Helen of Troy, L Brands, Best Buy, Builders FirstSource and Photronics highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – January 17, 2019 – Zacks Equity Research Helen of Troy Limited HELE as the Bull of the Day, L Brands, Inc. LB as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Best Buy Co. BBY, Builders FirstSource BLDR and Photronics PLAB.

Here is a synopsis of all five stocks:

Bull of the Day:

Helen of Troy Limitedhas one of the hottest consumer brands on the market today: Hydro Flask. This Zacks Rank #1 (Strong Buy) recently raised full year guidance.

Helen of Troy is a global consumer products company with many well-known brands in housewares, health and home and beauty, including OXO, Hydro Flask, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar.

A Big Beat in the Fiscal Third Quarter

On Jan 8, Helen of Troy reported its fiscal third quarter results and blew by the Zacks Consensus Estimate by $0.61, or 24.3%.

Net sales jumped 10.1% to $474.7 million from $431.1 million, as the core business grew 10.7% primarily due to growth in online sales, an increase in brick and mortar sales in the Housewares segment, higher international sales and an increase in sales in the appliance category in the Beauty segment.

Leadership Brands saw sales jump 10.6%, as online sales grew 30%.

Housewares was the segment leader as OXO and Hydro Flask, which is popular with Millennials and GenZers, remained hot brands. It rose 28.2% to $40.3 million.

However there was a slight core business decline in the Health & Home segment of 1.1% and a decline in the personal care category within the Beauty segment even as Beauty rose 5.4%.  

Adding Drybar to Leadership Brands

On Dec 19, 2019, Helen of Troy added another well known brand to its stable of Leadership Brands by acquiring Drybar Products LLC, which includes the trademark, its products and other assets, for $225 million.

It does not include the salons, which will continue to operate independently but will be granted a worldwide license to use the Drybar trademark. The salons will use and sell Helen of Troy products exclusively.

Raised Fiscal 2020 Guidance

Given the strong third quarter, Helen of Troy raised its net sales outlook to the range of $1.65 to $1.675 billion, implying a sales growth of 5.5% to 7.1%, up from its prior guidance of 2.9% to 4.8%.

This increase doesn't include Drybar as the exact date of closing wasn't known.

In the segments, Housewares is expected to remain hot (gotta love the Hydro Flask) with sales growth of 19% to 21%, up from prior expectations of 13% to 15%.

Health & Home is expected to decline 2% to 4%, compared to the prior guidance of a decline in the low single digits.

Beauty is forecast to see sales growth of 3% to 5%, compared to the prior expectation of growth in the low-single digits.

Earnings are expected to be in the range of $8.90 to $9.10.

Earnings Estimates Move Higher

That was above the consensus, so it's not surprising that the analysts have raised their estimates in response.

The Zacks Consensus Estimate for Fiscal 2020 jumped to $9.13 from $8.67, which it above the high end of the company's new range. That's earnings growth of 13.3% compared to Fiscal 2019 where the company made $8.06.

2 analysts also revised estimates higher for Fiscal 2021, pushing the Zacks Consensus up to $9.95 from $9.19. That's another 9% growth in earnings.

Shares Soar to 5-Year Highs

Helen of Troy was overlooked by the Street for years until the shares took off in 2019.

They've skyrocketed 61% over the last year and are no longer cheap, with a forward P/E of 20.3.

But with hot consumer brands like Drybar and Hydro Flask, Helen of Troy is transforming itself into a growth company.

Bear of the Day:

L Brands, Inc.continues to struggle as its key brand, Victoria's Secret, is under pressure from new brands and start-ups. This Zacks Rank #5 (Strong Sell) saw same-store-sales decline in the important holiday quarter.

L Brands operates 2,943 company-owned specialty retail stores in the United States, Canada, the UK, Ireland and Greater China under three brands: Victoria's Secret, Victoria's Secret PINK and Bath & Body Works. There are also about 700 franchise stores. L Brands also has e-commerce websites for Victoria's Secret and Bath & Body Works.

Holiday Sales Disappoint

On Jan 9, L Brands reported its fourth quarter, or holiday quarter, net sales which fell 4.1% to $3.906 billion from $4.072 billion a year ago.

Comparable store sales, one of retail's important metrics, fell 3% for the 9 week period. This is coming on the back of a positive 4% comp a year ago.

L Brands also guided earnings per share below its own prior guidance, at $1.85 versus the previous guidance of $2.00. This was also below consensus of $1.95.

Analysts Cut Full Year Estimates

Given the weak fourth quarter guidance, it's not surprising that analysts moved to lower Fiscal 2020 earnings estimates.

The Fiscal 2020 Zacks Consensus Estimate fell to $2.22 from $2.29 in the last week.

That's an earnings decline of 21.3% as the company made $2.82 last year.

5 analysts also lowered Fiscal 2021 earnings estimates pushing the Zacks Consensus Estimate down to $2.16 from $2.27. That's a further earnings decline.

L Brands has struggled the last few years.

Here is its 5 year price-to-consensus chart which shows that earnings have been on the decline for 5 years.

Is This a Buying Opportunity?

Shares hit 5-year lows in 2019 and have moved higher, but they're still down 24% over the last year and 76% over the last 5 years.

They're cheap, with a forward P/E of 8.9.

L Brands continues to pay its hefty dividend, currently yielding 6.1%.

3 Value Stocks Around 52-Week Highs

Investors don’t tend to look for value in a market that’s consistently making new highs. This is the time for exciting momentum names, not good old dependable stocks that set your mind at ease.

But what if you could have both? What if you could find value stocks that are also rising along with the market? You can! There’s a screen called “Value Stocks at 52-Week Highs” that can help you find the best of both of those worlds.

Specifically, it looks for Zacks Rank #1s or #2s (Strong Buys and Buys, respectively) along with a Zacks Value Score of “A”. It also wants price as a percentage of the 52-week high-low range to be greater than or equal to 95.

Here are three names that recently passed the test for this screen:

Best Buy Co.

Best Buy Co. is one of those “exceptions” in retail. You know, a mostly brick-and-mortar company that managed to survive in ‘the world according to Amazon’.

However, it’s doing much more than just getting by. BBY is prospering. The stock has jumped more than 62% over the past year and is the only name from the Retail – Consumer Electronics industry with a Zacks Rank #2 (Buy).

If you’re willing to drop $2500 on a 75” TV even though your current 65” one works just fine, you’re going to want to see it in person before committing. And that’s when Best Buy has you.

Because you’re certainly going to want a new sound system to go with that TV. It’s right over there! And since you’ve already spent all this money, what’s another $400 for one of those Apple Watches you’ve been thinking about? Or maybe a Nintendo Switch? Or both!

BBY has beaten the Zacks Consensus Estimate for eight straight quarters now. Most recently, it reported fiscal third quarter earnings of $1.13, which topped our estimates by nearly 8.7% and jumped 21.5% from last year.

The top line also beat our expectations and improved 1.7% year over year to nearly $9.8 billion.

The quarter was good enough for BBY to lift its outlook for fiscal 2020. It now expects enterprise revenue between $43.2 billion and $43.6 billion, which is up slightly from the previous range of $43.1 billion to $43.6 billion.

Furthermore, non-GAAP diluted EPS is now between $5.81 and $5.91 instead of $5.60 to $5.75.  

Looking even further in the future, BBY expects enterprise revenue of about $50 billion by 2025, thanks in large part to its Best Buy Health and an ongoing supply chain transformation as it embarks on its “Building the New Blue: Chapter Two” strategy.

Analysts picked up on the company’s confidence for the future. The Zacks Consensus Estimate for the year ending this month has climbed 3.3% in the past 60 days to $5.94.

As for the year ending January 2021, the consensus rose 3.7% in that time to $6.23, which also suggests year-over-year improvement of about 5%.

BBY will report again on February 26.  

Builders FirstSource

Buying a single homebuilder to capitalize on that strong industry is like putting all your drill bits in one pocket.

You never know what company-specific or region-specific factor could spring up and limit your profit potential. So if you’re not absolutely positively certain your favorite homebuilder is the best way to take advantage, then you may want to go in a more general direction like Builders FirstSource.  

The company is a leading supplier of building products, prefabricated components and value-added services for new residential construction, repair and remodeling.

It’s part of the Building Products – Retail space, which is in the top 19% of the Zacks Industry Rank with a one-year return of nearly 27%. BLDR is the only Zacks Rank #1 (Strong Buy) from that industry.

The stock easily outperformed its highly-ranked industry by soaring more than 100% over the past year. It has also beaten the Zacks Consensus Estimate in 12 of the past 13 quarters.

For its third quarter, earnings per share of 72 cents beat the Zacks Consensus Estimate by 20%. That was the fifth straight quarter that topped our expectations. The average surprise over the past four quarters is over 28%.

Revenue was more than 6% better than the Zacks Consensus Estimate at $1.98 billion.

Over the past three months, earnings estimates have been on the rise. The Zacks Consensus Estimate for the year ended last month has jumped 11.5% in that time to $2.04.

For the year ending December 2020, analysts revised their estimates higher by 10.7% over the past three months to $2.18. This suggests year-over-year improvement of about 7%.

BLDR will report again on February 20.

Photronics

You may not know what photomasks are, but you’re well aware of what they do. They are high precision quartz plates that contain microscopic images of electronic circuits… and they’re a key element in the manufacture of semiconductors and flat panel displays.

In fact, it’s such a big deal that it is its own industry, the Semiconductor Equipment – Photomasks space. And it’s in the top 1% of the Zacks Industry Rank.

One of the big names in this space is Photronics, which jumped more than 47% over the past year and has met or beaten the Zacks Consensus Estimate for 10 straight quarters now.

Last month, PLAB reported fiscal fourth quarter earnings of 15 cents, which matched our estimates. Over the past four quarters, the company has an average surprise of more than 36%.

Revenue of $156.3 million topped the Zacks Consensus Estimate by more than 6% and marked the third beat in the past four quarters.

The result was also 8% better than last year and 13% more than the previous quarter. PLAB also mentioned that fourth-quarter revenue has now advanced year-over-year for nine consecutive quarters.

For its fiscal first quarter, the company expects revenue between $146 million and $154 million with earnings per share of 13 cents to 18 cents.

Earnings estimates improved significantly over the past 60 days. The Zacks Consensus Estimate for this fiscal year (ending October 2020) has jumped 23% in that time to 91 cents.

Analysts currently expect earnings of $1.07 for next fiscal year (ending October 2021), which has advanced 12.6% from two months ago and suggests year-over-year improvement of 17.6%.

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Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
 
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