AK Steel, Chef'sWarehouse, iRobot, CiscoSystems and RockwellAutomationhighlighted as Zacks Bull and Bear of the Day
CHICAGO, March 19, 2014 /PRNewswire/ -- Zacks Equity Research highlights AK Steel (NYSE: cronym>AKS-Free Report) as the Bull of the Day and Chef's Warehouse (Nasdaq: cronym>CHEF-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis oniRobot Corporation (Nasdaq: IRBT-Free Report), Cisco Systems, Inc. (Nasdaq: CSCO-Free Report) and Rockwell Automation Inc. (NYSE: ROK-Free Report).
Here is a synopsis of all five stocks:
It wasn't long ago when steel stocks were a guaranteed way to lose money in the market. This sector is famously sensitive to the world economy. Steel is the backbone of products that generally fit into the durables space or construction. When the economy stalls, individuals, corporations and governments don't make investments in this space, thereby hurting worldwide steel demand.
Now add the glut of cheap Chinese steel supply into the equation and the deck is stacked against you. That's exactly what steelmaker AK Steel (NYSE: cronym>AKS-Free Report) had to deal with. As a result, last year's numbers were ugly, very ugly. In fact, last year AK Steel lost 24 cents per share.
Well the past is the past and this year AK looks like a bona fide turnaround story for the ages. Estimates for this year call for AK to make between 30 cents and $1 per share. Analysts have been so bullish on the stock that in the last 60 days ten different analysts raised their estimate for the current year, and seven raised estimates for next year.
The story has been so good recently that AK Steel has surprised earnings to the upside by an average of 57% over the last 4 quarters. Early this week, news came that AK's lenders decided to extend its $1.1 billion credit facility through March 2018, when it had been set to expire in April 2016. These are all signs that things are going well over at AK Steel.
Shrinking is never a good thing, unless you're Alice trying to chase the White Rabbit. Shrinking profits and earnings estimates are even worse. That's the story for today's Bear of the Day, The Chef's Warehouse (Nasdaq: cronym>CHEF-Free Report). CHEF is a distributor of specialty food products in the US. The company focuses on the needs of chefs who own or operate restaurants and fine dining establishments.
The stock is part of the FOOD-MISC/DIVERSIFIED industry that ranks in the bottom 30% of our Zacks Industry Rank. The Chef's Warehouse's Zacks Rank #5 (Strong Sell) rating comes mostly from the fact that three analysts have revised current year earnings estimates to the downside in the last 30 days, helping lower consensus from 95 cents down to 76 cents per share. This news comes on the heels of two analysts lowering next year's estimates to 92 cents from $1.11 per share.
Part of the downward revisions is accounting for acquisitions CHEF made over the course of the last year or so. Revenue last quarter was in line with CHEF's guidance, falling between $840 million and $810 million at $820.4 million. Analysts still remain concerned with earnings growth prospects in the near future. One bright spot is CHEF surprised to the upside by 10% last quarter. The surprise was not big enough to budge CHEF off our Zacks Rank #5 (Strong Sell).
The technical picture is text book for a momentum stock that went bust. You have a very strong uptrend in the stock, as well as earnings, which took it from trading down in the $12s to $30 in a 15 month period. Investors piled on and poured money into the stock as it maintained strong momentum and earnings growth. Note how the 25 day moving average shifted to the right by 5 days provides support throughout the rally from the teens. Given the volatile nature of this growth stocks, there were periods of time along the uptrend where the stock traced below support and still continued higher. That is the formula for a very strong momentum stock.
iRobot Launches Ava 500
Robot maker iRobot Corporation (Nasdaq: IRBT-Free Report) recently launched the video collaboration robot Ava 500 in the U.S., Canada and certain European markets. The self-driven robot is easy to use and allows users a complete freedom of movement. The robot reduces the cost and time associated with long travels for a meeting and offers remote management in a collaborative work environment.
The robot is a mixture of iRobot's autonomous mobile robotics platform and Cisco Systems, Inc.'s (Nasdaq: CSCO-Free Report) telepresence solutions. In the coming quarters, iRobot plans to introduce the robot worldwide. Ava 500 boasts various applications including manufacturing, data center, call centers, corporate training, laboratories and clean rooms, supply chain or logistics and customer experience centers.
It is believed that the merger of Cisco TelePresence and iRobot's autonomous mobility will bring about a new phase in the growth of collaboration industry.
iRobot has been steadily launching products to increase its footprint in the market. In January this year, the company launched a newer version of its existing floor cleaning robot, Scooba. The Scooba 450 was launched in North America on Jan 7. Boasting three-cycle cleaning process, Scooba 450 is three times more efficient than the existing models.
Bedford, MA-based iRobot is one of the leading manufacturers of robots worldwide. The company is a leading player in the domestic market and also has a significant presence in the commercial field.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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