MakeMyTrip, Elizabeth Arden, Procter & Gamble, Kellogg and Unilever highlighted as Zacks Bull and Bear of the Day
CHICAGO, Aug. 5, 2014 /PRNewswire/ -- Zacks Equity Research highlights MakeMyTrip Limited (Nasdaq: MMYT-Free Report) as the Bull of the Day and Elizabeth Arden (Nasdaq: RDEN-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onProcter & Gamble Company (NYSE: PG-Free Report), Kellogg Company (NYSE: K-Free Report) and Unilever plc (NYSE: UL-Free Report).
Here is a synopsis of all five stocks:
MakeMyTrip Limited (Nasdaq: MMYT-Free Report) is an India based online travel company. Its services and products include air tickets, customized holiday packages, hotel bookings, railway tickets, bus tickets, car hire mainly for travel within India and the US.
On June 30, MMYT reported the results for the first quarter of its fiscal 2015. The company generated revenue of $94.8 million in the quarter, up 22.9% (31.3% in constant currency) over the same quarter last year.
Revenue from the Air Ticketing business grew 23.9% year-on-year in constant currency terms, driven largely by strong transaction growth in the international Air Ticketing business. Domestic air transaction also grew by over 12% year-on-year, thanks primarily to discounted seasonal fares.
Hotels and Packages business revenue surged 70.9% growth year-on-year in constant currency terms, driven largely by 106.5% growth in transactions. According to the management, strong uptake in domestic hotel bookings, particularly through mobile platforms, as well as a strong growth in international hotel bookings led to the growth in transactions.
After impressive earnings, Zacks Consensus Estimates for current and the next fiscal year estimates have improved to a loss of ($0.36) per share and ($0.19) per share respectively, from a loss of ($0.43) per share and ($0.22 per share), 7 days ago.
Rising estimates sent MMYT back to Zacks Rank #1 (Strong Buy) earlier this month.
The e-commerce industry is going through a rapid change in India as internet usage, mainly through mobile devices has been surging. Aviation market is India continues to expand with rising middle class incomes. Recent entry of Air-Asia and license issuance to Tata Airlines will further drive the growth of domestic air industry.
Plans to liberalize the airline industry and ongoing price war among airlines in India are also very supportive for online travel companies.
Further, with the new business-friendly, reform-oriented government in India, longer-term outlook for promising Indian companies looks quite positive.
Elizabeth Arden (Nasdaq: RDEN-Free Report) is a beauty products company that makes high-end cosmetics, skin-care products and fragrances. It has an extensive portfolio of beauty brands sold in over 120 countries.
On June 26, South Korean cosmetics firm LG Household & Healthcare said that it was no longer interested in acquiring RDEN, citing Elizabeth Arden's restructuring plans. RDEN's shares slumped 17% after the news. Earlier in April, an interest by LG affiliate had led to a surge in RDEN's stock price.
On June 24, the company announced a restructuring program that included cutting jobs and exiting some unprofitable businesses.
Earlier during the quarterly conference call, the company announced that they had engaged Goldman Sachs to assist them in exploring potential strategic alternatives to enhance shareholder value and to accelerate the growth and maximize the value of their brand portfolio.
On May 12, RDEN reported results for its third fiscal quarter results. Net sales for the quarter were $210.8 million, down 20.3%, or 19.4% excluding the impact of foreign currency rates. Net adjusted loss was $0.84 per share, way worse than the Zacks Consensus Estimate of earnings of $0.02 per share.
Net sales of the Company's North America segment decreased 23% primarily resulting from store closings due to harsh winter weather and continued poor demand in the fragrance category.
Net sales in the international segment decreased 16%, from the same quarter prior year and Elizabeth Arden branded skin care, color and fragrance products sales declined by 19%.
According to the management, the beauty market particularly in fragrance is experiencing heavy price discounting and promotional activity.
P&G to Divest 100 Brands, Streamline Business
During its fourth-quarter and fiscal 2014 conference call held on Friday, Aug 1, Chief Executive Officer (CEO), A.G. Lafley, announced plans to streamline its business to focus more on 70 to 80 of its biggest brands including the Billion Dollar brands like Tide, Pampers and Oral-B. Though the company did not specify the brands it plans to keep or divest, it stated that these 70 to 80 brands have accounted for 90% of company sales and over 95% of profits.
Over the next two years, P&G will divest or discontinue 90 to 100 brands whose sales and profits have been declining over the past three years. Reportedly, the list could even include some larger brands if they do not strategically fit into the company's core business.
CEO Lafley believes that a smaller and more focused company should be able to grow faster, create more value and be much easier to manage.
Though P&G has been accelerating productivity savings, cutting costs and improving marketing efficiency, currency headwinds, rising commodity and labor costs, increasing competitive pressures, challenging retail trends and deceleration in emerging market growth rates have made it difficult to sustain profits. Moreover, the Zacks Rank #4 (Sell) company has been struggling to grow sales and, in fact, missed the Zacks Consensus Estimate for sales in the past three quarters. In the recently-concluded fiscal 2014, revenues grew a mere 1%.
P&G has been regularly divesting unfit units to concentrate on its fast growing businesses. On Friday, the consumer goods giant sold off a significant portion of its pet food business for $2.9 billion to privately-held American confectionary and pet food manufacturer, Mars, Inc. under a deal entered into in April this year.
In Jun 2012, P&G sold its snack unit, which included Pringles, to cereal makerThe Kellogg Company (NYSE: K-Free Report), for $2.7 billion. In Oct 2009, the consumer giant sold its global pharmaceuticals business to pharmaceutical company Warner Chilcott plc to focus on the fast growing consumer oriented healthcare business. In fiscal 2013, P&G divested its underperforming bleach business in Italy and Portugal and the Braun household appliances business.
The decision to right size its business came after P&G reported mixed fiscal fourth-quarter 2014 results beating the Zacks Consensus Estimate for earnings but missing the same for sales. The consumer products giant met its financial targets for the fiscal year and issued a positive outlook for the next. Shares of P&G climbed more than 3% in trading on Friday following the divesture announcement and earnings report.
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