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Wingstop, Etsy, EBay And Facebook Highlighted As Zacks Bull And Bear Of The Day

Published 10/20/2016, 09:30 PM
Updated 07/09/2023, 06:31 AM

For Immediate Release

Chicago, IL – October 21, 2016 – Zacks Equity Research highlights definitely Wingstop Inc. (NASDAQ:WINGFree Report) as the Bull of the Day and Etsy, Inc. (NASDAQ:ETSYFree Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on eBay (NASDAQ:EBAYFree Report) and Facebook (NASDAQ:FB) (NASDAQ:FBFree Report).

Here is a synopsis of all four stocks:

Bull of the Day:

Wingstop Inc. (NASDAQ:WINGFree Report) is finding a restaurant sweet spot in low cost stores which target Millennials. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in both 2016 and 2017.

Wingstop operates and franchises 914 restaurants in the United States, Mexico, Singapore, the Philippines, Indonesia and the United Arab Emirates.

It features 11 distinctive wing flavors including Original Hot, Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian, Garlic Parmesan, Hickory Smoked BBQ, Louisiana Rub and Mango Habanero. It also offers house-made sides including hand cut, seasoned fries.

Another Beat in the Second Quarter

On Aug 4, Wingstop reported its second quarter results and beat the Zacks Consensus Estimate by a penny.

Domestic same-store-sales were up 3.1% as total revenue rose 18.2%.

It added a net of 41 new restaurants in the fiscal second quarter as system-wide restaurant count increased 16.4% to 914 worldwide.

The company managed to produce solid numbers despite the higher cost of chicken wings, which rose 8% year over year.

But Wingstop's low cost business model helped alleviate some of that cost issue. It has a limited menu with wings and just a few sides.

Its stores are also small as 75% of its business is takeout.

Wingstop has really been pushing its brand with the Millennial market. Millennials now make up about half of its customer base.

Analysts Bullish About the Future

The analysts like what they are seeing and are even raising estimates ahead of fiscal third quarter results which will be out on November 1.

2 estimates have been raised for the third quarter and the full fiscal year in the last week. Usually, analysts are leery about raising estimates just ahead of an earnings report. They only do so if they feel good news is definitely coming.

The fiscal 2016 Zacks Consensus Estimate has risen to $0.56 from $0.55 in the last 7 days. That is earnings growth of 18%.

Fiscal 2017 is also looking up, with earnings growth of 11.7% expected.

Big Rally in 2016

Wingstop went public in 2015 so it is a "new" stock.

Shares have soared in 2016, however, as the company continues to post solid same-store-sales growth and its growth rate remains elevated.

Bear of the Day :

Can Etsy, Inc. (NASDAQ:ETSYFree Report) turn it around? This Zacks Rank #5 (Strong Sell) is actually supposed to be profitable by next year.

Etsy operates an online marketplace where people make, sell and buy unique goods.

It allows entrepreneurs to set up an online shop and reach a customer base they otherwise might not be able to do on their own.

Etsy Acquires Blackbird Technologies

On Sep 19, Etsy announced it was acquiring privately-held Blackbird Technologies, Inc.. Terms of the deal were not disclosed.

Blackbird operates technology that combines images and text using artificial intelligence to enhance search in the shopping experience.

Etsy has over 40 million unique listings. The technology should make it easier for customers to search the site.

Handmade is In

In a world where everything seems to be made by machines, there is something very attractive about handmade goods. Etsy taps into that need. Even Amazon (NASDAQ:AMZN) has recognized there is a market in handmade goods as it has launched Amazon Handmade in Europe.

The growth is in the numbers.

In 2015, Etsy saw sales of $273.5 million. The Zacks Consensus Sales Estimate is looking for $364.8 million in 2016, or growth of 33.4%.

2017 looks equally healthy as sales are expected to rise another 24% to $451 million.

Turning a Profit Soon

Etsy went public in 2015 but it was not yet profitable. It lost $0.15 a share in 2015.

It's still going to lose money in 2016, however. The Zacks Consensus Estimate is looking for a loss of $0.06 this year.

But it looks like 2017 could be a break out year. The analysts are looking for $0.14 a share.

So Why Is It a Strong Sell?

One earnings estimate was lowered for full year 2016 in the last month. With just 2 estimates, that's enough to push the Rank lower.

However, the company reports on Nov 1, so the estimates will likely be updated then.

Remember, the Zacks Rank is a short term 1-3 month recommendation.

Shares Off 50% from IPO High

Like many IPOs, Etsy went out of the gate last year very hot. The shares have been on a downward spiral since then but recently they've turned around as the fundamentals have improved.

Additional content:

Should Facebook (FB) Buy eBay (EBAY)?

Shares of online marketplace eBay (NASDAQ:EBAYFree Report) are down over 10% since the company reported its fiscal 2016 results after the closing bell Wednesday. Investors are reacting negatively to eBay’s sluggish holiday season guidance; however, some on the internet are pointing to the company’s new partnership with Facebook (NASDAQ:FBFree Report) as an encouraging sign for growth—or a potential buyout.

Lackluster Guidance

eBay posted third-quarter earnings of 45 cents per shares, which beat average analyst expectations by a penny. The company saw revenue figures of $2.22 billion, beating our consensus estimate of $2.182 billion and gaining 5.6% year-over-year.

Despite two beats, investors punished eBay for what was seen as relatively lackluster guidance. For the fourth quarter, eBay expects to see revenue of $2.36 billion to $2.41 billion and adjusted earnings of 52 to 54 cents per share. Wall Street analysts were previously calling for revenue of $2.40 billion and earnings of 54 cents per share (also read: eBay Reports Earnings Beat, Slumps 6.5% on Weak Holiday Guidance ).

Perhaps the worst part about eBay’s weak fourth-quarter guidance is that, by all accounts, this year is gearing up to have a solid holiday shopping season.

Research from the National Retail Federation predicts that holiday sales, excluding autos, gas, and restaurant sales, will increase 3.6%, which is “significantly higher” than the 10-year average of 2.5% and above the seven-year post-recovery average of 3.4% (also read: 3 Reasons Why This Holiday Shopping Season Will Be Great ).

New Relationship with Facebook

While eBay’s fourth-quarter guidance is unsettling, some investors are looking forward to the company’s new partnership with Facebook. The social media site has employed eBay to help it launch a shopping bot on its Messenger app.

Once dubbed “ShopBot,” the artificial intelligence technology is expected to drive sales to Facebook, which has been looking for ways to employ bots without overloading users. Facebook’s Messenger application has over one billion users, but the company currently does not have a way to monetize the transactions that take place on the platform.

A struggling eBay’s new-found friendship has, of course, sparked rumors and commentary on the web, with many suggesting that Facebook should go even further by buying out the online marketplace.

We do know that Facebook is gaining interest in e-commerce; the site just recently launched “Marketplace,” a sort-of Craigslist-eBay hybrid that allows users to buy and sell items from other users that are within the same geographical area (also read: Facebook Takes on E-Commerce with Marketplace ).

If Facebook is willing to try out its own online shopping platform, is it too unrealistic to think that it might want to carve out a main competitor? Personally, I don’t think it is crazy at all, especially considering the fact that eBay is basically the original online re-selling platform.

Marketplace could keep its focus on local sales, and eBay could continue to allow shipping to anywhere. Listings could be cross-posted on both sites and, using Facebook’s plethora of user data, customers could be targeted with products that would interest them specifically.

Bottom Line

At this point, any conversation about Facebook buying out eBay is simply an unfounded internet rumor. However, just because a rumor is unfounded doesn’t mean it’s inherently a bad idea. In my humble opinion, if the price is right, an eBay buyout could make sense for Facebook.

You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>

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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.

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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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WINGSTOP INC (WING): Free Stock Analysis Report

ETSY INC (ETSY): Free Stock Analysis Report

EBAY INC (EBAY): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

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