Apple, Bloomin' Brands, Chipotle Mexican Grill and Jamba highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 6, 2014 /PRNewswire/ -- Zacks Equity Research highlights Apple (Nasdaq:AAPL-Free Report) as the Bull of the Day and Bloomin' Brands (Nasdaq:BLMN-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Chipotle Mexican Grill (NYSE:CMG-Free Report) and Jamba (Nasdaq:JMBA-Free Report).
Here is a synopsis of all four stocks:
Apple (Nasdaq:AAPL-Free Report) is a stock that needs no introduction to investors. The technology giant has come to dominate several markets, while its profit margins are the envy of many of its major competitors.
Yet following its massive stock split and its subsequent rise close to the $100/share mark, investors have to be asking, can Apple continue to march higher, or is the run over for AAPL?
Why Apple is Still a Buy
Several new products are really what makes Apple an interesting choice for investors right now. Obviously the most important is the new iPhone 6 along with the iPhone 6 plus. These new phones should help AAPL more easily compete in the smartphone market with companies that have been launching bigger phones, a trend which is definitely in vogue with consumers right now. Some even suggest that Apple could sell 60 million phones in the December quarter alone.
Beyond this key product, Apple also has some exciting new additions to its lineup coming down the pike. While we can debate about the viability of the Apple Watch, Apple Pay could be a game-changer in the mobile payments market.
Apple has secured deals with all of the major credit card companies for its payment system, and as such could blow competitors out of the water. And though it is hard to say how much of the market Apple will be able to capture here, mobile payments are expected to see a transaction volume approaching $100 billion by 2017, a 48% compounded growth rate when compared to 2012 figures.
The new iPhone and Apple Pay, along with a successful Apple Watch roll out a little further down the line, should help to give this massive company a number of fresh potential revenue streams that could provide AAPL with growth opportunities for years to come.
Earnings and Estimates
Thanks to some of these new products and predictions for the iPhone's continued success, analysts have been revising their earnings estimates higher for AAPL. In fact, for both the current year and the next year time frames, not a single estimate in our consensus has gone lower, while both consensus estimates for these time periods show EPS growth exceeding 11%.
It also worth noting that Apple has a stellar record when it comes to living up to analyst expectations at earnings season. The company has beaten estimates by an average of 6.5% in the past four quarters and it is riding a streak of five consecutive beats as well.
As a result, it shouldn't be too surprising to note that we currently have Apple as a Zacks Rank #1 (Strong Buy) stock, suggesting we are looking for outperformance from this company in the next few months.
Bottom Line
Not only does Apple have an impressive product lineup that is likely to spur more earnings growth, but it has an amazing track record at earnings season too. And with analysts slowly starting to revise their estimates higher, now could be time to get in on this stock ahead of its quickly approaching earnings release where Apple seems poised to deliver yet again.
Author is long AAPL
It has been a very rough stretch for the restaurant industry as a number of issues have conspired to drag down many names in the space. First, it was wild weather that kept many customers at home, but then sluggish economic conditions and broad investor concerns about heavy competition and changing consumer tastes acted as the next catalyst to send stocks lower in this industry.
Take for example Bloomin' Brands (Nasdaq:BLMN-Free Report), the company behind brands such as Outback Steakhouse, Carrabbas Italian Grill, and Flemings Prime Steakhouse and Wine Bar, just to name a few. The company started off the year on an ok footing, but never really recovered from there, losing nearly 25% so far this year and over 18% in the past three months alone.
What Happened?
The main reason for the slump is really the most recent earnings report, as the company fell short of estimates by two cents a share, a roughly 6.9% miss. However it was the outlook that really disappointed investors and caused the massive slide as of late.
In their revision to guidance, management slashed its full year estimate from $1.21/share down to a range of between $1.05-$1.10/share. This suggests that the outlook is sliding for BLMN and that more trouble could be ahead to end the year.
This has been further confirmed more recently by sluggish same store sales for many of the company's key brands. In other words, it isn't looking too favorable for BLMN to close out the calendar year and that the company may have issues getting back to a solid growth rate.
Analysts' Take
Those tracking the company seem to agree with this negative assessment as every earnings estimate revision as of late has been lower. 10 have gone lower for the full year, while nine have gone lower for the next fiscal year, suggesting total agreement about BLMN's prospects.
Not only has there been agreement among analysts, but the magnitude of revisions has been pretty big too. Current quarter estimates have fallen from 15 cents a share 60 days ago to just eight cents a share today. The full year has also seen a drop, with estimates sliding from $1.22/share 60 days ago to $1.07/share today.
Clearly, analysts are thinking that the company's near term prospects aren't looking too great. For this reason, it isn't too surprising that BLMN has earned itself a Zacks Rank #5 (Strong Sell) and that we are expecting more weakness out of this company in the months ahead.
Other Picks
For investors who want to stay in the restaurant segment, it is worth noting that the industry rank here is pretty unfavorable, coming in at the bottom 40%. However, there are a few companies that could still be worth a closer look as they both have top Zacks Ranks.
These include Chipotle Mexican Grill (NYSE:CMG-Free Report) and Jamba (Nasdaq:JMBA-Free Report), two companies that had a positive EPS surprise last quarter and have moved into 'strong buy' territory in just the past week. Given that, either could be a better selection than BLMN, at least until the company can turn around its struggling same store sales, and see earnings estimates rise once more.
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.
About Zacks
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.
Get the full Report on AAPL - FREE
Get the full Report on BLMN - FREE
Get the full Report on CMG - FREE
Get the full Report on JMBA - FREE
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.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO
SOURCE Zacks Investment Research, Inc.
Share this article