For Immediate Release
Chicago, IL – May 19, 2016– Zacks Equity Research highlights Dean Foods (DF) as the Bull of the Day and Nordstrom (NYSE:JWN) (JWN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple (NASDAQ:AAPL) (AAPL) and Fitbit (FIT).
Here is a synopsis of all four stocks:
Sometimes I’m very surprised when stocks pop up on my Bull of the Day radar. I get all sorts of stocks across a broad range of industries. They can range from the very exciting to the mundane. Today, I’d have to say the tilt is decidedly mundane. But there’s nothing all that boring about profits so let’s explore. The dairy producer industry is in the Top 7% of all the 265 industries we rank with our Zacks Industry Rank. At the top of that industry is Zacks Rank #1 (Strong Buy) Dean Foods (DF).
Dean Foods is the nation’s leading processor and distributor of fresh milk and other dairy products. The company produces a full line of company-branded and private label dairy products. I’m sure a quick look at the milk aisle at your local grocery store will reveal several of their offerings.
Whether you love milk or you’re lactose intolerant, the important thing is this stock is absolutely on fire right now with Value, Growth and Momentum Style Scores of A to go along with that fantastic Zacks Rank. The reason for the bullish rank is in the recent earnings estimate revisions. In the last 30 days, six analysts have revised their estimates for the current year while five have done so for the current quarter.
The resulting impact on the Zacks Consensus Estimate has been impressive. Our consensus for the current quarter has jumped from 30 cents to 38 cents while the current year number has shot up from $1.25 to $1.51. The recent quarterly surprises may have made an impression on analysts. Last quarter earnings came in at 38 cents versus expectation for 45 cents. This is coming on the heels of a 2 cent beat the quarter before.
It has been an absolutely brutal stretch for companies in the retail corner of the investing world. If you look to a popular ETF tracking this market, the SPDR S&P Retail ETF (XRT), we can see a loss of over 11% in just the past month, and severe underperformance when compared to the broad market over the past one year time frame too.
These sluggish returns are especially the trend when investors look to the apparel or department store segments of the retail sector. Here, investors are losing faith in turnaround stories thanks to changing consumer tastes which seem to favor discretionary spending on experiences instead of clothes, and the drag of Amazon (NASDAQ:AMZN) as the e-commerce giant slowly swallows up ever-larger chunks of the retail world.
For a great example of these trends, investors have to look no further than one of the former gold-standards in the retail world, Nordstrom (JWN). In the past one month alone, JWN shares have plunged by more than 30% as a horrendous earnings report sunk shares of the company.
Recent Earnings
JWN followed the trend of many of its retail counterparts when it missed analyst expectations for the most recent quarter. The company really wasn’t even close though, as it missed by over 40% thanks to posting EPS of 26 cents compared to a 45 cent estimate.
The company also offered up weak sales number and declining comparable store sales figures too, further adding to the bearish trend. Additionally, it offered a sluggish outlook including reduced sales guidance, and weaker earnings guidance as well.
Investors raced to get out of shares following the release, and that is a primary reason JWN has lost nearly a third of its value in the past month, and why the stock remains on its weak trend line which has seen the stock lose close to half of its value in the past two years.
Additional content:
Does Fitbit Really Have a Wearables Advantage Over Apple?
Apple (AAPL) and Fitbit ( FIT) have been at loggerheads in the wearables market despite the fact that the two companies essentially provide quite different products with different utility levels. Fitbit is well known for its wearable fitness trackers while Apple is offering smartwatches that can be paired up with iPhones or other Apple devices.
Despite the difference in their offerings, competition is rife as a user will likely buy only one of these products.
What Do the Numbers Say?
There is no denying that the wearables market is growing in leaps and bounds with users lapping up the technology for various purposes, ranging from fitness to more sophisticated uses based on the IoT trend.
In the first quarter, shipments in the wearables market surged 67% over the prior year quarter to 19.7 million, as revealed in a recent IDC report.
The report goes even further, disclosing detailed shipments from key players, which companies like Apple refrain from doing.
Per the report, Fitbit is still the leading player in the overall wearables category with a 24.4% share. Apple, which entered the market last year, with its Watch has quickly scaled up to hold the prime position in the smartwatch domain. In the wearables category, however, Apple has slipped to the third position with a market share of 7.6% after China-based Xiaomi with18.8% share.
According to IDC, Apple shipped 1.5 million smartwatches in the quarter, much ahead of the second player Samsung (KS:005930), which shipped 700K units.
Who is Winning?
While Apple lags behind Fitbit in the wearables category, it is noteworthy that the same may not be said for profits. This is because of the difference in prices of the companies. While Apple has priced its devices in a range of $299 to $1500 and even more, Fitbit devices are comparatively lower priced with the higher end devices costing $199. So, it’s no surprise that Fitbit has an edge over Apple in terms of volumes.
Furthermore, Apple has never been a volume player. The tech giant has a reputation to provide premium products to a handful of consumers for a much larger share of the profits. This year, IDC projects wearables shipments to grow approximately 38.2% over 2015 levels to 110 million, while the same for smart watches is estimated to be 28.3 million.
With the market on the growth trajectory, both the players are likely to grow in their respective niches. It’s just that Apple is increasingly adding more fitness-centered features to its Apple Watch, thereby heating up the competition for Fitbit.
Zacks Rank
At present, Apple carries a Zacks Rank #4 (Sell) while Fitbit has a Zacks Rank #3 (Hold).
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DEAN FOODS CO (DF): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
APPLE INC (AAPL): Free Stock Analysis Report
FITBIT INC (FIT): Free Stock Analysis Report
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