For Immediate Release
Chicago, IL – September 16, 2016 – Zacks Equity Research highlights Lifeway Foods, Inc. (LWAY) as the Bull of the Day and Tractor Supply Company (TSCO) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Micron (MU), Telefonica (TEF) and Usana Health Sciences ( USNA).
Here is a synopsis of all the five stocks:
Lifeway Foods, Inc. (LWAY) is cashing in on the probiotics craze. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 216% this year.
Lifeway Foods is a supplier of the probiotic fermented beverage known as kefir. It has drinkable kefir in smoothies, including the yummy blueberry smoothie, frozen kefir, specialty cheeses and a ProBugs line for kids.
Headquartered in Illinois, its products are available in the United States but it is slowly growing its business in Canada, Latin America and the United Kingdom.
Probiotics are commonly called "healthy bacteria" by the rest of us and it's supposed to be good for your gut.
Big Earnings Beat in the Second Quarter
On Aug 17, Lifeway reported second quarter results and blew by the Zacks Consensus Estimate by 9 cents. Earnings were $0.13 versus the consensus estimate of $0.04.
Sales rose 4.4% to $31.1 million from $29.8 million in the year ago quarter on higher sales of its kefir products.
Margin expansion was boosted from lower milk prices and manufacturing efficiencies, including lower packaging costs, improved labor productivity and improved manufactured costs related to increased production at the Waukesha facility.
It saw its highest second profitability in company history.
Shareholder Friendly
Lifeway has cash and cash equivalents of $6 million as of June 30, 2016. That's up from $5.6 million at the end of 2015.
It has been spending some of that cash repurchasing shares. In the six months ending June 30, 2016, it repurchased about 69,000 shares at the cost of $738,000.
Lifeway has 1.2 million shares remaining on its repurchase plan. There's no expiration date for the plan and the company is under no obligation to continue it. It can be suspended or discontinued at any time.
Tractor Supply Company (TSCO) is feeling the pinch of the farming and energy slowdown. This Zacks Rank #5 (Strong Sell) recently warned and lowered full year guidance.
Tractor Supply is a retail chain with 1542 stores in 49 states. Despite its name, it doesn't sell tractors but supplies products for recreational farmers, ranchers and others in the rural areas.
Its motto has long been "For Life Out Here."
It sells equine, livestock, pet and small animal products; hardware, truck, towing and tool products; seasonal products including heating, lawn and garden like riding mowers, power equipment and gifts and toys; work/recreational clothing and footwear; and maintenance products for agricultural and rural use.
Warned on the Third Quarter
On Sep 7, Tractor Supply warned that comparable store sales for the third quarter would likely range from flat to a decrease of 1% versus an increase of 2.9% in 2015's third quarter.
The company is seeing a number of "economic headwinds" especially in the energy and agricultural market areas.
The prolonged downturn in the energy industry is now starting to hit consumers in those regions. They are experiencing a decline in comparable store sales and transaction counts.
With farming incomes declining for the third year in a row, those areas are also being hit as the farming community cuts back on discretionary spending.
Tractor Supply also said its seeing lower demand for pre-season heating related products such as wood stoves and heating fuel.
Where Is It Doing Well?
The strongest regional performance in the third quarter has been in the Southeast and the West. Neither has extensive exposure to farming or energy.
Livestock and Pet categories continue to be strong with mid-single digit comparable store sales.
Lowered Full Year Guidance
With the third quarter tracking weaker than expected, Tractor Supply lowered its full year earnings and sales guidance.
Earnings are now expected in the range of $3.22 to $3.26, down from the previous range of $3.35 to $3.40.
Comparable store sales are forecast in the range of 1% to 1.7% down from the former range of 2.5% to 3.5%.
The analysts, as you can expect, have lowered their estimates.
Additional content:
Fast Money Gets It Wrong This Time
Welcome! Here's a short review of Zacks 26-page September 2016 Market Strategy Report.
To start, I want to make a declaration up front. I am not a U.S. decline-ist. By that, I mean I am not one with the opinion the U.S. economy has seen its better days and is presently in decline. However, I do think the fast money has overbid this nation's financial markets at this moment in time.
My September Theme: U.S. Markets Look Overbid – While Global Fundamentals Have Turned
GDPs of Japan, Germany and the UK are at the bottom. The orange line is Japan. It approached $6 trillion in 2012. Japan then declined on US dollar strength vs. the yen and weak internal growth combined. I think China's GDP rise does cause some of Japan's torpor.
Now a different issue: The reality of U.S. dollar strength. Since 2012, the US dollar's value has steadily grown. Further, it has strengthened against ALL foreign currencies.
The British Pound trades at multi-year highs against the US dollar, after Brexit. So too does the Mexican Peso, shown next. Ditto the Canadian Dollar and even the Indian Rupee at the very bottom.
The U.S. dollar is king. Book that vacation abroad. Now is the time to see London, or go to Cancun, or Vancouver.
The idea the U.S. is seeing slower export growth --due to a strong U.S. dollar-- granted via fast capital sucked into the U.S. from abroad? Now, that's a reality!
Now, about that fast capital shifted to U.S. risk markets? -- It may be headed in the wrong direction .
According to data published in the FT, a recent GDP global growth recovery has been especially pronounced in the emerging economies, where growth is now exactly at its +5.5% trend rate.
Read my primary Zacks strategy report for details!
Zacks Sector/Industry/Company Telescope
Other than the perennially strong domestic sector Health Care, September Zacks Industry Ranks are clear: The global economy is indeed where positive EPS estimate revisions, and therefore more attractive growth, is coming from now.
The leader is Info Tech, that most global of industries. Semiconductors lead the way. Telcos got a big industry upgrade. This shows the power of still spreading wireless demand and telco equipment upgrades. Materials are the final Attractive sector. This can ONLY happen when China's growth stabilizes.
(1) Info Tech is the star. This highly global sector stays at Very Attractive. The leader is Misc. Technology followed by Semiconductors, a perennial strong industry suit to play. Telco Equipment looks good too.
Attractive Company to look at: Micron (MU). The Semi-Memory industry is #4 out of 265 Zacks Ranks.
Micron Technology, Inc . has established itself as one of the leading worldwide providers of semiconductor memory solutions. Its shares currently get a short-term Zacks #2 (BUY) Rank, which joins an attractive Zacks long-term VGM score of B.
(2) Telcos are the big sector upgrade in September, getting to the Very Attractive rating, and helping to explain the strong Info Tech industries, much of the time. The best are Utility-Telephone and Telco Equipment.
Attractive Company to look at: Telefonica (TEF). The Diversified Telco industry is #34 out of 265 in Zacks Industry Ranks.
Telefonica S.A. is the largest supplier of teleco services in the Spanish and Portuguese speaking world. Its shares currently get a short-term Zacks #2 (BUY) Rank, which joins an attractive Zacks long-term VGM score of B.
(3) Health Care slips to Attractive this month. The best is Medical Care.
Attractive Company to look at: Usana Health Sciences (USNA). The Drugs industry is #82 out of 265 in Zacks Industry Ranks.
USANA Health Sciences Inc. develops and manufactures high-quality nutritional, personal care and weight management products. Its shares currently get a short-term Zacks #1 (STRONG BUY) Rank, which joins an attractive Zacks long-term VGM score of B.
(4) Materials stay Attractive. The best is Metals-non-Ferrous, which says China is stabilizing. The next best are Containers & Glass and Steel. Again, a good China signis here.
(5) Utilities stay at Market Weight.
(6) Energy remains a Market Weight. The industries in the very middle are Pipelines, Exploration & Production, Coal, and even the Drillers and Oil & Gas Integrated and Solar-Alternates. All cluster at Market. Only Oil-Misc. stinks.
(7) Consumer Staples looks Unattractive again this month. Yet, there are bright spots. Food and Consumer Product-Misc. Staples look great.
(8) Consumer Discretionary rises to Unattractive from Very Unattractive. The bright spot is Apparel. Home Furnishing-Appliances is next in line. Leisure and Autos/Tires/Trucks hold the sector back.
(9) Financials stay at Unattractive. The best industries right now appear as Consumer Finance, Real Estate, Banks-Major, and Banks & Thrifts. A September or December Fed rate hike would mostly help here.
(10) Industrials fall to Very Unattractive. In a low growth overall environment, business spending mostly stagnates. The exception looks to be Business Products, which is very attractive. All other Industrials industries are in the doldrums. The airlines with their low price wars are at the bottom now.
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LIFEWAY FOODS LWAY: Free Stock Analysis Report
TRACTOR SUPPLY TSCO: Free Stock Analysis Report
MICRON TECH MU: Free Stock Analysis Report
TELEFONICA S.A. TEF: Free Stock Analysis Report
USANA HLTH SCI USNA: Free Stock Analysis Report
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