For Immediate Release
Chicago, IL – June 28, 2017 –Zacks Equity Research H&R Block HRB as the Bull of the Day, Bed Bath & Beyond BBBY as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Big Five Sporting Goods BGFV.
Here is a synopsis of all three stocks:
Headquartered in Kansas City, MO, H&R Block HRB is a global consumer tax services provider. They have approximately 12,000 company-owned and franchise retail locations and 9,000 bilingual tax professionals and client service professionals in the US, other US territories, and on US military bases around the world. An H&R Block office is located within five miles of most Americans in addition to their online solutions.
Excellent Results
The company reported excellent results earlier this month as they appear to be benefitting from tightening labor markets and improving wages. Their Q4 FY 2017 ended Apr 30 adjusted earnings were $3.76 per share, ahead of the Zacks Consensus Estimate of $3.51.
"With competitive promotions, impactful marketing and an improved client experience, we achieved this goal and also produced strong financial results, all during a year in which the industry experienced a decline in returns," said the CEO.
Rising Estimates
Estimates have gone up significantly after excellent results. Zacks Consensus Estimates for the current and next year have gone up to $2.00 per share and $2.05 per share from $1.81 and $1.87 respectively, before the results. Rising estimates sent the stock back to a Zacks Rank #1 (Strong Buy).
Return Capital to Shareholders
The company continues to return cash to shareholders via dividends and share buybacks. With the results, they announced an increase in their quarterly dividend by 9%. This was a significant increase in their quarterly dividend for the second year in a row.
Since 2005, their dividends per share have grown at 6% CAGR, even though there were no dividend increases in FY14, FY15 and a portion of FY16 due to savings and loan holding company regulatory constraints.
The company has been paying quarterly dividends to its shareholders since going public in 1962. Their current dividend yield is 3.1%.
The Bottom Line
HRB is a Zacks Rank #1 (Strong Buy) stock with Zacks Style Scores of "A" for Value as well as Growth and "B" for Momentum, with a VGM Score of "A". It looks pretty good from industry and sector rank perspective look, which are in the top 8% and 31% respectively.
Going forward, they should also benefit from tax reforms promised by the Trump administration.
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Founded in 1971, Bed Bath & Beyond BBBY is an omnichannel retailer offering a wide selection of domestic merchandise and home furnishings.
The company operates 1,546 stores (as of February 2017), including 1,023 Bed Bath & Beyond stores, and remaining under the names of World Market, Cost Plus World Market, Cost Plus, buybuy BABY, CTS and Harmon, in the US and Canada. They also offer products through various websites.
Weak Results Reflect Rising Challenges
The company reported Q1 results last week. Adjusted earnings of 58 cents per share were down 27.5% year over year and also below the Zacks Consensus Estimate of 66 cents. Sales were also below estimates.
While comparable sales from digital channels had strong growth, comparable sales from stores declined in the mid-single-digit percentage range year-over-year.
Shares fell about 12% to their lowest level in eight years after the report.
Falling Estimates
Analysts have slashed their estimates for the company after weak results. Zacks Consensus Estimates for the current and next fiscal year have fallen to $4.04 per share and $3.91 per share from $4.29 each, before the results.
The company had missed in three out of past four quarters, with an average negative surprise of 7.1%.
The Bottom Line
In addition to disappointing foot traffic in malls, the retail space is going through a shift toward online shopping, particularly from Amazon. With tightening labor markets, wage pressure has also started hurting retailers.
The stock is down about 25% year-to-date but a rebound any time soon does not appear likely. Investors looking for a better play in the Retail sector could consider Big Five Sporting Goods BGFV, a Zacks Rank #1 (Strong Buy) stock.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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H&R Block, Inc. HRB: Free Stock Analysis Report
Bed Bath & Beyond Inc. BBBY: Free Stock Analysis Report
Big 5 Sporting Goods Corporation BGFV: Free Stock Analysis Report
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