E-Commerce China Dangdang, Rosetta Stone, RadioShack, Amazon.com and Best Buy highlighted as Zacks Bull and Bear of the Day
CHICAGO, Sept. 15, 2014 /PRNewswire/ -- Zacks Equity Research highlights E-Commerce China Dangdang (NYSE:DANG-Free Report) as the Bull of the Day and Rosetta Stone (NYSE:RST-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on RadioShack Corp. (NYSE:RSH-Free Report), Amazon.com Inc. (Nasdaq:AMZN-Free Report) and Best Buy Co., Inc. (NYSE:BBY-Free Report).
Here is a synopsis of all five stocks:
E-Commerce China Dangdang (NYSE:DANG-Free Report) is a leading business-to-consumer e-commerce company in China. They have focused on selling books online since their inception and are now the largest book retailer in China. With a growing customer base, they have expanded into other products including fashion and apparel, baby, children and maternity and home and lifestyle products.
In addition to offering products on its website, Dangdang also operates an online marketplace program, which allows third-party merchants to sell their products. Dangdang had its IPO in 2010. As of now, they resemble Amazon in its early years.
Dangdang reported its Q2 results on August 14. Total net revenues for the quarter were $316.1 million, up 31.3% from the same period in 2013. Net Income for the quarter was $4.6 million, or 1.5% of total net revenues, compared with a loss a year ago. Results were better than street estimates.
Dangdang expects about 30% year-over-year growth in net revenues for the third quarter.
Analysts have been raising their estimates for the company. Zacks Consensus Estimates for the current and the next year are now $0.18 per share and $0.42 per share, up from $0.07 per share and $0.34 per share respectively, 60 days ago.
Based in Arlington VA, Rosetta Stone (NYSE:RST-Free Report) is a leading provider of technology-based solutions for learning languages. Founded in 1992, the company had its IPO in 2009.
The company operates through three segments: North America Consumer, Rest of World Consumer, and Global Enterprise & Education. They sell their software products directly as well as through selected retailers.
Rosetta reported its Q2 2014 results on August 5. Total revenue excluding discontinued operations, decreased 6% to $57.3 million from $61.2 million, in the same quarter of 2013.
Enterprise & Education revenue grew 32%, but North America Consumer revenue declined 17%, primarily due to weakness in the retail and call center channels. Rest Of World Consumer revenue decreased 27% due mainly to the downsizing in Asia in Q1.
Adjusted EBITDA for the quarter fell to negative $0.1 million compared with $3.7 million in Q2 of 2013, mainly due to lower contribution from North America Consumer, partially offset by an increase in contribution from E&E. Loss for the quarter was $0.74 per share, substantially worse compared to the Zacks Consensus Estimate for a loss of $0.20 per share.
Additional content:
RadioShack Heads Toward Bankruptcy
Beleaguered electronic and mobile products retailer RadioShack Corp. (NYSE:RSH-Free Report) announced yesterday that the company is running out of cash and may file for Chapter 11 bankruptcy if it fails to improve its cash position.
Despite desperate attempts to turn around business over the last 18 months, the company has failed to do so. RadioShack's core consumer electronics (including digital TVs, digital music players, and digital cameras) retail business has been on a secular downtrend and is unlikely to recover in the near future. Also, loss of foot traffic is taking a toll on RadioShack's mobility business – a platform on which the company had been banking for its future growth.
We believe it might be difficult for RadioShack to make a substantial turnaround in its business owing to stiff competition from retail giants like Amazon.com Inc. (Nasdaq:AMZN-Free Report) and Best Buy Co., Inc. (NYSE:BBY-Free Report).
RadioShack stated that it is in talks with its bondholder, lenders, shareholders and landlords to make a possible arrangement for capital in order to avoid bankruptcy. It is considering options like a sale of the company, a near-term recapitalization or debt restructuring.
Of late, RadioShack had undertaken several strategic moves to improve its financial position. Management has been focusing on reducing costs, which includes closing up to 200 stores every year over the next three years; lowering rent expense through negotiations with landlords; reducing compensation expense by optimizing labor hours and store operating hours; and reviewing other expenses to identify cost-reduction opportunities. Unfortunately, none of these methods has led RadioShack out of the dark.
Dismal Quarterly Numbers
Investors' apprehension about RadioShack's future increased further following dismal financial numbers in the second quarter of fiscal 2015, reported yesterday. The company's adjusted loss per share of $1.00 was much wider than the Zacks Consensus Estimate of a loss of 59 cents. Meanwhile, total revenue came in at $673.8 million, down 21.8% year over year and below the Zacks Consensus Estimate of $742 million.
Notably, comparable store sales for company-operated stores and kiosks (stores and kiosks that have been operational for at least a year) were down 16.9% in the reported quarter mainly affected by traffic declines and slowdown in the mobility business.
At the end of the reported quarter, RadioShack had only $30.5 million in cash & cash equivalent compared with $109.6 million at the end of Feb 1, 2014. This hints at the possibility that the company is fast running out of cash and will not be in a position to fund its operations beyond the 'very near term', unless it formulates a concrete plan to increase its cash. Moreover, total debt at the end of the quarter was much higher at $656.9 million versus $613 million at the end of Feb 1, 2014.
Volatile Trading Session
Over the last few trading sessions, RadioShack's share price has witnessed high volatility. In the previous nine sessions, the company's shares have traded between $0.76 and $1.77. This may be because investors are unsure about the future of the company and are merely reacting in accordance to new developments doing the rounds in the market.
RadioShack currently has a Zacks Rank #3 (Hold).
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