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U.S. Steel, Flagstar Bancorp, Facebook, Twitter and Alibaba Group highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL - February 21, 2017 - Zacks Equity Research highlights U.S. Steel (NYSE: X - Free Report ) as the Bull of the Day Flagstar Bancorp (NYSE: FBC - Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Facebook (NASDAQ: FB - Free Report ), Twitter (NYSE: TWTR - Free Report ) and Alibaba Group (NYSE: BABA - Free Report ).

Here is a synopsis of all three stocks:

Bull of the Day :

It is hard to deny the impact that Trump has had on the sentiment for the steel industry. General industrial and factory production numbers have been good, while outlook readings have been fantastic lately. It also doesn't hurt that the economy is heating up either.

However, it is really a longer-term story at play here, as the industry has been on fire for over a year. In fact, in the past twelve months, the VanEck Vectors Steel ETF has added more than 130%, easily crushing broad benchmarks in the process.

A great stock example of this trend is definitely U.S. Steel (NYSE: X - Free Report ) though. The company not only looks to benefit from the current administration's focus on domestic producers but it has been on a longer-term run thanks to an improving economy and better fundamentals.

U.S. Steel has actually crushed its steel brethren in the past year too, as the company has gained an outrageous 385% in the past twelve months. But even with this incredible move, there is actually plenty of room for U.S. steel to come back from a longer term perspective, and especially if we look to recent earnings estimate revisions for the company as well.

Recent Earnings

In its most recent earnings report, U.S. Steel thoroughly demolished earnings estimates. The company reported EPS of 27 cents per share, compared to estimates of one cent per share. But the earnings outlook is really what is incredible about U.S. Steel, as the company is expected to post earnings growth of over 260% this year.

And even more impressive is the company's path in terms of earnings estimates in the last few months. We haven't seen any cuts to the current year or next year outlook, while estimates have absolutely surged.

In fact, sixty days ago, the consensus estimate for X was just 84 cents a share and now it is $2.61/share. This represents a 210% increase in the consensus expectation in just two months, a truly astounding feat. It is thanks to figures like these that U.S. Steel has earned itself a Zacks Rank #1 (Strong Buy) and why there is probably enough momentum to carry this company to fresh heights in the months ahead too.

Bear of the Day :

The finance industry has been soaring in the past few months as rates look likely to rise in the near term. And with recent Fed members suggesting there could be three-or more-hikes this year, the profits could really roll in for the finance sector in 2017.

No wonder the sector has the pole position in the Zacks Sector Rank, and why it has stayed in a lofty position for much of the start of this new year.

You'd think that with this kind of environment, pretty much any bank stock would be a great investment. However, that isn't the case, as several actually have 'strong sell' ranks and should probably be avoided by investors at this time. One such example is Flagstar Bancorp (NYSE: FBC - Free Report ) which not only has a Zacks Rank #5 (Strong Sell) but a fundamental score of 'F' as well.

Why FBC Has Such a Poor Rank

Though Flagstar has soared in recent weeks, the company actually just missed earnings estimates, its first such miss in quite some time. FBC missed estimates by close to 11% and revenues were lackluster as well.

Shares have surged in recent weeks, but analysts are still skeptical on the company's potential, at least if we look to how recent estimates have trended. In fact, the company is now projected to post an earnings decline of roughly 32% for the current quarter (year-over-year), and a roughly 6.6% decline for full year when compared to the year ago period.

This is thanks to analysts in our consensus slashing estimates across the board for the company, suggesting they are no longer believers in FBC's near term growth story. The current quarter estimate has actually cratered by over 22% in the past two months, while the full year estimate has fallen by over 10%.

Additional content:

Snapchat IPO: Can It Live Up to a $22 Billion Valuation?

Snap Inc., the parent company of the disappearing photo-sharing application Snapchat, is asking the investors for a lot of money and faith for its widely anticipated initial public offering (IPO).

The company will offer 200 million shares between $14 and $16 per share and is expecting to raise $3.2 billion. Snap's market value could be up as much as $22 billion through the offering, though an earlier estimate valued Snap at between $20 billion to $25 billion.

Bloomberg reported with data from Bloomberg Intelligence that Snap is asking a heftier price than its competitors when they go public. Snap's proposed price is valued at 19.7 times the forward 12-month advertising sales, just over the 19.4 times that of Facebook (NASDAQ: FB - Free Report ) had and 13 times that Twitter (NYSE: TWTR - Free Report ) had during their IPOs.

However, investors will have to trust the company's founders and management to maintain growth and revenue despite the substantial price that Snap is asking for. The company listed their shares as non-voting share, which means the control will largely rest in the hands of co-founders Evan Spiegel and Bobby Murphy and the majority holders. Stockholders will have to put complete trust in the company when it comes to director nomination and executive compensation. The co-founders will each have 10 votes per share while existing investors will have one vote per share.

Snap, who declared as a camera company instead of a social media company as many others had predicted, reported total revenue of $404 million for 2016, which is about six times more than the 2015's total revenue at of $58 million. However, the company also experienced a larger total net loss from $372 million in 2015 to $514 million in 2016.

Another concern that investors are having is Snap's ability to grow new users. As mentioned in their SEC filing that the Daily Active Users growth for the quarter ended September 30, 2016 remained flat after a 7% growth in the previous quarter ended June 30, 2016 from 143 million to 153 million.

The company's main user population is between 18-34 years old, where brand loyalty is less of a concern and more likely to follow trends than other demographics. As competition like Facebook's Instagram Stories, another disappearing-photo function, Snap will have to have a solid plan to attract investors.

This will be one of the largest and most anticipated IPOs in the tech industry in recent years since China's Alibaba Group's (NYSE: BABA - Free Report ) $25 billion market debut back in 2014 and Facebook's $16 billion offering in 2012.

Both Alibaba and Facebook have continued to excel after their IPOs. Alibaba started their offering at $92.70 and is currently trading at $100.74. Facebook's stock has grown 250% from $38.23 in 2012 to currently at $133.72. Though both companies encountered some obstacles and slumps right after their IPO, Facebook's success is no doubt the path that Snap is looking to follow.

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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 >>.

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United States Steel Corporation (X): Free Stock Analysis Report

Flagstar Bancorp, Inc. (FBC): Free Stock Analysis Report

Facebook, Inc. (FB): Free Stock Analysis Report

Twitter, Inc. (TWTR): Free Stock Analysis Report

Alibaba Group Holding Limited (BABA): Free Stock Analysis Report

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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.

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