For Immediate Release
Chicago, IL - July 25, 2018 - Zacks Equity Research highlights Tilly's TLYS as the Bull of the Day, Skechers SKX as the Bear of the Day. In addition, Zacks Equity Research provides analysis on iRobot IRBT and Amazon AMZN .
Here is a synopsis of all four stocks:
Momentum stocks-be they trendy internet plays or red-hot small caps-sold off on Tuesday as investors were weary of pushing hot companies into new ranges. However, this does not necessarily change the fundamental picture right now, and one company that dipped-Tilly's is still worthy of our "Bull of the Day" honors.
Tilly's is a specialty retailer in the action sports industry selling clothing, shoes, and accessories. The retailer is popular among skateboarders and surfers, as well as trendy young fashion purveyors who love "streetwear" brands. Shopping at Tilly's would yield everything from legacy apparel makers like The North Face and Adidas to forward-thinking brands such as LRG and Primitive.
Tilly's has capitalized on the explosion of streetwear and action sports fashion trends and is now poised to see new growth opportunities. This, plus its solid valuation and recent earnings estimate and price performance momentum, make it a Zacks Rank #1 (Strong Buy) stock to watch right now.
Earnings and Outlook
Tilly's most recently reported earnings on May 30. For the period ending in April 2018, Tilly's saw earnings of four cents per share, beating the Zacks Consensus Estimate by three cents and improving from a loss of a penny in the year-ago period. Meanwhile, quarterly revenue of $124 million also topped estimates and moved about 2.5% higher year over year.
Investors loved this report, and the stock surged about 25% over the next few trading periods to test new 52-week highs. The stock currently sits right near those highs and could break higher with another solid report.
Earnings season can be a tricky time as investors look to digest a plethora of new financial data, and sometimes, reactions to report surprises-be they positive or negative-end up being overstated. However, when a company proves that its core business is struggling majorly, and if its stock has failed to recover from similar selloffs in the recent past, investors should avoid buying the dip.
One such company is Skechers , a designer of lifestyle and performance footwear for men, women and children. Skechers shoes are available through its own stores and e-commerce platforms, as well as third-party retail outlets around the world.
Last week, shares of Skechers dropped more than 25% after the company posted disappointing quarterly results. Earnings of 29 cents per share were well below both the Zacks Consensus Estimate of 40 cents and management's guidance of 38 to 43 cents, and revenue of $1.13 billion also missed expectations.
That revenue figure was actually up nearly 11% year over year, casting more of a cloud on the earnings result, which declined about 24% from the 38 cents reported in the year-ago period. Skechers faced profitability headwinds on account of higher operating expenses, unfavorably foreign exchange impacts, and a higher-than-expected effective tax rate.
This is should be the first red flag for investors. The company's quarterly earnings drastically missed management's own guidance range, mostly because management was wrong about how recent tax reform would affect the effective rate. Should we really trust this type of management with leading a rebound?
Making matters worse was Skechers' outlook for the remainder of the year. In the most recent quarter, the company saw sluggish performance in its domestic wholesale business, and although management remarked that this unit could see a revival in the second half of 2018, its actual guidance was not encouraging.
Skechers now projects earnings between 50 cents and 55 cents a share for the current quarter, which compares to the 59 cents delivered in the year-ago period. Investors should also note that the Zacks Consensus Estimate for earnings was pegged at 66 cents prior to this report.
This should be another red flag for investors, as it is likely that analysts are only just starting to revise their estimates downwards. In fact, we have seen three negative revisions for this period's earnings in the past week, and our consensus projection is already 12 cents lower.
iRobot (IRBT) Rallies on Big Earnings Beat, Revenues Up 24%
iRobot just released its latest quarterly results, posting earnings of 37 cents per share and revenues of $226.3 million.
Currently, IRBT is a #3 (Hold) on the Zacks Rank, but that could change based on today's results. Investors should note that our consensus estimate trend has not changed for the current fiscal year in the last 60 days.
Shares of the company have fallen 6.20% over the past month and were down 2.88% during regular trading hours today.
However, the stock is currently surging nearly 18% to $84.34 per share in after-hours trading shortly after its earnings report was released.
Beat earnings estimates. The company reported earnings of $0.37 per share, topping the Zacks Consensus Estimate of $0.17 per share.
Beat revenue estimates. The company saw revenue figures of $226.3 million, surpassing our consensus estimate of $221.22 million and growing 24% year-over-year.
Operating income in the second quarter of 2018 was $13.4 million, compared with $4.1 million in the second quarter of 2017.
On Amazon's Prime Day, the Roomba robots sold out, with twice its sales volume since the event started in 2015.
The company now anticipates full-year 2018 revenue of $1.06 to $1.08 billion, which is year-over-year growth of 20 - 22%, full-year 2018 operating income of $90 to $96 million, and full-year 2018 EPS of $2.30 to $2.50.
"We are continuing to execute against the strategy underlying our 2018 expectations and three-year financial targets which we believe is the most effective way to drive sustainable growth and shareholder value," said Colin Angle, the chairman and chief executive officer of iRobot.
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 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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://twitter.com/zacksresearch
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.
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com 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. www.zacks.com/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 https://www.zacks.com/performance 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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.