For Immediate Release
Chicago, IL – Feb 12, 2018 – Zacks Equity Research highlights Micron Technology, Inc. MU as the Bull of the Day, Bassett Furniture Industries, Inc. BSET as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Diamond Offshore Drilling, Inc. DO, USA Compression Partners, LP USAC and Gulfport Energy Corporation GPOR.
Here is a synopsis of all five stocks:
Bull of the Day:
Micron Technology, Inc. continues to crush it as it recently raised fiscal second quarter guidance even after giving bullish guidance last year. This Zacks Rank #1 (Strong Buy) is also dirt cheap, with one of the lowest P/Es in the technology sector, or any sector for that matter.
Micron makes memory and storage solutions including DRAM, NAND, NOR Flash and 3d XPoint memory. Its technology is used in artificial intelligence, machine learnings and autonomous vehicles.
Raised Fiscal Second Quarter Guidance
After easily beating the Zacks Consensus Estimate for its first quarter in December 2017, and providing strong second quarter guidance, Micron surprised the Street by raising that already bullish guidance less than two months later.
On Feb 5, Micron raised its fiscal second quarter revenue guidance to a range between $7.2 and $7.35 billion, up from $6.8 to $7.2 billion.
Earnings per share is now expected between $2.70 and $2.75 per share versus the prior guidance of $2.51 to $2.65.
It didn't provide any color about why it's so bullish, but clearly the company is still seeing strong demand this quarter.
Full Year Estimates Leap Again
The analysts are even more bullish than just 2 months ago after the last earnings report.
6 estimates are already higher for fiscal 2018, pushing the Zacks Consensus Estimate up to $10.13 from $9.83 in the last week. But that's a big increase from even just 60 days ago when the Zacks Consensus was a mere $7.66.
That's a jump of 104% over fiscal 2017 when the company made a mere $4.96.
Analysts are also getting more bullish on fiscal 2019.
Investors and analysts had believed that the supply-demand cycle would most likely moderate in the second half of calendar 2018. But will it?
2 months ago the Zacks Consensus Estimate for fiscal 2019 was just $5.95. But since the revised Q2 guidance, it has jumped to $8.67.
That's still a decline of 14.4% compared with this year, however, so the analysts continue to be cautious.
Want to Know More?
On Feb 7, Micron announced that it would present at several upcoming investor conferences.
Investors might want to tune in on Feb 15 at the Goldman Sachs Technology and Internet Conference in San Francisco or at the Feb 27 Morgan Stanley Technology, Media and Telecom Conference, also in San Francisco.
The company is set to report its second quarter results on Mar 22, after the bell, wherein it will likely provide some insight into how demand looks for the second half of the calendar year.
Micron Is Dirt Cheap
Despite the bullishness by the company and the analysts, the shares have sold off with the rest of the market in the recent stock market correction.
They're down over 12% year-to-date and haven't re-tested the old highs in 2018.
Bear of the Day:
Bassett Furniture Industries, Inc. is working on positioning itself for the digital phase of retail. This Zacks Rank #5 (Strong Sell) missed the Zacks Consensus for the fiscal fourth quarter but business isn't looking too bad.
Bassett is a well known furniture maker with 92 company- and licensee-owned stores and a large wholesale network with more than 700 accounts. It makes both furniture and accessories, including custom-built furniture that is ready for delivery within 30 days.
An Earnings Miss in the Fiscal Fourth Quarter
On Jan 18, Bassett reported its fiscal fourth quarter results and missed on the Zacks Consensus Estimate by 6 cents. It reported $0.46 versus the Zacks Consensus of $0.52.
However, Zacks has just one estimate for the quarter and the full year.
Wholesale sales rose 1% to $63.2 million from $62.6 million a year ago.
Comparable store sales fell 1.7% year-over-year but some of that was due to flooding from Hurricane Harvey. Four of the company's stores in Houston were closed for almost 2 weeks.
Excluding those 4 stores, comparable store sales fell just 0.4% in the quarter.
Bassett also tracks written sales, which is the retail dollar value of sales orders taken, rather than delivered, as a key store performance indicator. Written sales for comparable stores actually rose 2.7% year-over-year in the quarter.
In other good news, it intends to open 10 new stores, and reposition 2 to 3, in the next 18 months as it's finding success with both brick and mortar as well as digital.
New Generation 3 Stores
In the third quarter of 2018, Bassett intends to debut, in Frisco, Texas, its new "Generation 3" prototype store which will showcase Bassett's interior design and customizable home furnishings with the latest technology.
You'll be able to track, from a mobile device, the item, it's creation and then finally when it's being delivered.
Estimates Cut for the Fiscal Year
As I mentioned, Zacks only has one estimate for Bassett, but that estimate was cut in the last month which pushed the fiscal 2018 Zacks Consensus Estimate down to $1.72 from $1.98.
That's the reason the stock has fallen to a Zacks Rank #5 (Strong Sell), even though earnings are still expected to be up 8.9% year-over-year even with the estimate revision.
Stock Falls, Is It a Deal?
Shares have taken a hit during the stock market correction, falling about 15% year-to-date.
They now trade with a forward P/E of 18.5, however, until the #5 (Strong Sell) ranking changes, you probably will want to stay on the sidelines.
Upcoming Oil Earnings to Watch: DO, USAC, GPOR
We have crossed the half-way mark of the Q4 earnings season, with 322 S&P 500 members having reported their numbers. This accounts for 78.1% of the index’s total market capitalization. Per the latest Earnings Trends, total earnings for these companies are up 15.3% from the same period last year on 9.4% higher revenues, with 79.6% companies delivering positive earnings surprises and 76.9% beating revenue estimates.
Among the 16 Zacks sectors, we expect only energy to witness triple-digit earnings growth of 150.1%, way ahead of 43.5% growth for basic materials standing next in the que. Partial recovery in crude prices supported this massive improvement.
Q4 Oil & Gas Prices Encouraging
West Texas Intermediate (WTI) crude increased almost 20% in the fourth quarter of 2017, per The U.S. Energy Information Administration (EIA). Through most of November and the entire month of December, the commodity traded above the $55-per-barrel psychological mark. The extension of the production cut deal by OPEC players supported the rally.
On Nov 30, 2017, OPEC members met non-OPEC players to decide on an extension of the crude production cut accord, first signed in late 2016, beyond the first quarter of 2018. More than 20 oil producers, including leading exporters like Russia and Saudi Arabia, attended the meeting. As expected by most analysts, all crude exporters decided to extend the deal through 2018-end. Saudi Arabia, Russia, and their allies have pledged to put 1.8 million barrels a day of crude oil out of the market through the end of this year.
Like oil, natural gas prices also reflected a gain of 25.5% through the fourth quarter of 2017.
Which Energy Players Could Benefit?
The improvement in crude prices is favorable for upstream energy players. During fourth-quarter 2017, there was more production of crude and natural gas in the United States as compared to the prior year, per EIA. Higher upstream activities may call for more contracts for drillers and to the companies that provide natural gas compression services.
Stocks to Watch for Earnings on Feb 12
Headquartered in Houston, TX, Diamond Offshore Drilling, Inc. is a leading offshore contract driller with services across the globe.
Last quarter, the company delivered earnings of 25 cents per share that surpassed the Zacks Consensus Estimate of 19 cents. Earnings also increased from 10 cents recorded a year ago. Diamond beat the Zacks Consensus Estimate in all the prior four quarters, the average positive surprise being 208.4%.
However, our proven model does not conclusively show that the company is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 (Hold) and an Earnings ESP of -1,387.88%. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 for a beat.
USA Compression Partners, LP — headquartered in Austin, TX — is the leading provider of services related to compression works to energy players.
Last quarter, the partnership reported earnings of 7 cents per unit, in line with the Zacks Consensus Estimate and higher than the year-ago profit of 6 cents. However, the company’s earnings surprise history is not impressive, wherein it delivered an average negative earnings surprise of 6.7% for the last four quarters.
An earnings beat looks unlikely for USA Compression Partners. For the to-be-reported quarter, the partnership has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Headquartered in Oklahoma City, Gulfport Energy Corporation is primarily involved in oil and natural gas exploration and production operations.
The company surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters, the average positive surprise being 40.8%. Our proven model does not conclusively show a beat for the company this earnings season. This is because the company has a Zacks Rank #4 (Sell) and an Earnings ESP of -2.02%. Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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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.
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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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Bassett Furniture Industries, Incorporated (BSET) : Free Stock Analysis Report
USA Compression Partners, LP (USAC) : Free Stock Analysis Report
Diamond Offshore Drilling, Inc. (DO) : Free Stock Analysis Report
Gulfport Energy Corporation (GPOR) : Free Stock Analysis Report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
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