For Immediate Release
Chicago, IL - June 02, 2016 - Zacks Equity Research highlights Rose Rock Midstream ( RRMS ) as the Bull of the Day and On Deck Capital ( ONDK ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on SoftBank Group ( SFTBY ) and Alibaba ( BABA ).
Here is a synopsis of all four stocks:
The massive decline in oil prices forced many companies to become more efficient, and cost conscious in order to stay afloat. These cost cutting measures included decreased capital expenditures and improving efficiency. Now, as oil prices have begun to stabilize just below the $50 level, companies that were successful in reigning in costs are starting to see benefits from the cost cutting measures and improved oil prices simultaneously come together. This is why Rose Rock Midstream ( RRMS ) is the Zacks Bull of the Day.
This Zacks Ranked #1 (Strong Buy) company owns, operates, develops and acquires a diversified portfolio of midstream energy assets. The Company is engaged in the business of crude oil gathering, transportation, storage and marketing in Colorado, Kansas, Montana, North Dakota, Oklahoma and Texas. Rose Rock Midstream, L.P. is based in Tulsa, Oklahoma.
In their most recent earnings report, the company saw year over year gains in adjusted gross margin +17.1%, net income +81.5%, and adjusted EBITDA +16%. Management also produced a distributable cash flow of $35.3 million in the first quarter 2016. This caused management to raise their quarterly cash distribution by +4% to $0.66 per unit.
According to Carlin Conner, CEO, "Rose Rock's first quarter results were right in line with expectations and highlight the benefits of our fee-based business model and our continued focus on efficient execution. We've maintained our solid financial performance and continue to execute in a cost effective manner, positioning Rose Rock to successfully navigate these challenging market conditions."
In certain circumstances a company will endure some short term growing pains in-order to achieve their long term goals. This is the case with our Bear of the Day, On Deck Capital ( ONDK ). Management has decided to sell fewer loans in-order to enhance their long-term financial goals. Therefore, in the near-term the company will see lower profits in anticipation of big gains in 2017.
This Zacks Rank #5 (Strong Sell) is an on-line platform that uses a big data, analytic model to source, underwrite, and fund loans to small businesses. The Company offers online tools and resources including data aggregation and electronic payment technology, and to evaluate the health of small businesses. It's small business loans include dental loans, restaurant loans, medical financing, restaurant financing, fast small business loans, fast small business financing, online small business loans, online applications for small business loans, small business loans online, retail capital, fast small business financing, short-term business loans, business equipment financing, small business equipment financing and merchant cash advance.
In their most recent earnings report missed both the Zacks Consensus Earnings and Revenue estimates by a sizable margin. The company posted adjusted EBITDA of -$7.3 million, down from -$1.8 million in the year ago quarter. Further, the company saw an adjusted Net Loss of -$8.8 million compared to a loss of -$3.3 million in the year ago quarter. Finally, GAAP net loss to shareholders was -$12.6 million compared to a loss of -$5.3 million in the year ago quarter.
According to Noah Breslow, CEO, "Our hybrid funding model is designed to adapt to changing capital markets conditions and is a point of competitive differentiation. In the first quarter, we utilized this flexibility and decided to sell fewer loans through OnDeck Marketplace. This decision optimized for long-term financial performance but, over the short-term, will lead to lower Gross revenue, higher provision expense, and lower Adjusted EBITDA than we previously planned. We will see greater financial benefits from our decision beginning in 2017."
Alibaba (BABA) a Strong Sell Right Now: Here's Why
Today, SoftBank Group ( SFTBY ) announced plans to sell $7.9 billion worth of Alibaba ( BABA ) shares. The company is doing this in order to cut down its debt. Currently, SoftBank owns about 33% of Alibaba shares. After selling the stock, SoftBank will retain about a 28% ownership stake in the Chinese e-commerce giant. SoftBank hasn't announced if it is bearish on BABA shares over the short term, but maybe it should be.
Alibaba stock has recently been downgraded to a Zacks Rank #5 (Strong Sell). Analysts have been revising their earnings expectations lower over the last month. These revisions are being driven by the poor earnings results from Alibaba's quarterly earnings which were released on the 5 th of May. Although the company beat sales estimates, EPS fell well below expectations. BABA posted quarterly EPS of $0.20, missing our consensus estimate of $0.38 by 47%. Alibaba shares have dropped by over 4% since SoftBank announced its plans to sell BA BA stock .
Over the last month, 5 analysts have revised their earnings expectations for this quarter. Four of those analysts revised their EPS expectations downwards. As a result, our quarterly EPS consensus has moved lower, going from $0.45 to $0.39.
Over the last 60 days, 10 analysts have revised their fiscal year earnings expectations downwards for Alibaba. In this same time frame, no analysts have revised their estimates higher. As a result of the downward pressure from analysts, our EPS consensus for the current fiscal year has dropped significantly, going from $2.43 to $2.11.
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.
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