For Immediate Release
Chicago, IL – July 25, 2016 – Zacks Equity Research highlights Goldcorp Inc. (GG) as the Bull of the Day and Interactive Brokers Group (IBKR) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Texas Instruments (NASDAQ:TXN) Inc. (TXN), Open Text Corp. ( OTEX) and Silicon Motion Technology Corp. (SIMO).
Here is a synopsis of all five stocks:
Gold prices have soared in 2016, from around $1060 per ounce in the beginning of the year to over $1300 per ounce in late July. These increased prices are enabling gold mining companies to sell their products at a much higher price than previously envisioned. This is why Goldcorp Inc. ( GG) is the Zacks Bull of the Day.
This Zacks Ranked #1 (Strong Buy) company has operations in Canada, the US, Mexico and Central and South America. Apart from gold, the company also produces copper and silver. The company's principal producing mining properties are the Red Lake, Porcupine and Musselwhite gold mines in Canada, the Penasquito gold/silver/zinc/lead mine, the Pueblo Viejo gold mine (40% interest) in the Dominican Republic, the Los Filos and El Sauzal gold mines in Mexico the Marlin gold/silver mine in Guatemala the Alumbrera gold/copper mine (37.5% interest) in Argentina and the Marigold (66.7% interest) and Wharf gold mines in the United States.
Goldcorp has significant development projects which include the Cerro Negro gold project in Argentina Eleonore and Cochenour gold projects in Canada, the El Morro gold/copper project (70% interest) in Chile and the Camino Rojo gold/silver projects in Mexico.
Recent Earnings Performance
In the first quarter of 2016, the company posted net earnings of $80 million compared to a net loss of $87 million in the year ago quarter. Further, Goldcorp produced 783,700 ounces of gold, a +8.1% increase from the year ago quarter.
Even big investors make mistakes, but those mistakes are usually brushed aside if the company’s overall performance is above par. Yet, when earnings, and net revenues decline as well, the mistakes are scrutinized. This is the case with the Zacks Bear of the Day, Interactive Brokers Group ( IBKR).
One segment that significantly underperformed is the Market Making segment, which is currently under formal review by the CEO. Specifically, the CEO has given the segment 12months to reverse their current course or risk being liquidated, sold, or some other alternative solution.
This Zacks Rank #5 (Strong Sell) company is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments on more than 70 electronic exchanges and trading venues around the world. As a market maker, they provide liquidity at these marketplaces and, as a broker, they provide professional traders and investors with direct access to stocks, options, futures, forex and bonds from a single IB Universal AccountSM.
Recent Earnings Report
Management announced Q2 16 results on July 19 where they beat the Zacks Consensus Earnings results, but came very short of the Zacks Consensus Revenue estimate. The company saw on a year over year basis declines in Diluted earnings per share -8.1%, Net revenues -4.7%, Commission and execution fees -3%, Customer option contracts -8%, Stock shares volume -40%, Pretax profit margins down -3%. Further, the company experienced a $2 million loss in their currency diversification strategy, compared to a profit of $53 million in 2015. Most importantly, in the Market Making segment, income before taxes fell by -83% to $5 million. Also, in the Market Making segment, pretax profit margins decreased to 12%, down from 42% in Q2 15.
Price and Consensus
As you can see from the graph below, IBKR had been outperforming expectations for the past two years, but their most recent earnings report caused both the stock price to decline and future estimates to be lowered.
Additional content:
What's in Store for Texas Instruments (TXN) on Q2 Earnings?
Texas Instruments Inc. (TXN) is set to report second-quarter 2016 results on Jul 25. Last quarter, the company posted a 4.84% positive earnings surprise.
Let’s see how things are shaping up for this announcement.
TEXAS INSTRS Price and EPS Surprise | TEXAS INSTRS Quote
Factors at Play
Texas Instruments or TI reported mixed first quarter results with earnings beating the Zacks Consensus Estimate but revenues missing the same. Though the communications, personal electronics and other markets were weak, the recovering auto and industrial markets helped the company to deliver good results.
Texas Instruments continues to prudently invest its R&D dollars in several high-margin, high-growth areas of the analog and embedded processing markets. This is gradually increasing its exposure to the industrial and automotive markets as well as dollar content at customers, while reducing its exposure to the volatile consumer/computing markets.
The company along with chipmaker Intel (NASDAQ:INTC) remains one of the few semiconductor companies that depend on internal capacity for manufacturing the bulk of its devices. However, since it has the policy of building out capacity ahead of demand, it can make opportunistic purchases. As a result, the company has been able to contain capex at up to 4% of sales even while expanding.
TI provided strong revenue guidance for the second quarter. The company expects revenues between $3.07 billion and $3.33 billion (up 5.9% sequentially at the mid-point). The outlook includes acquisition charges of $80 million per quarter continuing till the third quarter of 2019, which will then decline to $50 million per quarter for the next two years. The annual effective tax rate and the rate to be applied for the second quarter will be around 30%.
This revenue guidance reflects lackluster demand for personal electronics, particularly PCs, and communications equipment.
Earnings per share in the quarter are expected to be in a range of 67 cents to 77 cents.
Earnings Whispers
Our proven model does not conclusively show that Texas Instruments is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 72 cents. Therefore, its Earnings ESP is 0.00%.
Zacks Rank: Texas Instruments has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
You may consider the following stocks, with a positive Earnings ESP and a favorable Zacks Rank:
Open Text Corp. (OTEX) with an Earnings ESP of +1.10% and Zacks Rank #1.
Silicon Motion Technology Corp. (SIMO) with an Earnings ESP of +15.15% and Zacks Rank #1.
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GOLDCORP INC (GG): Free Stock Analysis Report
INTERACTIVE BRK (IBKR): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
OPEN TEXT CORP (OTEX): Free Stock Analysis Report
SILICON MOTION (SIMO): Free Stock Analysis Report
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