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Celanese, Mead Johnson, Facebook, FireEye and Microchip Technology highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL - November 05, 2015 - Zacks Equity Research highlights Celanese ( CE ) as the Bull of the Day and Mead Johnson ( MJN ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook ( FB ), FireEye ( FEYE ) and Microchip Technology ( MCHP ).

Here is a synopsis of all five stocks:

Bull of the Day :

Celanese ( CE ) recently delivered a solid "beat and raise", driven by expanding profit margins. This prompted analysts to revise their earnings estimates significantly higher for both 2015 and 2016, sending the stock to a Zacks Rank #1 (Strong Buy).

The valuation picture looks attractive too with shares trading at just 11x forward earnings.

Celanese Corporation produces specialty materials and chemical products which are used in most major industries and consumer applications. It is one of the world's largest producers of acetyl products, which are intermediate chemicals for nearly all major industries. Celanese is also a leading producer of high performance engineered polymers, which are used in various high-value applications.

The company has a large and diverse customer base, with sales approximately equally divided between North America, Europe and Asia.

Third Quarter Results

Celanese reported solid third quarter results on October 19. Adjusted earnings per share came in at $1.50, beating the Zacks Consensus Estimate of $1.38.

Net sales actually fell 20% to $1.413 billion, missing the consensus. However, approximately six percentage points (p.p.) of this decline was due to foreign currency headwinds from the strong dollar. Lower prices contributed 10 p.p. while volume contributed 5 p.p.

Nonetheless, profit margins improved as the segment income margin expanded 150 basis points to Q3 record of 21.6%. This was driven in large part by record margin in the 'Materials Solutions' segment, along with productivity improvements across the company. This more than offset lower profits in the 'Acetyl Chain' segment due to higher methanol costs. It's worth noting, too, that Celanese completed construction and began methanol production at a joint venture in Clear Lake, Texas in October.

Bear of the Day :

Mead Johnson ( MJN ) recently reported disappointing third quarter results as both sales and earnings fell short of consensus. Weakness in the emerging markets more than offset growth in North America and Europe in Q3.

Management also lowered its full year sales and EPS guidance, prompting analysts to revise their estimates lower too. In fact, the drop in consensus estimates has been significant enough to send the stock to a Zacks Rank #5 (Strong Sell), placing it in the bottom 5% of all stocks that Zacks ranks based on earnings momentum.

The valuation picture doesn't look very compelling either with shares trading at more than 23x forward earnings. It sports a Zacks Value Style Score of 'F'.

Mead Johnson Nutrition Company is a pediatric nutrition that makes more than 70 products. Its "Enfa" family of brands, includes Enfamil infant formula.

Third Quarter Results

Mead Johnson reported its third quarter results on October 22. Adjusted earnings per share came in at $0.80, missing the Zacks Consensus Estimate by 5 cents. It was a 14% decline over the same quarter last year.

Net sales fell 10% to $977.5 million, missing the Zacks Consensus Estimate of $1.041 billion. A decline in volume contributed 4 percentage points (p.p.) while foreign currency accounted for the other 6 p.p.

Strength in North America and Europe was more than offset by weak performance in emerging markets, including China.

The adjusted gross profit margin actually expanded from 60.1% to 64.9%. But this was more than offset by a higher tax rate, as the effective tax rate jumped from 17.2% to 28.1%.

Additional content:

Facebook Posts Q3 Beats Across the Board

Following a string of so-so to disappointing quarters through most of 2015, social media giant Facebook ( FB ) posted very impressive Q3 earnings after the bell Wednesday. Earnings per share of 36 cents in the quarter (accounting for stock-based compensation and other non-recurring items [BNRI]) beat the Zacks consensus estimate of 35 cents, and revenues reached $4.50 billion, easily topping the $4.39 billion we had expected.

Of course, the real story of Facebook is in its user growth and increased ad revenues, not the bottom line (this is what has accounted for 38 percent growth in Facebook shares year over year despite missing EPS numbers in the previous 3 quarters). And on this score, Facebook has done extremely well: Daily Active Users (DAU) topped 1 billion, mobile DAU gained 27 percent year over year to 894 million and mobile Monthly Active Users (MMAU) increased 23 percent to 1.39 billion users.

Importantly, 78 percent of Facebook's advertising revenues in Q315 came from mobile, way up from 66 percent in Q314. Average revenue per user is now closing in on $3 at $2.97. Facebook's Instagram business performed particularly well in the quarter; you may recall Facebook paid $1 billion to acquire the social media competitor early in Facebook's public existence, and this looks to have already paid off quite nicely.

CEO Mark Zuckerberg commented on the earnings press release: "We had a good quarter and got a lot done... We're focused on innovating and investing for the long term to serve our community and connect the entire world." Not too shabby. After-market trading is sending Facebook shares up another 2.75 percent after an initial pop of around 5 percent. It would appear its economies of scale have yet to catch up to Facebook's impressive growth.

Within the Internet-based family of companies reporting after the bell, cyber-security firm FireEye ( FEYE ) also reported Q3 results, but the stock is selling off more than 14 percent in late trading. Although FireEye posted an improved loss of 75 cents per share from the Zacks consensus of -88 cents per share (again, including stock-based compensation and other BNRI) on sales of $166 million in the quarter (just a smidge light of the $167 million we'd expected), but Q4 guidance was disappointing. While the Zacks consensus had been expecting $202 million for the final 3 quarters of the year, FireEye now expects between $182-190 million.

Finally, Microchip Technology ( MCHP ) announced earnings of 59 cents per share (ex-BNRI, etc.) on sales of $559.4 million in its fiscal Q2 of 2016. This beats the Zacks estimates of 57 cents per share and $552 million, respectively. However, while the company did point out it has now posted profits in 100 straight quarters, CEO Steve Sanghi also remarked, ""We believe that industry conditions continue to be very weak."

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CELANESE CP-A (CE): Free Stock Analysis Report

MEAD JOHNSON NU (MJN): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

FIREEYE INC (FEYE): Free Stock Analysis Report

MICROCHIP TECH (MCHP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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