the effort recently. Just a few weeks back, The Wall Street Journal reported that U.S. regulators are investigating potential price manipulation at four major exchanges occurring after CME Group launched bitcoin futures.

According to CoinMarketCap.com, bitcoin prices have dropped more than 7.7% over the past 24 hours. In that time, Ethereum—the world’s second largest cryptocurrency by way of market cap—has slumped about 9.9%, Ripple has tumbled 6.5%, and Bitcoin Cash has lost more than 11.8%. Litecoin, a popular coin among traders and retail investors, has also dropped about 11.5%.

Overall, only two of the top 100 cryptocurrencies have remained in the green in the past day, based on CoinMarketCap’s data. The total capitalization of the global crypto market has shed nearly 9.5%.

Shares of crypto-proxy stocks like Riot Blockchain and the Bitcoin Investment Trust were also sharply lower on Friday morning.

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

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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HollyFrontier Corporation (HFC) : Free Stock Analysis Report
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