For Immediate Release
Chicago, IL – January 18, 2018 – Zacks Equity Research Square SQ as the Bull of the Day, Freeport-McMoRan FCX asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix NFLX and American Express AXP.
Here is a synopsis of all four stocks:
Bull of the Day:
Square, the "fintech" disruptor and hero of small business owners everywhere, just launched its in-app payments software development kit (SDK), which will enable sellers to process payments with Square through their own mobile apps.
Here's how the company described the new offering in a January 9 press release...
"With just a few lines of code, developers can easily and professionally build a fully PCI compliant, secure, and elegant Square-powered payments flow in their Android or iOS apps. With this SDK, developers leave the complexity of payments to Square and focus instead on providing a delightful buyer experience."
The in-app payments software will aid buyers in securely making payment for goods purchased online, using their credit or debit cards and digital wallets including Apple Pay and Google Pay.
The new software can also be customized per developers’ need and will assist buyers to make seamless transactions. Notably, the new solution is expected to gain momentum with developers and sellers as it will enable them to manage online and offline payments on a single unified platform.
Square Emerges as an Omnichannel Payment Platform
Now offering first-party payment solutions in stores, online, and in mobile apps, the company says it's the only platform delivering solutions across all three channels.
While some competitors might challenge that assertion, Square innovations for small business are definitely expanding its presence in the digital payment solutions space and the company differentiates itself by offering a comprehensive payment platform, which enables sellers to combine software, hardware and payments services from various vendors.
An omnichannel payment solution enables sellers and developers to accept payments in multiple ways through one processing company. This aids in curtailing the complexity and security of managing payments across different channels.
And omnichannel buyers spend 50% to 300% more than shoppers who use a single channel. Notably, a single unified system also garners in-depth information about buying patters and enhances customer loyalty.
E-commerce Drives Innovation and Competition
From a simple idea to offer entrepreneurs a way to accept credit card payments using their mobile devices, Square has expanded and evolved into a thriving ecosystem of financial management for the small business person. The variety and uses of sales and accounting information tools is only expected to grow in the era of cloud-based data apps.
Just this week, Square launched a free debit card for business, with sellers immediate access to funds. The launch of Square Card, a free business debit Mastercard that helps businesses manage their cash flow by eliminating the time between making a sale and having the funds available to spend, will only further embed the ecosystem for entrepreneurs.
And the total addressable market (TAM) for transactions is enormous. Global retail sales from e-commerce are expected to hit $1.7 trillion in 2018 and $2.5 trillion in 2022 at a CAGR of 9.6% between 2018 and 2022. While China dominates this flow, the US is expected to top $600 billion in e-commerce sales by 2020.
Bear of the Day:
Freeport-McMoRanshares recently touched 2-year lows as the global economy comes to a screeching halt and commodity inflation takes a dive.
Based on projected gold and copper prices, the $17 billion metals miner is expected to see revenues drop 22.7% to $14.5 billion this year.
And earnings are expected to plunge 55% from $1.66 to just $0.75.
When the company reports on January 24, analysts project FCX to deliver a Q4 year-over-year decline in earnings on nearly 23% lower revenues for the same period.
The miner is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of -57%.
Downward Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 17.24% lower over the last 30 days to the current level. This is essentially a reflection of how the covering research analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.
While it's possible that FCX could deliver a positive surprise vs. these lowered expectations, any results and corresponding outlook must be viewed in the context of peak global growth remaining in the review mirror as China and Europe slip closer to economic recession.
Could recent stimulus measures by the Chinese government and central bank help reflate and support the Chinese economy?
They certainly could. But it probably won't help the revenue and earnings outlook for FCX in the first half of this year.
Before you consider buying FCX, keep your eyes on the EPS revisions to signal a turn in the growth outlook.
The Zacks Rank will let you know.
Netflix (NFLX), AmEx (AXP) Report Mixed Q4
Netflix has just reported Q4 earnings following the closing bell today, with mixed results that are sending shares down 4% in late trading. Earnings of 30 cents per share beat the Zacks consensus of 24 cents, though revenues came in light of expectations at $4.19 billion, as opposed to the $4.21 billion analyst were looking for.
Overall, 8.8 million new paid subscribers joined Netflix in the quarter — 1.53 million in the U.S. and 7.31 million overseas — though this is also light of estimates for 9.4 million net adds. The company projects negative free cash flows for the year as the company continues to invest in new content, which is driving Netflix sales. Guidance for Q1 is lighter than expected on top and bottom lines.
After gaining in stock price 15% since the start of the year, anything less than a full blowout number was likely going to lead to a sell-off in shares during after-market, and this was something less than a blowout number. Yet after initially dropping in the immediate aftermath of the report’s release, shares have fought back a bit at this hour (though they are back down 4% currently).
American Express also improved over projections of $1.80 per share in its Q4 reported after the bell, although tax benefits are muddying up this bottom-line result, reportedly $2.32 per share. Revenues missed expectations, however — $10.47 billion was beneath the $10.58 billion in the Zacks consensus — which is what led to another initial 4% sell-off (which has ebbed a bit back to -2.5%). Earnings guidance for fiscal 2019 is stronger, however, to a range of $7.89-8.35 per share; the Zacks consensus had been $7.39 per share.
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