For Immediate Release
Chicago, IL – September 30, 2016 – Zacks Equity Research highlights Finisar Corp. (NASDAQ:FNSR- Free Report) as the Bull of the Day and Cal-Maine Foods (NASDAQ: CALM- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Twitter Inc. (NYSE: TWTR-Free Report) and Apple (NASDAQ:AAPL) (NASDAQ: AAPL- Free Report).
Here is a synopsis of all the four stocks:
Upgrade cycles have large impacts on suppliers, and today’s Zacks Bull of the Day, Finisar Corp. (NASDAQ:FNSR- Free Report) is in the midst of two big ones. Currently, China is in the middle stages of their fiber optical 100G upgrade cycle, and North America is in the beginning stages up the same metro cycle upgrade. During the early stages of this upgrade cycle, Finisar has posted record revenues and margins have improved by more than 200 basis points.
This Zacks Rank #1 (Strong Buy) company is a provider of fiber optic subsystems and network test and monitoring systems which enable high-speed data communications over local area networks, or LANs, storage area networks, or SANs, and metropolitan access networks, or MANs. They are focused on the application of digital fiber optics to provide aline of high-performance, reliable, value-added optical subsystems for data networking and storage equipment manufacturers.
Recent Earnings
Finisar reported Q1 17 earnings in the early part of September where they beat both the Zacks Consensus Earnings and Revenue estimates for the second consecutive quarter (they have beaten the earnings estimates for four consecutive quarters). The company saw year over year gains in the following; Revenues +7.1%, Operating income +100%, Net income +83.2%, and operating margins increased from +4.4% to +8.3%. On a quarterly basis, the company saw gains in the following; Sales of telecom products +29%, Sales of Datacom products +0.2%, and GAAP gross margins rose to +31.7% from +28.4% last quarter.
Management’s Take
According to Jerry Rawls, CEO, “I am pleased to announce that Finisar achieved record revenues for our first quarter of $341.3 million, an increase of $22.5 million, or 7.1% compared to the prior quarter. This growth was primarily driven by strong demand for 100Gb/s transceivers in CFP, CFP2, CFP4, and QSFP28 form factors. In addition, demand for wavelength selective switches was strong. Our gross margins improved significantly due to favorable product mix and leverage of our vertically integrated manufacturing infrastructure over the larger volume. The combination of revenues being at the higher end of our guidance range and better than expected gross margins resulted in earnings per fully diluted share exceeding the upper end of our guidance range.”
Investing in poultry carries certain risks like, fluctuating volumes, and changing consumer tastes. The combination of these risks have negatively impacted our Bear of the Day, Cal-Maine Foods (NASDAQ: CALM- Free Report). The company saw lower institutional demand for egg products which caused inventories to increase, and subsequently put pressure on the overall selling price. To make matters worse, a USDA report showed that there has been an increase in chicks hatched, increasing the total supply which is resulting in more pressure on selling prices.
This Zacks Rank #5 (Strong Sell) company is engaged in the production, cleaning, grading, and packaging of fresh shell eggs for sale to shell egg retailers. The company is the one of the largest producers and distributors of fresh shell eggs in the United States. The company markets its eggs primarily in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.
Earnings Release
Cal-Maine Foods reported Q1 17 results on 9-26 where they posted year over year losses in multiple categories; Net sales are down -60.7%, amount of Dozen eggs sold fell by -6.4%, amount of Dozen eggs produced declined by -1.9%, Specialty egg pricing dropped by -20%, Specialty egg volume fell by -4.5%, selling prices fell by -58%, and net income plummeted to $0.64 per diluted share from $2.95 per diluted share in Q1 2016.
Management’s Take
According to Dolph Baker, Chairman and CEO, “ Our results for the first quarter of fiscal 2017 reflect a disappointing shell egg market with more challenging market conditions and significantly lower market prices than the first quarter of fiscal 2016. Average customer selling prices dropped 58 percent from the record high levels we experienced a year ago. As the supply of shell eggs moved higher after the disruptions created by the Avian Influenza outbreak in the spring of 2015, market prices declined. Retail demand remained favorable; however, lower institutional demand for egg products and reduced egg exports pushed inventory levels higher and created additional pricing pressures. As cited in recent USDA Chickens and Eggs Reports, the increase in chicks hatched indicates the national laying flock will continue to expand. Based on this report, we expect the shell egg supply will continue to grow through calendar 2016, and then we may begin to see a correction early next year .”
Additional content:
Spotify Update: Japan Launch, Reportedly Acquiring SoundCloud
In a blog post, popular music streaming platform Spotify announced at a press event in Tokyo that it has launched its services in Japan, albeit on an invite-only basis.
In Japan, Spotify will be the first music streaming service to offer a free, ad-supported music service, as well as its ad-free, subscription service. Spotify Premium will be available to users for only 980 yen (or $9.60) a month.
“We’re incredibly excited to launch Spotify with a uniquely Japanese music experience,” says Spotify’s CEO and Founder, Daniel Ek. “With Spotify’s revolutionary discovery and personalization features that fit your every mood, we aim to help people enjoy more music and connect more artists with fans than ever before.”
But reaching new customers in Japan may prove to be difficult for Spotify, as Japanese consumers still prefer to purchase music physically—think CDs and records—rather than digitally, according to TechCrunch. However, its free-tier option will likely work in its favor. It is the only mainstream music streaming service in Japan that offers this option, allowing consumers to try out Spotify, see if they even like it, before shelling out a monthly subscription fee.
Spotify is now available in 60 markets worldwide, with over 100 million users. Its push into Japan follows Spotify’s expansion into Indonesia back in March. The company first entered Asia in 2013, launching in Hong Kong, Malaysia, and Singapore.
SoundCloud Acquisition
On Wednesday, the Financial Times reported that Spotify is in talks to acquire SoundCloud, a platform that allows artists to upload their music and share it with fans on blogs and across social media.
German-based SoundCloud has over 125 million songs—it also launched its own paid service earlier this year—and if the deal goes through, Spotify would eliminate a strong player in the music streaming industry.
As Spotify eyes an IPO next year, SoundCloud and its investors stand to benefit; Twitter Inc. (NYSE: TWTR- Free Report) is a notable investor, having put $70 million into the company this past June. SoundCloud’s valuation stands at about $700 million, the same value it saw in 2014.
Spotify’s current valuation is roughly $8.5 billion, and the company just reached 40 million paying subscribers, still well above Apple (NASDAQ: AAPL- Free Report) Music’s 17 million paying subscribers.
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FINISAR CORP (FNSR): Free Stock Analysis Report
CAL-MAINE FOODS (CALM): Free Stock Analysis Report
TWITTER INC (TWTR): Free Stock Analysis Report
APPLE INC (AAPL): Free Stock Analysis Report
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