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SOURCE Zacks Investment Research, Inc.
CHICAGO, Feb. 19, 2014 /PRNewswire/ -- Zacks Equity Research highlights Motorcar Parts of America (Nasdaq:MPAA-Free Report) as the Bull of the Day and FLIR Systems (Nasdaq:FLIR-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onHerbalife (NYSE:HLF-Free Report), NuSkin (NYSE:NUS-Free Report) and Avon (NYSE:AVP-Free Report).
Here is a synopsis of all five stocks:
Motorcar Parts of America (Nasdaq:MPAA-Free Report) recently delivered another impressive quarter as net sales jumped 29% and EPS more than doubled year-over-year. And once again, analysts revised their estimates significantly higher after the earnings report, sending the stock to a Zacks Rank #1 (Strong Buy).
Since the company's former subsidiary Fenco has been shuttered and liquidated, the company has delivered 3 consecutive positive earnings surprises, with an average beat of 43%. And since my colleague Brian Bolan first wrote about Motorcar Parts (MPAA - Snapshot Report) as the 'Bull of the Day' on November 22, 2013, shares have jumped more than +50%.
Motorcar Parts of America remanufactures, manufactures and distributes automotive aftermarket parts, including alternators, starters and wheel hub assembly products. The company sells its products automotive retailers like AutoZone and O'Reilly. The market for aftermarket auto parts remains strong as the age of vehicles in North America is approximately 10 years.
Motorcar Parts of America recently owned a subsidiary called Fenco that lost it a lot of money. Fenco sold undercar products like steering components, pumps and gears, brake calipers and master cylinders. MPAA acquired the company in May 2011 and tried to turn it around, but it was unsuccessful. On June 10, 2013, Fenco filed for Chapter 7 bankruptcy. It is now shuttered and has no recourse back to MPAA. Fortunately, because of the riskiness of the original acquisition, MPAA kept its debt isolated from the entire company.
FLIR Systems (Nasdaq:FLIR-Free Report) recently reported its third consecutive earnings miss. Management also provided 2014 guidance below consensus, prompting a flurry of negative estimate revisions from analysts.
It is a Zacks Rank #5 (Strong Sell).
Despite the disappointing financial results, shares of Flir Systems trade at a premium to their peers on a forward P/E basis. Investors should consider avoiding this stock until its earnings momentum improves.
FLIR Systems designs, manufactures, and markets sensor systems used in a variety of thermal imaging, situational awareness, and security applications.
FLIR Systems delivered disappointing Q4 results on February 7. Adjusted EPS came in at 35 cents, missing the Zacks Consensus Estimate of 39 cents. It was a -30% decrease from the same quarter last year.
Revenue rose 4% to $400.3 million as strength from its 'Commercial Systems' division offset weakness in 'Government Systems'. CEO Andy Teich stated that its sales "were impacted by slowed activity from domestic defense customers."
Herbalife Meets Estimates, Guides Higher
The long-running Wall Street soap opera known as Herbalife (NYSE:HLF-Free Report) reported earnings for its fiscal 4th quarter after the bell Tuesday. Both earnings and revenues came in-line with Zacks Consensus Estimates, but what's driving HLF shares higher in the after-market is its fiscal year earnings guidance, which has been raised to $5.85 - $6.05 per share -- well above our consensus of $5.37.
Revenues of $1.27 billion in the quarter matched the Zacks estimate exactly, as did earnings per share of $1.28. These numbers had been bumped northward following Herbalife's preliminary guidance a couple weeks ago, which did not at the time see much love from investors upon the update. Some observers found this a bit strange, however, especially seeing Herbalife increased its share buyback program to $1.5 billion, which was 50% higher than was expected.
Herbalife is, however, seeing some love now: HLF was up 3.8% prior to the earnings announcement in regular-day trading, and it's up another 2.4% as of this moment.
Shares of HLF fell three weeks ago amid the continued controversy regarding its business model as an unsafe investment by Senator Ed Markey (D-MA), following the insistent table-pounding from activist investor Bill Ackman that Herbalife is a "pyramid scheme." Herbalife endured an audit in mid-December 2013 and came out with a clean bill of health. This didn't stop Ackman from writing as letter to Herbalife investors about the company's "improper" sales recruiting methods inflating sales figures.
For an excellent and comprehensive -- if completely pro-biased -- account of this and many other aspects of the story surrounding this Zacks Rank #2 (Buy) company, please read Zacks Aggressive Growth Strategist Brian Bolan's Bull of the Day article from January 24, 2014 -- one day after shares fell 10% on Sen. Markey's actions inquiring to the SEC and FTC regarding Herbalife's operations.
Herbalife's business model is not as straightforward as some, but it isn't one-of-a-kind, either. Multi-level marketing companies like Herbalife, NuSkin (NYSE:NUS-Free Report) and Avon (NYSE:AVP-Free Report) all rely or had previously relied on recruitment of sales reps to sell their products. Herbalife, which specializes in nutritional supplies, seems to have precedent on its side... at least for the moment. Stay tuned!
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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.
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