We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shares of RH, formally Restoration Hardware, have plummeted recently, but the company’s bottom-line estimates appear strong. RH’s plans to revamp its stores and its business model also look poised to pay off.
Overview
RH saw its bottom line soar from $0.65 per share in the year-ago period to post adjusted second-quarter earnings of $2.05 per share. This crushed our Zacks Consensus Estimate of $1.74 per share. The firm also raised its fiscal 2018 earnings guidance.
Investors were displeased to see RH fall short of quarterly revenues estimates. However, the Corte Madera, California-based company’s comparable brand revenues climbed 5%.
On top of that, RH’s long-term outlook appears solid based on the success of its transformation into a more membership-based retailer, where consumers pay an annual fee for 25% savings on all full-priced items and an additional 20% on all sale items. The company has also slowly tried to become a kind of high-end club that offers a more complete brick-and-mortar retail experience. This includes new restaurant and cafe offerings.
Plus, the company said it has streamlined its distribution process and has sold more goods at full price. “Due to the earnings power of our new operating model, we are also updating our previous long-term targets,” CEO Gary Friedman said in a September company statement.
Looking ahead, RH said it sees a “clear path” to $4 to $5 billion in North American revenues. In total, the company thinks its international growth could see it become a $7 to $10 billion dollar global brand. The company also reaffirmed its long-term revenue growth targets of 8% to 12% and earnings growth of 15% to 20% annually.
Price Movement
Now that we have covered RH’s business and some of its overarching outlook, it’s time to take a peek at its stock price performance over the last few years. We can clearly see that RH stock has come in well above its industry’s average over the last three years.
It is also worth noting that RH has soared over 260% in the last 24 months. This tops the S&P 500’s roughly 28% climb and beats its industry’s 12% jump. However, 2018 has not been as kind to RH. Shares of RH closed regular trading Wednesday at $104.28 per share, down roughly 36% from their 52-week high of $164.49 per share.
Papa John's has seen its stock price surge over 16% in the past three months. Yet, it appears the embattled pizza giant is headed in the wrong direction for the foreseeable future.
Overview
At this point, many investors have likely heard about the scandals involving Papa John's founder John Schnatter. These issues aside, Papa John’s has struggled mightily as of late. The company saw its adjusted Q2 earnings sink nearly 25% from the year-ago period. Worse yet, North American comparable sales sunk 6%, while international comps dipped 0.8%.
The company also revised downward its 2018 earnings outlook on the back of declining sales trends. Plus, Yum!'s Pizza Hut will now receive the positive exposure that Papa John’s once pointed to as a huge reason for the company’s growth and success as the official pizza sponsor of the NFL.
With that said, rumors have swirled for some time now that the Louisville, Kentucky-based pizza chain might possibly be an acquisition target.
Stock Price Movement
As we mentioned at the top, PZZA stock has jumped roughly 16% during the last three months. This tops its industry’s average climb of 7%. With that said, shares of Papa John’s are down over 23% over the last year and 34% during the past two years.
Investors will also note that PZZA has experienced a significant amount of turbulence over the last five years. Papa John’s stock closed regular trading Wednesday at $51.86 per share, which marked a roughly 25% downturn from its 52-week high of $69.45 per share.
Outlook & Earnings Trends
And now we get to the why Papa John’s is our Bear of the Day. Our current Zacks Consensus Estimate is calling for the firm’s quarterly revenues to fall by roughly 11% to hit $384.44 million. PZZA's full-year revenues are also projected to sink 9.4%.
Worst still, PZZA’s adjusted quarterly earnings are projected to plummet 61.7% to $0.23 per share. Plus, the chain’s adjusted full-year earnings are expected to sink 42.4%.
Additional content:
Tesla Electrifies in Q3, Microsoft Also Beats
Tesla has electrified the late trading markets today following its Q3 2018 earnings release after today's closing bell. Earnings of +$2.90 per share simply obliterated expectations of a loss of 53 cents for the quarter. Sales of $6.82 billion, an all-time high for the Zacks Rank #3 (Hold) company, rose 128% year over year, and well above the $5.67 billion analysts had been looking for.
Strength in delivery of its Model 3 -- from just under 41K units delivered a quarter ago to nearly 70K in the September quarter -- spurred Tesla in its letter to shareholders. This helped push Auto Gross Margins to 26%, freeing up cash flow of $881 million, with $731 million in cash and equivalents.
Even more impressive, Tesla has been a company under fire in recent months for CEO Elon Musk's erratic behavior, finally resulting in an SEC agreement whereby Musk stepped down as Chairman of the company he founded. Tesla had also missed earnings estimates 8 times in its past 14 quarters. But now the smoke looks to have cleared; shares of TSLA are up 8.5% in after-hours trading.
Zacks Strategist David Borun has been following Tesla closely for months now, and his hot-take on the earnings release today was that the strength in the company's quarter is completely warranted:
"There's nothing funny. They didn't even sell any ZEV credits or anything shady like that. They just sold lots of cars and made money on them, just like a normal business.
"Instead of the production cost of Model 3s going up during the quarter, labor costs per vehicle actually decreased 30%.
"The only even remotely negative item is the mention of 40% tariffs in China, although this didn't significantly affect Model S and X deliveries there during the quarter."
In quoting the letter to shareholders, Borun pointed out, "Demand in china remains challenging... we managed to offset the decline there with growth in North America and Europe."
Unfortunately for investors today who've endured another difficult regular trading session with indexes awash in red ink, Microsoft's fiscal Q1 earnings release was not enough to turn things around in the after-market. Although earnings of $1.14 per share represented a 19% positive surprise from the Zacks consensus and up 36% year over year. Revenues of $29.08 billion also topped expectations and grew 19% from fiscal Q1 2018.
This marks the fifth straight quarter without an earnings miss for the Zacks Rank #2 (Buy)-rated tech giant. Its high-growth Azure server business grew 76%, helping bring the server products sector overall up 28% year over year. Dynamics products and cloud services rose 20%, led by 51% revenue growth in the quarter. The company's LinkedIn segment grew 33% from a year ago. Microsoft will provide full-year guidance on its upcoming conference call. For more on MSFT's Earnings, click here.
Today’s Stocks from Zacks’ Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
RH, Papa John's, Tesla and Microsoft highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – October 25, 2018 – Zacks Equity Research RH (RH - Free Report) as the Bull of the Day, Papa John's (PZZA - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tesla (TSLA - Free Report) and Microsoft (MSFT - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Shares of RH, formally Restoration Hardware, have plummeted recently, but the company’s bottom-line estimates appear strong. RH’s plans to revamp its stores and its business model also look poised to pay off.
Overview
RH saw its bottom line soar from $0.65 per share in the year-ago period to post adjusted second-quarter earnings of $2.05 per share. This crushed our Zacks Consensus Estimate of $1.74 per share. The firm also raised its fiscal 2018 earnings guidance.
Investors were displeased to see RH fall short of quarterly revenues estimates. However, the Corte Madera, California-based company’s comparable brand revenues climbed 5%.
On top of that, RH’s long-term outlook appears solid based on the success of its transformation into a more membership-based retailer, where consumers pay an annual fee for 25% savings on all full-priced items and an additional 20% on all sale items. The company has also slowly tried to become a kind of high-end club that offers a more complete brick-and-mortar retail experience. This includes new restaurant and cafe offerings.
Plus, the company said it has streamlined its distribution process and has sold more goods at full price. “Due to the earnings power of our new operating model, we are also updating our previous long-term targets,” CEO Gary Friedman said in a September company statement.
Looking ahead, RH said it sees a “clear path” to $4 to $5 billion in North American revenues. In total, the company thinks its international growth could see it become a $7 to $10 billion dollar global brand. The company also reaffirmed its long-term revenue growth targets of 8% to 12% and earnings growth of 15% to 20% annually.
Price Movement
Now that we have covered RH’s business and some of its overarching outlook, it’s time to take a peek at its stock price performance over the last few years. We can clearly see that RH stock has come in well above its industry’s average over the last three years.
It is also worth noting that RH has soared over 260% in the last 24 months. This tops the S&P 500’s roughly 28% climb and beats its industry’s 12% jump. However, 2018 has not been as kind to RH. Shares of RH closed regular trading Wednesday at $104.28 per share, down roughly 36% from their 52-week high of $164.49 per share.
Bear of the Day:
Papa John's has seen its stock price surge over 16% in the past three months. Yet, it appears the embattled pizza giant is headed in the wrong direction for the foreseeable future.
Overview
At this point, many investors have likely heard about the scandals involving Papa John's founder John Schnatter. These issues aside, Papa John’s has struggled mightily as of late. The company saw its adjusted Q2 earnings sink nearly 25% from the year-ago period. Worse yet, North American comparable sales sunk 6%, while international comps dipped 0.8%.
The company also revised downward its 2018 earnings outlook on the back of declining sales trends. Plus, Yum!'s Pizza Hut will now receive the positive exposure that Papa John’s once pointed to as a huge reason for the company’s growth and success as the official pizza sponsor of the NFL.
With that said, rumors have swirled for some time now that the Louisville, Kentucky-based pizza chain might possibly be an acquisition target.
Stock Price Movement
As we mentioned at the top, PZZA stock has jumped roughly 16% during the last three months. This tops its industry’s average climb of 7%. With that said, shares of Papa John’s are down over 23% over the last year and 34% during the past two years.
Investors will also note that PZZA has experienced a significant amount of turbulence over the last five years. Papa John’s stock closed regular trading Wednesday at $51.86 per share, which marked a roughly 25% downturn from its 52-week high of $69.45 per share.
Outlook & Earnings Trends
And now we get to the why Papa John’s is our Bear of the Day. Our current Zacks Consensus Estimate is calling for the firm’s quarterly revenues to fall by roughly 11% to hit $384.44 million. PZZA's full-year revenues are also projected to sink 9.4%.
Worst still, PZZA’s adjusted quarterly earnings are projected to plummet 61.7% to $0.23 per share. Plus, the chain’s adjusted full-year earnings are expected to sink 42.4%.
Additional content:
Tesla Electrifies in Q3, Microsoft Also Beats
Tesla has electrified the late trading markets today following its Q3 2018 earnings release after today's closing bell. Earnings of +$2.90 per share simply obliterated expectations of a loss of 53 cents for the quarter. Sales of $6.82 billion, an all-time high for the Zacks Rank #3 (Hold) company, rose 128% year over year, and well above the $5.67 billion analysts had been looking for.
Strength in delivery of its Model 3 -- from just under 41K units delivered a quarter ago to nearly 70K in the September quarter -- spurred Tesla in its letter to shareholders. This helped push Auto Gross Margins to 26%, freeing up cash flow of $881 million, with $731 million in cash and equivalents.
Even more impressive, Tesla has been a company under fire in recent months for CEO Elon Musk's erratic behavior, finally resulting in an SEC agreement whereby Musk stepped down as Chairman of the company he founded. Tesla had also missed earnings estimates 8 times in its past 14 quarters. But now the smoke looks to have cleared; shares of TSLA are up 8.5% in after-hours trading.
Zacks Strategist David Borun has been following Tesla closely for months now, and his hot-take on the earnings release today was that the strength in the company's quarter is completely warranted:
"There's nothing funny. They didn't even sell any ZEV credits or anything shady like that. They just sold lots of cars and made money on them, just like a normal business.
"Instead of the production cost of Model 3s going up during the quarter, labor costs per vehicle actually decreased 30%.
"The only even remotely negative item is the mention of 40% tariffs in China, although this didn't significantly affect Model S and X deliveries there during the quarter."
In quoting the letter to shareholders, Borun pointed out, "Demand in china remains challenging... we managed to offset the decline there with growth in North America and Europe."
Click here for a link to TSLA's earnings.
Unfortunately for investors today who've endured another difficult regular trading session with indexes awash in red ink, Microsoft's fiscal Q1 earnings release was not enough to turn things around in the after-market. Although earnings of $1.14 per share represented a 19% positive surprise from the Zacks consensus and up 36% year over year. Revenues of $29.08 billion also topped expectations and grew 19% from fiscal Q1 2018.
This marks the fifth straight quarter without an earnings miss for the Zacks Rank #2 (Buy)-rated tech giant. Its high-growth Azure server business grew 76%, helping bring the server products sector overall up 28% year over year. Dynamics products and cloud services rose 20%, led by 51% revenue growth in the quarter. The company's LinkedIn segment grew 33% from a year ago. Microsoft will provide full-year guidance on its upcoming conference call. For more on MSFT's Earnings, click here.
Today’s Stocks from Zacks’ Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
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.