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Urban Outfitters, Southwest Airlines, Microsoft, Amazon and Alphabet as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – May 8, 2018 – Zacks Equity Research highlights SodaStream International Ltd. as the Bull of the Day and Southwest Airlines Co. (LUV - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft (MSFT - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .
SodaStream International Ltd.continues to crush it. This Zacks Rank #1 (Strong Buy) recently reported record revenue for the first quarter and raised its full year outlook.
SodaStream makes and distributes home beverage carbonation systems called Sparkling Water Makers. These allow consumers to turn tap water into sparkling water and flavored sparkling water. Products are available at more than 80,000 retail stores in 45 countries.
Another Beat in the First Quarter
On May 2, SodaStream reported its first quarter results and beat the Zacks Consensus Estimate again. It reported earnings of $0.81 versus the consensus of $0.66.
It was the 11th earnings beat in a row, an impressive record.
Revenue rose 24.6% to a first quarter record of $143.6 million, up from $115.3 million in the first quarter of last year. Growth was primarily driven by Germany, the U.S., Canada and Australia.
It was the company's 25th consecutive quarter of double-digit growth in Germany.
Gross margin increased 250 basis points to 55.2% from 52.7% a year ago.
SodaStream also saw its global active user base rise, as gas refill units rose 9% to 8.3 million, a first quarter record.
Raised Full Year Guidance
SodaStream continues to see strong business in 2018.
It raised full year revenue guidance to an increase of 15% over 2017, up from 12%.
The company also raised full year earnings guidance which prompted the analysts to raise their estimates.
3 estimates have moved higher for 2018 in the last week, pushing the Zacks Consensus Estimate to $3.59 from $3.42 in that time. That's earnings growth of 9.1% compared to 2017 where it made $3.29.
One estimate was also raised for 2019 over the last 7 days, pushing the 2019 Zacks Consensus Estimate up to $4.04 from $3.93.
Shares Retreat From the Highs
SodaStream's stock has been on fire.
The shares retreated from recent highs after the earnings report, but they're still up 30% year-to-date compared to a decline of 0.9% for the S&P 500 over that same time.
Over the last year, the difference is even more stark as SodaStream is up 62.7% versus 11% for the S&P 500.
This is a growth stock. It trades with a forward P/E of 24, which is well above the average of the S&P 500 which is at 17.3x.
But for investors looking for a way to play the growth in the hot health and wellness markets, SodaStream is definitely one to keep on the short list.
Southwest Airlines Co.is suffering from being in an out-of-favor industry. The full year estimates have been cut on this Zacks Rank #5 (Strong Sell).
Southwest Airlines operates a low cost airline in the United States and 10 other countries. Based in Dallas, it carries over 120 million passengers a year.
Met the Estimate in the First Quarter
On Apr 26, it reported its first quarter results and met the Zacks Consensus of $0.75.
Total operating revenue rose 1.9% to a first quarter record of $4.9 billion. First quarter operating revenue per available seat mile (RASM), an important airline metric, was comparable with the first quarter of 2017.
As demand for travel remains strong worldwide, the company saw a first quarter record load factor of 81.5%.
However, it does expect second quarter RASM to decrease in the 1 to 3% range year over year due to the recent softness in bookings following the Flight 1380 accident.
Second quarter fuel costs are expected at $2.20 per gallon, up from $1.99 in the second quarter of last year.
Thanks to revisions to its future fleet order book with Boeing, it raised its CAPEX to $2.0 to $2.1 billion, up from $1.9 billion.
New Hawaii Flights Coming
Southwest's announcement that it would push into Hawaii sent tremors through the industry as those are lucrative routes.
But due to the flight capability of its fleet, the impact will mainly be felt along the West Coast routes.
Southwest has announced that its inaugural flights will operate from Oakland, San Diego, San Jose and Sacramento. The flights will begin later this year.
Estimates Cut for 2018
Given the uncertainty moving forward with softer bookings, and higher than expected fuel costs, the analysts moved to cut 2018 estimates.
8 estimates were cut in the last month for 2018, pushing down the Zacks Consensus Estimate to $4.60 from $4.96. That's still a year-over-year earnings gain of 31% as the company made $3.50 in 2017.
The Zacks Rank, however, only cares that the estimates were cut and that a large number of analysts were all in agreement on cutting.
Why Microsoft Stock Popped on Monday
Shares of Microsoft had surged 1.5% through mid-afternoon trading on Monday to inch close to their all-time high. The question is what had investors so excited a few weeks after the tech giant reported better-than-expected quarterly financial results.
Cloud Computing
CEO Satya Nadella pointed directly to his company’s growing cloud computing business as a major reason for Microsoft’s success on the company’s third quarter earnings call. Microsoft’s top line numbers helped prove just how important cloud is and how much the company will rely on it going forward.
Microsoft’s overall Q3 revenues surged 16% to $26.82 billion, with its Intelligent Cloud unit climbing 17% to reach $7.89 billion. This topped our exclusive non-financial metrics consensus estimate. Investors should also note that Microsoft’s Azure cloud division skyrocketed 93%.
On Monday, Microsoft’s chief executive doubled down on his commitment to cloud computing and noted that the company plans to compete directly against fellow industry giants.
Nadella said in a CNBC interview that he thinks consumer trust will lift Microsoft’s cloud offerings ahead of Amazon and Google parent Alphabet. This comes at a time when many consumers and investors have become increasingly aware of privacy concerns and data security.
Nadella also noted that both Google and Amazon utilize revenue from their advertising and retail businesses to support their cloud ventures. The CEO claimed that this might run against the interests of some of Google and Amazon’s business customers.
Microsoft Build 2018
Microsoft also kicked off its Build conference on Monday. The three-day conference features a ton of keynote speakers and will help the company share its goals for the future.
So far, the company announced its new Visual Studio IntelliCode, which is designed to improve “everyday software development” using Microsoft’s artificial intelligence technology. The company also noted that it is the largest single corporate contributor to open source on Github. This is something that could become even more important going forward as Microsoft tries to further democratize the internet.
Microsoft also explained more of its plans to combine Microsoft 365 and Cortana to improve meetings. Overall, the company detailed its continued push to utilize technology—especially AI—in order to enhance peoples’ lives.
The tech power’s main focus seems to be on offering greater access to technology, even diving into its plans to help people with disabilities. “It’s not really about adding more screens or grabbing more screen time,” Nadella said at Microsoft Build. “It’s about truly figuring out how to empower more people and more organizations.”
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Urban Outfitters, Southwest Airlines, Microsoft, Amazon and Alphabet as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – May 8, 2018 – Zacks Equity Research highlights SodaStream International Ltd. as the Bull of the Day and Southwest Airlines Co. (LUV - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft (MSFT - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
SodaStream International Ltd.continues to crush it. This Zacks Rank #1 (Strong Buy) recently reported record revenue for the first quarter and raised its full year outlook.
SodaStream makes and distributes home beverage carbonation systems called Sparkling Water Makers. These allow consumers to turn tap water into sparkling water and flavored sparkling water. Products are available at more than 80,000 retail stores in 45 countries.
Another Beat in the First Quarter
On May 2, SodaStream reported its first quarter results and beat the Zacks Consensus Estimate again. It reported earnings of $0.81 versus the consensus of $0.66.
It was the 11th earnings beat in a row, an impressive record.
Revenue rose 24.6% to a first quarter record of $143.6 million, up from $115.3 million in the first quarter of last year. Growth was primarily driven by Germany, the U.S., Canada and Australia.
It was the company's 25th consecutive quarter of double-digit growth in Germany.
Gross margin increased 250 basis points to 55.2% from 52.7% a year ago.
SodaStream also saw its global active user base rise, as gas refill units rose 9% to 8.3 million, a first quarter record.
Raised Full Year Guidance
SodaStream continues to see strong business in 2018.
It raised full year revenue guidance to an increase of 15% over 2017, up from 12%.
The company also raised full year earnings guidance which prompted the analysts to raise their estimates.
3 estimates have moved higher for 2018 in the last week, pushing the Zacks Consensus Estimate to $3.59 from $3.42 in that time. That's earnings growth of 9.1% compared to 2017 where it made $3.29.
One estimate was also raised for 2019 over the last 7 days, pushing the 2019 Zacks Consensus Estimate up to $4.04 from $3.93.
Shares Retreat From the Highs
SodaStream's stock has been on fire.
The shares retreated from recent highs after the earnings report, but they're still up 30% year-to-date compared to a decline of 0.9% for the S&P 500 over that same time.
Over the last year, the difference is even more stark as SodaStream is up 62.7% versus 11% for the S&P 500.
This is a growth stock. It trades with a forward P/E of 24, which is well above the average of the S&P 500 which is at 17.3x.
But for investors looking for a way to play the growth in the hot health and wellness markets, SodaStream is definitely one to keep on the short list.
Bear of the Day:
Southwest Airlines Co.is suffering from being in an out-of-favor industry. The full year estimates have been cut on this Zacks Rank #5 (Strong Sell).
Southwest Airlines operates a low cost airline in the United States and 10 other countries. Based in Dallas, it carries over 120 million passengers a year.
Met the Estimate in the First Quarter
On Apr 26, it reported its first quarter results and met the Zacks Consensus of $0.75.
Total operating revenue rose 1.9% to a first quarter record of $4.9 billion. First quarter operating revenue per available seat mile (RASM), an important airline metric, was comparable with the first quarter of 2017.
As demand for travel remains strong worldwide, the company saw a first quarter record load factor of 81.5%.
However, it does expect second quarter RASM to decrease in the 1 to 3% range year over year due to the recent softness in bookings following the Flight 1380 accident.
Second quarter fuel costs are expected at $2.20 per gallon, up from $1.99 in the second quarter of last year.
Thanks to revisions to its future fleet order book with Boeing, it raised its CAPEX to $2.0 to $2.1 billion, up from $1.9 billion.
New Hawaii Flights Coming
Southwest's announcement that it would push into Hawaii sent tremors through the industry as those are lucrative routes.
But due to the flight capability of its fleet, the impact will mainly be felt along the West Coast routes.
Southwest has announced that its inaugural flights will operate from Oakland, San Diego, San Jose and Sacramento. The flights will begin later this year.
Estimates Cut for 2018
Given the uncertainty moving forward with softer bookings, and higher than expected fuel costs, the analysts moved to cut 2018 estimates.
8 estimates were cut in the last month for 2018, pushing down the Zacks Consensus Estimate to $4.60 from $4.96. That's still a year-over-year earnings gain of 31% as the company made $3.50 in 2017.
The Zacks Rank, however, only cares that the estimates were cut and that a large number of analysts were all in agreement on cutting.
Why Microsoft Stock Popped on Monday
Shares of Microsoft had surged 1.5% through mid-afternoon trading on Monday to inch close to their all-time high. The question is what had investors so excited a few weeks after the tech giant reported better-than-expected quarterly financial results.
Cloud Computing
CEO Satya Nadella pointed directly to his company’s growing cloud computing business as a major reason for Microsoft’s success on the company’s third quarter earnings call. Microsoft’s top line numbers helped prove just how important cloud is and how much the company will rely on it going forward.
Microsoft’s overall Q3 revenues surged 16% to $26.82 billion, with its Intelligent Cloud unit climbing 17% to reach $7.89 billion. This topped our exclusive non-financial metrics consensus estimate. Investors should also note that Microsoft’s Azure cloud division skyrocketed 93%.
On Monday, Microsoft’s chief executive doubled down on his commitment to cloud computing and noted that the company plans to compete directly against fellow industry giants.
Nadella said in a CNBC interview that he thinks consumer trust will lift Microsoft’s cloud offerings ahead of Amazon and Google parent Alphabet. This comes at a time when many consumers and investors have become increasingly aware of privacy concerns and data security.
Nadella also noted that both Google and Amazon utilize revenue from their advertising and retail businesses to support their cloud ventures. The CEO claimed that this might run against the interests of some of Google and Amazon’s business customers.
Microsoft Build 2018
Microsoft also kicked off its Build conference on Monday. The three-day conference features a ton of keynote speakers and will help the company share its goals for the future.
So far, the company announced its new Visual Studio IntelliCode, which is designed to improve “everyday software development” using Microsoft’s artificial intelligence technology. The company also noted that it is the largest single corporate contributor to open source on Github. This is something that could become even more important going forward as Microsoft tries to further democratize the internet.
Microsoft also explained more of its plans to combine Microsoft 365 and Cortana to improve meetings. Overall, the company detailed its continued push to utilize technology—especially AI—in order to enhance peoples’ lives.
The tech power’s main focus seems to be on offering greater access to technology, even diving into its plans to help people with disabilities. “It’s not really about adding more screens or grabbing more screen time,” Nadella said at Microsoft Build. “It’s about truly figuring out how to empower more people and more organizations.”
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.