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Expedia Group and Digital Turbine have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – February 17, 2023 – Zacks Equity Research shares Expedia Group, Inc. (EXPE - Free Report) as the Bull of the Day and Digital Turbine, Inc. (APPS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tapestry, Inc. (TPR - Free Report) , Conagra Brands, Inc. (CAG - Free Report) and Arhaus, Inc. (ARHS - Free Report) .
Expedia Group, Inc. is riding last year's momentum in the travel industry into 2023. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in 2023 and 2024 as the travel industry puts the pandemic behind it.
Expedia is a global travel platform. It has three business segments: Expedia Product and Technology, Expedia Brands and Expedia for Business.
It's brands includes Expedia, Hotels.com, Expedia Partner Solutions, Vrbo, trivago, Orbitz, Travelocity, Hotwire, Wotfi, ebookers, CheapTickets, Expedia Group Media Solutions, CarRentals.com, and Expedia Cruises.
A Surprising Miss in the Fourth Quarter of 2022
On Feb 9, 2023, Expedia reported fourth quarter and full year 2022 results. It posted a big miss on the fourth quarter, reporting $1.26 versus the consensus of $1.85. That's a 31% miss.
With travel demand so strong, what went wrong?
Expedia said the quarter was negatively impacted by severe weather but that demand was "markedly stronger" since the start of the year.
2022 was a strong rebound year coming out of the pandemic downturn. Booked room nights were up 26% and revenue gained 36% last year.
"We begin '23 with record app usage and member counts, led by Expedia US, the first of our brands to deploy new capabilities and marketing strategies. This year, we are excited to see these benefits accrue to more of our brands and geographies, driving further growth and margin expansion," said Peter Kern, CEO.
Earnings Estimates for 2023 and 2024 on the Rise
The analysts are still bullish on travel, and Expedia, for the next two years. Demand is still strong.
3 estimates are up for 2023 in the last 30 days, although 1 estimate has also been cut, pushing up the Zacks Consensus Estimate to $9.23 from $8.97 during that time.
This is earnings growth of 35.9% over 2022 as Expedia only earned $6.79 last year.
Analysts expect further growth in 2024 as well. The 2024 Zacks Consensus Estimate is up in the last 30 days to $11.64 from $10.79. That's another 26% earnings growth.
Shares Are Cheap
Expedia shares sold off in 2022 along with the other growth stocks. It declined 47% in the last year.
But, along with the earnings rising, that means the stock is cheap on a classic valuation basis. It has a forward P/E of just 12.6. A P/E under 15 usually indicates value.
Expedia also has a PEG ratio of 0.9. A PEG ratio under 1.0 means a company has both growth and value. It's also a sign the stock is cheap.
Expedia is shareholder friendly and has an ongoing share repurchase program. In the fourth quarter of 2022, it repurchased about 3.7 million shares for $347 million. It has about 18 million shares remaining under the authorization.
For investors looking for a value stock in the fast growing travel industry, Expedia is one to keep on your short list.
Digital Turbine, Inc. is still seeing macro headwinds. This Zacks Rank #5 (Strong Sell) is expected to see declining earnings in Fiscal 2023 but is hopeful for a rebound later this calendar year.
Digital Turbine, headquartered in Austin, Texas, is a mobile growth platform for advertisers, publishers, carriers and OEMS. By integrating a full ad stack with proprietary technology built into devices by wireless operators and OEMs, it supercharges advertising and monetization.
It has offices in large cities across the United States, and in London, Berlin, Singapore, and Tel Aviv.
A Big Miss in Fiscal Third Quarter
On Feb 8, 2023, Digital Turbine reported its fiscal third quarter of 2023 and missed on the Zacks Consensus. It reported earnings of $0.29 versus the consensus of $0.37.
It was the company's second miss in the last 4 quarters.
Revenue fell 25% to $162.3 million compared to the year ago period.
"While nothing has changed regarding our long-term view of the digital media industry or our strategic positioning within the industry, macro headwinds are impacting our near-term results," said Bill Stone, CEO.
"We expect current macro headwinds to continue into the first half of the calendar year, but our high-level strategic vision remains intact, as advertising spending tends to be among the first items to be negatively impacted at the onset of a cyclical downturn, but is typically also among the first items to rebound," he added.
Analysts Cut Fiscal 2023 and 2024 Earnings Estimates
The analysts are bearish given the challenging macro environment.
2 estimates have been cut for Fiscal 2023 since the earnings report, pushing the Zacks Consensus down to $1.18 from $1.32. This is an earnings decline of 28.9% as the company made $1.66 in fiscal 2022.
Analysts also cut for Fiscal 2024 cutting the Zacks Consensus down to $1.17 from $1.40. That's just a penny less than this year but shows that the analysts, for now, think that earnings might stabilize in the second half of this calendar year.
Shares Sink 85% in the Last 2 Years
It's been rough being a shareholder of Digital Turbine the last 2 years. Shares are down 85% during that time.
Even in 2023, shares are down 15.8% year-to-date after the earnings miss sent shares tumbling again.
But, the good news is that they are now cheap. Digital Turbine trades with a forward P/E of 11.3. It also has a PEG ratio of just 0.8. A PEG under 1.0 usually indicates a company is undervalued.
However, investors interested in the online advertising industry might want to wait until the macro headwinds abate before jumping in.
Additional content:
3 Stocks to Buy on Solid Rebound in Retail Sales
The retail sector has had a hard time as soaring prices compelled people to spend cautiously. However, sales bounced back in January as inflation showed signs of easing. Demand is still high, which is helping boost retail sales. Moreover, the labor market is still going strong despite the growing inflationary pressure.
This is helping people as purchasing power has continued to increase with new job additions to the economy. Given this situation, stocks like Tapestry, Inc., Conagra Brands, Inc. and Arhaus, Inc. are likely to benefit from a surge in retail sales.
Retail Sales Rebound
Retail sales in the United States rose a solid 3% month over month in January, beating economists' expectations of a rise of 1.9%, the Commerce Department said on Feb 15. January's jump follows a 1.1% decline in December. Excluding autos, retail sales jumped 2.3%, which was also higher than the expectations of a jump of 0.9%.
The impressive numbers reported in January were driven by sales in food services and drinking places, which surged 7.2% month over month. Sales at motor dealers and parts dealers increased 5.9%, while sales at furniture and furnishings stores climbed 4.4%. Sales at electronics and appliance stores rose 3.5%.
However, receipts at gas stations remained flat despite gas prices increasing 2.4%.
E-commerce, which has been playing a key role in driving retail sales since the onset of the pandemic, once again helped the sector, as online sales rose 1.3%. E-commerce has turned out to be the most preferred mode of shopping.
The pandemic saw millions shopping from home in order to maintain social distancing on fears of contracting the COVID-19 virus. This made them finally realize the safety and convenience of shopping online. The trend has continued since then and has been helping the retail sector in a major way.
Moreover, people have been spending more freely over the past couple of months as inflation has been showing signs of easing. Although the consumer price index (CPI), the preferred gauge of measuring inflation, increased 0.5% in January, inflation has slowed in the prior months.
Another reason that has been helping the retail sector is the solid job additions to the economy. The job market is still doing well despite rising inflationary pressures that have forced individuals to spend cautiously.
The labor market remained resilient in 2022 and this year too, it has been good so far.
The Labor Department reported that nonfarm payrolls increased a solid 517,000, which came in above economists' expectations of a modest 187,000 increase. This follows job gains of 260,000 in December.
This came as the unemployment rate fell to 3.4%, its lowest level since 1969. With jobs being added at an aggressive pace, people will get more money in hand, which will help them spend more.
Our Choices
This is thus the right opportunity to invest in retail stocks that have both a strong offline and online presence.
Tapestry, Inc. is a designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR offers lifestyle products, which include handbags, women's and men's accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches.
Tapestry'sexpected earnings growth rate for the current year is 7.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. TPR presently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Conagra Brands, Inc. is one of the leading branded food companies of North America. CAG offers premium edible products, with a refined focus on innovation. Conagra Brands maintains a highly dynamic product portfolio and incorporates alterations within it per the preference pattern of the end-users.
Conagra Brands' expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 9% over the past 60 days. CAG presently sports a Zacks Rank #1.
Arhaus, Inc. is a lifestyle brand and omni-channel retailer of premium home furnishings. ARHS offers an assortment of heirloom quality products. Arhaus is based in BOSTON HEIGHTS, OH.
Arhaus Inc.'s expected earnings growth rate for the current year is 26.1%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days. ARHS presently sports a Zacks Rank #1.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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/performancefor information about the performance numbers displayed in this press release.
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Expedia Group and Digital Turbine have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – February 17, 2023 – Zacks Equity Research shares Expedia Group, Inc. (EXPE - Free Report) as the Bull of the Day and Digital Turbine, Inc. (APPS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tapestry, Inc. (TPR - Free Report) , Conagra Brands, Inc. (CAG - Free Report) and Arhaus, Inc. (ARHS - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Expedia Group, Inc. is riding last year's momentum in the travel industry into 2023. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in 2023 and 2024 as the travel industry puts the pandemic behind it.
Expedia is a global travel platform. It has three business segments: Expedia Product and Technology, Expedia Brands and Expedia for Business.
It's brands includes Expedia, Hotels.com, Expedia Partner Solutions, Vrbo, trivago, Orbitz, Travelocity, Hotwire, Wotfi, ebookers, CheapTickets, Expedia Group Media Solutions, CarRentals.com, and Expedia Cruises.
A Surprising Miss in the Fourth Quarter of 2022
On Feb 9, 2023, Expedia reported fourth quarter and full year 2022 results. It posted a big miss on the fourth quarter, reporting $1.26 versus the consensus of $1.85. That's a 31% miss.
With travel demand so strong, what went wrong?
Expedia said the quarter was negatively impacted by severe weather but that demand was "markedly stronger" since the start of the year.
2022 was a strong rebound year coming out of the pandemic downturn. Booked room nights were up 26% and revenue gained 36% last year.
"We begin '23 with record app usage and member counts, led by Expedia US, the first of our brands to deploy new capabilities and marketing strategies. This year, we are excited to see these benefits accrue to more of our brands and geographies, driving further growth and margin
expansion," said Peter Kern, CEO.
Earnings Estimates for 2023 and 2024 on the Rise
The analysts are still bullish on travel, and Expedia, for the next two years. Demand is still strong.
3 estimates are up for 2023 in the last 30 days, although 1 estimate has also been cut, pushing up the Zacks Consensus Estimate to $9.23 from $8.97 during that time.
This is earnings growth of 35.9% over 2022 as Expedia only earned $6.79 last year.
Analysts expect further growth in 2024 as well. The 2024 Zacks Consensus Estimate is up in the last 30 days to $11.64 from $10.79. That's another 26% earnings growth.
Shares Are Cheap
Expedia shares sold off in 2022 along with the other growth stocks. It declined 47% in the last year.
But, along with the earnings rising, that means the stock is cheap on a classic valuation basis. It has a forward P/E of just 12.6. A P/E under 15 usually indicates value.
Expedia also has a PEG ratio of 0.9. A PEG ratio under 1.0 means a company has both growth and value. It's also a sign the stock is cheap.
Expedia is shareholder friendly and has an ongoing share repurchase program. In the fourth quarter of 2022, it repurchased about 3.7 million shares for $347 million. It has about 18 million shares remaining under the authorization.
For investors looking for a value stock in the fast growing travel industry, Expedia is one to keep on your short list.
Bear of the Day:
Digital Turbine, Inc. is still seeing macro headwinds. This Zacks Rank #5 (Strong Sell) is expected to see declining earnings in Fiscal 2023 but is hopeful for a rebound later this calendar year.
Digital Turbine, headquartered in Austin, Texas, is a mobile growth platform for advertisers, publishers, carriers and OEMS. By integrating a full ad stack with proprietary technology built into devices by wireless operators and OEMs, it supercharges advertising and monetization.
It has offices in large cities across the United States, and in London, Berlin, Singapore, and Tel Aviv.
A Big Miss in Fiscal Third Quarter
On Feb 8, 2023, Digital Turbine reported its fiscal third quarter of 2023 and missed on the Zacks Consensus. It reported earnings of $0.29 versus the consensus of $0.37.
It was the company's second miss in the last 4 quarters.
Revenue fell 25% to $162.3 million compared to the year ago period.
"While nothing has changed regarding our long-term view of the digital media industry or our strategic positioning within the industry, macro headwinds are impacting our near-term results," said Bill Stone, CEO.
"We expect current macro headwinds to continue into the first half of the calendar year, but our high-level strategic vision remains intact, as advertising spending tends to be among the first items to be negatively impacted at the onset of a cyclical downturn, but is typically also among the first items to rebound," he added.
Analysts Cut Fiscal 2023 and 2024 Earnings Estimates
The analysts are bearish given the challenging macro environment.
2 estimates have been cut for Fiscal 2023 since the earnings report, pushing the Zacks Consensus down to $1.18 from $1.32. This is an earnings decline of 28.9% as the company made $1.66 in fiscal 2022.
Analysts also cut for Fiscal 2024 cutting the Zacks Consensus down to $1.17 from $1.40. That's just a penny less than this year but shows that the analysts, for now, think that earnings might stabilize in the second half of this calendar year.
Shares Sink 85% in the Last 2 Years
It's been rough being a shareholder of Digital Turbine the last 2 years. Shares are down 85% during that time.
Even in 2023, shares are down 15.8% year-to-date after the earnings miss sent shares tumbling again.
But, the good news is that they are now cheap. Digital Turbine trades with a forward P/E of 11.3. It also has a PEG ratio of just 0.8. A PEG under 1.0 usually indicates a company is undervalued.
However, investors interested in the online advertising industry might want to wait until the macro headwinds abate before jumping in.
Additional content:
3 Stocks to Buy on Solid Rebound in Retail Sales
The retail sector has had a hard time as soaring prices compelled people to spend cautiously. However, sales bounced back in January as inflation showed signs of easing. Demand is still high, which is helping boost retail sales. Moreover, the labor market is still going strong despite the growing inflationary pressure.
This is helping people as purchasing power has continued to increase with new job additions to the economy. Given this situation, stocks like Tapestry, Inc., Conagra Brands, Inc. and Arhaus, Inc. are likely to benefit from a surge in retail sales.
Retail Sales Rebound
Retail sales in the United States rose a solid 3% month over month in January, beating economists' expectations of a rise of 1.9%, the Commerce Department said on Feb 15. January's jump follows a 1.1% decline in December. Excluding autos, retail sales jumped 2.3%, which was also higher than the expectations of a jump of 0.9%.
The impressive numbers reported in January were driven by sales in food services and drinking places, which surged 7.2% month over month. Sales at motor dealers and parts dealers increased 5.9%, while sales at furniture and furnishings stores climbed 4.4%. Sales at electronics and appliance stores rose 3.5%.
However, receipts at gas stations remained flat despite gas prices increasing 2.4%.
E-commerce, which has been playing a key role in driving retail sales since the onset of the pandemic, once again helped the sector, as online sales rose 1.3%. E-commerce has turned out to be the most preferred mode of shopping.
The pandemic saw millions shopping from home in order to maintain social distancing on fears of contracting the COVID-19 virus. This made them finally realize the safety and convenience of shopping online. The trend has continued since then and has been helping the retail sector in a major way.
Moreover, people have been spending more freely over the past couple of months as inflation has been showing signs of easing. Although the consumer price index (CPI), the preferred gauge of measuring inflation, increased 0.5% in January, inflation has slowed in the prior months.
Another reason that has been helping the retail sector is the solid job additions to the economy. The job market is still doing well despite rising inflationary pressures that have forced individuals to spend cautiously.
The labor market remained resilient in 2022 and this year too, it has been good so far.
The Labor Department reported that nonfarm payrolls increased a solid 517,000, which came in above economists' expectations of a modest 187,000 increase. This follows job gains of 260,000 in December.
This came as the unemployment rate fell to 3.4%, its lowest level since 1969. With jobs being added at an aggressive pace, people will get more money in hand, which will help them spend more.
Our Choices
This is thus the right opportunity to invest in retail stocks that have both a strong offline and online presence.
Tapestry, Inc. is a designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR offers lifestyle products, which include handbags, women's and men's accessories, footwear, jewelry, seasonal apparel collections, sunwear, travel bags, fragrance and watches.
Tapestry'sexpected earnings growth rate for the current year is 7.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.5% over the past 60 days. TPR presently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Conagra Brands, Inc. is one of the leading branded food companies of North America. CAG offers premium edible products, with a refined focus on innovation. Conagra Brands maintains a highly dynamic product portfolio and incorporates alterations within it per the preference pattern of the end-users.
Conagra Brands' expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 9% over the past 60 days. CAG presently sports a Zacks Rank #1.
Arhaus, Inc. is a lifestyle brand and omni-channel retailer of premium home furnishings. ARHS offers an assortment of heirloom quality products. Arhaus is based in BOSTON HEIGHTS, OH.
Arhaus Inc.'s expected earnings growth rate for the current year is 26.1%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days. ARHS presently sports a Zacks Rank #1.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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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/performancefor information about the performance numbers displayed in this press release.