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For Immediate Release
Chicago, IL – December 1, 2020 – Zacks Equity Research Shares of Capri Holdings Limited CPRI as the Bull of the Day, Edgewell Personal Care Company EPC asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Moderna, Inc. MRNA, Novavax, Inc. NVAX and Zoom Video Communications, Inc. ZM.
Here is a synopsis of all four stocks:
Bull of the Day:
Capri Holdings is a luxury retail holding company that specializes in men’s and women’s ready-to-wear apparel, accessories, and footwear. Its brand portfolio includes Michael Kors, Jimmy Choo, and Versace, each making up 75%, 10%, and 15% of total revenue, respectively.
Q2 Earnings Impress
Shares of Capri rose over 8% after the retailer reported better-than-expected second quarter results.
Revenue fell 23% to $1.11 billion but handily beat estimates of $924.9 million. The company’s top line benefited from e-commerce growth, which solidly increased quarter-over-quarter, and positive sales growth in China.
Jimmy Choo was the best performing brand, with revenue down only 2.4%.
Additionally, Capri succeeded in controlling costs in Q2 thanks to initiatives like limiting advertising spending; adjusted operating margin rose 240 basis points to 16.4%.
Because of this, the company reported a strong profit of $0.90 per share compared to estimates of $0.04 per share.
As the world continues to emerge from this crisis, we are increasingly optimistic about the outlook for the fashion luxury industry and Capri Holdings,” said CEO John Idol.
CPRI Is Surging
Since March 23, shares of Capri have climbed over 262%. Estimates have been rising too, and CPRI is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, nine analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $0.47 per share to $1.21 per share. Earnings are expected to decline for the current fiscal year, but in 2021, CPRI’s bottom line is expected to see triple-digit year-over-year growth.
Due to the pandemic and related uncertainty, Capri didn’t provide guidance for Q3 or the rest of the fiscal year.
But Capri is well-positioned as the coronavirus pandemic continues. Q2’s results showed that it can generate much-needed profits in trying times, utilizing all three of its brands’ popularity in China (where the economy has bounced back and consumers are shopping at pre-pandemic levels) as well as its overall digital strength.
If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep CPRI on your shortlist.
Bear of the Day:
Edgewell Personal Care Co. manufactures and markets personal care products. Its brand portfolio consists of Schick, Skintimate, Wilkinson Sword men’s and women’s shaving products and disposable razors; Banana Boat and Hawaiian Tropic sun care products, Diaper Genie; Playtex, Stayfree, and Carefree feminine care products; and Wet Ones wipes.
Q4 Earnings Recap
Both the top and bottom line beat the Zacks Consensus estimate but were still down year-over-year.
Adjusted EPS was $0.59 and revenue fell 7.4% to $488.8 million, while organic net sales were down 3.5%
Looking at segment performance, Wet Shave sales decreased 4%; Sun and Skin Care jumped 15% thanks to strong demand for Wet Ones; and Feminine Care fell 10.8% due to Covid-19 related category softness.
Gross margin increased 180 basis points for the quarter, while gross profit decreased $7.9 million compared to the prior year period.
EPC is now a Zacks Rank #5 (Strong Sell).
Four analysts cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 18 cents to $2.72 per share; earnings are expected to be flat for fiscal 2021.
Shares have gained 48% since the March lows, but are lagging the S&P 500’s 57+% rebound during the same time frame.
For fiscal 2021, Edgewell expects net sales to increase in the mid-single digits, with organic sales growth in the low-single digits; adjusted EPS is expected in the range of $2.62 to $2.82
Edgewell is continuing to work on beefing up its online presence, which it will need to drive sales in the short- and long-term, as well as to better compete with competitors like Dollar Shave Club.
Management is confident in EPC’s positioning going forward, and while the company looks to be on the road to recovery, the Covid-19 crisis will likely be a growth obstacle for a while now, as the pandemic has altered the way in which consumers shop for everyday necessities.
Markets Sell, but November Overall Great; Plus ZM’s Q3 Beat
Market indexes were down on the last trading day of November, though it still managed to be an historically strong month for stocks overall, and across the board. Covid-19 vaccines and a presidential election that erased uncertainty going into 2021 were the main catalysts. They proved to have far-reaching indications, with mean reversion coming back in a big way to industries that had been downtrodden earlier in the year, like Energy and Airlines.
The Dow fell -0.89% or 266 points, followed by the S&P 500 at -0.45%. Both indexes are roughly +11% for the month, however; it’s the best S&P 500 month since April, and the best monthly Dow performance since January 1987. The Nasdaq had actually posted a new intraday high earlier in the session, but finished dipping 0.06% in the negative. The Nasdaq also saw its best trading month since April. The Russell 2000, which saw its best month ever in November 2020, dropped nearly 2% on the day.
For sure Moderna was going to have a great day, +20%. After all, it’s not every day you post results of a vaccine trial to end a global pandemic with 100% efficacy among its most severe cases. But even Novavax, which announced earlier Monday it was delaying its late-stage Covid vaccine trial in the U.S., rose 11% in the session. Market participants are clearly pleased with pharma and biotech efforts regarding vaccine candidates that everyone’s boat is getting lifted today.
December will bring about a number of challenges — the U.S. pandemic keeps setting new records, with a widely available vaccine not until sometime likely in the spring of next year — but also carries forth some hope. President-elect Biden’s choice for Treasury Secretary, Janet Yellen, has already stated plainly that more economic stimulus is needed promptly to assist individuals and small businesses. Thus, questions whether efforts will be made to extend stimulus measures — like we have seen over the past several months — look like they are about to be a thing of the past.
Zoom Video shares fell 7% in the early after-market Monday, following its Q3 earnings results which “zoomed” ahead of estimates on both top and bottom lines: 99 cents per share easily beat the 75 cents in the Zacks consensus, and were 11x the year-ago earnings result. Revenues of $777 million were well higher than the $694.5 million expected, representing growth of 367% year over year. Zoom has not missed on earnings since its IPO in early 2019.
Shares have buoyed back somewhat, but remain around -5% following the results. Guidance was raised for both Q4 and full-year; in fact, initial guidance for 2020 revenues a year ago was for around $1 billion — currently, it is guiding north of $2.5 billion for the year. Zoom tallies 433,700 customers with 10 or more employees, +485% year over year.
However, perhaps it is the overlying narrative of the U.S. economy going into 2021 that is causing this sell-the-news on Zoom’s results. After all, this is pretty much the epitome of a “stay at home” stock; if a widespread vaccine makes “stay at home” less pertinent, that could mean a lower trajectory for the company in the future.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it’s predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce “the world’s first trillionaires,” but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks’ 3 Best Stocks to Play This Trend >>
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Moderna, Inc. (MRNA): Free Stock Analysis Report
Novavax, Inc. (NVAX): Free Stock Analysis Report
Edgewell Personal Care Company (EPC): Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM): Free Stock Analysis Report
Capri Holdings Limited (CPRI): Free Stock Analysis Report
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