For Immediate Release
Chicago, IL – October 29, 2013 – Zacks Equity Research highlights Nu Skin ( NUS- Free Report) as the Bull of the Day and Abaxis ( ABAX- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Apple ( AAPL- Free Report), Google ( GOOG- Free Report), Microsoft ( MSFT- Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Nu Skin ( NUS- Free Report) recently delivered the coveted "triple play":
- A positive earnings surprise
- A positive revenue surprise, and
- Increased guidance from management
This was driven in large part by soaring sales in Greater China and expanding profit margins. Analysts revised their estimates significantly higher after the latest beat, sending the stock to a Zacks Rank #1 (Strong Buy).
Nu Skin Enterprises, Inc. is a global direct selling company that develops and distributes personal care products and nutritional supplements. It operates in 53 markets worldwide, and its products are primarily sold under the Nu Skin and Pharmanex brands. The company reports revenue in five geographical segments:
- Greater China (42% of total revenue)
- North Asia (27%)
- South Asia/Pacific (13%)
- Americas (12%)
- EMEA (6%)
Nu Skin delivered a nice "beat and raise" quarter on October 22. The company reported earnings per share of $1.80, crushing the Zacks Consensus Estimate by 27%. It was more than double EPS in the same quarter last year.
Revenue jumped 76% to $927.6 million, well ahead of the consensus of $815.0 million. Each segment experienced top-line growth, but its largest segment - Greater China - was remarkable as revenue surged 240%.
Gross profit as a percentage of total revenue was an impressive 84.9%, up from 83.5% in the same quarter last year. The operating margin improved from 15.7% to 18.1% due in large part to operating leverage. General and administrative expenses, for instance, improved from 23.1% to 17.5% of revenue.
Bear of the Day:
Abaxis ( ABAX- Free Report) reported its second straight earnings miss on October 22 as revenue came in below expectations and profit margins contracted. Analysts revised their estimates meaningfully lower for both 2013 and 2014 after the latest miss, sending the stock to a Zacks Rank #5 (Strong Sell).
Although shares have fallen after the Q3 report, the stock still looks pricey at 33x forward earnings. Investors should consider waiting for earnings momentum to turn around before investing.
Abaxis, Inc. manufactures portable point-of-care blood analysis systems for use in veterinary and human patient-care settings.
Abaxis reported disappointing Q3 earnings on October 22. Earnings per share came in at 18 cents, missing the Zacks Consensus Estimate of 20 cents. Earnings growth was flat compared with the same quarter last year.
Revenues rose 4% year-over-year to $45.9 million, which was short of the $48.0 million consensus. Total sales in the veterinary market were up 8% to $37.9 million.
Despite the increase in revenues, gross profit declined 5% as the gross margin fell 480 basis points to 47.7% of revenue. Total operating expenses improved 304 basis points, however, to 35.3% of revenues. But operating income still fell 9% year-over-year.
Apple Kept Red Post After-Hours Earnings
Gone are the days when Apple ( AAPL- Free Report) would report new quarterly earnings and smash expectations like so many pumpkins on doorstoops during Halloween. The iBehemoth brought in $8.26 per share on sales of $37.5 billion in the quarter, both of which are decent-sized beats from the Zacks Consensus Estimates. Yet AAPL stock was sold off aggressively in the first minutes of after-hours trading today. So what gives?
One word: margins. While a 37% profit margin is certainly nothing to sneeze at -- especially for such a huge company designing, creating and mass-producing so many high-tech gadgets -- Apple investors have seen margins sliding in the smartphone space for the past few quarters, and that's not great for a company that's made its name on mind-blowing innovation and products it takes its competition literally years to catch up to.
And Apple's guidance for its all-important holiday season quarter (Q1 fiscal 2014)? Expected gross margins of 36.5-37.5% marks the potential to see this number sink even lower. And with main competition for all intents and purposes already "caught up" to Apple -- Samsung, Google ( GOOG- Free Report), heck even Microsoft ( MSFT- Free Report) will have the ability to make snazzy smartphones, too -- it's going to be tougher and tougher for the Cupertino giant to keep its big lead in the market, especially without new innovations coming down the pike to re-invigorate the hopes of investors.
Make no mistake, either: the iPhone is the key to Apple's success these days. Sales of the iPhone make up over 50% of the company's business, and when Steve Jobs held the first prototype in his hand those many years ago now, anyone could see it was unquestionably a superior product compared to what else was on the market at the time. But these days people see the iPhone 5s launch and they start weighing their options -- sometimes to await a new upgrade or opt for a smartphone elsewhere. And that's no way to exude dominance in the industry, especially the kind Apple (and everyone else) had grown used to over time.
Thus, traders in the late session have kept AAPL shares in the red, though some of the fervor seems to have burned away by now. Apple shares are down around 3% in the after-market, but they were encroaching on -4% early in the session. Very curious from a casual observer's perspective that such a big company with such well-known brands would post a 3.7% positive surprise and brought in more than $200 million in sales than analysts expected over the past three months.
After all, the U.S. Olympic Team once put the "Dream Team" on the basketball court. Nobody could even hope to compete with them. But it was only a matter of time before the U.S. finally wound up losing that Gold medal.
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