For Immediate Release
Chicago, IL - January 10, 2019 - Zacks Equity Research Wynn Resorts WYNN as the Bull of the Day, Sprouts Farmers Market SFM asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Micron MU .
Here is a synopsis of all three stocks:
People often talk about stocks as if they are a gamble. To a certain extent, depending on your definition of the word "gamble" I suppose they are right. But what if you could take your hard-earned money and invest it in the casino? As they say in Vegas, "The house always wins." Today's Bull of the Day is a gaming stock that could be primed for a jackpot.
I'm talking about Zacks Rank #1 (Strong Buy) Wynn Resorts. Wynn Resorts, Limited owns and operates Wynn Las Vegas and Encore in Las Vegas, Nevada as well as Wynn Macau and the Wynn Palace located in the Special Administrative Region of Macau in the People's Republic of China. The Company holds more Forbes Travel Guide Five Stars than any other independent hotel company in the world and is led by Chairman of the Board and Chief Executive Officer, Mr. Stephen A. Wynn, who possesses more than 45 years of development experience of casino resorts.
The reason for the favorable Zacks Rank lies in the recen t earnings estimate revisions to the upside. Over the last week, two analysts have increased their earnings estimates for both the current year and next year. The upwards revision has pushed up our Zacks Consensus Estimate for the Current Year from $6.65 to $676 while next year's number has jumped from $5.99 to $6.26. The gaming industry currently ranks in the Top 40% of our Zacks Industry Rank.
After having a very rough period from a May high over $200 to a December low near $90, WYNN shares have bounced back along with the broad market. Shares have leapfrogged the 50-day moving average down at $105 to close yesterday at $114.37. The December high of $122 lingers as topside resistance. A move past that would put the 200-day into focus. That moving average is all the way up at $155.
There is no question that the market has been rallying sharply off the lows. That doesn't mean that you can jump out in this market and buy anything that moves. You really should make sure that the price movement can be sustained over the long run. What I mean by that is you should check the underlying earnings trend of the stock you are looking at. Stocks with strong earnings trends to the upside tend to outperform over time. Buying into stocks with weak trends just because they're on the move can be a recipe for disaster.
Today's Bear of the Day is a stock with an earnings trend that has been a bit negative. I'm talking about Zacks Rank #5 (Strong Sell) Sprouts Farmers Market. Sprouts Farmers Market, Inc., a healthy grocery store, provides fresh, natural, and organic food products in the United States. Its stores offer fresh produce, meat and seafood, deli and baked goods, packaged groceries, vitamins and supplements, bulk foods, dairy and dairy alternatives, frozen foods, beer and wine, and natural body care and household items. As of October 25, 2018, it operated 315 stores in 19 states.
The reason for the unfavorable Zacks Rank lies in the recent negative revisions to earnings estimates. Over the last ninety days, nine analysts have cut their earnings estimates for next year. The bearish moves have cut the Zacks Consensus Estimates from $1.41 to $1.32 for next year.
The Food - Natural Foods Products industry currently ranks in the Bottom 16% of our Zacks Industry Rank.
Why Was Micron (MU) Surging Wednesday?
Shares of Micron were up more than 6% through early afternoon trading Wednesday, as investors reacted to an analyst note that foresaw bullishness for the beaten-down memory chip market. Micron has now rebounded roughly 23.5% over the past two weeks.
The positive report was delivered by Bernstein's Mark Newman, who raised his rating for MU to "Outperform" and predicted that a turnaround in chip prices is on the horizon.
"After the sharp correction of memory stocks, and even with significantly lowered numbers, we now see more attractive risk/reward for 2019," Newman wrote in a note. "Sharper downturn is leading to faster supply response and earlier recovery in late 2019. The speed of this downturn is happening faster than usual, which should be a good thing."
Newman is describing a positive view of the ongoing cyclical rollover in the memory market. In his eyes, the peak-to-trough process will happen much quicker than in the past, and that's a positive for investors.
The analyst now thinks that industry earnings will bottom in the second quarter of 2019. This will lead to stabilization in the second half of the year and earnings growth in 2020, according to today's note. Given the forward-looking nature of stock prices, Newman thinks the risk/reward for Micron is "now too attractive to ignore."
Newman's optimism comes just one day after Samsung , the largest manufacturer of memory chips in the world, announced that its Q4 operating profit will decline by nearly 30%. This put pressure on Micron shares during Tuesday trading, although the stock managed to recoup nearly all of its morning losses.
Micron has now returned to levels it has not seen since before last month's disappointing earnings report and guidance. The chip manufacturer in December said it expects Q2 earnings to fall in the range of $1.65 to $1.85 per share, which was well below where estimates were prior to the announcement.
Nevertheless, Micron still has a long way to go if it plans on returning to the high-flying peaks of early 2018. The stock remains more than 45% lower than its 52-week high.
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Wynn Resorts, Limited (WYNN): Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis Report
Micron Technology, Inc. (MU): Free Stock Analysis Report
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