Restoration Hardware, Equinix, Polycom, AT&T and Microsoft highlighted as Zacks Bull and Bear of the Day
CHICAGO, Sept. 13, 2013 /PRNewswire/ -- Zacks Equity Research highlights Restoration Hardware (NYSE: RH-Free Report) as the Bull of the Day and Equinix (Nasdaq: EQIX-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onthePolycom Inc. (Nasdaq: PLCM-Free Report), AT&T Inc. (NYSE: T-Free Report) and Microsoft Corp. (Nasdaq: MSFT-Free Report)
Here is a synopsis of all five stocks:
The $2.6 billion luxury home furnishings retailer offers a private-label assortment that is rich in fashion but reasonably priced for its target clientele. It is a true multi-channel retailer that sells its furniture, lighting, decor, bathware, and outdoor and garden products through 71 retail locations that it calls "design galleries" and 13 outlet stores, which together account for 55% of sales.
Rounding out the customer engagement is a strong e-commerce platform that accounts for the remaining 45% of sales, which include child and baby products.
RH reported earnings this week and continued its strong performance with impressive second-quarter fiscal 2013 results. The company's adjusted quarterly earnings of 49 cents a share handily surpassed the Zacks Consensus Estimate of 42 cents and jumped 48% year over year.
But the stock got slammed down 12% after the report because including one-time items the company actually reported a loss. There may have also been some investor uncertainty about another company decision: eliminating the splashy and expensive fall catalog. It seems this struck many as having a potential negative effect on revenues.
Equinix (Nasdaq: EQIX-Free Report) is a global provider of network-neutral data centers and Internet exchange services for enterprises and network providers. But a slow-down in the build-out of data centers, high debt and the company's conversion to a REIT structure have taken EPS estimates down considerably in the past month since its 2nd-quarter report.
Through its 90+ International Business Exchange, or IBX, data centers across 31 strategic markets in the U.S., Europe, Middle East and Africa and the Asia-Pacific, Equinix customers can directly interconnect critical traffic exchange requirements. The company is integral to global communications and has the billing addresses to prove it.
While some customers, such as AOL, Google, AT&T and MSN, may build and operate their own data centers for their large infrastructure deployments, these customers still rely on Equinix IBX centers for their critical inter-connection relationships.
British Telecom, Cable & Wireless, Comcast, Level 3, NTT, Qwest, SingTel, Sprint and Verizon are other large customers. With this kind of global enterprise business, it's easy to see how Equinix grew quarterly revenues from $213 million in the June quarter of 2009 to $525 million recently.
It may not be as easy to see how the company supported a 50X multiple with the stock was trading above $200 on forward estimates of $4.65. But you know what happens when those estimates get taken down. And that's part of what took the stock down since July to trade in the $170's.
Polycom Boosts Shareholder Wealth
Yesterday, videoconferencing equipment manufacturer Polycom Inc. (Nasdaq: PLCM-Free Report) announced that its board of directors has approved a $400 million share buy-back program of its common stocks. The company is expected repurchase 20% of its outstanding common shares through this program. The new capital return program will be funded through $150 million in cash and $250 million in loan.
For loan financing, Polycom will launch a modified Dutch auction self-tender offer on Sep 13, 2013 which will expire on Oct 30, 2013. The price range of these tenders will be $10 to $11.50 per share. Shareholders will decide how many share to sell at what price within this price range. Polycom expects to purchase approximately 23 million shares of its common outstanding stocks at the mid-point of this price range.
Polycom's business model is currently undergoing a transition from hardware-centric to cloud and software-centric. Meanwhile, Polycom has made several product enhancements for its popular RealPresence platform. Recently, Polycom entered into a strategic agreement with AT&T Inc. (NYSE: T-Free Report) to offer cloud-based video conferencing services to different organizations, which will be accretive for its long-term growth.
Further, Polycomis one of the most vital business partners of Microsoft Corp. (Nasdaq: MSFT-Free Report) and provides hardware for Microsoft's video chat and VoIP software, Lync, which can be used to replace traditional phone systems. Lync-compatible voice devices have become a major growth driver for Polycom.
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
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.
SOURCE Zacks Investment Research, Inc.