IAC/Interactive, L Brands, Progress Software, Appfolio and Paycom as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 12, 2018 – Zacks Equity Research highlights IAC/Interactive IAC as the Bull of the Day and L Brands LB as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Progress Software Corporation PRGS, Appfolio, Inc. APPF and Paycom Software, Inc. PAYC.
Here is a synopsis of all five stocks:
Bull of the Day:
IAC/Interactive is a media and internet conglomerate organized into four distinct groups: The Match Group, which consists of dating, education and fitness business brands such as Match.com, OkCupid, Tinder, The Princeton Review, and DailyBurn; Search & Applications, which includes brands like About.com, Ask.com, Dictionary.com, and Investopedia; Media, which comprises Vimeo, Electus, The Daily Beast, and CollegeHumor; and eCommerce, which includes HomeAdvisor and ShoeBuy.
This is just the tip of the iceberg of the products IAC has in its portfolio (over 150 in total), and the company boasts more than 125 million mobile apps downloaded.
Strong Q4 Results
The Zacks #1 (Strong Buy) stock reported impressive fourth quarter fiscal 2017 back in February.
Earnings of $1.40 surged past the Zacks Consensus of $1.13 per share, and adjusted net income grew 6% year-over-year.
Revenues also beat our consensus estimate and saw double-digit growth from the prior year period.
Highlights of the quarter include ANGI Homeservices revenue increasing 80% to $223.2 million and Match Group revenue growth accelerating 28% thanks to 24% growth in average subscribers; total subscribers hit over 7 million. Vimeo subscribers also saw an increase, up 14% year-over-year.
Publishing revenues jumped 44% driven in part by Premium Brands revenue growth increasing to 29%.
Earnings Outlook
For IAC, its bottom line is trending upward for the foreseeable future.
Earnings are expected to grow well over 200% for the current quarter, though one analyst has cut their outlook in this time period.
Fiscal 2018 figures are looking pretty great, with three estimates moving higher in the past two months. The Zacks consensus estimate trend has jumped from $5.78 per share to $6.00 per share.
Earnings estimates for fiscal 2019 are on the rise as well, jumping from $8.18 per share to $8.28 per share in the last 60 days.
Can Shares Push Higher?
Shares of IAC have gained about 26% since the start of the year, and 106% in the past one-year period. In comparison, the S&P 500 has lost roughly 0.76% and gained 12.5%, respectively.
The company is currently trading at a forward P/E of 26X and a PEG ratio of 3.1X.
While its industry, Internet-Commerce, currently sits in the bottom 27% of all industries ranked by Zacks—the group has lost 7.5% in the past month, no doubt feeling the effects of the tech sell-off in the last two weeks or so—it has gained over 45% in the past year.
Taking into account its impressive price appreciation over the last one-year period, as well as its expected earnings growth, IAC could be an exciting opportunity for investors looking to get in to the internet space.
Bear of the Day:
Based on Columbus, OH, L Brands is a retail company with Victoria’s Secret, PINK, Bath & Body Works, La Senza, and Henri Bendel included in its brand portfolio. LB operates over 3,000 company-owned specialty stores throughout the U.S., Canada, the U.K., Ireland, and China, as well as more than 800 franchised locations worldwide.
The company recorded sales of $12.6 billion last year.
While LB managed solid holiday quarter numbers, it wasn’t enough to ease investor fears. The stock currently sits at a #5 (Strong Sell) on the Zacks Rank, and shares have continued to fall. Can the retailer turn things around?
Holiday Quarter Results
LB actually beat both top and bottom line estimates for its fourth quarter.
Earnings of $2.11 per share beat the Zacks Consensus of $2.04 per share, while revenues of $4.82 billion marginally came out ahead of our consensus estimate and grew 7.4% year-over-year.
Total comparable sales, including direct sales, were up 2% during Q4, but store-only comps fell 2% year-over-year.
Over at Victoria’s Secret, total sales rose 3.1% and comps fell 1%. Bath & Body Works’ total sales were up 10.7%, with a 6% rise in comparable sales.
Victoria’s Secret and Bath & Body Works International sales surged 37.2% to $170.3 million.
Fiscal 2018 Guidance
For 2018, management expects comps to increase in the 2-4% range, while sales are anticipated to be 2 points higher than comps. Gross margin rate is expected to remain flat compared with the prior-year period.
The company also projects earnings in the band of $2.95-$3.25 per share compared with $3.20 last year.
Earnings Outlook
Despite these decent numbers, analysts were not impressed.
For the current quarter, seven analysts slashed their outlook in the last 60 days, and the consensus has dipped from $0.32 to $0.19 per share. Earnings are expected to decline about 42% for this time period.
11 analysts have revised their estimates downward for the current fiscal year, and the consensus has also fallen, declining 30 cents in the last 60 days.
While earnings are projected to grow in the next fiscal year too, and the current earnings consensus has dipped from $3.74 to $3.42 per share in the last 60 days.
What’s Next for L Brands?
Like many retailers, L Brands has struggled, and its product seems to be missing the mark the customers again and again. To make up for that, the company has doubled down on promotions to entice people back in its stores, hurting margins in return.
Shares are down about 37% so far this year and have declined over 20% in the last one year.
Additional content:
3 Cloud Stocks to Buy Right Now
In a matter of just a few years, “the Cloud” has evolved from the new feature that your grandmother just can’t quite seem to understand to one of the main factors driving growth in the technology sector. Cloud computing is now an essential focus for software-related companies, and cloud stocks have piqued the interest of many tech-focused investors.
New technologies and changing consumer behavior have changed the shape of the technology landscape, and an industry that was once centered on the personal computer has adapted to survive in the world of mobile computing and the Cloud. The markets have been paying attention, and some of the best tech stocks have been those that are either primarily cloud-based companies, or those that have shown growth in their cloud operations.
With this in mind, we’ve highlighted three stocks that are not only showing strong cloud-related activity, but also strong fundamental metrics. Check out these three cloud stocks to buy right now:
1. Progress Software Corporation
Progress develops software and cloud-based products that assist clients with application deployment, application management, data connectivity, web content management, and predictive analytics. The company has shifted its focus to cloud computing and is looking to expand its cloud subscription offerings. Currently, PRGS is a Zacks Rank #2 (Buy).
In its recently-reported quarter, the firm surpassed earnings estimates for the six-consecutive period, inspiring some positive estimate revisions for upcoming quarters. This is a stock to love based on its earnings growth, with consensus estimates calling for EPS expansion of 29% this quarter and 24% for the full fiscal year. But shares are also trading at an attractive 15.8x forward 12-month earnings.
2. Appfolio, Inc.
AppFolio offers cloud-based software solutions for the property management and legal industries. The company’s AppFolio Property Manager is a leading solution for property management, while its MyCase application is ideal for practitioners and small law firms. AppFolio has found consistent profitability, and investors have rewarded the stock with 66% gains over the past year.
APPF is currently sporting a Zacks Rank #2 (Buy), as well as an “A” grade for Growth in our Style Scores system. The stock will hope to maintain its momentum with continued bottom-line expansion, with current consensus estimates projecting EP growth of 37% on net sales growth of 26% this year.
3. Paycom Software, Inc.
Paycom Software is a provider of a cloud-based human capital management software solution delivered as Software-as-a-Service. Paycom was one of the first fully online payroll options out there, so this is a really interesting example of a company that has that first-mover advantage and industry leading product that still has a mountain of growth ahead of it.
PAYC is currently sporting a Zacks Rank #1 (Strong Buy). Based on our latest consensus estimates, we expect the company to witness EPS growth of 89% and revenue growth of 26% in its current fiscal year. Looking further ahead, Paycom is projected to improve its bottom line at an annualized rate of nearly 25% over the next three to five years. Shares are trading at an expensive 45x forward 12-month earnings, but its PEG ratio of 1.8 is actually quite attractive.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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IAC/InterActiveCorp (IAC) : Free Stock Analysis Report
Paycom Software, Inc. (PAYC) : Free Stock Analysis Report
AppFolio, Inc. (APPF) : Free Stock Analysis Report
Progress Software Corporation (PRGS) : Free Stock Analysis Report
L Brands, Inc. (LB) : Free Stock Analysis Report
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