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Ellie Mae, American Airlines, JPMorgan Chase, MB Financial and Fidelity Southern highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – April 13, 2016 – Zacks Equity Research highlights Ellie Mae (ELLI) as the Bull of the Day and American Airlines (AAL) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on JPMorgan Chase & Co. (JPM), MB Financial Inc. (MBFI) and Fidelity Southern Corporation (LION).

Here is a synopsis of all five stocks:

Bull of the Day:

Ellie Mae (ELLI) beat the Zacks Consensus Estimate about three months ago earnings are right around the corner. The stock is a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.

The Numbers

ELLI beat the Zacks Consensus Estimate of $0.00 by $0.23 for a huge positive earnings surprise. Revenues came in a little above expectations at $65 million for a 5.7% positive revenue surprise.

Description

Ellie Mae operates electronic mortgage origination networks in the United States. The Company's network and technology-enabled solutions help streamline and automate the mortgage origination process. Ellie Mae is headquartered in Pleasanton, California.

Earnings History

The recent earnings history for ELLI is rather solid with six of the last six reports topping the Zacks Consensus Estimate.

Estimates

The FY16 Zacks Consensus Estimate has been moving higher. The number stood at $0.53 in September of last year. The number moved higher to $0.70 in October and on the strength of the most recent beat the estimate kicked higher to $0.95 in February.

The FY2017 Zacks Consensus Estimate is only recently out, and it has held steady at $1.22 over the last two months.

Bear of the Day :

American Airlines (AAL) has beaten the Zacks Consensus Estimate rather consistently but the estimates have slipped and it is now a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.

The Numbers

AAL topped the Zacks Consensus Estimate of $1.96 by $0.04 for a 2% positive earnings surprise. Revenues came in a little below expectations at $9.63B for a 1% negative revenue surprise.

Description

American Airlines Group operates in the airline industry. The company provides scheduled passenger, freight and mail service. American Airlines Group is based in Fort Worth TX.

Earnings History

Usually when a stock is the Bear of the Day, the earnings history is filled with misses. This is not the case for AAL, as the stock has posted six straight beats.

Estimates

Here is the real reason the stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day. The Zacks Consensus Estimate has fallen in each of the last two months. The FY16 estimate stood at $6.96 in January but fell to $6.76 in February and is now down to $6.21 in April.

Next year is seeing an even larger move to the downside, with numbers sliding from $6.29 to $6.22 down to $6.00 over the same time period as mentioned above. That is the reason this stock is a Zacks Rank #5 (Strong Sell).

Additional content:

Why Q1 Earnings May Be Ill-Fated for JPMorgan (JPM)

A huge respite from legal costs, effective cost cutting and increased revenues had helped JPMorgan Chase & Co. ( JPM) to churn out juicy fourth-quarter results – beating the Zacks Consensus Estimate on both the top and the bottom lines – despite tough market conditions. But that failed to translate into any strength for its stock, as evident from its year-to-date plunge of over 11%.


In the absence of any known catalyst that can turn the tables, the stock might not have any better luck after the company releases first-quarter results on Apr 13. In fact, if the results disappoint, the stock could lose further value.

However, an earnings beat doesn’t look very difficult for JPMorgan, as the Zacks Consensus Estimate is pretty conservative at $1.26 after a number of downward revisions over the last couple of months.

Our quantitative model doesn’t point to an earnings beat though. Here’s why:

JPMorgan doesn’t have the right combination of the two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – for increasing the odds of an earnings surprise.

Zacks ESP: The Earnings ESP for JPMorgan is +2.38%, but it alone isn’t enough to enhance the chance of an earnings beat.

Zacks Rank: JPMorgan carries a Zacks Rank #5 (Strong Sell), which makes our earnings prediction difficult. Also, we caution against Sell-rated stocks going into an earnings announcement, especially if the company has seen negative estimate revisions.

The lackluster performance by the JPMorgan stock so far this year can be attributed to the uncertainty over the Fed’s rate hike schedule, concerns related to banks’ exposure to the distressed energy sector and the expected ill effects of the low rate environment on the finance industry. We believe the chance of first-quarter results validating the concerns is high. The industry-wide disruption across the key operating segments can dampen JPMorgan’s overall performance in the quarter.

Likely Factors at Play

The anticipated adverse impact of plunging oil prices, a weakening global economy and low interest rates resulted in low client activity and volatility in the financial markets. As a result, JPMorgan has already hinted at dismal trading activities (particularly fixed-income and equity trading) in the first quarter, which is typically a strong quarter for the industry.

Further, the continued shift toward electronic platforms may have weighed on the investment banking performance of JPMorgan.

Moreover, JPMorgan’s revenues from advisory and underwriting may have been dampened by the persistent decline in M&A activities and a weakening IPO market in the wake of the global rout.

At its Investor Day conference, JPMorgan's corporate and investment bank chief Daniel Pinto said that that the company’s first-quarter investment banking revenues are expected to be down 25% year over year. He also revealed a 20% decline in markets revenues due to a tough comparison with the year-ago period.

The mortgage business is not expected see any improvement either. People might have rushed to get homes financed to avoid higher rates later, but that did not help the bank’s business anyway. Low margin on fresh mortgages due to low rates made the mortgage business miserable. Further, repayment and charge-off of mortgage loans at a rate faster than fresh originations might have led to a declining trend in outstanding mortgage loans.

JPMorgan continued with its efforts to keep expenses at check. The company had outflows related to legal settlements, but there was nothing as such to impact its earnings unusually. The company has agreed to settle two of its biggest cases – one related to Lehman Brothers and the other pertaining to Insurer Ambac – for about $2.5 billion. However, it doesn’t expect any of the settlements to materially affect its earnings.

Stocks That Warrant a Look

Here are a few bank stocks that you may want to consider, as our model shows that these have the right combination for an earnings beat this time around:

With an Earnings ESP of +1.96% and a Zacks Rank #3, MB Financial Inc. (MBFI) is expected to report on Apr 18.

Fidelity Southern Corporation (LION) has an Earnings ESP of +2.86% and carries a Zacks Rank #2 (Buy). It is scheduled to report results on Apr 21.

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About the Bull and Bear of the Day

 

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

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ELLIE MAE INC (ELLI): Free Stock Analysis Report
 
AMER AIRLINES (AAL): Free Stock Analysis Report
 
JPMORGAN CHASE (JPM): Free Stock Analysis Report
 
MB FINANCL INC (MBFI): Free Stock Analysis Report
 
FIDELITY SOUTHN (LION): Free Stock Analysis Report
 
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