Best Buy, Groupon, Fortinet, Check Point Software Technologies and Zix highlighted as Zacks Bull and Bear of the Day

Elva Mankin

For Immediate Release Chicago, IL – July 28, 2020 – Zacks Equity Research Shares of Best Buy Co. BBY as the Bull of the Day, Groupon GRPN asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Fortinet, Inc. FTNT, Check Point Software Technologies Ltd. CHKP and […]

For Immediate Release

Chicago, IL – July 28, 2020 – Zacks Equity Research Shares of Best Buy Co. BBY as the Bull of the Day, Groupon GRPN asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Fortinet, Inc. FTNT, Check Point Software Technologies Ltd. CHKP and Zix Corp. ZIXI.

Here is a synopsis of all five stocks:

Bull of the Day:

Headquartered in Richfield, MN, Best Buy Co. is a popular consumer electronics retailer that offers a wide range of home office products, entertainment software, communication, appliances, wellness, heath, security, appliances and related services.

Q1 Earnings Recap

Overall, Best Buy reported better-than-expected first quarter fiscal 2021 earnings, despite selling off by nearly 6% after the report was released.

The retailer beat consensus estimates on both the top and bottom line, earning $0.67 per share on sales of $8.56 billion. However, BBY suffered some pretty tough year-over-year comparisons. Revenue fell 6% over the prior-year period, and profits shrank by 38%.

As is a common narrative nowadays, the coronavirus pandemic played a big part in Best Buy’s Q1 sales and earnings declines, thanks to store closures and a curbside-only business model, though digital sales skyrocketed 155% year-over-year in the U.S.

It didn’t take BBY too long to start growing again, and just last week said that it has returned to revenue gains as of mid-July. Revenue is up 2.5% so far for Q2, and store locations that have reopened have contributed to the solid rebound.

Best Buy’s online channel continues to be strong, and sales have climbed a massive 255% for the second quarter.

The company hasn’t provided investors any long-term guidance, but that’s to be expected.

“Strong consumer demand, combined with shopping experiences that emphasize safety and convenience, has helped produce our sales results to date,” said CEO Corie Barry in a press release.

BBY Is Rallying

Since March 23, shares of BBY have climbed almost 90% compared to the S&P 500’s 40.5% increase. Earnings estimates have been rising too, and BBY is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, eight analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 58 cents to $5.57 per share. Earnings are expected to fall 8.2% compared to the prior year period, but 2021 looks strong, and earnings are expected to see double-digit year-over-year growth.

Going forward, Best Buy will likely benefit from a high, sustained surge in online shopping and overall e-commerce demand. Because of its supply chain initiatives, customers are now receiving their goods faster, both online and for in-store pickup.

The company also offers shareholders a nice dividend, currently yielding almost 2.3% on an annual basis. Plus, shares trade at a very reasonable trailing P/E of 16.8X, making it relatively inexpensive compared to the broader retail sector (35.4X) and S&P 500 (20.8X).

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep BBY on your shortlist.

Bear of the Day:

Groupon is an app and website that offers daily discount deals. Through its Local Deals, the company acts as a third-party marketing agent and sells vouchers, known as Groupons, which users can redeem against products or services at merchant locations.

How Covid-19 Has Impacted GRPN

Investors were disappointed with Groupon’s first-quarter earnings report back in June. The stock tumbled 9% the morning after the results were released.

Even though the company beat analyst expectations on the bottom line, reporting an adjusted loss of $1.63 per share, revenue of $371 million lagged forecasts.

Gross billings of $526.7 million slumped 31.5% year-over-year, while gross profits plunged 34% to $201 million.

Covid-19 hit overall business hard in March; demand for its vouchers fell drastically, and refund levels soared in the company’s primary goods segment. But Groupon did initiate a restructuring plan at the beginning of the pandemic, and is hoping to save $100 million this year and $125 million in 2021.

“Once fully implemented, we expect our multi-phase restructuring plan to deliver approximately $225 million in annualized cost savings,” said interim CEO Aaron Cooper.

Bottom Line

GRPN is now a Zacks Rank #5 (Strong Sell).

Three analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen well over two dollars to a loss of $5.10 per share; earnings are expected to see a triple-digit decline for fiscal 2020.

Groupon reports Q2 earnings after the bell on Tuesday, August 4, so these estimate figures could change afterwards.

Shares have fallen over 40% since its Q1 earnings. The company also recently announced a reverse stock split, which sent many investors to cash out and sell their holdings before the split became effective. GRPN fell more than 12% on that news.

Groupon will likely have a long, hard road ahead of it. According to analysts polled by S&P Global Market Intelligence, the company hasn’t reported a profit in the past two years, and isn’t expected to return to profitability until 2024 at the earliest.

While there’s certainly still consumer and market interest for Groupon’s products, they become a much more difficult sell when the number of coronavirus cases continues to rise and unemployment numbers still rest at historic highs.

Additional content:

3 Cybersecurity Stocks to Buy at a Time of Global Remote Work

Cybersecurity has become a matter of great importance over the past few months, as most of the employees across the country have taken to working from home amid the pandemic.

In fact, as the number of coronavirus infections keeps surging in the United States, companies have prompted their staff to continue working remotely and are now faced with the challenging task of adapting their security measures to meet the need of the hour.

Therefore, now would be the ideal time to invest in companies that are increasingly dealing with cyber attacks and offer products and services to strengthen cybersecurity.

Cyber Security Market Promises Growth Ahead

According to Cybersecurity Ventures, global spending on cybersecurity products and services are expected to surpass $1 trillion cumulatively from 2017 to 2021.

Per Gartner, global expenditure on information security (which is a subset of the broader cybersecurity market) products and services were more than $114 billion in 2018, up 12.4% from 2017. Gartner forecasts the cybersecurity market to rise to $170.4 billion in 2022.

Factors Boosting Need for Global Cyber Security

Unlike other areas of technology, which derive their growth from reducing inefficiencies and raising productivity, cybersecurity is driven by cybercrime. One may consider the current work scenario as a demanding one in terms of cybersecurity as people are having to deal with large volumes of sensitive and proprietary data online.

After all, as more employees work from home amid the pandemic and many companies advise their staff to continue to do so until next year, cybersecurity is an issue that needs to be addressed urgently. In fact, companies such as Twitter, Inc. have advised their staff to work from home permanently if they want to. Developments such as this on the workspace front have brought to attention the intricacies of security online, as sensitive data gains more exposure.

In addition, the usage of multiple devices such as mobile phones, laptops and tablets have also brought the issue of cybersecurity to the forefront. Increasing access to the Internet and unauthorized access to critical data are also major factors behind cyber attacks.

In fact, more exposure to the Internet without following security measures such as privacy screens, background-checking on new employees and introduced measures to monitor new hires during the pandemic along with accessing an unsecured network are also pushing the need for a more secure system to shield one’s data from cybercrimes.

3 Stocks to Buy

We have, therefore, chosen three cybersecurity stocks from the Zacks Security industry. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortinet, Inc. is a provider of broad, integrated and automated cybersecurity solutions. Fortinet has an expected earnings growth rate of 13.8% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has moved 1.4% north in the past 60 days. 

Check Point Software Technologies Ltd. is a developer of a range of products and services for IT security. Check Point Software Technologies has an expected earnings growth rate of 5.7% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has moved 2% north in the past 60 days.

Zix Corp. is a provider of services such as email encryption, data loss prevention, threat protection and archiving for the secure exchange of email. Zix has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the company’s current-year earnings has moved 1.8% north in the past 60 days.

Zacks Top 10 Stocks for 2020

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Check Point Software Technologies Ltd. (CHKP) : Free Stock Analysis Report
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