CHICAGO, Nov. 13, 2014 /PRNewswire/ -- Zacks Equity Research highlights Skechers (NYSE:SKX-Free Report) as the Bull of the Day and InvenSense (NYSE:INVN-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onCisco Systems (Nasdaq:CSCO-Free Report), IBM (NYSE:IBM-Free Report) and Oracle (NYSE:ORCL-Free Report).
Here is a synopsis of all five stocks:
Skechers (NYSE:SKX-Free Report) recently posted a monster beat of Wall Street expectations for revenue and earnings per share, yet the traded lower by 6.5% in the session following the release. In reaction to the solid beat, analysts have raised estimates for the remainder of 2014 and 2015. Those increases in earnings estimates have pushed the stock to a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.
Skechers makes and sells footwear for men, women and children. As of February 15, 2014, the company operated 122 concept stores, 131 factory outlet stores, and 71 warehouse outlet stores in the US; and 44 concept stores and 26 factory outlets internationally. Skechers was founded in 1992 and is headquartered in Manhattan Beach, California.
On October 22, SKX posted EPS of $1.07, topping the Zacks Consensus Estimate of $0.91 by $0.16 for a 17% positive earnings surprise. This is down from the past two positive surprises of 84% and 65%, but up significantly from a 13% negative earnings surprise in the year ago quarter. The company posted sales of $674M, $56M ahead of the Zacks Consensus Estimate.
Despite these solid numbers the stock tumbled in the session following the release. There has been some concern that an unseasonably warm September and October have hurt some retail sales, but at the same time the lower oil prices have been a tailwind for the same stocks.
InvenSense (NYSE:INVN-Free Report) recently posted a rather large miss when the company reported a loss of $0.03 compared to the Zacks Consensus Estimate that was calling for a gain of $0.10. The $0.13 miss translates into a 130% negative earnings surprise, making it the fifth miss in a row. The stock is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.
InvenSense makes micro-electro-mechanical system (MEMS) gyroscopes for motion tracking devices in consumer electronics. The company was founded in 2003 and is headquartered in San Jose, California.
As mentioned, the company has a very poor track record of beating the Zacks Consensus Estimate. In this case, "Very poor" means never. That's right, INVN has never beaten the Zacks Consensus Estimate going back to the December 2011quarter. Five times the company has met the estimate and seven times it has missed.
The recent miss is the fifth straight for the company and came with downside guidance as well.
When looking at the valuation for INVN, one has to believe that this stock is not done falling. The trailing PE of 161x is a hard pill to swallow but even worse is the 86x forward PE. Compare that with the 20x industry average for trailing and forward PE and you have INVN trading at a significant premium to the market. The premium can also be found in the 3.9x price to book multiple when compared to the 2.4x industry average, while the 4.6x price to sales multiple is head and shoulders above the 0.8x industry average.
Additional content:
Cisco Beats on Top & Bottom Again
Tech giant Cisco Systems (Nasdaq:CSCO-Free Report) has again beaten estimates in both sales and earnings for its fiscal Q1 of 2015, at a time when its main competitors like IBM (NYSE:IBM-Free Report) and Oracle (NYSE:ORCL-Free Report) were disappointing investors by missing quarterly estimates earlier this earnings season. Cisco brought in a one-cent beat on earnings per share of 49 cents (basic, before non-recurring items) on revenues of $12.25 billion in the quarter.
Cisco has not missed estimates on the bottom line in 6 years, but this is also the third straight beat on the top line -- revenues had been expected to come in at $12.14 billion. Shares of CSCO jumped immediately on the news near 3% before slowly trading off to an after-market gain of roughly 1%.
The company is clearly succeeding where IBM and Oracle have been faltering; much of this may have to do with Cisco's relatively early forays into the cloud-based space. Cloud computing's growth trajectory remains much higher than the routers and switches businesses in which Cisco has been a long-time industry leader. To that end, gross margins in the September quarter reached 63.3%, also higher than expected.
Guidance for fiscal 2015 will be forthcoming in Cisco's conference call; some slight negative revisions from analysts have taken projections down a penny for the current fiscal year over the past month or so. The Zacks consensus estimate for revenues in fiscal Q2 is $12.12 billion prior to the call. One final potential wrinkle on the call has to do with the announcement that CFO Frank Calderoni will be stepping down as of January 1st, 2015.
At the closing bell Wednesday, Cisco shares had climbed 11.7% year-to-date, more than 7% of which has come in the past month. Partly this is a result of trading indexes continuing to reach all-time highs, but much of it certainly speaks to Cisco's highly capable management team. Before the earnings announcement, Cisco shares had a Zacks Rank #3 (Hold).
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