Tesla Motors Inc (NASDAQ:TSLA), Fitbit, Electronic Arts, LinkedIn, Priceline – 5 Stocks To Watch This Week 8/2
In August, Mohnish Pabrai took part in Brown University's Value Investing Speaker Series, answering a series of questions from students. Q3 2021 hedge fund letters, conferences and more One of the topics he covered was the issue of finding cheap equities, a process the value investor has plenty of experience with. Cheap Stocks In the Read More
Wednesday, August 3
Friday, August 4
Fitbit Inc (FIT)
Information Technology – Electronic Equipment | Reports August 2, after the close.
The Estimize consensus is looking for earnings of 14 cents per share on $589 million in revenue, 3 cents higher than Wall Street on the bottom line and right in line on the top. Compared to a year earlier, earnings are expected to fall by 36% with revenue increasing 47%. Revisions activity since Fitbit’s last report show that EPS estimates have fallen 61% in the last 3 months, while sales estimates are up 9%.
What to Watch: It’s been a rough year for Fitbit shareholders, with the stock down 53% year to date and almost 71% in the past 12 months. Troubles have only been exacerbated as more competition emerges in the wearables space. At the top sits names like Fitbit, Apple, Garmin, and Samsung, all offering similar products at a range of different price points. Fitbit’s two newest products, the Alta and Blaze, have done a good job of differentiating themselves from the competition. The two products have also been successful in attracting new customers and upselling old ones.
Last quarter saw the launch of the Fitbit Blaze and Alta which have so far performed remarkably well. Approximately 40% of user activations from those products were by users with prior devices and 20% were those who rejoined the Fitbit community after 3 months of being inactive. This is a remarkable achievement for a company that in the past suffered from limited upgrade demand.
In May of this year, Fitbit announced the availability of its two newest and most popular products, Fitbit Blaze and Alta, in China. Fitbit has also partnered with Alibaba to organize a health and wellness initiatives called “China is Getting Fit”. Its products will also be available on Alibaba’s third party platform, a move that is certain to drive sales. China has a wealth of resources and consumers that Fitbit should be able to leverage for its success.
Electronic Arts Inc. (EA)
Information Technology – Software | Reports August 2, after the close.
The Estimize consensus is calling for earnings per share of 1 cent on $662 million in revenue. Per share and revenue estimates have been cut considerably since EA’s last report in May, with profits slashed by 94% and sales by 11%. Compared to a year earlier, this represents a 94% decline on the bottom line and a 4% decline on the top.
What to Watch: Electronic Arts begins the week with second quarter earnings today after the market closes. The game publisher took a major leap in the past year, largely driven by the success of its sports titles like Madden and Fifa, as well as Star Wars: Battlefront. Star Wars synergies aren’t expected to have a huge impact on the quarter to be reported as the game nears its 1-year anniversary. Without any blockbuster titles this quarter, EAs prospects appear relatively subdued on a year-over-year basis.
The second half outlook for EA still looks promising regardless of muted Q2 expectations. The company Is showing strong growth in digital sales and continued traction in the mobile market. Downloadable content is replacing physical games as its fastest growing source of income. With the next iterations of Fifa and Madden scheduled to hit the market within the next month, don’t be surprised if tomorrow’s results are an aberration from the rest of the year.
Tesla Motors Inc (TSLA)
Consumer Discretionary – Automobiles | Reports August 3, after the close.
The Estimize community has set the bar very low for Tesla this quarter. Analysts are calling for a 53 cent loss per share right in line with earnings from a year earlier. That estimate has declined by 442% since Tesla’s last report in May. Revenue is anticipated to increase by 35% to $1.55 billion, marking a considerable slowdown from the previous two quarters.
What to Watch: Tesla has been in the news a lot recently and not for good reasons. Just last month the company agreed to buy SolarCity for $2.6 billion which will unite two Elon Musk founded companies. Tesla is also dealing with its first fatality due to the autonomous feature and attempting to meet sales expectations.
The model 3 has been very successful to date, with demand outpacing supply. This compact and inexpensive version of the model S has accumulated an astronomical amount of pre orders, 500,000 to be exact. Tesla even raised an additional $1.7 billion in an offering to meet production. However, when Elon Musk decided that resources were better off in acquiring the struggling SolarCity, the deal sent Tesla shares tumbling and now the stock is down 15% in the past 12 months
Its other vehicle, the model X, is receiving mixed reactions nearly a year after Tesla delivered the first units. Customers have complained about glitches and inefficiencies that weren’t apparent in the flagship Model S vehicle. At the current pace, Tesla is unlikely to meet its 80,000 deliver goal by the end of the year.
LinkedIn Corp (LNKD)
Information Technology – Internet Software & Services| Reports August 4, after the close.
The Estimize consensus is looking for earnings per share of $0.81 on $902 million in revenue, 3 cent higher than Wall Street on the bottom line and $4 million on the top. Compared to a year earlier this reflects a 47% increase in earnings and 26% in sales. Earnings estimates have increased 8% since the last quarterly report, with sales estimates unchanged.
What to watch: This is likely one of the last quarterly reports we will get from LinkedIn as a publically traded company after Microsoft’s bid last month to acquire the social media brand for $26.2 billion. Linkedin’s official vote regarding the Microsoft acquisition will take place on August 19, meaning this report should not greatly impact the stock no matter which way it turns out. In preparation, MSFT just sold $20B in debt today to fund the deal.
For the last four quarters, LinkedIn has blown expectations out of the water, with EPS greatly surpassing estimates in each period, and revenues doing so for all but one of those quarters. Bottom-line growth has continually hovered around the 50% mark, while sales growth has been a bit lower in the 30s. LinkedIn has often come under fire for stagnant user growth, especially when compared to other social media companies such as Facebook. However, in the first quarter of 2016, the company saw the largest growth in cumulative members since 2014, up 19% to 433 million.
Both core business, Talent Solutions and Marketing Solutions have remained LNKD’s strongest segments, growing 41% and 29%, respectively, last quarter. The company is also making Sales Solutions and Learnings & Development focal points as well.
Priceline Group Inc (PCLN)
Consumer Discretionary – Internet & Catalog Retail | Reports August 4, after the close.
The Estimize consensus calls for EPS of $12.79, 10 cents higher than Wall Street’s consensus. Revenue expectations are slightly higher than the sell-side, with the Estimize community expecting $2.6 billion, as compared to $2.58 billion. Earnings expectations have trended downward by 17% since last quarter, while revenue estimates are down 3%. This puts YoY growth expectations at 4% for EPS and 14% for sales.
What to Watch: Lately the online travel industry has been one of the hottest industries much to the delight of Priceline and its peers. In the past 3 months, shares of Priceline have increased nearly 8% on indications of a reversing trend in the travel industry. However, Expedia’s report last week featured better than expected earnings, but sales that fell short of estimates, perhaps foreshadowing a trend that could be realized for other online travel companies this quarter.
Priceline’s fourth quarter was highlighted by significant gains on both the top and bottom line. This featured a 21% increase in gross travel bookings, 23% increase in international operations, and continued growth in Booking.com. Priceline has guided for double digit growth in almost all key metrics for the second quarter. Including a 15 – 22% increase in room nights booked, total gross travel booking growth of 11 – 18% and gross profits increasing 9 – 16%.
This biggest concern this quarter is around fallout from Brexit. Priceline currently generates more than two thirds of its revenue from Europe, far more than Expedia or TripAdvisor. The company is still expected to report 15% revenue growth this quarter, but estimates have come down considerably due to negative currency exchange fluctuations.
Be sure to get your estimates in here!