For Immediate Release
Chicago, IL – August 20, 2018 – Zacks Equity Research highlights iRobot Corporation IRBT as the Bull of the Day, Autohome ATHM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Deere & Company DE and Caterpillar CAT.
Here is a synopsis of all four stocks:
Bull of the Day:
Headquartered in Bedford, MA, iRobot Corporation is a leading global consumer robot company. They also have offices in Europe and Asia.
Their product line includes the Roomba vacuuming robot and the Braava family of mopping robots. These robots help in domestic chores like vacuum cleaning, floor scrubbing, floor mopping, pool cleaning and gutter cleaning.
Company History
The company was founded in 1990 by MIT roboticists. For the past more than 25 years, it has been a global pioneer in the robotics and consumer products and has sold more than 20 million robots worldwide.
Excellent Results, Raised Guidance
The robot maker reported excellent results for Q2 2018, beating on both the top and bottom lines.
Adjusted earnings rose to 37 cents per share from 27 cents in the same quarter a year ago and beat the Zacks Consensus Estimate by a massive 117.6%.
The management raised the revenue guidance for 2018 to $1.06-$1.08 billion from the previous expectation of $1.05-$1.08 billion and they now expect earnings to be between $2.30-$2.50 per share, higher than earlier guidance of $2.15-$2.40 per share.
The stock surged almost 20% in the after-hours trading.
Rising Estimates
Analysts have been raising estimates for the company after better than expected results and guidance. Zacks Consensus Estimates for the current and next year have increased to $1.64 per share and $2.44 per share from $1.53 and $2.29, before the results.
Bear of the Day:
Autohome is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today. I try to avoid almost all Chinese stocks and not just because of the trade war or tariff tantrums that have hit the market of late. I simply do not trust the accounting and audits of these stocks as I have seen too many frauds come out of China. That said, I do not know if ATHM is a fraud or not, but I do know that estimates are falling and that is not what we want to see.
Description
Autohome Inc. is the leading online destination for automobile consumers in China. Its mission is to enhance the car-buying and ownership experience for auto consumers in China. Autohome provides professionally produced and user-generated content, a comprehensive automobile library, and extensive automobile listing information to automobile consumers, covering the entire car purchase and ownership cycle.
Recent Earnings
ATHM recently posted a 3 cent beat of the Zacks Consensus Estimate which translated into a 3%positive earnings surprise. It is not that often we see a stock that recently beat become the Bear of the Day.
Estimates
The main reason this stock has fallen to a Zacks Rank #5 (Strong Sell) is that the Zacks Consensus Estimate for 2018 and 2019 keeps moving lower.
30 days ago, the Zacks Consensus Estimate for 2018 was at $3.61, but it has since moved lower to $3.40.
Over the same time period, the Zacks Consensus Estimate for 2019 moved from $4.59 to $4.26.
Additional content:
Why Is Deere (DE) Up Despite Missing Earnings?
Deere & Company released its third-quarter earnings on August 17 before the market opened. The major farm and construction equipment manufacturer missed profits for the quarter due to higher costs, but shares are still up 3.25% through late-afternoon hours Friday.
Deere & Co reported earnings of $2.59 per share, missing the Zacks Consensus Estimate of $2.77 per share. The company also stated it would deliver adjusted net income of $3.1 billion in the fiscal 2018. JP Morgan analysts said that would translate into an EPS of $9.45, lagging the current Zacks Consensus Estimate of $9.69.
Earnings were hurt by increased costs for raw materials and freight due to tariffs on steel and aluminum imports. In the post-earnings news release, CEO Samuel R. Allen mentioned the rise in costs.
“We have continued to face cost pressures for raw materials and freight, which are being addressed through a combination of cost management and pricing actions,” he said. “Other manufactures like Caterpillar have also been affected by higher material costs.”
Typically, missing earnings estimates would drive share prices down. However, that hasn’t been the case so far as other aspects of the report seem to have overshadowed the miss for investors.
To start, earnings of $2.59 per share did miss expectations, but it was the all-time highest third-quarter EPS for the company. Further, earnings grew 31% year-over year. That growth was driven by higher revenues from a year ago, despite the increased costs. Net Sales totaled nearly $9.3 billion, up 36% from one year ago. That beat the Zacks Consensus Estimate of $9.17 billion.
Deere & Co. specifically benefited from its construction and forestry division, which reported $2.9 billion in net sales, doubling the sales from the same quarter in 2017. Favorable market conditions, like higher housing starts in the United States, bode well for the construction and forestry industries as demand for equipment is elevated.
Moreover, the company acquired Wirtgen in December of 2017, a leading global road-construction equipment maker. Wirtgen added a significant 77% in construction and forestry sales for the quarter.
In addition to the growing construction division, the agriculture segment has a promising outlook as farmers continue to buy equipment, according to the company. CFO Raj Kalathur said Friday on the earnings call that overall global demand for grain is still growing and that the farm economics picture for 2019 may “actually be stronger” than realized.
Deere & Co. did miss its earnings expectation, but the overall picture appears to be positive. The market shares that optimism for now.
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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.
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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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Autohome Inc. (ATHM) : Free Stock Analysis Report
iRobot Corporation (IRBT) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
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