Dropbox, Goodyear Tire, Starbucks and Dunkin??? Donuts as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL - July 2, 2018 - Zacks Equity Research highlights DropboxDBX as the Bull of the Day and Goodyear TireGT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on StarbucksSBUX and Dunkin' DonutsDNKN .

Here is a synopsis of all four stocks:

Bull of the Day :

Dropbox is a more recent IPO but has a solid Zacks Rank #2 (Buy) which tells me the estimates are moving higher. We saw this stock spike not to long ago, so with the recent pull back, now is the perfect time to look at why this stock is a Zacks Rank #2 (Buy) and how it became the Bull Of The Day.


Dropbox, Inc. is a service company. It offers a platform which enables users to store and share files, photos, videos, songs and spreadsheets. Dropbox, Inc. is headquartered in San Francisco, California.

Recent IPO

DBX made is debut on the public markets on March 19 of this year. The deal was a hot one as the investment bankers moved the indicated range from $16-$18 to $18-$20 - a signal of strong institutional demand. The deal priced at $21 - above the upwardly revised indicated range and then opened for trading at $29.

What a ride that day way... but more recently there was an even bigger swing higher.

Recent Earnings

On May 10 the company reported its first quarter as a public entity and beat the estimate. The company had 8 cents per share in earnings when the consensus was calling for 5 cents. Revenues of $316M were ahead of the $309M estimate as well.

On the conference call, the company then guided higher for next quarter and the full year for revenues.

That made the first quarter a beat and raise. Just what you want to see out of the gate.


With the report and call in the rearview mirror, Canaccord Genuity raised their target to $36 for the stock and told clients to "buy aggressively" noting that they had "zero hesitation" to recommend the purchase of shares.


The Zacks Rank is based on the movement of earnings estimates. When analysts move estimates higher, the Rank moves up. If estimates are cut then the Rank moves lower.

Following the earnings release and the guide higher, estimates moved higher.

In fact, the estimate for the current quarter DOUBLED from $0.03 to $0.06.

We also saw the estimate the next quarter move from $0.05 to $0.07.

Importantly, the Zacks Rank puts more weight on the annual numbers as quarterly estimates tend to move around a lot more.

The 2018 Zacks Consensus Estimate moved from $0.19 to $0.28 - a huge move. What is more that idea carried forward to next year as well.

The 2019 Zacks Consensus Estimate moved from $0.30 to $0.40.

These big moves higher in earnings estimates are what drove the stock to surge up in recent weeks.

Bear of the Day :

Goodyear Tire ( GT ) has seen estimates fall of late and that pushed it down to a Zacks Rank #5 (Strong Sell). The estimates from a wide range of brokerages come in to Zacks and we feed them into an algo that shows which stocks have the best postiive estimate revisions and which ones have the worst revisions. Among those with the more negative revisions is GT and that is why it is the Bear of the Day.

Not all car companies are seeing slowing demand; Tesla has huge demand for its Model 3 car but that is another story.( and this piece come to mind: )

GT makes tires, and new car demand is falling. Analysts see that and have moved their earnings estimates lower.

Estimate Review

I see the Zacks Consensus Estimate has moved lower for the current quarter over the last 60 days. The number moved from $0.74 to $0.59. That same type of move is present in the next quarter as well.

The Zacks Rank focuses on the annual number a little more so let's look there.

I see a move from $3.65 to $3.46 over the last 60 days. The 2019 number has moved from $4.38 to $4.15 over that same time period.

So while estimates are moving lower, there is still earnings growth ahead for GT.

We get auto sales data later this week, that might be the data points we need to see if you believe that it is time to buy the dip. If sales disappoint, then GT is likely to continue to move lower.

With CFO Retiring, What's Next for Starbucks (SBUX)?

Starbucks announced on Thursday that CFO Scott Maw would retire, effective November 30 th of this year, and serve in a senior consultant role through March of 2019. Maw, who has been in the CFO role for the last four years, did not offer any explanation as to the timing of the announcement. Considering Maw's relatively young age and short tenure at the firm, analysts were caught off-guard by the news.

During Maw's first two years as CFO Starbucks performed very well, with its stock value seeing nearly 73% in growth compared to an industry average of 14.3%. But since then things have slowed down, with the stock seeing a 20.7% decrease in value in from February of 2016 to the present.

The news comes just weeks after Executive Chairman Howard Schultz, who oversaw the global expansion of the firm, said that he would step down from his position later this month.

The Facts

This slump is largely due to recent sluggishness in comparable store sales numbers. The firm's Americas segment (accounting for 70% of total revenues) posted 3% comps growth in fiscal 2017, representing a notable decrease from the 6% growth of the previous year. Another concern stems from the company's announcement earlier this month that it would close 150 poorly performing company-operated stores next year, about three more than its typical annual numbers.

In its Q2 FY18 earnings report, Starbucks reported in-line earnings and exceeded revenue estimates, posting $0.53 in earnings per share on $6.03 billion in revenues. These numbers represent 17.8% and 13.9% year-over-year growth, respectively.

Still, the company's 490 basis point decrease to 12.8% in GAAP operating margin is a source of concern, as this is not the first decrease in recent memory. However, according to the report, the decrease is part of the firm's larger "restructuring and impairment charges." The company is developing a product mix shift largely toward food as well as spending on efforts to streamline business operations.

Plenty of Reason for Optimism

While investor weariness is justified, there are still some shining points for Starbucks. Specifically, the firm is seeing large payoff on its investments in Asia. It continues to see benefits from its $1.4 billion purchase of East China JV at the end of last year. Starbucks initially operated in Eastern China, its most urban and populous region, through a 50-50 joint venture with local franchiser Uni-President group. By the deal's close, this brought its total number of stores in China to 3,100 (in late December).

As of FY17, the China-Asia-Pacific segment of SBUX's operations account for only 14% of its total revenues. In its earnings report, it also highlighted a 54% revenue increase in China to nearly $1.2 billion in revenue and the construction of 216 new stores. Being that China's middle class is set to double from 300 million to 600 million by 2030, there is a significant amount of earnings potential in the region. Starbucks currently operates nearly 3,300 stores in 141 cities in China (compared to over 13,000 in the US). The firm plans to build 600 net new stores per year over the next five years in the region.

Another significant initiative is its global coffee licensing deal with Nestle, under which it will receive $7.15 billion in return for giving it the exclusive rights to sell Starbucks packaged coffee and teas around the world. SBUX currently reaches consumers in about 28 countries, and through Nestle will reach consumers in nearly 190 nations.


Starbucks is one of the most recognized coffee brands in the world. For the 12 th consecutive year, it was named one of the world's most ethical companies by the Ethisphere Institute. The ability to get consumers to quickly recognize the brand has already proven quite useful as the firm continues to expand its reach globally. Furthermore, it is a brand that inspires loyalty. Last quarter, it announced an 11% year-over-year increase in membership of its loyalty program to 14.2 million active members in the US.

It will face numerous challenges moving forward, including the need to replace its CFO and competition from other large coffee brands such as Dunkin' Donuts. Yet, while it has recently fallen on hard times with sluggish growth in the US, Starbucks is positioning itself well to capture the trends of an ever-changing global consumer climate. Because of its resources and brand recognition, it is uniquely tooled to continue its rapid expansion abroad, which given recent trends, serves as a positive indicator.

Starbucks currently sits at a Zacks Rank #3 (Hold) and will be an interesting stock for investors to keep an eye on moving forward.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Follow us on Twitter:

Join us on Facebook:

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339 provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. .

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

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

Starbucks Corporation (SBUX): Free Stock Analysis Report

Dunkin' Brands Group, Inc. (DNKN): Free Stock Analysis Report

The Goodyear Tire & Rubber Company (GT): Free Stock Analysis Report

Dropbox, Inc. (DBX): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

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.

In This Story


Other Topics


Latest Markets Videos