For Immediate Release
Chicago, IL – November 29, 2019 – Zacks Equity Research Wellcare Health WCG as the Bull of the Day, Six Flags Entertainment SIX as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Salesforce CRM, Dropbox DBX and Zoom Video ZM.
Here is a synopsis of all five stocks:
Bull of the Day:
If you look at some of the biggest buildings in the downtown areas of the biggest cities in the country, you’re likely to see some signage from insurance companies. It is a big money business, and one that can enrich astute investors that know the right insurance stocks to buy. As with all stocks, there is risk. With insurance companies, you’ve got risks coming from not only the market but from Mother Nature herself. Just think about all the payouts coming after catastrophic events like hurricanes and tornados. Today’s Bull of the Day is an insurance company that makes its money from a business that doesn’t have to deal with natural disasters on a grand scale. I’m talking about a stock that’s in the HMO business.
Today’s Bull of the Day is Zacks Rank #2 (Buy) Wellcare Health. WellCare Health Plans, Inc. provides government-sponsored managed care services. The company operates in three segments: Medicaid Health Plans, Medicare Health Plans, and Medicare Prescription Drug Plans (PDPs). This stock really took a hit along with the entire industry earlier this year. There was a fear that politically the climate could change and setup a candidate with a “Medicare for All” plan to take office. That would have provided a major shock to the industry. Now that those fears have subsided a bit, the stocks in this industry have been on the move to the upside.
The Medical – HMO industry is in the Top 24% of our Zacks Industry Rank. Wellcare is currently a Zacks Rank #2 (Buy). The reason for the favorable Zacks Ranks lies in the series of earnings estimates coming in to the upside recently. Over the last thirty days, seven analysts have increased their earnings estimates for the current year while six have done so for next year. The bullish moves have really contributed to some upside action in our Zacks Consensus Estimate. The current year consensus is up from $13.99 to $15.42 over the last ninety days while next year’s number is up from $16.56 to $16.99.
Bear of the Day:
With the economy rocking and rolling, summer vacations were more fun than ever. Folks were out there buying boats and RVs, taking family vacations to Europe, and enjoying theme parks. You may think that this bullish momentum helped out industries like Leisure and Recreation Services. After digging into the numbers, I myself was shocked to see that this industry actually ranks in the Bottom 14% of our Zacks Industry Rank. That means that individual companies within that industry have been seeing negative earnings estimate revisions coming in from analysts. That, typically, is not what you want to see when looking for your next stock to buy. That’s why I’m naming Six Flags Entertainment as today’s Bear of the Day.
Six Flags Entertainment Corporation owns and operates regional theme and water parks under the Six Flags name. The company's parks offer various thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets. It owns and operates 25 parks, including 22 parks in the United States; 2 parks in Mexico; and 1 park in Montreal, Canada.
The company is currently a Zacks Rank #5 (Strong Sell). The reason for the negative Zacks Rank is the recent string of negative earnings estimate revisions coming from analysts. Over the last ninety days, nine analysts have cut their estimates for the current year and next year. That bearish attitude has dropped our Zacks Consensus Estimate for the Current Year from $2.76 down to $2.59. Next year’s number has come down from $3.00 to $2.79.
Six Flags Entertainment Corporation New Price and Consensus
That bearish sentiment has gone through the rest of the industry, which is why it’s not in the good graces of our Zacks Industry Rank. Several names in the industry are Zacks Rank #3 (Hold) stocks.
Can Salesforce (CRM) Reach New Highs on Q3 Earnings?
Salesforce is set to report its third quarter financial results after the closing bell on Tuesday, December 3. The company has seen its shares rise 18% in 2019 but it has lagged behind the broader software market’s 41% run.
Investors have been enthusiastic about the growth runway Salesforce has in its cloud-based customer relationship management software. As more enterprises transition to cloud-based data, companies like Salesforce have the opportunity to garner a large chunk of that business. On top of that, Salesforce recently held its Dreamforce event, which gave investors better insight into the company’s trajectory.
Salesforce wrapped up its Dreamforce conference last week as it hosted customers, partners, and key stakeholders at a week-long event. Dreamforce’s conferences and sessions provided valuable insight for investors about the company’s operations and how it plans to conduct its business in the new digital era.
During the Dreamforce conference, Salesforce announced that it expects to generate $34 billion to $35 billion in revenue for fiscal 2024. This implies a growth rate of about 20% annually, which is impressive considering it is roughly double the $17 billion the company expects to bring in fiscal 2020?
Earlier this year the company forecasted revenue of $26 billion to $28 billion for fiscal 2023, which would be roughly double the $13.3 billion it achieved in fiscal 2019. Salesforce executives also announced that its acquisition of MuleSoft was finally starting to come together.
The company introduced Accelerators, which allow customers to integrate data from outside sources directly with Salesforce Service Cloud and Salesforce Commerce Cloud. The firm also debuted the Flow Designer that allows users to navigate a smart integration platform instead of writing complex code to unlock the legacy system data.
These two new programs unveiled at Dreamforce integrates MuleSoft’s capabilities into Salesforce’s operations, which bodes well for investors who were hesitant about the acquisition.
The projections that Salesforce shared with its event attendees was definitely encouraging and its 26% and 25% revenue growth rates in fiscal 2019 and 2018, respectively, attest to the company’s ability to deliver on its new target. To drive top-line growth and to better equip itself for the expected cloud computing shift, Salesforce has made a series of acquisitions that have weighed on its margins.
However, management has indicated that the acquisitions would likely slow for the time being as Salesforce works to integrate Tableau Software into its ecosystem. Salesforce has also taken stakes in other smaller companies like Dropbox and Zoom Video that can better expand its reach in the tech industry. Salesforce is already a titan in the CRM space as the next three largest CRM competitors combined don’t match Salesforce’s market share.
Our Q3 consensus estimates forecast earnings to grow 8.2% to $0.66 per share and for sales to reach $4.44 billion for a 30.79% rally. Subscription and support is projected to bring in $4.15 billion for a 30.9% hike.
Looking ahead to the firm’s full fiscal year figures, earnings are anticipated to pop 3.64% to $2.85 per share and revenue is projected to rally 27.7% to $16.96 billion.
Our fiscal 2021 estimates call for top-line growth off 22.8%, which would be on target with Salesforce’s new 2024 forecast.
The tech giant’s acquisitions and the way Salesforce has been able to integrate the capabilities of the acquired firms into its own operations is a good sign moving forward. Salesforce is certainly not cheap as it trades 57X its forward earnings, which might discourage many investors.
Additionally, the company is not immune to volatility, which could weigh on the business’ short-term operations. However, this doesn’t seem to be a company with its sights set on short-term success as it is gearing up for a major secular shift towards the cloud.
Salesforce is currently trading around 3.4% below its 52-week high of $167.56 per share and a strong Q3 report, with encouraging forward guidance, could potentially send it to new highs and close the gap with the broader software market.
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salesforce.com, inc. (CRM) : Free Stock Analysis Report
Six Flags Entertainment Corporation New (SIX) : Free Stock Analysis Report
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Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
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