The Zacks Analyst Blog Highlights: Facebook, Apple, Las Vegas Sands, Wynn Resorts and MGM Resorts International
For Immediate Release
Chicago, IL – April 24, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Facebook (FB-Free Report), Apple Inc. (AAPL-Free Report), Las Vegas Sands Corp. (LVS-Free Report), Wynn Resorts Ltd. (WYNN-Free Report) and MGM Resorts International (MGM-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday’s Analyst Blog:
Facebook, Apple Post Earnings Surprises – And More!
After the bell Wednesday, Facebook (FB-Free Report) beat Q1 earnings estimates on both the top and bottom lines. Earnings of 25 cents per share (discounting for stock-based compensation) on $2.50 billion beat expectations of 18 cents per share and $2.36 billion in sales. But the fly in the ointment -- or at least the question that arose once earnings numbers were reported -- was the announcement that Facebook CFO David Ebersman would be stepping down later this year.
Of immediate concern was why a high-profile CFO resignation would so soon follow recent acquisitions of WhatsApp and Oculus, which provided billions in Facebook stock as currency to fund these deals. The official note via the company is that Ebersman will be returning to the high-growth healthcare sector. This reason more than any other, has kept after-market gains of Facebook relatively muted. Shares have just made back regular Wednesday trading losses.
This is especially true considering that Facebook outperformed in the most highly-watched areas of the company's business: ad revenues of $2.27 billion was up 82% year over year, mobile advertising revenues hit 59% compared to 30% a year ago, and daily active users (DAU.V) topped 800 million for the first time to 802 million, up from 790 million expected. Basically a solid beat any way you slice it; this marks Facebook's third positive earnings surprise in the last four quarters.
The conference call will likely grill Ebersman's decision to leave Facebook. Otherwise, whether WhatsApp and Oculus will prove worthy of their high price tags is a discussion likely for another day.
Apple Inc. (AAPL-Free Report) also posted earnings after the bell Wednesday, and beat expectations as well. Earnings hit $11.62 (before non-recurring items) on $45.6 billion in revenues, beating expectations of $10.22 per share and $43.4 billion in sales. This is the biggest Apple beat in quite some time. But... then the company announced a 7 to 1 stock split to AAPL share owners as of June 2nd.
Say what?! Big surprise here. Dividing Apple shares by 7 will bring AAPL share prices below $100 for the first time in ages. Of course, it doesn't add any actual value to the company, but CEO Tim Cook is betting a lot more folks who may have blanched at the $500+ price tag will now hop on board. Short of unveiling a major new product, this was about as big a "positive" announcement as the company could have made. Apple shares are up 7.5% in after-hours trading.
Sales of the iPhone were very impressive in the quarter: 43.7 million units sold, when the consensus was for 38.5 million. Tablets took it on the chin, however: only 16.4 million iPads sold in the quarter, where analysts were looking for numbers up near 20 million. Cook mentioned supply and demand issues which will likely be addressed on the call. Guidance was on the low side, of course, but that's par for the course for Apple.
So there you have it: two high profile stocks reporting after the bell -- two real knockout artists, to consider their history of earnings beats, in fact -- both companies topped expectations, and then trumped them with even bigger news. This has been fun!
3 Leisure Stocks Likely to Beat Earnings
With the wide array of companies in the sector muddling up the stock picking power, the Zacks methodology could offer some relief. One could narrow down the list using the positive Zacks Earnings ESP as a guide, along with a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
(For a detailed look at the earnings outlook for this sector and others, please read our Earnings Trends report)
We have picked three leisure stocks, from the gaming industry, which have the right combination of elements to deliver an earnings beat this time around.
As a part of the broader leisure industry, gaming companies draw maximum attention. Las Vegas and Macau are the biggest gambling centers in the world, thanks to heavy spending by companies in these regions on infrastructure development. Meanwhile, the liberalization of gaming policies in China has allowed Macau to become the world's biggest market in terms of revenues. Moreover, its proximity to Hong Kong, mainland China, Taiwan, South Korea, Japan, and other nearby countries where gambling is popular ensures a steady inflow of visitors and gaming enthusiasts. The chosen gaming stocks are focused on the Las Vegas and Macau markets and are set to capitalize on the opportunities provided by them.
Las Vegas Sands Corp. (LVS-Free Report) carries a Zacks Rank #2 and has an Earnings ESP of +3.26%. The Zacks Consensus Estimate for the first quarter is pegged at 92 cents per share. The company has delivered an average earnings beat of +1.74% over the last four quarters. Over the past 60 days, the Zacks Consensus Estimate (on an average) has increased 3.4%.
This international developer of multi-use integrated resorts primarily in the U.S. and Asia continues to boost its gaming portfolio in prime locations such as Las Vegas and Macau, which is helping it to gain market share. The company’s upcoming projects in the Cotai Strip are expected to spur growth.
This casino operator is expected to release its earnings on Apr 24.
Wynn Resorts Ltd. (WYNN-Free Report) carries a Zacks Rank #2 and has an Earnings ESP of +2.37%. The Zacks Consensus Estimate for the first quarter stands at $2.11 per share. This casino operator has posted an average earnings surprise of 17.76% over the past four quarters and is slated to report its first quarter 2014 earnings very soon. Over the past 60 days, the Zacks Consensus Estimate (on an average) has increased 4.5%.
Wynn Resorts is experiencing improved business in Las Vegas with the gradual recovery of the U.S. economy giving way to increased demand for leisure activities. Meanwhile we remain optimistic about Wynn Resorts’ Cotai project based on the long-term growth potential of the region.
MGM Resorts International (MGM-Free Report) carries a Zacks Rank #3 and an Earnings ESP of +20.00%. The Zacks Consensus Estimate for the first quarter is 10 cents per share. Over the past four quarters, the company has posted a significant average earnings surprise of 449.17%.
MGM Resorts is doing well domestically as well as overseas. The company’s properties are well-diversified within the U.S. It is expected to witness increased occupancy and better pricing in the domestic markets, going forward. Meanwhile, it also continues to undertake initiatives to increase revenues and junket productivity in Macau. It is progressing well with its casino-hotel development project in Cotai.
MGM Resorts is expected to report its earnings on Apr 29, 2014.
Bottom Line
The outlook for the leisure industry for 2014 remains positive as it focuses on innovative and inspired ways of meeting customer expectations. However, an uncertain consumer spending environment, and volatile emerging market economies, especially tight money supply in China could decelerate the pace of growth.
Nevertheless, given the ongoing economic recovery in the U.S., fast infrastructure development in the regions where these companies operate and increasing employment opportunities in the emerging markets, these leisure stocks look like worthy investments in the near term.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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