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Jack in the Box, Alcoa, eBay, Google and Apple highlighted as Zacks Bull and Bear of the Day - Press Releases

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For Immediate Release

Chicago, IL - July 20, 2015- Zacks Equity Research highlights Jack in the Box Inc. ( JACK ) as the Bull of the Day and Alcoa Inc. ( AA ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on eBay Inc. ( EBAY ), Google ( GOOGL ) and Apple ( AAPL ).

Here is a synopsis of all five stocks:

Bull of the Day :

Thanks to improving wages and savings from low gas prices, consumers are spending more on eating out and as a result restaurant industry stocks have been quite hot lately.

Based in San Diego, CA, Jack in the Box Inc. ( JACK ) operates and franchises Jack in the Box restaurants, one of the nation's largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam, and Qdoba Mexican Grill, a fast-casual dining chain, with more than 600 restaurants in 47 states, the District of Columbia and Canada.

With constant menu innovation to cater to the changing tastes of its clients and savvy marketing, the restaurant chain has been able to drive additional transactions.

The chain reported its second quarter results on May 13. Operating earnings of $0.69 per share beat the Zacks Consensus Estimate of $0.66 per share and were higher than the year-ago quarter earnings of $0.51 per share. The gain was mostly due to improved revenues and better margins.

Total revenue for the quarter increased 5.1% year over year to $358.1 million, ahead of the Zacks Consensus Estimate of $355 million. Sales grew in all major markets and were strong across all dayparts. Comparable store sales (comps) at Jack in the Box increased 8.9% and 8.3% at Qdoba's restaurant. Consolidated restaurant operating margin increased by 210 basis points to 20.6% of total sales.

For FY 2015, the company expects operating earnings per share (excluding restructuring charges and gains or losses from refranchising) to be in range of $2.90 to $3.00 compared with $2.45 per share in 2014.

Bear of the Day :

Falling aluminum prices and weak global economic trends have created a very challenging for the metals giant Alcoa, even though the company continues to invest in higher growth areas and reduce its reliance on commodity business.

PA-based Alcoa Inc. ( AA ) has an industry leading position in aluminum productions. They focus on production and management of primary aluminum, fabricated aluminum, and alumina as well as mining of bauxite and refining of alumina.

The company has four worldwide reportable segments: Alumina, Primary Metals, Global Rolled Products, and Engineered Products and Solutions. They have operations in 30 countries and 59,000 employees worldwide.

Alcoa missed the Zacks Consensus Estimate of $0.23 per share for Q2, with earnings (excluding one-time special items) at $250 million or $0.19 per share. Earnings were hurt by lower selling prices for aluminum, which more than offset benefits from volume increases and productivity gains.

However, revenues beat expectations on the back of stronger results from the company's aerospace and automotive divisions. Revenues rose 1% to $5,897 million in the second quarter from $5,836 million in the year-ago quarter. The increase was mainly due to organic growth, backed by strong aerospace, automotive and alumina businesses.

Prices for the aluminum remain under pressure due to supply surplus, primarily from China. During the conference call, the management talked about rising Chinese export of fake semis disguised as semi-finished products. These products compete directly against the Western primary, even though the export of primary metal from China remains at a low level.

Aluminum prices are down about 10% since the beginning of the year. China is the buyer of about half of the world's supply of aluminum and financial woes in the country could keep the metal price under pressure in the coming months. During the conference call, Alcoa raised its forecast for the global aluminum surplus, with supply expected to exceed demand by 760,000 tons this year.

Additional content:

eBay Shares in Focus Ahead of PayPal Split

Shares of eBay Inc. ( EBAY ) rose 3.4% in the last trading session to $65.59, after the company reported better-than-expected earnings of 63 cents for the second quarter of fiscal 2015, beating the Zacks Consensus Estimate.

Revenues jumped 7% from the year-earlier quarter to $4.38 billion. Sales were driven by higher demand in the PayPal business, while the Marketplace business fell 3%, hurt by a strong dollar.

The results showed that PayPal continued to enjoy higher rates of growth and stabilization in the marketplace business.

However, the earnings report came on the eve of its split from the PayPal payments unit; making this the last quarter in which eBay and PayPal reported as a unified entity.

The Spinoff

The separation will be completed today. Both companies will become independent and start trading publicly. PayPal will begin trading on Jul 20 on the Nasdaq stock exchange under the stock symbol PYPL. eBay's ticker will remain unchanged.

eBay stockholders on record as of Jul 8 will receive one PayPal common stock against each eBay share. The distribution of PayPal stock will take place today. Goldman, Sachs & Co. and Allen & Company LLC are serving as financial advisors and Wachtell, Lipton, Rosen and Katz is serving as official counsel for the separation and distribution.

What Happens After the Separation?

Following the separation, one company will focus on online commerce and the other on digital payments. This is an opportunity for both companies to increase focus on core capabilities and operate with greater flexibility for success in their respective markets.

eBay aims at reinvigorating its Marketplace business. It intends to focus on growing its 25 million sellers and 157 million active buyers, mainly small- and medium-size merchants, which constitute about 70% of the global retail market.

PayPal on the other hand will focus on positioning itself as a "full-service" payments associate for consumers and merchants, managing mobile transactions, credit purchases and customer loyalty rewards programs. PayPal is already gearing up to sustain itself in the fast growing digital payments market. It recently acquired Xoom Corporation, a service for international money transfers, which will enable PayPal to sell international transfers to its U.S. customer base of nearly 68 million, by cross-selling Xoom's services. It will also accelerate expansion of PayPal services into the overseas money transfers market.

However, eBay and PayPal will continue operating under a five-year contract to assure a dependable source of revenues for the latter after separation. However, both the companies will be free to partner with new retailers and other financial firms.

Last Word

PayPal has been the fastest growing division for eBay for quite some time now and has been surpassing eBay's marketplace revenue (as displayed in the recent results also).

Though the Marketplace division has also been growing, the pace of growth has been slower, due to sluggish sales and user growth after a data violation last year, which compelled customers to change passwords. Google's ( GOOGL ) change in its search engine also reduced eBay's traffic.

Though things might look very rosy for PayPal, it is important to remember that the online payments business is moving rapidly to the mobile devices platform, where PayPal does not have a dominant presence. Management painted an optimistic picture on the call and both VenMo and the PayPal brand could help it some. But it will face stiff competition from mobile wallets like Apple ( AAPL ) and Android Pay and online payment service from Alibaba and other retailers.

On the other hand, eBay's business has been bolstered by PayPal's strong growth. So without PayPal, eBay's growth rate is likely to come down. However, the company will no longer be required to invest in Paypal's growth, which could mean it will generate higher profits and cash.

eBay currently has a Zacks Rank #2 (Buy).

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JACK IN THE BOX (JACK): Free Stock Analysis Report

ALCOA INC (AA): Free Stock Analysis Report

EBAY INC (EBAY): Free Stock Analysis Report

GOOGLE INC-CL A (GOOGL): Free Stock Analysis Report

APPLE INC (AAPL): 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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