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Delphi, Deutsche Bank, Walmart and Amazon as Zacks Bull and Bear of the Day


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For Immediate Release         

Chicago, IL - July 5, 2018 - Zacks Equity Research highlights Delphi Technologies PLC DLPH as the Bull of the Day and Deutsche Bank DB as the Bear of the Day. In addition, Zacks Equity Research provides analysis on  Walmart WMT and  Amazon AMZN .

Here is a synopsis of all four stocks:

Bull of the Day :                                              

Headquartered in London, U.K., Delphi Technologies PLC is a technology company specializing in the manufacturing, development and design of integrated powertrain technologies to increase vehicle efficiency, reduce emissions, improve driving and engine performance, and support increasing electrification of vehicles.

On Dec 4, 2017, Delphi Technologies became an independent, publicly-traded company. Prior to this, it operated as the Powertrain Systems segment of Delphi Automotive PLC. The company manages technical centers, manufacturing sites and customer support services in 24 countries.

Strong Results

The company reported strong Q1 results, beating on both the top and bottom lines. Adjusted earnings of $1.30 per share were ahead of the consensus by 14 cents.

Revenues of $1.30 billion also surpassed the Zacks Consensus Estimate of $1.26 billion and were up 10.9% year over year.

The management also raised its outlook for full year 2018. It now expects adjusted earnings to be in the range of $4.65-$4.95 per share, compared with $4.50-$4.80 expected earlier.

The company continues to see strong demand for more fuel-efficient propulsion systems and acceleration in activity around electrification.

Rising Estimates

After a strong quarterly report, analysts have significantly raised their estimates for the company.

Zacks Consensus Estimates for the current and the next fiscal year have increased to $4.94 per share and $5.44 per share respectively, from $4.80 per share and $5.12 per share, before the results. 

Bottom Line

The company works with world's leading passenger car and truck manufacturers to help them deliver cleaner and more efficient internal combustion solutions.

As vehicle manufacturers are looking at technologies and varying levels of electrification to get cleaner and more fuel-efficient cars and trucks on the road, Delphi Technologies is poised to benefit from these trends.

The stock currently has a Zacks Rank #1 (Strong Buy). It is currently trading at 8.98 times forward earnings, which makes it looks pretty attractive in terms in valuation considering its growth potential.  The stock has Zacks Style Score of "A" for Value as well as Growth, resulting in a VGM Score of "A."

Bear of the Day :

Headquartered in Frankfurt, Deutsche Bank is the largest bank in Germany and one of the largest financial institutions in Europe, with assets totaling €1.48 trillion as of Mar 31, 2018.

It offers a wide variety of investment, financial and related products and services to private individuals, corporate entities and institutional clients around the world. 

Fails U.S. Stress Tests

Deutsche Bank's U.S. operations failed the Fed's stress tests, the results of which were released last week. The regulator cited "material weaknesses in capital planning" at the German bank.

The Fed was concerned about the ability of the bank to "effectively determine its capital needs on a forward-looking basis."

Disappointing Results

The bank reported net income of €120 million ($147.5 million) for Q1 2018, down 79% year-over-year.

Revenues of €7 billion ($8.6 billion) were down 5% year over year. Expenses surged in the reported quarter.

Falling Estimates

Germany's flagship bank has seen a sharp plunge in earnings estimates as a result of weak performance and continued woes.

Zacks Consensus Estimates for the current and next year EPS are now $0.94 per share and $1.32 per share respectively, down from $1.13 and $1.43, before the results.

How Important Is India to Walmart's Future?

Quartz India reported on Monday about protests taking place across India in response to Walmart's $16 billion takeover of e-commerce giant Flipkart. Up to a million shopkeepers were expected to protest the takeover over concerns that the buyout will create a monopoly in the retail market and drive small mom-and-pop stores out of business. However, in an update on Tuesday, reports stated that fewer than 100 people would go on to show up to a protest in New Delhi, India's capital city.

As it stands, up to 90% of the nation's $670 billion market transactions take place through small businesses, and protestors do not want that to change. Flipkart, which holds a third of the e-commerce market share in India, has been in direct competition with Amazon India, which is right behind it, with about 30% of the market share. Walmart, which has not been able to grab a significant foothold in region, is instead leveraging Flipkart to build its presence.

Walmart is recognized as one of the giants in American retail, but how important could India be to the firm's operations in the future? Let's take a look.

By the Numbers

Walmart had a solid Q1 FY19 earnings report in mid-May, posting earnings of $1.14 per share on revenues of $122.7 billion, representing 14% and 4.4% respective year-over-year growth. US net sales rose 3.1% to $77.7 billion while international sales went up by 11.7% to $30.3 billion. Specifically, eight out of its overall eleven markets delivered favorable comps, four of which are in its largest markets.

One of the big highlights however was Walmart's e-commerce growth over the quarter. Sales jumped 33% compared to a 23% boost from the previous quarter. This improvement was mainly guided by strength in Walmart.com and online grocery. Forward looking management remains optimistic about achieving 40% growth in FY2019.

As part of the deal, both Walmart and Flipkart will continue to operate as distinct brands. However, Flipkart's financials will become part of Walmart's international segment following the conclusion of the transaction. It is also worth noting that Walmart's purchase includes a $2 billion investment into the firm, which is expected to help propel growth.

According to a report by the Economic Times , Flipkart posted revenues of $3.09 billion in FY 2017, representing a 29% year-over-year increase.         At the same time, it posted an overall loss of $1.3 billion, representing a 68% increase from FY16. This was however mainly guided by a five-fold increase in finance costs due to the company's degraded valuation of $11.6 billion in April 2017 compared to $15.2 billion in 2015.

Flipkart is not the only firm feeling the pain, as Amazon also saw a loss of $2.1 billion in its international segments in FY17. Part of the reason why these big firms are not yet turning a profit in India is because the online retail market in the region is not yet mature. Furthermore, FDI policies make it so that firms must bring more sellers on board and reduce the share of revenue made by in-house vendors.

Outlook

All things considered, Walmart's investment in Flipkart is based on the enormous amount of promise that the region shows. According to a report by the India Brand Equity Foundation, a trust established by its Department of Commerce, the nation's e-commerce industry is expected to surpass the US to become the second largest e-commerce market in the world by 2034. The market is projected to approach $64 billion in value by 2020 and $200 billion by 2026 compared to $38.5 billion in 2017.

Estimates are guided by projections on the number of internet users in India growing from 429.2 million people as of September 2017 to 829 million by 2021. Digital literacy in the region is growing, and the nation's population is quite young overall. The expectation is that as the rate of smartphone adoption increases, e-commerce will continue to surge.

These numbers are promising for Walmart, which is up 12.4% over the last 12 months compared to a 25.3% industry average. With as large as it has become in the US, new revenue streams will characterize its growth in the future. India is both a young and large market that could potentially become the next big catalyst for the firm.

Walmart currently sits at a Zacks Rank #3 (Hold).

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Delphi Technologies PLC (DLPH): Free Stock Analysis Report

Deutsche Bank Aktiengesellschaft (DB): Free Stock Analysis Report

Walmart Inc. (WMT): Free Stock Analysis Report

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This article appears in: Investing , Stocks
Referenced Symbols: AMZN , DLPH , DB , WMT



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