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Unilever, Rite Aid and Facebook highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL –July 27, 2017 –Zacks Equity Research highlights Unilever PLC (NYSE: UL Free Report) as the Bull of the Day Rite Aid Corporation (NYSE: RAD Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook (NASDAQ: FB Free Report) .

Here is a synopsis of all three stocks:

Bull of the Day :

After many years of underperformance, emerging markets are shining in 2017. We can see signs of improving economic growth in many parts of the developing world. This rebound has benefitted multinational giants that derive a significant portion of their sales from emerging markets.

About the Company

Headquartered in London, UK, Unilever PLC ( NYSE:UL Free Report) is a multinational consumer goods company. They employ ~169,000 people.

The company has a huge portfolio of more than 400 well-known brands including Dove, Lipton, Knorr and Ben & Jerry’s. Emerging markets account for about 57% of their sales. Seven out of every ten households around the world contain at least one Unilever product.

Better-than-expected Results

The company reported much better than expected results for the six months ended June 30. Underlying sales grew 3.0%, with growth across all categories. Turnover increased 5.5% and gross margin improved by 40 bps.

Sales were driven by higher prices in emerging markets where volumes were flat. Segment wise, sales growth was strongest in refreshments business—with strong performances in both ice cream and tea businesses.

“The actions we are taking keep us on track for another year of underlying sales growth ahead of our markets, in the 3 – 5% range. We anticipate accelerating growth in the second half of the year driven by the phasing of our innovation plans and a step-up in brand and marketing investment. We now expect an improvement in underlying operating margin this year of at least 100 basis points and strong cash flow,” said the CEO.

The company also raised its guidance for the year after strong results.

Bear:

Headquartered in Camp Hill, PA, Rite Aid Corporation (NYSE: RAD Free Report) is the third largest retail drugstore in the US, based on revenues and number of stores. The company operates over 4,500 stores in 31 states across the country and in the District of Columbia.

Weak Results

Rite Aid reported adjusted loss of $0.05 per share for Q1 2018 ended June 3, worse than the Zacks Consensus Estimate of a loss of $0.02, as also earnings of $0.02 reported a year ago. Revenues fell 4.9% to $7,781.5 million, meeting our estimate.

“The negative trends in our pharmacy business that we saw during fiscal 2017 continued into the first quarter of fiscal 2018. Same-store sales in the retail business declined 3.9% from the prior year, consisting of a 1.5% decrease in front-end sales and a 5% decrease in pharmacy sales. Comparable script count decreased 1.1% on a 30-day adjusted basis,” Said the CFO.

Merger Agreement with Walgreens Terminated; Shares Plunge

The company announced that based upon feedback received from the FTC, they believe that the FTC would not approve the merger, and hence both sides mutually agreed to terminate the merger agreement. As Walgreens and Rite Aid are the second and third largest drugstore chains in the US, the FTC believed the merger could give rise to a duopoly and hurt competition.

Instead of merger, they entered into an agreement with Walgreens to sell 2,186 stores for $5.18 billion in cash.

Shares plunged more than 25% after the announcement.

Falling Estimates

Analysts have slashed their estimates for the company after weak results and merger termination. Zacks Consensus Estimates for the current and next fiscal year have fallen to negative $0.08 per share and negative $0.03 per share from negative $0.03 and $0.02 respectively, before the results.

The company has missed in two out of past four quarters and just met in one. The average negative quarterly surprise for the past four quarters is 20.83%.

Additional content:

Facebook MAUs Hit 2 Billion Facebook Inc. (NASDAQ: FB Free Report) just released its second quarter fiscal 2017 financial results, posting diluted earnings of $1.32 per share and revenues of $9.32 billion. Currently, FB is a #2 (Buy) on the Zacks Rank, and is up 0.16% to $165.79 per share in trading shortly after its earnings report was released.

Facebook:

Beat earnings estimates. The company posted diluted earnings of $1.32 per share, surpassing the Zacks Consensus Estimate of $1.13 per share and increasing 69% year-over-year. Net income was 3.89 billion for the quarter.

Beat revenue estimates. The company saw total revenue figures of $9.32 billion, topping our consensus estimate of $9.17 billion and growing 45% year-over-year. Revenues from advertising were $9.16 billion.

Mobile advertising revenue represented roughly 87% of advertising revenue in Q2, up from approximately 84% of advertising revenue in the second quarter of 2016.

Daily active users (DAUs) came in at 1.32 billion for June 2017, an increase of 17% year-over-year, while monthly active users (MAUs) were 2.01 billion as of June 30, 2017, reflecting an increase of 17% year-over-year.

"We had a good second quarter and first half of the year," said Mark Zuckerberg, Facebook founder and CEO. "Our community is now two billion people and we're focusing on bringing the world closer together."

Here’s a graph that looks at Facebook’s price, consensus, and EPS surprise.

Facebook, Inc. Price, Consensus and EPS Surprise | Facebook, Inc. Quote

Facebook Inc. operates a social networking website worldwide. The Company's products for users are free of charge and available on the Web, mobile Web, and mobile platforms, such as Android and iOS. Its website enables users to connect, share, discover, and communicate with each other. The Facebook Platform is a set of tools and application programming interfaces that developers can use to build social apps on Facebook or to integrate their Websites with Facebook. It offers products that enable advertisers and marketers to engage with its users. Facebook Inc. is headquartered in Menlo Park, California.

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 Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Rite Aid Corporation (RAD): Free Stock Analysis Report
 
Unilever PLC (UL): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
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