For Immediate Release
Chicago, IL – May 02, 2017 –Zacks Equity Research Nutrisystem, Inc. (NASDAQ: NTRI – Free Report ) as the Bull of the Day, W.W. Grainger, Inc. (NYSE: GWW – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on BASF SE (OTCMKTS: BASFY – Free Report ), CSX Corp. (NASDAQ: CSX – Free Report ) and Volvo AB (OTCMKTS: VLVLY – Free Report ).
Here is a synopsis of all five stocks:
Bull of the Day :
Nutrisystem, Inc. (NASDAQ:NTRI – Free Report ) continued with its hot streak as it beat the Zacks Consensus Estimate by 56% in the prime Diet Season quarter. This Zacks Rank #1 (Strong Buy) is expected to see strong double digit revenue growth in 2017.
Nutrisystem is famous for weight loss programs including Nutrisystem Lean13 program, designed to deliver weight loss of up to 13 pounds in the first month. The company also has other branded weight-loss products including Fast 5, Turbo 10 and the South Beach Diet as well as multi-day kits sold at select retail outlets.
Feeding on the healthy food frenzy sweeping the nation, the company's meal choices including 100 foods which do not contain artificial preservatives or flavors.
Plans can also be customized for specialized diets, including those with Type 2 diabetes or pre-diabetes.
Another Quarter, Another Beat
On April 26, Nutrisystem reported first quarter results and beat on the Zacks Consensus Estimate again. It has only missed once in the last 4 years.
It reported earnings of $0.25 versus the consensus of $0.16, which was a beat of 9 cents or 56.3%.
The first quarter is the "Diet Season" quarter, which is the holidays for the diet companies thanks to January new year resolutions.
Nutrisystem's Lean 13 campaign exceeded expectations and its a la carte and shake sales also showed strong growth.
The company also said the launch of the South Beach Diet was meeting its expectations.
Revenue rose 31% to $212.7 million, up from $162.1 million a year ago. It was the 15th consecutive quarter of year-over-year revenue growth.
Gross margins increased 230 basis points to 53.8% from 51.5%.
Raised Full Year Guidance
Given the hot start to the year, it's not a surprise that Nutrisystem raised both revenue and EPS guidance for the year.
Full year revenue is now forecast to be in the range of $650 to $665 million, up from $630 to $650 million.
Earnings guidance is projected at between $1.65 and $1.75 versus the prior range of $1.55 to $1.65.
As a result, the analysts are pushing their estimates higher. The Zacks Consensus for 2017 jumped to $1.70 from $1.54 in the last week. That is earnings growth of 38%.
Even 2018 rose to $1.87 from $1.63, which is another 10% boost in earnings.
Bear of the Day :
W.W. Grainger, Inc. (NYSE:GWW – Free Report ) is struggling in its largest market. This Zacks Rank #5 (Strong Sell) is one of the few industrial-focused companies to lower full year guidance this earnings season.
Grainger supplies maintenance, repair and operating products in North America, Europe, Asia and Latin America. Nearly everyone in an industrial or manufacturing industry has probably used a Grainger product at some point.
A Miss in the First Quarter
On April 18, Grainger reported its first quarter results and missed on the Zacks Consensus by 4.3%. EArnings were just $2.88 versus the consensus of $3.01.
Sales increased, but only 1%, to $2.5 billion year-over-year.
Grainger instituted a new pricing strategy in January and February of this year which included new web prices on about 450,000 SKUs to drive growth. It also negotiated large customer contracts with more competitive pricing for infrequently purchased items.
As a result, the customers with access to the lower prices bought more than company expectations in the first quarter.
It was going to wait until 2018 to institute the web pricing on all SKUs but it now will do it by the third quarter of 2017.
As a result, in the quarter, more product was sold but at lower prices and that will also be the result later in the year when the pricing is on all SKUs.
Lowered Full Year Guidance
As a result of its pricing actions, the company lowered 2017 sales and earnings per share guidance.
Sales growth is now expected to be just 1% to 4% for the year, a reduction from its previous forecast of 2% to 6%.
While earnings per share are now expected in the $10.00 to $11.30 range, down from the company's prior range of $11.30 to $12.40.
It's no surprise that the analysts all cut estimates to get in line with the new guidance.
9 estimates were lowered for 2017, pushing the Zacks Consensus down to $10.53 from $11.87. That's an earnings decline of 9% from 2016.
They also lowered 2018 estimates, pushing the consensus down to $11.21 from $13.06.
Take No Chances, Get No Surprises: Global Week Ahead
What of this Global Week Ahead?
Coming trading days have a full smorgasbord …of boilerplate data and events.
However full, if you expect big surprises -- from either politics or macro data -- you may well be disappointed by this large agenda.
Despite the considerable noise and hoopla coming from new administrations on both sides of the Atlantic, traders most likely should anticipate a ‘muddle through’ scene – for politics, companies and stocks.
It’s déjà vu, all over again.
Case in point. On Sunday night, U.S. House & Senate negotiators reached a bi-partisan agreement on a $1.1 trillion budget. Under this agreement, the U.S. government stays open through the end of September.
Bloomberg wrote that Republican leaders -- eager to focus on health-care and tax overhauls -- bowed to Democratic demands to eliminate hundreds of policy restrictions aimed at curbing regulations.
This left the Trump administration with few victories. President Trump will be able to point to a $15 billion boost for the Pentagon.
Second, during the Global Week Ahead: 124 S&P 500 firms release earnings.
Any quarterly surprises will be concentrated in the Tech sector and Big Pharma.
Key names include Apple, Facebook, Time Warner, CBS, Kellogg, Loews, Merck, Pfizer, Mastercard and Berkshire Hathaway.
Third, on Tuesday and Wednesday, the Federal Open Market Committee (FOMC) meeting happens.
This culminates in a statement-only outcome on Wednesday at 2 pm ET. There will be no FOMC forecast updates or press conference.
Chair Yellen’s published statement should be brief. Language from the last statement should be the boilerplate. A minor change to wording could concern the Fed’s reinvestment policy on the huge $4.2 trillion Fed balance sheet.
On Friday, the Fed’s Vice Chair, Stanley Fischer, speaks publicly. That will close out the Fed story. This may be the only non-boilerplate moment from them.
Fourth, Friday’s release of April U.S. non-farm payroll data will be the big macro fundamental event.
Expect a bounce back (already foreseen) from March’s disappointing +98K pace of job adds. Wage growth should stick around the +2¾% y/y pace. In short, the muddle through scene is still the consensus on U.S. growth fundamentals.
Finally, on Sunday, May 7th, the French Presidential election gets held. The week’s European calendar of data should get ignored, in light of these politics.
Opinionway’s poll, published inside the Financial Times, predicts Emmanuel Macron wins 61% of the vote in the French run-off, with Marine Le Pen at 39%.
This 20-point gap is very wide. It hasn’t moved much. The bigger question may be to ask: Will Russian hackers attack Macron, like they did Hillary Clinton?
In Asia last week, Indian stock markets hit record highs. This was the 4th consecutive month of stock’s rallying there.
Keep an eye on that. This Indian stock market run may be news -- away from your usual headlines -- that is not boilerplate.???In conclusion, there are copious data and events to this week’s Global scene.
…But few surprises to brace for.
Top Zacks #1 Rank (STRONG BUY) Stocks—
(1) BASF SE (OTCMKTS:BASFY – Free Report ) : This is the big German diversified chemical company. This stock is a behemoth, at $89 billion in market capitalization. The long-term Zacks VGM score here is B.
(2) CSX Corp. (NASDAQ:CSX – Free Report ) : This is the big East Coast U.S. railroad group headquartered in Jacksonville, Florida. Are the U.S. railroads back from a slump? The stock has $46 billion in market cap. The long-term Zacks VGM score here is B.
(3) Volvo AB (OTCMKTS:VLVLY – Free Report ) : This is the Swedish auto and truck group. The stock has a $33 billion market cap. The long-term Zacks VGM score here is A.
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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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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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NutriSystem Inc (NTRI): Free Stock Analysis Report
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