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Facebook, Newell Brands and Tableau Software highlighted as Zacks Bull and Bear of the Day

NantHealth, Inc. (NH) delivered earnings and revenue surprises of 23.08% and -10.83%, respectively, for the quarter ended September 2018. Do the numbers hold clues to what lies ahead for the stock?

For Immediate Release

Chicago, IL – Feb 2, 2018 – Zacks Equity Research highlights Facebook, Inc. FB as the Bull of the Day, Newell Brands NWL as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tableau Software Inc. DATA.

Here is a synopsis of all three stocks:

Bull of the Day:

Social media behemoth Facebook, Inc. has been a “must-own” internet stock for years now, primarily because of the company’s remarkable ability to expand its core business. Facebook continued that trend with its latest quarterly earnings report. Now, despite spending concerns, Facebook has set itself up for a strong 2018—and beyond.

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Facebook operates its titular social networking website, as well as the popular image sharing platform Instagram and messaging application WhatsApp. The company’s networks are incredibly popular on the web and on mobile platforms, including iOS and Android. Facebook reaches more than two billion monthly active users (MAUs) around the world.

On Wednesday afternoon, the Mark Zuckerberg-led company once again reported better-than-expected quarterly results on both the top and bottom line. Facebook also witnessed strong growth in key geographic regions and reminded investors that it is well prepared for the future of the technology sector.

Latest Earnings Results

Facebook reported adjusted earnings of $2.21, beating the Zacks Consensus Estimate of $1.96 per share. The company notched total revenues of $12.97 billion, surpassing our consensus estimate of $12.58 billion. These results marked year-over-year growth of 77.4% and 47.3%, respectively.

Changes to the U.S. tax code impacted earnings by $0.77 per share. Factoring in these costs, Facebook reported earnings of $1.44 per share—still about 20% higher than the year-ago quarter. Daily active users reached an average of 1.40 billion in December. Monthly active users were 2.13 billion at the end of the quarter, an increase of 14% year-over-year.

Facebook also continued its shift to a primarily mobile focus. Mobile advertising revenue accounted for about 89% of total advertising revenue in the quarter, up from approximately 84% in the year-ago period.

The company also said that its cash, cash equivalents, and marketable securities totaled $41.71 billion at the end of the quarter.

“2017 was a strong year for Facebook, but it was also a hard one,” said Zuckerberg. “In 2018, we're focused on making sure Facebook isn't just fun to use, but also good for people's well-being and for society.”

Zuckerberg is starting to touch on a topic here that many investors are concerned about: the company’s pledge to spend more money on security and content vetting. The earnings report also showed that Facebook increased its headcount by 47% in 2017, indicating that the company had already hired many new employees to help with this goal.

Increased spending is something that investors will always worry about, but Facebook’s changes should help improve its user experience down the line. For example, a recent change to the News Feed has led to reduced time spent on the platform by roughly 50 million hours every day.

But the News Feed change has also reduced the amount of clutter and meaningless viral content that a user sees. This means that users can more easily engage with content that they like—things that they are more likely to click on or share.

We also know that Facebook has invested heavily in video content. This has helped lift revenues, as advertisers typically consider video ads to be more valuable than traditional banner ads.

Another key catalyst to Facebook’s growth is its expansion in key markets. Facebook topped our revenue projections for the Asia-Pacific region, totaling $2.059 billion. This result was 52.6% higher than the year-ago period and ahead of our consensus estimate of $2.040 billion.

Facebook also witnessed its monthly user base surge by 23% in Asia. This region is now Facebook’s largest geographic area based on total number of users.

Going forward, Asia should continue to be a catalyst for Facebook. The platform has only just scraped the service of its potential audience in the region, and several population-rich countries are still expanding their access to the internet.

Bear of the Day:

For manufacturers of many traditional consumer staples, the past several years have been a transitionary period. Consumer habits are shifting, product preferences are changing, and companies are responding. But for investors, now might be a good time to avoid these types of companies, including home goods giant Newell Brands.

Newell Brands is a leading global consumer goods company with a strong portfolio of well-known brands, including Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Coleman, Jostens, Marmot, Rawlings, Oster, Sunbeam, FoodSaver, Mr. Coffee, Rubbermaid Commercial Products, Graco, Baby Jogger, NUK, Calphalon, Rubbermaid, Contigo, First Alert, Waddington and Yankee Candle.

The company recently accelerated its transformation plan, but investors have not responded well to its results so far. The stock has dipped more than 15% over the past month, including a plunge this week on the back of soft preliminary results for the remainder of fiscal 2017. Newell Brands is currently sporting a Zacks Rank #5 (Strong Sell).

Latest Outlook

Earlier this week, Newell lowered its projections for fiscal 2017. The company now expects core sales growth of nearly 0.8%, down from the 1.5% to 2% growth predicted earlier. Adjusted earnings are expected to fall in the range of $2.72 per share to $2.76 per share, down from the previous forecast of $2.80 to $2.85.

As one would expect, Newell’s lowered guidance has led to a plethora of negative earnings estimate revisions. We have now seen six negative revisions to its full-year estimates within the past week.

But this trend has actually extended beyond this timeframe. The Zacks Consensus Estimate for its current fiscal year has slowly slumped from the $2.83 per share it was at about 90 days ago. Meanwhile, its soft results are having an effect on analyst expectations for the upcoming fiscal year.

Our consensus estimate for the company’s next-year earnings has lost 29 cents over the past 90 days, and we are now expecting profits to remain flat year-over-year. Newell is slated to release its latest quarterly results on Feb. 16.

Newell’s shaky results have forced management to accelerate its transformation plan and consider new strategic options. The company is aiming to trim its portfolio to nine core consumer segments that can garner nearly $11 billion of sales and $2 billion of EBITDA.

Brands to be evaluated in the industrial and commercial product business include Waddington, Process Solutions, Rubbermaid Commercial Products and Mapa. Meanwhile, Newell’s Rawlings, Goody, Rubbermaid Outdoor, Closet, Refuse and Garage, and U.S. Playing Cards could be trimmed.

These changes will likely lead to better shareholder value down the line. But investors know that transformation plans can be volatile and unpredictable. In the case of Newell, it might be better to sit this one out for now.

Additional content:

Tableau Software (DATA) Shares Soar on Strong Q4 Earnings

Tableau Software Inc.just released its fourth quarter fiscal 2017 financial results, posting earnings of 12 cents per share and revenues of $249.4 million. Shares are soaring 14% in trading shortly after as a result.

Currently, DATA is a #3 (Hold) on the Zacks Rank, and earnings estimates have remained stable for the past 60-day time frame.

Tableau:

Beat earnings estimates. The company posted diluted non-GAAP earnings of 12 cents per share, surging past the Zacks Consensus Estimate of 3 cents per share.

Beat revenue estimates. The company saw revenue figures of $249.4 million, beating our consensus estimate of $240.25 million but declining 1% year-over-year.

Tableau said that ratable license bookings were 51% of total license bookings, compared to 20% in the fourth quarter of 2016.

For the full year 2017, subscription annual recurring revenue was $195.5 million, which grew 235% year-over-year.

"Customers continued to embrace our subscription offerings in the fourth quarter with over half of our license bookings now recognized ratably," said Adam Selipsky, President and Chief Executive Officer of Tableau. "With the lower upfront cost and reduced risk that subscription licensing offers to customers, a record number of organizations are turning to Tableau as the mission-critical analytics platform for their data needs."

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About the Bull and Bear of the Day

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.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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