For Immediate Release
Chicago, IL – June 12, 2017 –Zacks Equity Research MercadoLibre, Inc. MELI as the Bull of the Day, Chico's FAS, Inc. CHS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Snap Inc. SNAP and Facebook FB.
Here is a synopsis of all four stocks:
MercadoLibre, Inc. MELI is gaining momentum as it takes on Amazon in the online shopping wars in Latin America. This Zacks Rank #1 (Strong Buy) is expected to see 46% sales growth in 2017.
MercadoLibre is the largest online commerce and payments site in Latin America. It is the eBay/Amazon of the region with websites serving 18 countries including Argentina, Brazil, Mexico, Colombia, Chile, Venezuela and Peru.
It operates MercadoLibre sites in each country as well as its online payment service MercadoPago.
Big Beat as Sales Soar
On May 4, MercadoLibre reported its first quarter results and crushed the Zacks Consensus Estimate by 32 cents. Earnings were $1.10 versus the consensus of $0.78.
Revenue soared 73.8% in US dollars and 78.9% on an FX neutral basis on strong growth in Brazil and Mexico, which grew 52.7% and 70.7%, respectively.
Sold items were up 38.6% while payment transactions through MercadoPago spiked 60.1% to 44.1 million.
In Mexico, items shipped rose 220% year-over-year to $2.6 million but gross margins fell 61.1% from 64.8% a year ago due to free Mexican shipping. Amazon recently entered the market in Mexico so the competition, especially with free shipping, is heating up.
Estimates Rise for 2017 and 2018
After the big blow out quarter, the analysts raced to raise full year 2017 and 2018 estimates.
4 estimates were raised over the last 60 days for this year which has pushed up the 2017 Zacks Consensus to $4.67 from $4.31. That's earnings growth of 34% as the company made just $3.48 in 2016.
They are also bullish on 2018 as the Zacks Consensus has jumped to $6.61 from $5.87 during the last 2 months. That's earnings growth of 41%.
Chico's FAS, Inc. CHS is experiencing the sales weakness that almost all women apparel retailers are experiencing. This Zacks Rank #5 (Strong Sell) expects comparable store sales to decline for the entire fiscal year 2017.
Chico's operates three brands: Chico's, White House Black Market and Soma. It operates 1,492 stores in the US and Canada and sells through franchises in Mexico. It also operates websites for each brand.
Three Cent Miss in the First Quarter
On May 24, Chico's reported its fiscal first quarter results and missed on the Zacks Consensus by 3 cents. Earnings were $0.26 versus the consensus of $0.29.
But earnings aren't the big issue with the retailers. It's really about the comparable store sales and inventories.
Inventories rose to $273.9 million from $268 million a year ago. The increase was primarily the result of a $10.5 million increase in in-transit inventories, due to shift in shipping terms with a major vendor, partially offset by a 2% decrease in on-hand inventories compared to last year's quarter.
Comparables, however, were not good. Only Soma saw a gain, as it rose 0.2%. Chico's comparable store sales sank 10% while White House Black Market fell 9.7% on lower average dollar sale and a decline in transaction count.
Women were simply buying and spending less.
Additional content:
Why Were SNAP Shares Down on Friday?
On Friday, shares of Snapchat parent company Snap Inc. SNAP are sinking, down about 4.5% in morning trading after analysts at Citi downgraded the stock, citing user growth and monetization concerns.
Citi analyst Mark May lowered its rating on Snap to Neutral from Buy, as well as lowered his price target to $20 from $24, which represented a 6% upside from Thursday's closing price.
The company's "pace of growth in monetization (including the contribution from new channels such as self-serve) may not be as fast as we had originally modeled in 2H17 due, in part, to a slower than expected roll-out of these new channels/platforms," wrote May in a note to clients.
"Given continued Android issues, summer seasonality, heightened competition and the nature of Snap's social network, we expect user growth will remain modest near term," he continued.
May also reduced his daily active users net adds for Snap to 9 million from 12 million for the second-quarter, in addition to lowering his fiscal 2018 earnings per share estimates to a loss of 46 cents from a loss of 42 cents.
While its IPO was successful, Snap's shares have struggled since then.Facebook's FB Instagram platform has rolled out continuous updates to Stories, its Snapchat clone that has surged in popularity recently. Coupled with disappointing first-quarter earnings results, many investors are wondering what's next for Snap.
Currently, SNAP is a #3 (Hold) on the Zacks Rank, with a VGM score of ‘F.' Since its IPO, Snap shares are down 23%.
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