The Zacks Analyst Blog Highlights: Twitter, American Express, Panera Bread, Whole Foods Market and Treehouse Foods

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Jul 30, 2014, 09:30 ET

CHICAGO, July 30, 2014 /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 Twitter (NYSE:TWTR-Free Report), American Express Company (NYSE:AXP-Free Report), Panera Bread (Nasdaq:PNRA-Free Report), Whole Foods Market, Inc. (Nasdaq:WFM-Free Report) and Treehouse Foods, Inc. (NYSE:THS-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday's Analyst Blog:

Twitter Q2 Gets Kick from FIFA, Shares Up 30%

Twitter (NYSE:TWTR-Free Report) has reported Q2 earnings after the closing bell Tuesday, and its numbers positively surprised estimates across the board. Earnings per share (EPS, accounting for stock-based compensation) was -24 cents on revenues of $312 million were both notably better than Zacks consensus estimates of -28 cents per share and $283 million in sales.

Monthly average user (MAU) growth hit 271 million in the quarter, up 6.3% sequentially and higher than the 267 million expected. Advertising revenue reached $277 million in the quarter a 129% leap from a year ago. 81% of Twitter's ad dollars came from mobile advertising. International revenues grew at a higher than 100% clip for now the second quarter in a row.

The FIFA World Cup was very good for Twitter, having not only occurred during Q2 but also having enjoyed a larger and more involved audience not only around the world but in the U.S. as well. Engaged users are another key metric for Twitter to keep tabs on, and the World Cup served nicely; Twitter included many features to accommodate soccer fans: real-time scoring, push notifications, event and match timelines and a voting ballot feature.

The question is now whether Twitter can continue to build its MAU tallies and keep ad revenue growth going strong. CEO Dick Costolo suggested that once Twitter users are made, they find more and more reasons to use the service. The company also plans to have a "Buy Now" button installed on users' Twitter feeds, but no mention of particular progress was made in the initial earnings statement.

Twitter did, however, increase guidance for Q3; the company expects between $330-340 million in sales for the quarter, up from the Zacks consensus of $329 million. This should help Twitter see some upward estimate revisions in the coming days, at which time the company should climb out of its current Zacks Rank #4 (Sell).

In the after-market, Twitter shares are trading up north of 30%, after a moderately positive regular trading day. Talk about getting a nice kick!

American Express Beats Earnings, Panera Flattens

American Express Company (NYSE:AXP-Free Report) announced Q2 earnings after the bell today. The company posted earnings of $1.43 per share, beating the Zacks Consensus Earnings Estimate of $1.38, and showed revenues of $8.66 billion, just below the Zacks Consensus Revenue Estimate of $8.67 billion.

The EPS of $1.43 is a 12.6% year over year growth, and Revenues of $8.66 billion is up 5% year over year.

Management stated that the company saw increased volumes across the board in every category in the U.S. and Internationally. This statement alleviated many fears that the International segment would be under-pressure due to the deluge of international conflicts impacting the global economy.

The company also stated that they saw a 9% increase in card spending. Again easing fears that spending would decrease in the second quarter.

While AXP showed solid Q2 numbers, Panera Bread missed on both the top and bottom lines.

Panera Bread (Nasdaq:PNRA-Free Report) posted Q2 EPS of $1.74, a penny below the Zacks Consensus Earnings Estimate, and revenues came in $9 million below the Zacks Consensus Revenue Estimate of $640 million. EPS showed 0% growth from the year ago numbers, and Revenues posted a 7.1% growth from the year ago numbers. Also, the Q2 EPS included a one-time $0.08 benefit from the resolution of an insurance matter.

The area where everyone was concentrating was Same Store Sales growth; the consensus mark was 1.8% growth, but Panera posted SSS growth of 0.1%. Further, due to this weakness the company revised their Q3 EPS estimates and FY 2014 EPS estimates; Q3 has dropped from the Zacks Consensus Earnings Estimate of $1.54 to a range of $1.40-$1.46, and FY 2014 has declined from the Zacks Consensus Earnings Estimate of $6.87 to a range of $6.65-$6.80.

In afterhours trading, American Express is up under 1% on mild volume, while Panera saw an initial decline in value immediately after the earnings announcement. But, about a half hour after the close, shares of Panera have begun to rally, and are up just above 3% on light volume.

Will Still Competition Drag Down Whole Foods Earnings?

Whole Foods Market, Inc. (Nasdaq:WFM-Free Report), one of the leading natural and organic foods supermarkets, is slated to report its third-quarter fiscal 2014 results on Jul 30. In the last quarter, it delivered a negative surprise of 7.32%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

Whole Foods has been grappling with increasing competition and aggressive pricing that are weighing on the company's performance as more and more companies are entering as well as expanding their presence in the Organic & Natural food business.

Earnings Whispers?

Our proven model does not conclusively show that Whole Foods is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Whole Foods is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 39 cents.

Zacks Rank: Whole Foods has a Zacks Rank #4 (Sell) which lowers the predictive power of ESP. We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

By comparison, Treehouse Foods, Inc. (NYSE:THS-Free Report) has an Earnings ESP of +1.21% and a Zacks Rank #1 (Strong Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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