iRobot, Alaska Air, SAP, PulteGroup and Twilio highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
·9-min read

For Immediate Release

Chicago, IL – October 27, 2020 – Zacks Equity Research Shares of iRobot Corporation IRBT as the Bull of the Day, Alaska Air Group, Inc. ALK asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on SAP SE SAP, PulteGroup, Inc. PHM and Twilio Inc. TWLO.

Here is a synopsis of all five stocks:

Bull of the Day:

iRobot is one of the "stay at home" winners during the coronavirus pandemic. This Zacks Rank #1 (Strong Buy) saw third quarter revenue jump 43% year-over-year as consumers rushed out to buy the Roomba and other products.

iRobot designs and builds robots for us both inside and outside the home. It’s products include the home robot Roomba Robot Vacuum which debuted in 2002 as well as the Braava family of mopping robots.

Big Earnings Beat in the Third Quarter

On Oct 20, iRobot reported its third quarter results and beat the Zacks Consensus by 183%. It reported earnings of $2.58 versus the consensus of just $0.91.

Revenue jumped 43% to $413.1 million from $289.4 million in the year ago quarter.

The US saw 75% revenue growth with 22% in EMEA and 12% in Japan over the prior year.

Online was hot on the company’s website and app as well as on traditional retailers’ websites. It grew about 70% and represented approximately 60% of the entire quarter’s revenue.

Direct-to-consumer jumped 155% to $35 million versus the third quarter of last year.

Full Year Guidance Above Expectations

With a strong third quarter, the extension of its tariff exclusion until the end of the year and bullish orders for the upcoming holiday season, the company sees fiscal 2020 above its original 2020 guidance.

Earnings are now expected in the range of $3.43 to $3.53.

However, even with the analysts raising the Consensus, it is still falling a bit short with the Zacks Consensus jumping to $2.98 from $2.45 in the last week. I would expect the consensus to rise further from here.

That’s earnings growth of just 0.3% as the company made $2.97 last year, but look for it to move higher to be in line with the company’s guidance range.

Plenty of Cash and Teladoc Health Stock on Hand

As of Sep 26, 2020, iRobot had $357.3 million in cash, cash equivalents and short-term investments on hand. That’s up from $242.3 million as of June 27, 2020.

It received about $35 million in tariff-related refunds  and approximately $52 million in Teladoc Health stock which it got in the third quarter when Teladoc Health acquired the company’s stake in InTouch Health.

iRobot’s Teladoc Health shares are subject to sales restrictions until early 2021.

iRobot has no debt but it does have access to a $150 million unsecured revolving line of credit.

Shares Soar in 2020

Wall Street has deemed iRobot a pandemic winner as its shares have soared 61.9% in 2020.

Shares aren’t cheap, on a P/E basis, with a forward P/E of 28.

But for investors looking for a company with no debt, cash on hand and a hot product for the home, iRobot is one to keep on your short list.

Bear of the Day:

Alaska Air Group is caught in the coronavirus cross hairs. This Zacks Rank #5 (Strong Sell) is looking forward to a recovery in travel in 2021.

Alaska Air Group operates Alaska Airlines and Horizon Air to more than 115 destinations across the United States and North America. It has hubs in Seattle, San Francisco, Los Angeles, Portland, Oregon and Anchorage.

A Miss in the Third Quarter

On Oct 22, Alaska Air reported its third quarter results and missed on the Zacks Consensus by 12.9%.

Earnings were a loss of $3.23 versus the consensus of a loss of $2.86.

It was the second earnings miss in a row but both quarters were impacted by the coronavirus pandemic.

Alaska reduced its cash burn rate in the third quarter to $4 million a day from $5 million a day in the second quarter as it saw improvement in the business each month of the quarter.

To soothe nervous fliers, it also extended its blocking of the middle seat on its aircraft through Jan 6, 2021.

Cash on Hand

As of Oct 21, 2020, Alaska had $3.7 billion in cash and marketable securities and $5.5 billion in total liquidity.

2020 and 2021 Earnings Estimates Cut Again

The analysts have gotten more bearish on Alaska in the last month.

5 estimates for 2020 have been cut in the last 30 days, with one in the last week after the earnings report.

The Zacks Consensus has fallen to a loss of $9.04 from a loss of $8.58 just a month ago. That’s a loss of 240% as Alaska Air made $6.42 in 2019.

The analysts are also more bearish on 2021.

2 estimates have been cut in the last week with the Zacks Consensus falling to $1.03 from $2.37 just 30 days ago.

Shares Still Down in 2020

While the shares got a bump off the March coronavirus lows, they have stagnated the last few months and are still down 43% year-to-date.

It’s no better anywhere else in the industry.

There are no Zacks #1 (Strong Buy) or #2 (Buy) airline stocks. American Airlines is a Zacks Rank #3 (Hold). But Delta joins Alaska in being a Zacks #5 (Strong Sell).

Investors may want to stay on the sidelines until travel begins to pick up further.

Additional content:

Markets Tank, but Off Monday Lows

We saw the start of the concerns affecting the market in early trading Monday before the opening bell: European countries enduring a “second wave” of Covid-19 virus cases were leading to lower guidance from tech giants like SAP. This put pre-market trading here at home into the red, around -350 on the Dow, -120 on the Nasdaq and -40 on the S&P 500.

From there, things got worse: vanishing enthusiasm for a stimulus deal passing Congress helped the major indexes hit day lows mid-afternoon, before recovering somewhat. We closed with the worst single trading day since early September: Dow -650 points, -2.3%; the S&P 500 -64, -1.86%; and the Nasdaq -189, -1.64%. For the Nasdaq, it’s the seventh close lower in the past 10 sessions. The Dow has managed to lose its entire gains from October so far. All 11 sectors on the S&P 500 finished lower.

New Home Sales fell 3.5% month over month in Monday’s latest report to 959K for the month of September, missing analyst estimates for over a million new units sold. That said, this metric maintained a robust 32% growth year over year. Seasonality plays a part, of course, as fewer new homes are built and sold in colder months, but the real story here makes these headlines more palatable: annual supply is down 32% from a year ago.

Shortages in land and labor — hindered, like so many other things, by the “shelter in place” initiatives to combat the pandemic earlier this year — have led to the shortfall. But the good news here is that demand is not the problem; things like higher prices for building materials, along with a shortage of plots and new structures, are what kept these figures down last month. PulteGroup sold off 3.5% in regular trading.

Cloud platform company Twilio posted a big beat on its Q3 bottom line Monday afternoon, swinging to a profit of $0.04 cents per share from the Zacks consensus of -$0.05 per share, on quarterly sales of $448 million — up 52% year over year and well beyond the $405 million our analysts were expecting. Active Customer Accounts grew 21% year over year, and the company now expects revenues of between $450-455 million in Q4; the Zacks consensus had been $428 million.

On the earnings side, Twilio is no stranger to big earnings beats. The company has never missed an estimate on its bottom line since its IPO in 2016, with a trailing four-quarter average earnings beat of more than 200%. We expect this earnings report will spur analysts to raise estimates for Q4 and take Twilio’s Zacks Rank up from a #4 (Sell) issued prior to the earnings beat.

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PulteGroup, Inc. (PHM) : Free Stock Analysis Report
 
SAP SE (SAP) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
iRobot Corporation (IRBT) : Free Stock Analysis Report
 
Twilio Inc. (TWLO) : Free Stock Analysis Report
 
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