Chicago, IL - October 14, 2015- Zacks Equity Research highlights Providence Service Corp ( PRSC ) as the Bull of the Day and Barracuda Networks ( CUDA ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Intel ( INTC ), JPMorgan Chase ( JPM ) and Wells Fargo ( WFC ).
Here is a synopsis of all five stocks:
There are many publically traded companies that often get overlooked because they are not flashy, or well known, but that does not mean that they do not post big profits. One of those overlooked areas is in a sizable sector, but rarely gets any attention: Specialized Health Services. The leader in this sub segment is Providence Service Corp ( PRSC ).
This company's non-emergency transportation segment has produced a 15% CAGR (compound annual growth rate) over the past six years. Further, with the recent acquisitions of Ingeus, and Matrix Medical Networks, management has been able to seamlessly integrate them into their business model which produced revenues of $140.7 million in the second quarter 2015. Therefore, Providence Service is the Zacks Bull of the Day.
This Zacks Ranked #1 (Strong Buy) company provides human services and non-emergency transportation (NET) management services to children, adolescents, young adults, and families. The Company focuses on providing its social services in the client's home or in community-based settings. It provides its NET management services through local transportation providers. The company also provides human services, workforce development services (WD Services), and health assessment services (HA Services) in the United States and Canada. The company's services are reimbursed by government programs such as welfare, juvenile justice, Medicaid or corrections.
In their most recent quarter, Providence Services reported consolidated revenues of $508.3 million, up 47.8% y/y, gross margins of 11.5%, and has cash and cash equivalents of $145.2 million. Also, this was the fifth consecutive quarter where Providence Services met or beat both the Zacks Consensus Earnings and Revenue estimates. In fact, this company has an average positive earnings surprise of +74.4% over the past four quarters. According to James Lindstrom, CEO, "Our financial results in the second quarter benefited from strong volumes in HA Services, execution on operational improvement and organic growth initiatives in Human Services, and increased membership and new contracts in NET Services. In our WD Services segment, management remained focused on launching large, recently won contracts. Partially due to delayed start-up expenses and additional complementary revenue sources associated with these new contracts, the financial performance of WD Services exceeded our internal expectations for the second quarter."
The IT services sector has seen big growth over the past few years with the cloud and new computing software driving the surge in billings. But when a company begins to miss their expected growth levels, and are compelled to revise guidance downwards, the stock price begins to drop. This is what happed to Barracuda Networks ( CUDA ), our Zacks Bear of the Day.
This Zacks Ranked #5 (Strong Sell) is engaged in designing and delivering security and storage solutions. Its products span three distinct markets, including: 1) content security, 2) networking and application delivery and 3) data storage, protection and disaster recovery. It offers cloud-connected solutions that help its customers address security threats, enhance network performance, and protect and store their data.
In their most recent quarter, management missed both the Zacks Consensus Earnings and Revenue estimates (fourth consecutive time they have missed the Zacks Consensus Earnings numbers), and lowered FY 16 guidance across the board. The main reason for these declines was total billings, which came in below the expected $102.5 million at $98.4 million for the quarter, and has declined from previous quarters; now expected to be around 10-13% from 16-18% growth levels for the second half of 2015.
Management said the cause of the sluggish billing was due to weak sales in EMEA (Europe, Middle East, and Africa), and longer sales cycles. Due to the declining total billings, management lowered Q3 revenue guidance from between $79-$81 million below the Zacks Revenue Consensus of $82 million. Unfortunately, management didn't stop at just Q3, they revised downward both Earnings and Revenues for FY 16 as well. Now management expects non-GAAP EPS from $0.36-$0.41 to $0.34-$0.36, and revenues from $325-$330 million to $320-$323 million for FY 2016.
Intel Beats, JPMorgan Misses Q3 Earnings
Two Dow components from the extremely important technology and finance industries -- Intel ( INTC ) and JPMorgan Chase ( JPM ) -- reported Q3 earnings after the closing bell Tuesday. Intel beat expectations on both top and bottom lines, while JPMorgan missed estimates on both quarterly sales and earnings.
Intel posted earnings of 64 cents on revenues of $14.47 billion i the quarter, easily surpassing Zacks consensus estimates of 59 cents and $14.23 billion, respectively. The chip giant has spent much of the past several quarters claiming space in the cloud-based solutions industry, where the company now conducts 90 percent of its business. PC shipments were down 11 percent, unsurprisingly, and data center revenues of $4.1 billion were a tad short of expectations, but overall this was a sound beat for Intel.
Q3 2015 is also the 5th straight quarter posting a positive earnings surprise, as Intel continues its dominance in the cloud space among top-tier tech firms. That said, it's been a difficult year in the market for INTC, with its stock plummeting in the broad sell-off in August, only to rebound more than 20 percent since. Following the Q3 earnings report, INTC shares were barely up upon the announcement, and have since slipped into negative territory.
On the conference call at the top of the hour, we look for Intel to proclaim that its roughest times are now behind it. With guidance in-line with expectations for Q4 and a solid earnings improvement quarter over quarter (64 cents compared to 55 cents in Q2), Intel should be able to at least carry forward its current Zacks Rank #3 (Hold).
JPMorgan, reporting after the closing bell for the first time in recent memory, posted $1.32 in earnings per share on $23.54 billion in revenues for its Q3. These numbers missed the Zacks consensus estimates of $1.38 and $23.8 billion, respectively, and the revenue estimate already demonstrated a big drop in year-over-year sales.
No doubt falling commodity prices and weaker Chinese economic growth put a dent into results of one of the biggest of the "too big to fail" financial firms on Wall Street. Looking forward to the conference call coming up, it will be interesting to see if the misses came from lower principal trading and fixed income trading levels -- JPMorgan's two biggest aspects of its overall business -- or if there is something else in play.
Analysts had been hacking away at EPS estimates, pushing downward estimate revisions for this quarter, next quarter, fiscal 2015 and fiscal 2016. JPMorgan retains a Zacks Rank #3 at this moment, mostly because of a couple upgrades for 2016 projections. Listeners to the call will be waiting to hear what the loan growth numbers for Q3 were, and until the Fed raises interest rates and the global economy picks up, we can probably expect similar Q3 performance out of upcoming earnings reports from other big banks like Wells Fargo ( WFC ).
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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Latest Markets Videos
- Stimulus Update: MIllions Will Get a Stimulus Check in June. Are You One of Them?
- Social Security Checks Could Soar in 2023: Here's How Much Extra Seniors Might Receive
- Better Buy: Dogecoin vs. Terra Classic vs. Terra (LUNA)?
- Bitcoin Uses 50 Times Less Energy Than Traditional Banking, New Study Shows