The Zacks Analyst Blog Highlights: Facebook, LinkedIn, Yahoo, Google and Rent-A-Center
CHICAGO, Oct. 31, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Facebook (Nasdaq:FB-Free Report), LinkedIn (NYSE:LNKD-Free Report) and even Yahoo (Nasdaq:YHOO-Free Report), Google (Nasdaq:GOOG-Free Report) and Rent-A-Center, Inc. (Nasdaq:RCII-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
Facebook Earnings: What a Difference Mobile Makes
Investors had discovered that Facebook (Nasdaq:FB-Free Report) had solved its "mobile problem" during its fiscal 2nd quarter of 2013. After the bell Wednesday, Facebook reported Q3 earnings, indicating further strength in its mobile business. The company posted a GAAP EPS of 17 cents per share on revenues of $2016 million in the quarter -- both of these figures outperformed the Zacks Consensus Estimates.
Analysts has expected 13 cents per share and $1913 million in revenues, so count this as a 30.77% positive surprise on the bottom line on more than $100 million in sales than expected. This follows a 44.44% beat in the 2nd quarter, with its mobile business finally demonstrating traction. With the improved fortunes of Facebook's growth trajectories, there was some concern going into this quarter that increased costs may have been a headwind, but the company seems to have gotten past it.
Daily active users increased 25% and advertising revenue is up 66% year over year -- very likely further reflections on its positive mobile business. Ad revenue holds a similar key to the fortunes of firms like LinkedIn (NYSE:LNKD-Free Report) and even Yahoo (Nasdaq:YHOO-Free Report) and Google (Nasdaq:GOOG-Free Report).
Streamlining those ads further -- and there were reports that some Facebook users have complained about targeted marketing campaigns not accurately addressing their wants -- may constitute further growth in coming quarters, based on advertisers paying potentially higher rates to get at their target markets more readily, even if Facebook membership grows at a more decelerated pace going forward.
For the December quarter, the Zacks Consensus Estimate is for Facebook to book $2200 million in sales. For this company, a Q4 holiday season doesn't really account for a lot of this -- FB's growth is more incremental. Today's press release did not include Q4 guidance, but this trajectory clearly supports healthy growth realizations for the company. Before users accessed Facebook on their mobile devices, this crucial issue was still in question. It doesn't seem to be anymore.
While the stock price trickled down in regular-day trading Tuesday before the announcement, FB shares have climbed over 9% in the after-market. This puts the stock up near its all-time highs of $54 and change, which it touched a couple weeks ago. You'll recall this was anything but the case back when Facebook went public, stumbling out of the gate and taking over a year to finally get back up to its IPO price.
From here right now, however, it appears the sky's the limit for Mark Zuckerberg & Co.
Rent-a-Center Down to Strong Sell
On Oct 26, 2013, Zacks Investment Research downgraded Rent-A-Center, Inc. (Nasdaq:RCII-Free Report) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Oct 21, 2013Rent-A-Center's third-quarter earnings per share of 51 cents missed the Zacks Consensus Estimate by 19.1% and was 23.9% lower than the year-ago figure. Though revenues of $754.8 increased 2.1% year over year, it fell short of the Zacks Consensus Estimate of $773 million.
The company also disappointed on the comparable-store sales front with comps dipping 0.8%. The sustained deflation in electronic products along with promotions undertaken to attract budget constrained consumers led to the year-over-year decline in average revenue per agreement and is the principal factor behind the drop in comparable-store sales and trim in the guidance.
The gross and operating margins fell 10 basis points (bps) and 170 bps to 70.1% and 7.5%, respectively. However, sales of the company's RAC Acceptance business rose 47.7% year over year.
Management now expects 2013 earnings in the band of $2.80–$2.85 per share, as against the earlier projection of $3.03–$3.15. Rent-A-Center also forecasts a contraction of 10 bps in gross profit, 100 bps in operating margin and 1.5 % decline in comparable-store sales for 2013.
The softness in results as well as conservative outlook stimulated a downward revision in the Zacks Consensus Estimate. For 2013, the Zacks Consensus Estimate fell 9.0% to $2.83 per share and for 2014, it fell 6.0% to $3.30 per share over the past 30 days.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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