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SkyWest and Kura Sushi USA have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – July 9, 2024 – Zacks Equity Research shares SkyWest (SKYW - Free Report) as the Bull of the Day and Kura Sushi USA (KRUS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Duolingo, Inc. (DUOL - Free Report) , Coursera (COUR - Free Report) and Chegg (CHGG - Free Report) .
The NASDAQ Composite has been ticking up to new all-time highs nearly every day. It can make it feel like the only way to make money is to chase some of these big names that have been printing money for investors. Some of those trades are getting really crowded though. You don’t want to be the last one in when everyone else heads for the exits.
There are plenty of stocks out there that have been reaching cruising altitude, with strong underlying earnings trends as well. One of them is today’s Bull of the Day, SkyWest. SkyWest engages in the operation of a regional airline in the United States. It operates through two segments, SkyWest Airlines and SWC; and SkyWest Leasing. The company is also involved in leasing regional jet aircraft and spare engines to third parties; and provision of on-demand charter, airport customer, and ground handling services. As of December 31, 2023, its fleet consisted of 603 aircraft; and provided scheduled passenger and air freight services with approximately 1,850 total daily departures to various destinations in the United States, Canada, and Mexico.
The stock is currently a Zacks Rank #1 (Strong Buy). The reason for the favorable Zacks Rank is that analysts on Wall Street have been increasing their estimates for the company recently. Over the last sixty days, we have seen our Zacks Consensus Estimate for the current year jump from $6.39 to $6.83 while next year’s number is up from $7.45 to $8.00.
Those estimates are forecasting some serious growth. The current year EPS numbers now call for an incredible jump over last year’s meager 77 cents EPS. Next year’s number is slated for 17% growth. That’s not due to a bunch of financial engineering either. Revenue growth is forecast at 14.58% this year and 9.86% next year. That means the stock is trading at 1.08x sales this year and a forward P/E of just 12x. Compare that to the S&P 500’s 22.5x.
The tech stocks are really rocking and rolling right now, as the US economy is showing some signs of weakening. That’s a good thing for the inflation hawks out there though. Essentially, the only way to cool inflation off is to cool off the economy. We are starting to see some signs of that in various industries. One area that has been hit is the restaurant business. You see closures from Red Lobster to TGI Friday’s and everything in between.
Today’s Bear of the Day is a stock in the restaurant industry. It’s Zacks Rank #5 (Strong Sell) Kura Sushi USA. Kura Sushi USA is a fast-growing, technology-enabled restaurant concept serving authentic Japanese cuisine through an engaging revolving sushi service model. The Kura experience creates an exciting atmosphere that promotes a sense of discovery and enables guests to control the variety, portioning, check size and pace of their dining experience.
The stock has been cut to a Zacks Rank #5 (Strong Sell) because of negative earnings estimate revisions coming from analysts. Over the last thirty days, negative revisions have cut our Zacks Consensus Estimate for the current year from a 26-cent profit to a 35-cent loss. Next year’s number is off from 58 cents to 15 cents. That means here the stock is trading at 413x next year’s earnings.
It’s not all gloom and doom for this name. Revenue growth is staggering, at 28% this year and 24% next year. Both are monster numbers that long-term investors can hang their hats on. It’s just the profitability that is an issue in the intermediate term.
The Retail – Restaurants industry is in the Bottom 29% of our Zacks Industry Rank.
Additional content:
Duolingo (DUOL - Free Report) Down -15% Year-to-Date: Should You Buy the Dip?
Duolingo, Inc. has been on a downward spiral lately with significant selling pressure. The stock has declined 15% year to date, a considerable drop compared to the 21.5% rally in the industry it belongs to and the 17.5% rise in the Zacks S&P 500 composite.
This drop mirrors the performance of its closest competitors, Coursera and Chegg, which have seen declines of 63% and 76%, respectively, over the same period.
Looking beyond the year-to-date performance, DUOL’s stock has surged an impressive 39% over the past year, indicating that the current downturn may be part of a correction phase.
As of the last trading session, Duolingo's stock closed at $193.09, which is 23% below its 52-week high of $251.3. Additionally, it is trading below its 50-day moving average, suggesting a bearish sentiment among investors.
Given the recent weakness in DUOL shares, investors might be tempted to buy the stock. But is this the right time to buy DUOL? Let’s find out.
Product Excellence Driving Subscriber Conversion
Duolingo’s success hinges on its product excellence and innovative approach to language learning. The platform offers interactive lessons in multiple languages, employing gamified techniques to engage users through exercises, quizzes and challenges. Its user-friendly interface makes language acquisition enjoyable and accessible for learners worldwide.
The company's strategy revolves around teaching more effectively, expanding its user base and converting users into subscribers. In 2024, Duolingo focused on optimizing its subscription offerings, such as the family plan and Duolingo Max. This focus on product excellence drives word-of-mouth growth, generating valuable data that helps refine the product further, thereby enhancing user engagement and subscriber conversion.
The impact of this strategy is evident in the company’s financial performance. In the first quarter of 2024, Duolingo reported a 45% year-over-year increase in revenues and a 41% rise in bookings. This growth is attributed to an increase in daily and monthly average users, along with a surge in the number of subscribers. Notably, the company's net income for the first quarter of 2024 was $27 million, a significant improvement from a net loss of $2.6 million in the same quarter of the previous year. The adjusted EBITDA margin also improved by 1,320 basis points.
Confidence in its higher-priced subscription tiers and improvements to the family plan has led Duolingo to raise its 2024 bookings growth guidance to 38% at the midpoint, up from the previous expectation of 28%. Additionally, the company has revised its adjusted EBITDA margin guidance to 23.5% compared to the earlier forecast of 22.5%.
Healthy Returns on Capital
Return on equity (ROE), an indicator of profitability, shows how efficiently a company uses its shareholders' investments to generate earnings. DUOL’s ROE has hovered around 7% over the last few years and outperformed the industry average. ROE was 7.1% at the end of the first quarter of 2024 compared with the industry’s 6.1%.
Duolingo has demonstrated effective investment in profitable areas, as reflected in its return on invested capital (ROIC). The company’s trailing 12-month ROIC is 6.8%, ahead of the industry average of 4.1%.
Strong Liquidity
DUOL’s liquidity position is robust, with a current ratio of 3.22 at the end of the first quarter of 2024, compared to the industry’s 0.97. A current ratio of more than 1 suggests that Duolingo can comfortably meet its short-term obligations, providing a cushion against potential financial challenges.
Strong Top and Bottom-line Prospects
The Zacks Consensus Estimate for DOUL’s 2024 earnings is pegged at $1.74, indicating 397% growth from the year-ago level. Earnings in 2025 are expected to increase 51.8% from the prior-year actuals. The company’s sales for 2024 are expected to increase 37.8% and 26.8% year over year, respectively, in 2024 and 2025.
Northward Estimate Revisions
Six estimates for 2024 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2024 earnings has moved up 26.1% in the past 60 days.
Is Duolingo a Must-Buy?
Duolingo’s product excellence, monetization efforts, expanding user and subscriber base, and strong liquidity position contribute to its potential for sustained success. The company’s solid financial health, coupled with strong top and bottom-line growth prospects, make it an attractive investment opportunity.
The significant correction in the year-to-date period, without a loss of fundamental strength, presents a compelling case for buying Duolingo stock at its current levels.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% 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/performance for information about the performance numbers displayed in this press release.
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SkyWest and Kura Sushi USA have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 9, 2024 – Zacks Equity Research shares SkyWest (SKYW - Free Report) as the Bull of the Day and Kura Sushi USA (KRUS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Duolingo, Inc. (DUOL - Free Report) , Coursera (COUR - Free Report) and Chegg (CHGG - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
The NASDAQ Composite has been ticking up to new all-time highs nearly every day. It can make it feel like the only way to make money is to chase some of these big names that have been printing money for investors. Some of those trades are getting really crowded though. You don’t want to be the last one in when everyone else heads for the exits.
There are plenty of stocks out there that have been reaching cruising altitude, with strong underlying earnings trends as well. One of them is today’s Bull of the Day, SkyWest. SkyWest engages in the operation of a regional airline in the United States. It operates through two segments, SkyWest Airlines and SWC; and SkyWest Leasing. The company is also involved in leasing regional jet aircraft and spare engines to third parties; and provision of on-demand charter, airport customer, and ground handling services. As of December 31, 2023, its fleet consisted of 603 aircraft; and provided scheduled passenger and air freight services with approximately 1,850 total daily departures to various destinations in the United States, Canada, and Mexico.
The stock is currently a Zacks Rank #1 (Strong Buy). The reason for the favorable Zacks Rank is that analysts on Wall Street have been increasing their estimates for the company recently. Over the last sixty days, we have seen our Zacks Consensus Estimate for the current year jump from $6.39 to $6.83 while next year’s number is up from $7.45 to $8.00.
Those estimates are forecasting some serious growth. The current year EPS numbers now call for an incredible jump over last year’s meager 77 cents EPS. Next year’s number is slated for 17% growth. That’s not due to a bunch of financial engineering either. Revenue growth is forecast at 14.58% this year and 9.86% next year. That means the stock is trading at 1.08x sales this year and a forward P/E of just 12x. Compare that to the S&P 500’s 22.5x.
Bear of the Day:
The tech stocks are really rocking and rolling right now, as the US economy is showing some signs of weakening. That’s a good thing for the inflation hawks out there though. Essentially, the only way to cool inflation off is to cool off the economy. We are starting to see some signs of that in various industries. One area that has been hit is the restaurant business. You see closures from Red Lobster to TGI Friday’s and everything in between.
Today’s Bear of the Day is a stock in the restaurant industry. It’s Zacks Rank #5 (Strong Sell) Kura Sushi USA. Kura Sushi USA is a fast-growing, technology-enabled restaurant concept serving authentic Japanese cuisine through an engaging revolving sushi service model. The Kura experience creates an exciting atmosphere that promotes a sense of discovery and enables guests to control the variety, portioning, check size and pace of their dining experience.
The stock has been cut to a Zacks Rank #5 (Strong Sell) because of negative earnings estimate revisions coming from analysts. Over the last thirty days, negative revisions have cut our Zacks Consensus Estimate for the current year from a 26-cent profit to a 35-cent loss. Next year’s number is off from 58 cents to 15 cents. That means here the stock is trading at 413x next year’s earnings.
It’s not all gloom and doom for this name. Revenue growth is staggering, at 28% this year and 24% next year. Both are monster numbers that long-term investors can hang their hats on. It’s just the profitability that is an issue in the intermediate term.
The Retail – Restaurants industry is in the Bottom 29% of our Zacks Industry Rank.
Additional content:
Duolingo (DUOL - Free Report) Down -15% Year-to-Date: Should You Buy the Dip?
Duolingo, Inc. has been on a downward spiral lately with significant selling pressure. The stock has declined 15% year to date, a considerable drop compared to the 21.5% rally in the industry it belongs to and the 17.5% rise in the Zacks S&P 500 composite.
This drop mirrors the performance of its closest competitors, Coursera and Chegg, which have seen declines of 63% and 76%, respectively, over the same period.
Looking beyond the year-to-date performance, DUOL’s stock has surged an impressive 39% over the past year, indicating that the current downturn may be part of a correction phase.
As of the last trading session, Duolingo's stock closed at $193.09, which is 23% below its 52-week high of $251.3. Additionally, it is trading below its 50-day moving average, suggesting a bearish sentiment among investors.
Given the recent weakness in DUOL shares, investors might be tempted to buy the stock. But is this the right time to buy DUOL? Let’s find out.
Product Excellence Driving Subscriber Conversion
Duolingo’s success hinges on its product excellence and innovative approach to language learning. The platform offers interactive lessons in multiple languages, employing gamified techniques to engage users through exercises, quizzes and challenges. Its user-friendly interface makes language acquisition enjoyable and accessible for learners worldwide.
The company's strategy revolves around teaching more effectively, expanding its user base and converting users into subscribers. In 2024, Duolingo focused on optimizing its subscription offerings, such as the family plan and Duolingo Max. This focus on product excellence drives word-of-mouth growth, generating valuable data that helps refine the product further, thereby enhancing user engagement and subscriber conversion.
The impact of this strategy is evident in the company’s financial performance. In the first quarter of 2024, Duolingo reported a 45% year-over-year increase in revenues and a 41% rise in bookings. This growth is attributed to an increase in daily and monthly average users, along with a surge in the number of subscribers. Notably, the company's net income for the first quarter of 2024 was $27 million, a significant improvement from a net loss of $2.6 million in the same quarter of the previous year. The adjusted EBITDA margin also improved by 1,320 basis points.
Confidence in its higher-priced subscription tiers and improvements to the family plan has led Duolingo to raise its 2024 bookings growth guidance to 38% at the midpoint, up from the previous expectation of 28%. Additionally, the company has revised its adjusted EBITDA margin guidance to 23.5% compared to the earlier forecast of 22.5%.
Healthy Returns on Capital
Return on equity (ROE), an indicator of profitability, shows how efficiently a company uses its shareholders' investments to generate earnings. DUOL’s ROE has hovered around 7% over the last few years and outperformed the industry average. ROE was 7.1% at the end of the first quarter of 2024 compared with the industry’s 6.1%.
Duolingo has demonstrated effective investment in profitable areas, as reflected in its return on invested capital (ROIC). The company’s trailing 12-month ROIC is 6.8%, ahead of the industry average of 4.1%.
Strong Liquidity
DUOL’s liquidity position is robust, with a current ratio of 3.22 at the end of the first quarter of 2024, compared to the industry’s 0.97. A current ratio of more than 1 suggests that Duolingo can comfortably meet its short-term obligations, providing a cushion against potential financial challenges.
Strong Top and Bottom-line Prospects
The Zacks Consensus Estimate for DOUL’s 2024 earnings is pegged at $1.74, indicating 397% growth from the year-ago level. Earnings in 2025 are expected to increase 51.8% from the prior-year actuals. The company’s sales for 2024 are expected to increase 37.8% and 26.8% year over year, respectively, in 2024 and 2025.
Northward Estimate Revisions
Six estimates for 2024 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2024 earnings has moved up 26.1% in the past 60 days.
Is Duolingo a Must-Buy?
Duolingo’s product excellence, monetization efforts, expanding user and subscriber base, and strong liquidity position contribute to its potential for sustained success. The company’s solid financial health, coupled with strong top and bottom-line growth prospects, make it an attractive investment opportunity.
The significant correction in the year-to-date period, without a loss of fundamental strength, presents a compelling case for buying Duolingo stock at its current levels.
DUOL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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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.