Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Ethan Allen Interiors, United Natural Foods, Facebook, Alphabet and Apple highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – April 28, 2016– Zacks Equity Research highlights Ethan Allen Interiors Inc. (ETH) as the Bull of the Day and United Natural Foods, Inc. (UNFI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook (FB), Alphabet (GOOGL) and Apple (AAPL).

Here is a synopsis of all five stocks:

Bull of the Day :

Ethan Allen Interiors Inc. (ETH) is bucking the trend that the consumer isn't buying. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth both this year and next.

Ethan Allen makes home furnishings and operates 300 Design Centers in the United States and overseas.

It owns 6 manufacturing plants in the United States, and one each in Mexico and Honduras. It also operates one sawmill in the United States. About 70% of its products are made in its North American plants.

The company also offers complimentary interior design services.

Two Beats in a Row

On Apr 25, Ethan Allen reported fiscal third quarter earnings and beat the Zacks Consensus by 2 cents. Earnings were $0.34 versus the Zacks Consensus of $0.32.

It was Ethan Allen's second consecutive earnings beat.

Who says the consumer is sitting on the sidelines?

Net sales rose 10% to $190.6 million year over year. Gross margin also improved, rising to 55.5% from 54.3%.

Comparable store net sales rose 18.6% while retail total written orders gained 4.3% and comparable written orders rose 5.5%. Its new products and marketing have gained traction.

Even wholesale net sales got into the game, rising 4.4% to $117.2 million.

"We are making very good progress with repositioning our product offerings, our interior design network, making technology enhancements and improvements in our manufacturing, sourcing and logistics," said CEO Farooq Kathwari.

Bear of the Day:

United Natural Foods, Inc. (UNFI) is facing competitive pressures in the natural food industry. This Zacks Rank #5 (Strong Sell) lowered its full year EPS and sales guidance in February.

United Natural Foods distributes 85,000 products to a variety of customers including supermarket chains, natural product stores and independent retail operators in the United States and Canada.

Disappointing Second Quarter

On Mar 7, United Natural Foods reported its second quarter results, after releasing preliminary numbers to the Street on Feb 29.

Net sales rose only 1.5% to $2.05 billion from $20.02 billion in the second quarter of the previous year.

Gross margins contracted year over year to 14.5% from 14.8%. The decrease was mainly due to competitive pricing pressures, moderated supplier promotional activity, a shift in the mix of sales towards lower margin sales channels, the unfavorable impact of foreign exchange in the Canadian business, and a reduction in fuel surcharges.

Nothing went right in the second quarter.

Full Year Guidance Cut

United Natural Foods announced a reorganization of its sales force, which will take time to implement. The company is in turnaround mode as it faces a lot of competitive pressures in the natural food industry.

It cut its outlook on revenue growth to a range of 1.5% to 3% from its prior range of 3% to 5%.

The earnings outlook was also reduced to a range of $2.34-$2.44 from $2.74-$2.89, a reduction of between 16%-18%.

It's not a surprise that the analysts also cut, with 9 estimates being cut over the last 60 days. Fiscal 2016's Zacks Consensus Estimate fell to $2.37 from $2.82.

Earnings are now expected to fall 16.7% for the year.

Additional content:

Facebook Clobbers Q1 Earnings, Offers C-Class Shares

Social media giant Facebook (FB) has reported Q1 earnings after the bell Wednesday, and results were a positive surprise of blowout proportions. The company posted earnings of 57 cents per share (accounting for stock-based compensation, etc.; the headline was 77 cents vs. 62 expected) on revenues of $5.4 billion in the quarter, far exceeding the 44 cents and $5.23 billion expected.

Advertising revenue rose 57 percent year over year to $5.2 billion in the quarter, and Mobile Ad Revenue now amounts to 82 percent of total ad revenue. User engagement also improved on the quarter — up 15 percent. Monthly Active Users reached 1.65 billion, of which 66 percent — 1.09 billion — are Daily Active Users. Both of these key metrics are better than expected.

Noteworthy in this quarter is Facebook’s proposal offering of C-class shares — non-voting entities granted to A-class FB holders at two per. This has been developed so that CEO Mark Zuckerberg, who has already stated he plans to give away 99 percent of his fortune to charity, can do so without affecting overall shareholder wealth. The proposal is expected to pass easily, as Zuckerberg holds the majority of A-class shares.

In all, it was an extraordinary quarter for the company, which continues to dominate ad revenue, especially on mobile devices, in an overall expanding social media industry. Companies that rival Facebook in terms of market cap and growth, like Alphabet (GOOGL) and Apple ( AAPL), are also burdened by huge expenses of developing businesses that Facebook is as yet unhindered by.

Even Zuckerberg’s move toward altruistic pursuits was handled smoothly and with seeming total ease. In short, a home run for Facebook in Q1 earnings for 2016. Finally one of the FANG stocks has proven to still have some tooth.

Want the latest recommendations from Zacks Investment Research? Today, you can download7 Best Stocks for the Next 30 Days. Click to get this free report >>

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.

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.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today. Find out What is happening in the stock market today on zacks.com.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ETHAN ALLEN INT (ETH): Free Stock Analysis Report
 
UTD NATURAL FDS (UNFI): Free Stock Analysis Report
 
FACEBOOK INC-A (FB): Free Stock Analysis Report
 
ALPHABET INC-A (GOOGL): Free Stock Analysis Report
 
APPLE INC (AAPL): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research