For Immediate Release
Chicago, IL – April 28, 2017 –Zacks Equity Research highlights Unilever (LON:ULVR) PLC (NYSE: UL – Free Report ) as the Bull of the Day, Kate Spade & Company (NYSE: KATE – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Starbucks Corp. (NASDAQ: SBUX – Free Report ).
Here is a synopsis of all three stocks:
After many years of underperformance, emerging markets are shining in 2017. We can see signs of improving economic growth in many parts of the developing world. This rebound has benefitted multinational giants that derive a significant portion of their sales from emerging markets.
About the Company
Headquartered in London, UK, Unilever PLC (NYSE: UL – Free Report ) is a multinational consumer goods company. They employ ~169,000 people.
The company has a huge portfolio of more than 400 well-known brands including Dove, Lipton, Knorr and Ben & Jerry’s. Emerging markets account for about 60% of their sales. Seven out of every ten households around the world contain at least one Unilever product.
Better-than-expected Results
The company reported better than expected results, thanks mainly to strong growth in emerging markets, except Brazil.
Turnover increased 6.1% with a positive currency impact of 2.4%. Underlying sales growth was 2.9% with price up 3.0% but volume down 0.1%. Weaker than expected growth in North America and Europe was mainly responsible for decline in volume.
The company saw strong pricing power in emerging markets, where sales growth was 6.1%--with price up 5.3% and volume up 0.8%. Price growth was particular impressive in Asia.
“The first quarter shows growth once more ahead of our markets. This reflects our continued investment in both innovations and brand support, and reconfirms the strength of our long term sustainable compounding growth model,” said the CEO.
The management said they are on track to achieve 3-5% sales growth and at least 80 bps operating margin growth in 2017.
Rising Estimates
Zacks Consensus Estimates for the current and next year have increased to $2.44 and $2.78 respectively, from $2.26 and $2.44, before the results.
Returning Capital to Shareholders
The company has been returning a lot of cash to shareholders. The dividend yield is 2.65% as of now. They raised their dividend by 12% earlier this month.
Kraft Heinz Bid
Earlier this year, Unilever spurned a $143 billion unsolicited takeover offer from Kraft Heinz. Per Unilever, the deal did not make sense due to difference in their business models. Their spokesman said “it was best to step away early so both companies can focus on their own independent plans to generate value.”
The Bottom Line
For the past many years, sluggish growth and weak currencies in emerging markets posed challenges to multinational companies. But the situation has changed this year. Growth has rebounded strongly and domestic currencies in many developing countries, particularly in India, Brazil, Indonesia and South Africa, have strengthened against the dollar.
UL is a Zacks Rank#1 (Strong Buy) stock with a VGM Score of “A”. Additionally, a Zacks Industry rank of 14 out of 265 (top 5%) and a dividend yield of 2.65% make the stock worth a look.
Headquartered in New York, Kate Spade & Company (NYSE: KATE – Free Report ) is a high-end handbag and apparel maker. They operate principally under two global, multichannel lifestyle brands: kate spade new york and Jack Spade New York.
The retailer also owns Adelington Design Group, a private brand jewelry group. They were earlier a part of Fifth & Pacific, formerly been known as Liz Claiborne.
The company has been exploring a sale, under pressure from an activist stakeholder.
Weak Results Lead to Falling Estimates
Net sales for the first quarter of 2017 were $271 million, down 1.2% year-over-year. Adjusted earnings were $0.01 per share, down from $0.05 reported a year ago and significantly short of the Zacks Consensus Estimate of $0.08.
While e-commerce sales grew by double digits, brick and mortar sales were soft.
Shares plunged 6% after the report.
Estimates have also plunged after the report. Zacks Consensus Estimates for the current and the next year have fallen to $0.76 per share and $0.93 per share from $0.89 and $ 1.09 respectively before the results.
The Bottom Line
As the company is currently exploring strategic options, its future remains somewhat uncertain. Poor earnings report has reduced the chances of the company getting an attractive deal from potential buyers.
Additionally, Zacks Industry Rank of 246 of 265 (Bottom 7%) and Sector Rank of 16 out of 16, suggests potential underperformance in the short to medium term.
Additional content:
Starbucks Meets Q2 Estimate, Comps Up 3%
Starbucks Corp. (NASDAQ:SBUX – Free Report ) just released its second-quarter fiscal 2017 financial results, posting earnings of 45 cents per share and revenues of $5.3 billion. Currently, SBUX is a #3 (Hold), and is down 3.4% to $59.20 per share in trading shortly after its earnings report was released.
Matched earnings estimates. The company reported earnings of 45 cents per share, matching the Zacks Consensus Estimate of 45 cents per share and increasing 15% year-over-year.
Missed revenue estimates. The company saw revenue figures of $5.3 billion, lagging behind our consensus estimate of $5.420 billion but growing 6% year-over-year.
During its second quarter, Starbucks said that comparable store sales increased 3% globally, 3% in the U.S., and 7% in China. Consolidated operating income increased 8% to $935 million, while consolidated operating margin expanded 40 basis points to 17.7%.
The company grew membership in its Starbucks Rewards program, up11% year-over-year to 13.3 million members, and Starbucks Rewards represented 36% of U.S. company-operated sales in Q2. Mobile Payment reached 29% of transactions, and Mobile Order and Pay grew to 8% of total transactions.
“With our U.S. business accelerating throughout the quarter and strong performance in China, we are poised to deliver strong revenue growth in the second half and into the future,” said Kevin Johnson, Starbucks president and ceo. “Our success in opening over 2,000 stores around the world annually, delivering record AUV and profit, despite a very difficult period for many brick-and-mortar retailers is a testament to the 330,000 partners who proudly wear the green apron.”
Here’s a graph that looks at Starbucks’ price, consensus, and EPS surprise:
Starbucks purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related equipment primarily through its company-operated retail stores. In addition to sales through its company-operated retail stores, Starbucks sells whole bean coffees through a specialty sales group and supermarkets. Additionally, Starbucks produces and sells bottled Frappuccino coffee drinks and a line of premium ice creams through its joint venture partnerships.
Zacks’ Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but chosen members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting today, and for the next month, you can follow all Zacks’ private buys and sells in real time. Our experts cover all kinds of trades: value, momentum, ETFs, stocks under $10, stocks that corporate insiders are buying up, and companies that are about to report positive earnings surprises. You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks’ secret trades>>
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 >>.
Get the full Report on UL - FREE
Get the full Report on KATE - FREE
Get the full Report on SBUX - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook (NASDAQ:FB): https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Unilever PLC (UL): Free Stock Analysis Report
Kate Spade & Company (KATE): Free Stock Analysis Report
Starbucks Corporation (NASDAQ:SBUX): Free Stock Analysis Report
Original post
Zacks Investment Research