For Immediate Release
Chicago, IL – November 9, 2020 – Zacks Equity Research Shares of Tapestry, Inc. TPR as the Bull of the Day, Delta Air Lines, Inc. DAL as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Royal Dutch Shell plc RDS.A, DCP Midstream, LP DCP and Matador Resources Company MTDR.
Here is a synopsis of all five stocks:
Bull of the Day:
Formerly known as Coach, Inc., Tapestry is a luxury retailer that owns and operates the Coach, Kate Spade & Company, and Stuart Weitzman brands. All three offer popular lifestyle products like handbags, clothes, shoes, and fragrance.
Q1 Earnings Recap
Last month, Tapestry reported first quarter fiscal 2021 results that significantly beat consensus estimates on the top and bottom lines.
Net income skyrocketed more than 11-fold from $20 million to $213.7 million, while operating profit nearly tripled from $51.6 million to $150.6 million. Revenue beat expectations, but fell 14% year-over-year to $1.2 billion.
Additionally, TPR generated free cash flow of a healthy $64 million.
CEO Joanne Crevoiserat said there were two main things that contributed to the company’s outperformance and recovery in Q1.
First, the retailer achieved triple-digit digital channel growth, and this resulted in e-commerce representing almost 25% of total revenue.
Second, Tapestry has seen huge growth in China thanks to successful marketing strategies, product variety, and wide-ranging customer engagement; Coach was recently ranked as the number one handbag brand on Alibaba’s T-mall platform.
TPR Breaks Out
Since March 23, shares of Tapestry have climbed over 100%. Estimates have been rising too, and TPR is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, eleven analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $1.84 per share to $2.23 per share. Earnings are expected to grow about 130% compared to the prior year, and in 2021, Tapestry’s bottom line should continue positive year-over-year growth.
Beyond the near-term setback that is Covid-19, Tapestry and its management team are ready and determined to build on recent momentum. The company has also provided customers more buying options, like curbside pickup, contactless payment, shopping appointments, and virtual queues that show how busy it is in some North American stores.
Tapestry’s many brands have built a large customer following over the years. Brand loyalty and renewed growth should help bolster the retailer amid the coronavirus pandemic.
If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep TPR on your shortlist.
Bear of the Day:
One of the four major airline carriers in the U.S., Delta Airlines is based in Atlanta, GA and was the second airline company to join the S&P 500. Delta generates the majority of its net sales from its passenger revenue segment, which is made up from ticket sales, loyalty travel awards, and travel-related services.
Big Loss in Q3
Overall, Delta posted big losses on both the top and bottom lines, but this was expected. Adjusted revenue was $2.65 billion, down 79% year-over-year, while adjusted net loss fell to $3.30 per share.
But beyond the awful headline numbers, the airline giant is actually making progress towards a post-pandemic recovery.
Delta has been aggressively reducing structural costs by retiring different kinds of aircraft types, cutting overhead spending, and rolling out a voluntary early retirement program. It’s also implemented short-term cost cuts like temporary leaves for employees this year and reducing maintenance spending.
These moves allowed the company to lower adjusted operating expenses by 52% in Q3.
Cash burn also improved, with average daily cash burn of $24 million last quarter (compared to around $100 million a day in late March).
Delta ended Q3 with $21.6 billion in liquidity, and expects to end 2020 with $16 billion in liquidity.
DAL is now a Zacks Rank #5 (Strong Sell).
Seven analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen over one dollar to a loss of $10.52 per share; earnings are expected to see a triple-digit decline for the current fiscal year.
Shares are actually up since the March lows, rising about 50%, which is roughly in line with the S&P 500’s rebound during the same time frame.
Even though shares have run up over the past few months, Delta will still have a hard road ahead of it, especially as coronavirus cases are on the rise once again. But, with plans to defer now-unneeded aircraft deliveries to 2022 and beyond, as well as continually improving its cash burn, Delta looks to be on the right path to recovery.
Delta isn’t the only carrier suffering right now; Covid-19 has impacted the entire industry. It’s probably best to avoid airline stocks like for the time being.
Shell (RDS.A) Looking Toward Recycling in China?
Royal Dutch Shell plc’s joint venture with specialty metals and minerals producer AMG Advanced Metallurgical Group N.V. signed a Memorandum of Understanding (MoU) with Shandong Yulong Petrochemical Co., Ltd. to assess the construction and operational prospective of a leading spent-catalyst recycling facility in Yantai, China. The joint venture — Shell & AMG Recycling B.V — was formed in 2019 and is designed to expand AMG’s clean recycling technology globally.
The MoU will enable Shell & AMG Recycling B.V. to analyse the usefulness of developing a facility that retrieves valuable metals by the recycling of spent residue-upgrading catalysts, produced by refineries in China. The catalyst enhances the upgradation of the oil barrel bottoms into valued products, namely nickel, molybdenum and petrochemicals feedstocks.
The opted method extracts toxic substances such as vanadium in the form of ferrovanadium, an alloy primarily used in infrastructure applications. Further, the facility will utilize China’s natural resources to the fullest extent and address the need to provide eco-friendly management of spent residue-upgrading catalysts to significantly reduce CO2 emissions.
Shell & AMG’s combined technological proficiency and integrated resources will provide benefits to the refineries by lowering risks along with reduction in transportation as well as disposing cost of spent-catalysts and eliminating the practise to landfill. Besides, the monetization of the valuable metals present in the wastes will grant extended benefits.
Per Andy Gosse, president, Shell Catalysts & Technologies, the rise in the number of operational residue-upgrading units reflects the increased focus on direct conversion of crude oil to high-value chemical products in our industry. The collaboration will provide a long-term feasible solution for catalyst reclamation and help deliver refiners the option of a truly circular solution, turning wastes into resources through recycling and reusing.
Company Profile & Price Performance
Shell is one of the primary oil supermajors — a group of U.S. and Europe-based big energy multinationals — with global operations. The company is fully integrated, as it participates in every aspect related to energy — from oil production to refining and marketing. Its shares have outperformed the industry in the past month. Its shares have gained 4.8% against the industry’s 1.1% decline.
Zacks Rank & Key Picks
Shell currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include DCP Midstream Partners LP, sporting a Zacks Rank #1 (Strong Buy) and Matador Resources Company carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DCP Midstream is expected to see an earnings growth of 169.1% in 2021. Suburban Propane Partners is likely to see earnings growth of 36.5% next year.
In the past six months, the Zacks Consensus Estimate for Matador Resources’ 2020 earnings has been raised by 400%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
Matador Resources Company (MTDR) : Free Stock Analysis Report
Tapestry, Inc. (TPR) : Free Stock Analysis Report
DCP Midstream Partners, LP (DCP) : Free Stock Analysis Report
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