For Immediate Release
Chicago, IL – March 01, 2017 – Zacks Equity Research highlights Deere & Company (NYSE: DE – Free Report ) as the Bull of the Day Buffalo Wild Wings, Inc. (NASDAQ: BWLD – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Shares of GameStop (NYSE: GME – Free Report ), Microsoft (NASDAQ: MSFT – Free Report ) and Sony (NYSE: SNE – Free Report ).
Here is a synopsis of all five stocks:
Deere & Company (NYSE: DE – Free Report ) is sounding optimistic as its non-agriculture business appears to be rebounding. This Zacks Rank #1 (Strong Buy) raised guidance for 2017.
For 175 years, Deere has manufactured agriculture, construction and forestry equipment. Headquartered in Illinois, it now has worldwide operations.
Another Beat in Fiscal Q1
On Feb 17, Deere reported its fiscal first quarter 2017 results and beat the Zacks Consensus Estimate again. It reported $ 0.61 versus the consensus of $ 0.50.
Despite the weakness in the agriculture sector, the company hasn’t missed on earnings since 2013. That’s an impressive streak.
Sales in the quarter fell 1%, while equipment net sales in the US and Canada decreased 8%. Outside of the US, net sales rose 11%, with a favorable currency-translation effect of 1%.
The company’s been cutting costs aggressively during this agriculture downturn and that will make for a lean, mean fighting machine once agriculture’s fortunes rise.
Outlook for 2017 Improving in Construction and Forestry
Everyone knows the pain in the agriculture sector. Low crop prices mean less income for farmers so there are less equipment sales.
For 2017, Deere forecasts agriculture and turf equipment sales to rise by about 3%. Industry sales for agriculture equipment in the US and Canada are forecast to be down 5% to 10% for the year as crop prices remain weak.
But many in the industry believe that 2017 could be the bottom of the weak agriculture cycle.
Construction & Forestry is where the optimism reigns. Deere sees worldwide sales up about 7%, reflecting moderate economic growth worldwide.
Earnings Estimates on the Rise
Deere raised its full year forecast moderately, which resulted in the analysts doing the same.
Suddenly, things don’t look so dire at the equipment makers.
4 estimates were raised for 2017 which pushed up the Zacks Consensus Estimate to $ 4.67 from $ 4.40 just 7 days ago.
But even with the optimism, it’s important to look at what has happened to Deere’s earnings over the last 5 years. This looks like it could be the bottoming though.
Buffalo Wild Wings, Inc. (NASDAQ: BWLD – Free Report ) is still struggling to find itself after a tough 2016. This Zacks Rank #5 (Strong Sell) recently guided below the consensus estimate for 2017.
Buffalo Wild Wings operates more than 1,220 restaurants around the world selling Buffalo, New York-style chicken wings. It specializes in 21 different varieties.
The restaurants also operate extensive multi-media systems where customers can watch their favorite sporting events.
Big Miss in the Fourth Quarter of 2016
On Feb 7, Buffalo Wild Wings reported its fourth quarter and full year 2016 results. It missed on the Zacks Consensus Estimate by 29%. Earnings were just $ 0.87 versus the consensus of $ 1.23.
Revenue rose just 0.8% to $ 494.2 million.
Same-store sales followed a pattern that was common throughout 2016 as they fell 4% at company-owned restaurants and 3.9% at franchised restaurants.
For the full year, while revenue jumped 9.6% to $ 2 billion, same-store sales finished down 2.4% at company-owned and down 2.7% at franchised restaurants.
Guided Under Consensus for 2017
Buffalo Wild Wings guided the full year earnings in the range of $ 5.60 to $ 6.00 per share.
That was significantly under the analysts’ consensus estimate of $ 6.53.
As a result, 12 analysts have cut their estimates, pushing the Zacks Consensus Estimate down to $ 5.75, which is towards the lower end of the company’s guidance range.
Analysts also lowered estimates for 2018, with the Zacks Consensus falling to $ 6.77 from $ 7.66 in the last month.
Additional content:
GameStop (GME) Tanks on Xbox Game Pass News
Shares of GameStop (NYSE: GME – Free Report ) dropped more than 8.5% in late afternoon trading Tuesday following the announcement of Xbox Game Pass, a subscription-based gaming service that stands to threaten the video game retailer’s business model.
Xbox Game Pass promises to be the Netflix (NFLX) of the gaming world, giving users access to a library of on-demand games for just a $ 10 per month subscription. The service will launch later this spring with over 100 Xbox and Xbox 360 games available to play and download on the Xbox One.
Although Microsoft (NASDAQ: MSFT – Free Report ), the developer of the Xbox brand, has yet to release a full list of available titles, a teaser page for Game Pass includes games like Halo 5 , Fable III , Gears of War: Ultimate Edition , and NBA 2k16.
(Also Read: 3 Video Game Stocks to Buy Right Now )
GameStop is feeling the effects of the announcement because a subscription-based service like Game Pass seriously threatens its business model. In a world where most new games can already be downloaded straight to the console, one of GameStop’s only remaining appeals is its used game library.
Each individual GameStop store has its own selection of used games, and this works perfectly for gamers looking for playable, recent-but-outdated titles. If you can access all of these games through a $ 10 a month subscription, why even bother heading into a GameStop store?
What’s worse is that Xbox Game Pass is likely just one of the first steps in the industry-wide acceptance of subscription services. Sony (NYSE: SNE – Free Report ) already has its PlayStation Now service, which allows PS4 users to stream PS3 games, but now Microsoft has joined the fray and upped the ante by giving gamers the ability to download from its library.
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Deere & Company (DE): Free Stock Analysis Report
Buffalo Wild Wings, Inc. (BWLD): Free Stock Analysis Report
Gamestop Corporation (GME): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
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