For Immediate Release
Chicago, IL – November 1, 2022 – Zacks Equity Research shares Wingstop WING as the Bull of the Day and Sleep Number SNBR as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Qualcomm Inc. QCOM, Unity Software Inc. U and United States Cellular Corp. USM.
Here is a synopsis of all five stocks:
Bull of the Day:
The key word of 2022 has been "inflation." We saw it in every facet of the economy from food prices to housing to watches. The red-hot CPI numbers have reflected this new reality. Recently though, these prices have come down off their highs. The data shows inflation cooling all around us. Food prices have certainly reeled in a bit. In the restaurant biz, I know people who paid $100+ for a 40-pound box of chicken wings not too long ago. That number is now down to $66.
That should be a wind in the sales of today's Bull of the Day, Wingstop. Wingstop operates restaurants under the Wingstop brand name. Its restaurants offer classic wings, boneless wings, and tenders that are cooked-to-order, and hand-sauced-and-tossed in various flavors. As of December 25, 2021, the company had 1,695 franchised restaurants and 36 company-owned restaurants in 44 states and 7 countries worldwide.
The reason for the favorable Zacks Rank is the influx of positive earnings estimate revisions coming from analysts. Over the last week alone, eight analysts have increased their earnings estimates for both the current year and next year. The bullish sentiment has pushed up our Zacks Consensus Estimates for the current year from $1.57 to $1.64 and next year from $1.84 to $1.92.
That means that current year EPS growth estimates are up at 21%, with next year coming in at 17%. Translated over to the revenue side of the equation, we are looking at 25% growth this year and 18% next year. I am sure that new chicken sandwich is helping things along as well.
Bear of the Day:
The COVID-induced work-from-home (WFH) revolution set about a sequence of events that shifted the behavior of consumers around the world. There was a huge increase in purchases related to making your home life more comfortable. It helped provide a tailwind to companies that sold furniture of all types. That huge influx of money has come and gone. Now, furniture retailers are faced with a new normal, and comps which are going to be impossible to meet.
One company struggling to keep up with a high bar is today's Bear of the Day, Sleep Number. Sleep Number Corp. offers sleep solutions and services in the United States. The company designs, manufactures, markets, retails, and services beds, pillows, sheets, and other bedding products under the Sleep Number name. It also provides adjustable bases under the FlextFit, and smart beds under the Sleep Number 360 brands. The company sells its products directly to consumers through retail, online, phone, and chat as well as through its e-commerce activities. As of January 2, 2022, it operated approximately 648 retail stores in 50 states.
The stock is currently a Zacks Rank #5 (Strong Sell). The reason for the unfavorable rank is the series of negative earnings estimate revisions coming from analysts. Over the last thirty days alone, four analysts have slashed their earnings estimates for the current year and next year. The bearish moves have dropped current-year Zacks Consensus Estimates from $3.49 to $1.70 while next year's number is off from $4.20 to $1.85.
The Furniture industry is in the Bottom 35% of our Zacks Industry Rank. There are a couple of stocks within the industry that are in the good graces of our Zacks Industry Rank.
Can Top-Line Growth Benefit Qualcomm's (QCOM) Q3 Earnings?
Qualcomm Inc. is set to report fourth-quarter fiscal 2022 results on Nov 2, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 3.5%. It pulled off a trailing four-quarter earnings surprise of 8.5%, on average.
This San Diego, CA-based company is expected to have recorded higher revenues year over year, driven by the ramp-up in 5G-enabled chips and strength in its Snapdragon portfolio. The company is increasingly benefiting from advanced radio frequency front-end solutions for high-performance 5G devices and automotive chips.
Factors at Play
During the quarter, Qualcomm extended its long-standing seven-year association with Meta Platforms, Inc. to manufacture new customized processors for the latter's Quest virtual reality (VR) headsets. Meta's Quest and Quest 2 VR headsets work on Qualcomm's Snapdragon chips. The new chips for VR headsets will operate on Qualcomm's Snapdragon extended reality processors.
It also inked an agreement with chipset manufacturer GlobalFoundries to manufacture advanced 5G multi-gigabit speed RF front-end products to cater to higher demands. The firms extended their RF collaboration to provide sturdy low-power semiconductor solutions with high cellular speeds, enhanced coverage and maximum power efficiency. Such innovative products are likely to have translated into higher revenues in the quarter.
In the to-be-reported quarter, Qualcomm launched its premium wearable platforms, Snapdragon W5+ Gen 1 and Snapdragon W5 Gen 1, for extended battery life and premium user experience. Its flagship Snapdragon 8+ Gen 1 mobile platform is powering Samsung Electronics' latest cutting-edge foldable smartphones, the Samsung Galaxy Z Fold4 and Galaxy Z Flip4. The new Galaxy Z series devices will also feature the latest Qualcomm FastConnect 6900 Mobile Connectivity System for fast, sustained Wi-Fi and Bluetooth connection. These are likely to have generated incremental revenues in the quarter.
In the fiscal fourth quarter, Qualcomm's automotive design-win pipeline soared to $30 billion. Driven by the increasing adoption of Snapdragon Digital Chassis solutions across the auto industry, the design win portfolio has improved by more than $10 billion sequentially. Qualcomm is witnessing healthy traction in EDGE networking that helps to transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets. These are likely to be reflected in the upcoming results.
For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $11,382 million, indicating growth of 21.9% from the year-ago quarter's reported figure. The consensus estimate for adjusted earnings per share stands at $3.15, which suggests an increase of 23.5%.
Our proven model does not predict an earnings beat for Qualcomm for the fiscal fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.42%, with the former pegged at $3.07 and the latter at $3.15. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Rank: Qualcomm has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Unity Software Inc. is set to release quarterly numbers on Nov 9. It has an Earnings ESP of +18.52% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here.
The Earnings ESP for United States Cellular Corp. is +47.46% and it sports a Zacks Rank of 1. The company is set to report quarterly numbers on Nov 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
United States Cellular Corporation (USM) : Free Stock Analysis Report
Wingstop Inc. (WING) : Free Stock Analysis Report
Sleep Number Corporation (SNBR) : Free Stock Analysis Report
Unity Software Inc. (U) : Free Stock Analysis Report
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