Applied Materials, O'Reilly Automotive and Netflix highlighted as Zacks Bull and Bear of the Day
Zacks Equity Research
Updated
For Immediate Release
Chicago, IL – July 18, 2017 –Zacks Equity Research Applied Materials (NASDAQ: AMAT – Free Report ) as the Bull of the Day, O'Reilly Automotive (NASDAQ: ORLY – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix Inc. (NASDAQ: NFLX – Free Report ).
Here is a synopsis of all three stocks:
Bull of the Day :
Applied Materials (NASDAQ:AMAT – Free Report ) is a global leader in semiconductor equipment sales. It is one of the world’s largest suppliers of equipment for the fabrication of semiconductor, flat panel liquid crystal displays (LCDs), and solar photovoltaic (PV) cells and modules.
The company reported results in four segments—Semiconductor Systems (64% of total 2016 revenue), Applied Global Services (24%), Display and Adjacent Markets (11%), and Corporate and Other (1%).
Excellent Results and Raised Guidance
The company reported strong results for its second quarter ended April 30, 2017, beating on both the top and bottom lines.
Net sales increased by 45% year-over-year to $3.55 billion; while operating margin increased by 9.2 points to 26.5%.
Pro-forma earnings per share (EPS) of 79 cents were ahead of the Zacks Consensus Estimate and toward the higher end of the guided range.
The company returned $390 million to shareholders via buybacks and cash dividends during the quarter.
“Applied Materials delivered the highest quarterly revenue and earnings in our history, and we’ve now set new earnings records for four quarters in a row,” said the CEO. “Across the company we have tremendous momentum as our markets are strong and getting stronger, and we’re sustainably growing faster than these markets by expanding our served opportunity and gaining share.”
For the current quarter, the company expects revenues to be between $3.60 and $3.75 billion and non-GAAP EPS between 79 and 87 cents.
Rising Estimates
After better-than-expected results and updated guidance, the Zacks Consensus Estimates for FY 2017 and 2018 have increased to $3.10 per share and $3.28 per share, from $2.69 and $2.83 respectively, before the results. The company has beaten the estimates in 19 out of past 20 quarters.
Bear of the Day :
O'Reilly Automotive (NASDAQ:ORLY – Free Report ) is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment, and accessories in the US, serving both professional service providers and do-it-yourself customers.
Founded in 1957, the company IPO’d in April 1993. As of March 31, 2017, they operated 4,888 stores in 47 states.
Shares Plunge After Weak Sales Results
On July 5, the company reported its Q2 comparable store sales results, which were much weaker-than-expected. The stock fell almost 20% and is down about 34% year-to-date.
“After exiting the first quarter and entering April on an improved sales trend, we faced a more challenging sales environment than we expected for the remainder of the quarter. Our second quarter comparable store sales results of 1.7% represent an improvement over our first quarter, but fell below our guidance of 3% to 5%, due to what we believe were continued headwinds from a second consecutive mild winter and overall weak consumer demand,” said the CEO.
The company reports second quarter earnings on July 26.
Falling Estimates
Analysts have slashed their estimates for the company after weak guidance. Zacks Consensus Estimates for the current and next fiscal year have fallen to $11.83 per share and $13.10 per share from $12.26 and $13.73 respectively, 30 days back.
The company has missed in three out of past four quarters and just met in one. The average negative quarterly surprise for the past four quarters is 2.3%.
Additional content:
Netflix Misses Q2 Earnings but Crushes Subscriber Estimates
Netflix Inc. (NASDAQ:NFLX – Free Report ) just released its second quarter fiscal 2017 earnings results, posting earnings of 15 cents per share and revenue of $2.79 billion. Currently, NFLX is a Zacks Rank #2 (Buy), and is up nearly 9% to $176.13 per share in after-hours trading shortly after its earnings report was released.
Netflix:
Missed earnings estimates . The company posted earnings of 15 cents per share, lagging behind the Zacks Consensus Estimate of 16 cents per share. Net income was $66 million for the quarter.
Beats revenue estimates . The company saw revenue figures (including DVD) of $2.79 billion, just edging past our consensus estimate of $2.76 billion and growing 32.2% year-over-year. Total streaming revenues were $2.67 billion, increasing 35.8% year-over-year.
Operating income came in at $128 million, while operating margin was 4.6% for the quarter.
Netflix said that streaming membership grew more than expected, from 99 million to 104 million, and the company cited its “amazing content” as the reason. The company also said it crossed the symbolic milestone of 100 million members during Q2.
The streaming platform added 5.2 million users during the period, well above Wall Street’s estimates of 3.23 million.
Looking ahead, Netflix expects earnings of 32 cents per share (net income of $143 million) and total revenues of $2.969 billion for the third quarter of fiscal 2017.
“Our Q3 guidance assumes much of this momentum will continue but we are cognizant of the lessons of prior quarters when we over-forecasted and there was lumpiness in net adds, likely due to demand being pulled forward,” said Netflix.
Netflix is the world's leading Internet television network with millions of subscribers in nearly 50 countries who have access to an ever-expanding library of TV shows and movies, including original programming, documentaries and feature films. The company offers the ability to watch as subscribers want, anytime, anywhere, on nearly any Internet-connected screen.
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