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Levi Strauss, Sabre Corp, Netflix, Chipotle and United Airlines highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – July 21, 2021 – Zacks Equity Research Shares of Levi Strauss & Co. LEVI as the Bull of the Day, Sabre Corporation SABR as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix, Inc. NFLX, Chipotle Mexican Grill, Inc. CMG and United AirlinesHoldings, Inc. UAL.

Here is a synopsis of all five stocks:

Bull of the Day:

Founded in 1873 in San Francisco, Levi Strauss is a retail company known around the world for its iconic Levi’s denim brand; Dockers, Denizen and Signature by Levi Strauss & Co. are also under the company’s umbrella. LEVI first went public back in 1971, but had been a private company up until its market return a couple of years ago.

Q2 Earnings Recap

Shares of Levi Strauss popped after reporting better-than-expected second-quarter results earlier this month.

Revenue soared 156% year-over-year to 41.28 billion, with growth driven by strength across the U.S. and China. Its wholesale channel’s net sales increased 167% and its direct-to-consumer segment rose 141%, while Levi’s e-commerce business grew 42% compared to the prior-year period.

Adjusted earnings per share of $0.23 beat the Street consensus estimate of $0.09 per share and strongly rebounded from the adjusted net loss of $0.48 it recorded in Q2 2020.

Operating cash flow rocketed 500% higher for the first half of 2021 to $248 million, and the retailer now has $1.22 billion in cash and cash equivalents on hand. Additionally, Levi raised its quarterly dividend to $0.08 per share, which yields about 0.91% on an annual basis.

LEVI Breaks Out

Shares have surged recently, up about 36% year-to-date compared to the S&P 500’s gain of 15.1%. Estimates have been rising too, and LEVI is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, four analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up $0.23 to $1.34 per share. Earnings are expected to grow about 538% compared to the prior year period, and 2022 should generate even more profits as well.

Looking ahead, Levi Strauss expects good things to continue for the rest of the year. Sales are expected to jump between 28% to 29% for the H2 2021, representing growth of 4% to 5% compared to the second half of fiscal 2019. "Revenues in most markets are recovering faster than anticipated," CFO Harmit Singh said, "and we are emerging from the pandemic with sustainable and improved structural economics."

Additionally, only 8% of Levi’s stores are closed due to pandemic restrictions, as the recovery of demand continues to be strong in all of its geographic regions.

All in all, the denim retailer has bounced back nicely from Covid-19’s hit to its business, and investors should expect more growth and potentially higher share price.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep LEVI on your shortlist.

Bear of the Day:

Based in Texas, Sabre Corp. provides software and technology solutions that powers the global travel industry. The company connects leading travel suppliers, including tour operators, airlines, rail carriers, car rental brands, hotels, and cruise lines, with travel buyers in a comprehensive marketplace.

Why SABR’s Q1 Earnings Disappointed

Shares of Sabre plunged as much as 13% the day of its Q1 earnings release after the results fell well short of expectations.

Revenue fell by half to $327 million, significantly below the Street estimate of $410.6 million and last year’s figure of $659 million. Management attributed the sales decline to reductions in global air, hotel, and other travel bookings because of the pandemic.

This impacted the company’s bottom line, resulting in a net loss of $266 million, or $0.84 per share.

Operating loss was $203 million, versus operating loss of $151 million in the first quarter of 2020.

Free cash flow was ($204 million) compared to free cash flow generation of $12 million in the first quarter of 2020.

However, the bookings environment did improve 15% versus Q1 2019, and Sabre saw the strongest rebound in North American air bookings and global hotel bookings.

Bottom Line

SABR is now a Zacks Rank #5 (Strong Sell).

Three analysts have cut their full year earnings outlook over the past 60 days, but Sabre’s bottom line is expected to grow roughly 40% year-over-year. However, the consensus estimate has fallen $0.38 to a loss per share of $1.91 for fiscal 2021. Next year’s earnings consensus has significantly dropped as well, and Wall Street now expects a loss per share of $0.21.

Shares have been volatile so far in 2021. Year-to-date, SABR is down 6% compared to the Nasdaq and S&P 500’s gain of 10.8% and 15.1%, respectively.

Because of ongoing global uncertainty about the pandemic, Sabre did not issue any guidance.

However, the company’s management team is optimistic about the short- and long-term future. President and CEO Sean Menke believes Sabre has “a healthy sales pipeline and the ability to capture new opportunities.” He also thinks that “as the travel environment improves…Sabre is well positioned.”

Until then, potential investors may want to wait on the sidelines until the outlook improves.

Additional content:

Resilient Market Bounces Back; Netflix Misses, Chipotle and United Beat

Betting on near-term market resilience paid off once again Tuesday, as bargain shoppers after Monday’s plummet took advantage and picked up some of their wish-list stocks. While not all the way back from the previous day, and off session highs, the Dow grew +1.62%, +550 points, while the S&P 500, up for the first day in its last four, was +1.52%. The Nasdaq was even better, +1.57%, while the Russell bested all major indexes +3%.

Investors continue to digest coronavirus news, not only in states like Florida (which reported 20% of all new U.S. Covid-19 cases) but around the globe. Closing factories and cancelled flights returned us all to last year's nightmare scenario, and clearly we’re not completely over the pandemic, emotionally speaking. But Tuesday was a different day; even with Building Permits disappointing in the Housing market, market participants held a stiff upper lip.

Q2 reports also hit the tape in yesterday's after-hours, with Netflix reporting its fifth earnings miss in its past six quarters, $2.97 per share versus $3.16 expected. Still, it’s far better than the year-ago read of $1.59 per share. Revenues topped expectations a bit, reporting $7.34 billion versus $7.31 billion in the Zacks consensus, for roughly 20% growth year over year.

However, the reason Netflix shares sold off more than 5% immediately upon the release was due to the low Q3 guidance in Net Subscriber Adds: 3.5 million now expected, down from the 5.5 million previous guide. Paid Net Adds in Q2 did top estimates: 1.54 million versus the company’s guide of 1.2 million previously. Perhaps this new guidance is more of the company setting easier goals to beat next quarter.

Chipotle also reported Q2 earnings yesterday afternoon, beating on the bottom line by a solid dollar: $7.46 per share versus $6.46 expected. Revenues eked out a slight beat: $1.89 billion versus $1.88 billion in the Zacks consensus, up more than 37% year over year. Same-store sales grew 31.2%, better than expected. The Zacks Rank #3 (Hold)-rated company was up 3.8% on the news.

Digital Sales continues to be a strength for Chipotle, +10.5% in the quarter, now accounting for 48.5% of overall sales. This helped the restaurant chain obtain 24.5% growth in Operating Margins, a strong number in light of wage hikes for work staff in a highly competitive labor environment. It also represents the highest quarterly gain in Operating Margins in nearly six years.

And United Airlines outperformed expectations in its Q2 earnings report Tuesday, with -$3.91 per share actually beating estimates of -$4.17, and far better than last year’s dismal -$9.31 per share. Revenues also topped expectations: $5.47 billion versus $5.31 billion anticipated. Total Revenue per Seat Mile (TRASM) came in at -11.3%, better than the company’s guide of -12%.

Clearly things are improving for the major airline, although with new outbreaks of Covid in certain patches of the U.S., this may come into question again as Q3 progresses. Currently, the company expects pre-tax profit guidance for next quarter and the full year. Yesterday’s earnings beat breaks a string of four straight quarterly misses. Shares were down 1.4% in after-market trading, but still up +11.3% year to date.

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