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Apple, Clorox, AMC, Planet Fitness and RealReal highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 10, 2021 – Zacks Equity Research Shares of Apple Inc. (AAPL - Free Report) as the Bull of the Day, The Clorox Company (CLX - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AMC Entertainment Holdings, Inc. (AMC - Free Report) , Planet Fitness, Inc. (PLNT - Free Report) and The RealReal, Inc. (REAL - Free Report) .
Apple hasn't needed an introduction in years, if not decades. The $2.4 trillion market cap firm's Q3 FY21 results on July 27 highlighted its profitability and growth, not to mention its commitment to buybacks and dividends.
AAPL's recent report further cements the strength of its non-iPhone business. Despite trading near its new records, Apple's valuation picture appears solid and it could be prepared to keep climbing since it has underperformed the broader tech space in 2021 and over the last 12 months.
Quick Q3 Overview
AAPL posted blowout Q3 FY21 results on July 27, with revenue up 36% and adjusted EPS 100% higher. The company's flagship smartphone helped drive the growth, with sales up 50% for the best iPhone growth in years. Apple also continues to enjoy strong expansion outside of the iPhone, with smartphone sales accounting for roughly 49% of Q3 revenue—a few years back iPhone sales often made up over 60%.
Mac sales popped 16% last quarter and iPad climbed 12%. The success of its wireless headphones and other devices helped its Wearables, Home and Accessories space jump 36%. Perhaps more importantly, its services unit climbed 33% to account for 22% of sales—making it easily the second-largest space behind the iPhone.
Continued Growth
Apple sells high-end consumer electronics that millions of people crave, pulling in $275 billion last year during a global pandemic. The company's branding prowess remains nearly unmatched and its constant cycle of new phones and devices keeps people wanting more.
In fact, many consumers upgrade to new iPhones and other devices habitually, even if there isn't a game-changing difference between the new model and their current smartphone. Many Apple customers rarely even consider buying anything other than an iPhone, opting to stay in the broader Apple universe for various reasons.
The company said on its January call with analysts that it reached over 1 billion active iPhones and 1.65 billion total active devices. AAPL didn't provide specific numbers this time around, but they are likely higher and CFO Luca Maestri said in Q3 remarks that it reached a "new all-time high for our installed base of active devices."
Apple's long-term growth case is not difficult to make in a world full of smartphone and device addicts, especially as its subscriptions grow. Chief executive Tim Cook focused on transforming Apple far beyond an iPhone company. The aim is to continually make money from its loyal and growing customer base for devices.
These services efforts go beyond its App Store and include Netflix and Spotify competitors, a subscription news offering, Apple Wallet, a video game platform, digital workout classes, and much more. AAPL finished its most recent period with over 700 million paid subscriptions, up 150 million from the year-ago period and "nearly four times the number of paid subscriptions" it "had only four years ago."
The company has brought more of its chips in-house, in efforts to one day possibly create what it has referred to as closed-looped.
AAPL does face some legal battles regarding its own highly profitable app store. But Wall Street doesn't seem worried, especially when the demand for its first 5G capable iPhone has been strong.
Near-Term Outlook
Apple executives did say they expect to experience supply chain setbacks in Q4, with "supply constraints" set to be "greater than what we experienced during the June quarter." Nonetheless, Zacks estimates call for AAPL's adjusted Q4 FY21 earnings to climb 68% on 31% stronger sales.
More broadly, Apple's full-year 2021 revenue is expected to climb by 34% from $275 billion to reach $367 billion. This would crush last year's 6% sales expansion and mark its strongest top-line growth since 2015.
Meanwhile, its adjusted earnings are projected to soar 70% this year. And it's still set to grow its top and bottom lines next year, with sales expected to climb to roughly $383 billion. Apple's bottom-line outlook has improved since its report to help it land a Zacks Rank #1 (Strong Buy) and it almost always beats EPS estimates. This run includes a 30% beat last quarter and 40% in Q2.
Other Fundamentals
As we touched on at the outset, Apple has underperformed its technology peers over the last year, up 30% vs. the Zacks Tech Sector's 42%. The divergence is larger in 2021, with tech up 22% against AAPL's 10% climb. Its underperformance, at first glance, might seem odd given its growth and standing within tech and the broader market.
Apple, like all stocks, is always at the risk of underperforming an index and other benchmarks during various periods of time. This is part of the reason why timing stocks is often difficult. AAPL's inability to outpace tech over the past 12 months is most likely due to the fact that it had previously skyrocketed from its covid lows until its stock split last August.
Over the past five years, AAPL has skyrocketed 440% to crush the tech's 175% and outclimb both Amazon and Microsoft. Apple has moved roughly sideways over the last month and it's fallen from above overbought RSI levels (70) at 78 back in mid-July to closer to neutral (50) at 56.
Even though its stock price is only a few percentage points off its highs, Apple trades at a nearly 30% discount to its own year-long highs at 25.7X forward 12-month earnings. This also marks 10% value against its year-long median and 7% compared to the Zacks Tech Sector's 27.6X.
Bottom Line
Given this backdrop, now appears to be a solid time to consider buying Apple. And long-term investors don't need to try to get fancy and think owning AAPL is too easy. The stock is certainly no hidden gem, but who cares?
The company is a cash cow and it returns that money to shareholders through buybacks and dividends—$29 billion worth last quarter. Apple closed Q3 with net cash of $72 billion and it plans to keep rewarding shareholders by trying to slowly reduce its cash position. The company's massive piggy bank also allows it to pursue any new area of tech, including ones not even on the radar at the moment.
Wall Street remains extremely high on Apple, with 18 of the 24 brokerage recommendations Zacks has coming in at "Strong Buys," with four more "Buys," and none below a "Hold." Still, some might opt to search for the next Apple.
Luckily, these are not mutually exclusive, and adding Apple to a well-diversified, long-term portfolio seems like a layup. And think of all the money someone with an extended horizon might have left on the table had they been worried about trying to time AAPL or buying Apple at its "peak."
The Clorox Co. was one of the early coronavirus stars both in the real economy and the stock market. But the maker of disinfectant wipes and many other consumer products has seen its stock price tumble in the past year. And its Q4 FY21 earnings fell short of expectations on August 3.
CLX's Pitch
Clorox's portfolio includes its namesake disinfectant wipes and other offerings for household cleaning. The company also boasts products made specifically for the healthcare industry. On top of that, the firm's portfolio includes everything from Kingsford charcoal and Brita water filters to Hidden Valley Ranch.
Many of CLX's products have been flying off the shelves for the better part of 18 months. The company's fiscal 2020 revenue (period ended on Jun 30, 2020) climbed 8%, for its strongest sales expansion in over a decade. The consumer goods and cleaning power's FY21 revenue then surged another 9% to reach $7.34 billion.
Despite the strong fiscal 2021, the company's fourth quarter sales slipped 9% from the year-ago period. Meanwhile, its adjusted earnings dropped 61% to $0.95 a share to miss our Zacks \estimates by 26%. And CLX provided disappointing earnings guidance, as the nearby chart highlights.
The company's margins also took a hit, driven by costs and more. CLX's Q4 gross margin fell from 46.8% in the year-ago quarter to 37.1%. Clorox stated that "gross margin performance was driven by higher manufacturing and logistics costs, increased commodity costs due to significant cost inflation, decreasing sales resulting in lower manufacturing fixed-cost absorption and unfavorable price mix, partially offset by the benefits of cost savings initiatives."
Bottom Line
Clorox's recent earnings revisions help it land a Zacks Rank #5 (Strong Sell) at the moment. CLX shares are now down 30% in the past year, including its recent post-release drop. And its FY22 sales and adjusted earnings are projected to slip as it comes up against tough comparisons.
The stock did pop during regular hours Monday and CLX still operates a strong business for the long haul. However, it might be best to stay away from the stock until it shows more signs of a comeback.
Additional content:
AMC Posts 1st Beat in 6 Quarters
Market indexes kept in something of a holding pattern through the first full trading session of the week, coming off record closing highs on the Dow and S&P 500 on Friday, the Nasdaq on Thursday. The Dow dropped -0.30% on the day. The S&P was marginally off a new all-time close, -0.09%. The Nasdaq gained +0.16% on the day, while the small-cap index Russell 2000 fell -0.58%.
The Nasdaq has now closed its trading day higher in five of the last six sessions, while the Dow and S&P broke two-day win streaks. Energy helped drag the S&P, -1.5% on the day — as demonstrated by a -2% drop in WTI oil prices. It's also down more than -6% in the past week and -10% for August so far. Banks were relatively flat. In all, indexes are holding near their highs.
One of 2021's "meme stocks," AMC — which has grown +1580% year to date — reported its first bottom-line beat in its past six quarters: -71 cents per share, while still a loss, beat expectations by 20 cents per share, and is miles ahead from the dire -$3.31 per share reported in the Q2 2020 quarter. Revenues swept past estimates for the quarter: $444.7 million, versus $341.3 million expected.
AMC brought in 22 million guests in Q2, and counts $1.25 billion in new equity (before commissions and fees). It would seem at first blush this company has taken its extra attention from meme-stock buyers, and its subsequent meteoric rise in share price, to fortify its business. That, and the start of the Great Reopening has brought more people to movie theaters. The company says it's "not out of the woods yet," but looks for a "happy Hollywood ending."
Planet Fitness also reported Q2 results after the closing bell Monday, missing earnings estimates for now six quarters in a row (the company had never posted an earnings miss prior) on better-than-expected revenues: 21 cents reported versus 23 cents in the Zacks estimate; $137.3 million in quarterly sales versus $123 million anticipated. Though the company announced expansion plans, it dropped full-year guidance. Shares are down 4.5% in the late session.
RealReal reported a miss on both top and bottom lines Monday afternoon: -50 cents per share versus expectations of a -45 cent loss, while coming up short on its top line: $104.9 million versus $106.4 million in the Zacks consensus. Even with key Gross Merchandise Value (GMV) growing 91% year over year to $350 million, shares immediately tumbled nearly 8% on the news. Shares have fought back from those lows, however.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Apple, Clorox, AMC, Planet Fitness and RealReal highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 10, 2021 – Zacks Equity Research Shares of Apple Inc. (AAPL - Free Report) as the Bull of the Day, The Clorox Company (CLX - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AMC Entertainment Holdings, Inc. (AMC - Free Report) , Planet Fitness, Inc. (PLNT - Free Report) and The RealReal, Inc. (REAL - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Apple hasn't needed an introduction in years, if not decades. The $2.4 trillion market cap firm's Q3 FY21 results on July 27 highlighted its profitability and growth, not to mention its commitment to buybacks and dividends.
AAPL's recent report further cements the strength of its non-iPhone business. Despite trading near its new records, Apple's valuation picture appears solid and it could be prepared to keep climbing since it has underperformed the broader tech space in 2021 and over the last 12 months.
Quick Q3 Overview
AAPL posted blowout Q3 FY21 results on July 27, with revenue up 36% and adjusted EPS 100% higher. The company's flagship smartphone helped drive the growth, with sales up 50% for the best iPhone growth in years. Apple also continues to enjoy strong expansion outside of the iPhone, with smartphone sales accounting for roughly 49% of Q3 revenue—a few years back iPhone sales often made up over 60%.
Mac sales popped 16% last quarter and iPad climbed 12%. The success of its wireless headphones and other devices helped its Wearables, Home and Accessories space jump 36%. Perhaps more importantly, its services unit climbed 33% to account for 22% of sales—making it easily the second-largest space behind the iPhone.
Continued Growth
Apple sells high-end consumer electronics that millions of people crave, pulling in $275 billion last year during a global pandemic. The company's branding prowess remains nearly unmatched and its constant cycle of new phones and devices keeps people wanting more.
In fact, many consumers upgrade to new iPhones and other devices habitually, even if there isn't a game-changing difference between the new model and their current smartphone. Many Apple customers rarely even consider buying anything other than an iPhone, opting to stay in the broader Apple universe for various reasons.
The company said on its January call with analysts that it reached over 1 billion active iPhones and 1.65 billion total active devices. AAPL didn't provide specific numbers this time around, but they are likely higher and CFO Luca Maestri said in Q3 remarks that it reached a "new all-time high for our installed base of active devices."
Apple's long-term growth case is not difficult to make in a world full of smartphone and device addicts, especially as its subscriptions grow. Chief executive Tim Cook focused on transforming Apple far beyond an iPhone company. The aim is to continually make money from its loyal and growing customer base for devices.
These services efforts go beyond its App Store and include Netflix and Spotify competitors, a subscription news offering, Apple Wallet, a video game platform, digital workout classes, and much more. AAPL finished its most recent period with over 700 million paid subscriptions, up 150 million from the year-ago period and "nearly four times the number of paid subscriptions" it "had only four years ago."
The company has brought more of its chips in-house, in efforts to one day possibly create what it has referred to as closed-looped.
AAPL does face some legal battles regarding its own highly profitable app store. But Wall Street doesn't seem worried, especially when the demand for its first 5G capable iPhone has been strong.
Near-Term Outlook
Apple executives did say they expect to experience supply chain setbacks in Q4, with "supply constraints" set to be "greater than what we experienced during the June quarter." Nonetheless, Zacks estimates call for AAPL's adjusted Q4 FY21 earnings to climb 68% on 31% stronger sales.
More broadly, Apple's full-year 2021 revenue is expected to climb by 34% from $275 billion to reach $367 billion. This would crush last year's 6% sales expansion and mark its strongest top-line growth since 2015.
Meanwhile, its adjusted earnings are projected to soar 70% this year. And it's still set to grow its top and bottom lines next year, with sales expected to climb to roughly $383 billion. Apple's bottom-line outlook has improved since its report to help it land a Zacks Rank #1 (Strong Buy) and it almost always beats EPS estimates. This run includes a 30% beat last quarter and 40% in Q2.
Other Fundamentals
As we touched on at the outset, Apple has underperformed its technology peers over the last year, up 30% vs. the Zacks Tech Sector's 42%. The divergence is larger in 2021, with tech up 22% against AAPL's 10% climb. Its underperformance, at first glance, might seem odd given its growth and standing within tech and the broader market.
Apple, like all stocks, is always at the risk of underperforming an index and other benchmarks during various periods of time. This is part of the reason why timing stocks is often difficult. AAPL's inability to outpace tech over the past 12 months is most likely due to the fact that it had previously skyrocketed from its covid lows until its stock split last August.
Over the past five years, AAPL has skyrocketed 440% to crush the tech's 175% and outclimb both Amazon and Microsoft. Apple has moved roughly sideways over the last month and it's fallen from above overbought RSI levels (70) at 78 back in mid-July to closer to neutral (50) at 56.
Even though its stock price is only a few percentage points off its highs, Apple trades at a nearly 30% discount to its own year-long highs at 25.7X forward 12-month earnings. This also marks 10% value against its year-long median and 7% compared to the Zacks Tech Sector's 27.6X.
Bottom Line
Given this backdrop, now appears to be a solid time to consider buying Apple. And long-term investors don't need to try to get fancy and think owning AAPL is too easy. The stock is certainly no hidden gem, but who cares?
The company is a cash cow and it returns that money to shareholders through buybacks and dividends—$29 billion worth last quarter. Apple closed Q3 with net cash of $72 billion and it plans to keep rewarding shareholders by trying to slowly reduce its cash position. The company's massive piggy bank also allows it to pursue any new area of tech, including ones not even on the radar at the moment.
Wall Street remains extremely high on Apple, with 18 of the 24 brokerage recommendations Zacks has coming in at "Strong Buys," with four more "Buys," and none below a "Hold." Still, some might opt to search for the next Apple.
Luckily, these are not mutually exclusive, and adding Apple to a well-diversified, long-term portfolio seems like a layup. And think of all the money someone with an extended horizon might have left on the table had they been worried about trying to time AAPL or buying Apple at its "peak."
Bear of the Day:
The Clorox Co. was one of the early coronavirus stars both in the real economy and the stock market. But the maker of disinfectant wipes and many other consumer products has seen its stock price tumble in the past year. And its Q4 FY21 earnings fell short of expectations on August 3.
CLX's Pitch
Clorox's portfolio includes its namesake disinfectant wipes and other offerings for household cleaning. The company also boasts products made specifically for the healthcare industry. On top of that, the firm's portfolio includes everything from Kingsford charcoal and Brita water filters to Hidden Valley Ranch.
Many of CLX's products have been flying off the shelves for the better part of 18 months. The company's fiscal 2020 revenue (period ended on Jun 30, 2020) climbed 8%, for its strongest sales expansion in over a decade. The consumer goods and cleaning power's FY21 revenue then surged another 9% to reach $7.34 billion.
Despite the strong fiscal 2021, the company's fourth quarter sales slipped 9% from the year-ago period. Meanwhile, its adjusted earnings dropped 61% to $0.95 a share to miss our Zacks \estimates by 26%. And CLX provided disappointing earnings guidance, as the nearby chart highlights.
The company's margins also took a hit, driven by costs and more. CLX's Q4 gross margin fell from 46.8% in the year-ago quarter to 37.1%. Clorox stated that "gross margin performance was driven by higher manufacturing and logistics costs, increased commodity costs due to significant cost inflation, decreasing sales resulting in lower manufacturing fixed-cost absorption and unfavorable price mix, partially offset by the benefits of cost savings initiatives."
Bottom Line
Clorox's recent earnings revisions help it land a Zacks Rank #5 (Strong Sell) at the moment. CLX shares are now down 30% in the past year, including its recent post-release drop. And its FY22 sales and adjusted earnings are projected to slip as it comes up against tough comparisons.
The stock did pop during regular hours Monday and CLX still operates a strong business for the long haul. However, it might be best to stay away from the stock until it shows more signs of a comeback.
Additional content:
AMC Posts 1st Beat in 6 Quarters
Market indexes kept in something of a holding pattern through the first full trading session of the week, coming off record closing highs on the Dow and S&P 500 on Friday, the Nasdaq on Thursday. The Dow dropped -0.30% on the day. The S&P was marginally off a new all-time close, -0.09%. The Nasdaq gained +0.16% on the day, while the small-cap index Russell 2000 fell -0.58%.
The Nasdaq has now closed its trading day higher in five of the last six sessions, while the Dow and S&P broke two-day win streaks. Energy helped drag the S&P, -1.5% on the day — as demonstrated by a -2% drop in WTI oil prices. It's also down more than -6% in the past week and -10% for August so far. Banks were relatively flat. In all, indexes are holding near their highs.
One of 2021's "meme stocks," AMC — which has grown +1580% year to date — reported its first bottom-line beat in its past six quarters: -71 cents per share, while still a loss, beat expectations by 20 cents per share, and is miles ahead from the dire -$3.31 per share reported in the Q2 2020 quarter. Revenues swept past estimates for the quarter: $444.7 million, versus $341.3 million expected.
AMC brought in 22 million guests in Q2, and counts $1.25 billion in new equity (before commissions and fees). It would seem at first blush this company has taken its extra attention from meme-stock buyers, and its subsequent meteoric rise in share price, to fortify its business. That, and the start of the Great Reopening has brought more people to movie theaters. The company says it's "not out of the woods yet," but looks for a "happy Hollywood ending."
Planet Fitness also reported Q2 results after the closing bell Monday, missing earnings estimates for now six quarters in a row (the company had never posted an earnings miss prior) on better-than-expected revenues: 21 cents reported versus 23 cents in the Zacks estimate; $137.3 million in quarterly sales versus $123 million anticipated. Though the company announced expansion plans, it dropped full-year guidance. Shares are down 4.5% in the late session.
RealReal reported a miss on both top and bottom lines Monday afternoon: -50 cents per share versus expectations of a -45 cent loss, while coming up short on its top line: $104.9 million versus $106.4 million in the Zacks consensus. Even with key Gross Merchandise Value (GMV) growing 91% year over year to $350 million, shares immediately tumbled nearly 8% on the news. Shares have fought back from those lows, however.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.