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Verint, Alcoa, Amazon, Walmart and Target as Zacks Bull and Bear of the Day

Zacks Equity Research
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For Immediate Release

Chicago, IL – April 29, 2019 – Zacks Equity Research highlights Verint Systems Inc. VRNT as the Bull of the Day and Alcoa Inc. AA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon AMZN, Walmart WMT and Target TGT.

Here is a synopsis of all five stocks:

Bull of the Day:                                              

Headquartered in Melville, NY, Verint Systems Inc. is a leading provider of analytic solutions for communications interception, digital video security and surveillance, and enterprise businesses.The company also specializes in “Actionable Intelligence” solutions. Actionable Intelligence helps to enable users and businesses to anticipate and respond in ways that help boost growth.

Q4 Results Impressed Wall Street

Last month, shares of Verint jumped over 13% after the software company reported fourth quarter results.

Despite reporting revenues that fell short of analyst estimates (though the top line managed to grow 3.6% year-over-year), non-GAAP earnings of $1.08 per share easily beat the Zacks Consensus and was up from $1.05 from the prior-year period.

The big standout from the report was Verint’s raised guidance. The company now expects to produce revenue growth of 8% and non-GAAP EPS growth of 14% for Q1. And for fiscal 2020, earnings and revenues are projected to be $3.60 and $1.37 billion (plus or minus 2%), coming in well ahead of what analysts were expecting.

VRNT On the Move

Year-to-date, shares of VRNT have increased about 45% compared to the S&P 500’s return of roughly 18%.

Earnings estimates have since been rising, and the stock is now a Zacks Rank #1 (Strong Buy).

For the current fiscal year, five analysts have revised their estimates upwards in the past 60 days, and the Zacks Consensus Estimate has jumped nine cents during that same time period. Earnings growth is expected to be positive this year, growing 12.8% over the prior-year period.

2021 looks pretty strong too, with earnings expected to grow over 11.7% year-over-year; next year’s consensus estimate has moved 45 cents higher from $3.79 to $4.04, with three upward revisions in the last 60 days.

Looking ahead, Verint expects its cloud business to be a huge growth factor for them over the next few years. Just in 2020, non-GAAP cloud revenue could reach $250 million, up 40%. And, the company sees 30% to 40% CAGR for its cloud business over the next three years.

So, thanks bullish guidance, soaring sales and a strong cloud acceleration, the future is looking promising for Verint Systems. If you’re an investor looking for a tech stock to add to your portfolio, make sure to keep VRNT on your shortlist.

Bear of the Day:

 

Alcoa Inc. is based in Pittsburgh, PA, and is a producer of aluminum, fabricated aluminum, and alumina. The company has an active role in all major parts of the industry: fabricating, mining, recycling, refining, smelting, and technology.

Disappointing Q1 Results

Revenues of $2.719 billion fell 12% year-over-year, and came in just below the Zacks Consensus Estimate. The bottom line came to an adjusted loss of 23 cents per share, also missing our consensus.

Shares were down 5% following the earnings release.

But, one bright spot of the company’s release was its free cash flow. Alcoa managed to generate $99 million in positive FCF in Q1, despite weakening alumina and aluminum prices; it was also a big improvement over the negative $19 million in free cash flow it reported in the year-ago quarter.

Alcoa’s shipment outlook for Bauxite, Alumina, and Aluminum for 2019 remains unchanged. The company expects total bauxite shipments expected to be between 47.0 and 48.0 million dry metric tons; alumina shipments between 13.6 and 13.7 million metric tons; and aluminum shipments between 2.8 and 2.9 million metric tons.

Estimates Keep Falling

Analysts have since turned bearish on Alcoa, with seven cutting estimates in the last 60 days for the current fiscal year. Earnings are expected to plunge over 66% for the year, and the Zacks Consensus Estimate has dropped 68 cents during that same time period from $1.89 to $1.21 per share.

This sentiment has stretched into 2020. Though earnings could bounce back and grow more than 70%, our consensus estimate has dropped significantly in the past two months.

AA is now a Zacks Rank #5 (Strong Sell).

Shares of the aluminum producer are up only 1.2% since January. In comparison, the S&P 500 is up 18% year-to-date.

Bottom Line

CEO Roy Harvey did point out that Alcoa improved operations in Q1 in the face of a weakening price environment. The company also “took steps last quarter to restructure our Aluminum portfolio,” Harvey said in Alcoa’s earnings release.

But, the headwinds Alcoa are facing have been persistent, and since the company is a commodity-linked business, any looming threat of a slowdown in the economy is going to put pressure on Alcoa and its stock

Additional content:

Should You Buy Amazon (AMZN) Post-Q1 Earnings?

 Shares of Amazon popped Friday morning after the company reported better-than-projected Q1 2019 earnings results after the closing bell Thursday. Wall Street also seems excited by the e-commerce giant’s plan to transform its free two-shipping for Amazon Prime members into one-day delivery.

The announcement helped send shares of Walmart and Target down through morning trading. With that said, let’s take a look at some of Amazon’s Q1 results and see if AMZN stock looks like a buy right now.

Quick Q1 Overview

Amazon’s Q1 revenue jumped roughly 17% from the year-ago period to hit $59.70 billion, which inched by our $59.69 billion Zacks Consensus Estimate. Investors should note that this top-line growth represented a downturn from the fourth quarter’s roughly 20% expansion, which was already down big compared to Q3 2018’s 29% climb, Q2’s 39% surge, and Q1’s 43% jump. In fact, Q4 2018 was Amazon’s smallest top-line expansion since 2015.

Once again, Amazon’s AWS cloud computing business saw its revenue surge. The key unit jumped roughly 41% to reach $7.69 billion. This, however, marked a slowdown compared to recent periods for the division that drives profits and helps Amazon stand out against cloud peers.

At the bottom end of the income statement, Amazon blew away Wall Street estimates. The company’s adjusted EPS figure skyrocketed 116.8% to reach $7.09 per share and crush our $4.61 per share estimate. The huge bottom-line beat continued a trend of impressive positive quarterly earnings surprises.

AMZN stock rested up 1.06% at $1,922 per share through morning trading Friday. Overall, shares of Amazon have surged 28% so far this year but still sit around 7% below their 52-week highs.

One-Day Shipping & Growth

Along with Amazon’s earnings beat and in-line revenue growth, Wall Street seems pleased to hear that the company is set to speed up its delivery times for its vital U.S. Prime customers. The move comes as Walmart, Target, and other retailers have ramped up their e-commerce and delivery offerings in order better compete with Amazon. CEO Jeff Bezos and executives seem to think the move will help attract more customers to its $119-a year Prime memberships and keep current members loyal as Target and others catch up.

The company said it will spend roughly $800 million to slowly roll out this one-day shipping program in the second quarter. It is important to note that Amazon will continue to offer members the ability to pay for same-day and Prime Now options. “We're currently working on evolving our Prime free two-day shipping program to be a free one-day shipping program,” CFO Brian Olsavsky said on the company’s earnings call.  “We're able to do this because we've spent 20-plus years expanding our fulfillment and logistics network, but this is still a big investment and a lot of work to do ahead of us.”

Amazon’s move to transition from free two-day to one-day shipping is part of its larger push to become a more robust logistics and shipping company. The company will also continue to work with USPS, UPS UPS, and other third-party firms. Looking ahead, our updated Zacks Consensus estimate calls for AMZN’s adjusted second-quarter earnings to jump 22% on 18.2% revenue growth. Meanwhile, the firm’s full-year earnings are projected to pop 32% on similar revenue expansion.

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