For Immediate Release
Chicago, IL – October 20, 2021 – Zacks Equity Research Shares of Urban Outfitters Inc. URBN as the Bull of the Day, Anheuser-Busch InBev SA/NV BUD as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Snap Inc. SNAP, Facebook, Inc. FB and Unity Software Inc. U.
Here is a synopsis of all five stocks:
Bull of the Day:
Based in Philadelphia, Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gifts products through its brands Urban Outfitters, Anthropologie, Free People, FP Movement, BHLDN, Nuuly and Terrain. URBN has operations in the U.S., Canada, and Europe.
Q2 Earnings Recap
Total company sales grew by more than 20% to hit a record of $1.16 billion, while total retail segment comps increased 40% year-over-year.
CEO Richard A. Hayne said that Urban saw “powerful demand” across the majority of its product categories, especially apparel, and all of its brands recorded positive double-digit comps during the quarter.
Net income came in at $127 million, or earnings per diluted share of $1.28, also a record for the retailer.
One of URBN’s fastest growing brands is FP Movement, a division of Free People that’s focused on activewear and accessories. Q2 was a standout quarter for Movement, with revenue soaring over 200%. The brand now operates 54 shop-in-shop locations inside Free People stores and 13 standalone stores.
Nuuly is another new addition to the retailer’s portfolio; it operates a subscription rental service for women’s apparel. Urban also recently launched Nuuly Thrift, a peer-to-peer, resale marketplace that can help the company capitalize on the growing resale fashion space.
Can URBN Break Out?
Year-to-date, shares of URBN have jumped 19.4%, which is roughly in-line with the S&P 500’s 20% increase. Earnings estimates have been rising too, and URBN is a Zacks Rank #1 (Strong Buy) right now.
For fiscal 2022, seven analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 94 cents to $3.32 per share. Earnings are expected to grow considerably compared to the prior year period. Fiscal 2023 looks strong too; eight analysts have upped their outlook and our consensus estimate has climbed 36 cents to $3.05 per share.
Looking ahead, management said that consumer demand for its products continues to be robust, and that the current third quarter will show healthy sales improvement across the board. The retailer expects retail segment comps growth to land in the mid-teens range and gross profit margins to improve over 100 basis points.
Urban hasn’t been the only retailer enjoying a rebound in demand, and if the current trend continues, shareholders could be in store for even more gains.
If you’re an investor searching for a retail sector stock to add to your portfolio, make sure to keep URBN on your shortlist.
Bear of the Day:
Anheuser-Busch InBev is a global brewing company with more than 500 iconic brands in its portfolio. The company’s leading position in the majority of its markets lends the advantage of economies of scale and growing its multi-country brands globally, like Budweiser, Bud Light, Corona, Stella Artois, Beck’s, and Michelob Ultra, among many others.
Q2 Earnings Recap
Total revenue improved by 27.6% while normalized EBITDA grew 31% year-over-year. Both metrics, however, missed analysts’ consensus estimates. The company’s top line advanced 3.2% compared to the same period in 2019.
Combined revenue from brands Budweiser, Corona, and Stella Artois increased 23% globally and 19.3% outside of their home markets.
Total volumes grew by 20.8%, with own beer volumes by 20.5% and non-beer volumes up 23.2%.
However, Anheuser was still bogged down by higher transportation costs and logistical difficulties like procuring enough cans for their beverage products.
BUD is now a Zacks Rank #5 (Strong Sell).
Four analysts have cut their full year earnings outlook over the past 60 days. Anheuser’s bottom line is actually expected to increase about 42% year-over-year, but the consensus estimate has fallen $0.22 to $2.71 per share for fiscal 2021. Next year’s earnings consensus has dropped as well, but Wall Street expects earnings to increase by 17.9% to $3.20 per share.
Investors should note that BUD reports third-quarter results in the next couple of weeks, so the Zacks Rank and estimate figures could change.
Shares have been volatile so far in 2021. Year-to-date, BUD has fallen about 20% compared to the S&P 500’s gain of 20%.
Unfortunately, Anheuser looks to have yet to fully shake off the disruption brought on by Covid-19, so business could still be rocky for the time being.
The company’s guidance for the rest of the year was tepidly received by Wall Street; it expects EBITDA to “grow between 8-12% and our revenue to grow ahead of EBITDA from a healthy combination of volume and price.”
Additionally, Anheuser’s hard seltzer brand Bon & Viv still only controls a little over 1% of the market, which is not a good sign as the once high-growth beverage category looks to be cooling off.
BUD will likely face more volatility as coronavirus challenges linger, so those looking to buy the stock after its summer sell-off should be prepared for more ups and downs.
SNAP Gears UP to Report Earnings: What's in the Cards?
Snap is set to report third-quarter 2021 results on Oct 21.
The Zacks Consensus Estimate for revenues is currently pegged at $1.09 billion, indicating 59.9% growth from the year-ago reported figure.
In the last reported quarter, its subscriber growth — reflected by Daily Active Users (DAUs) — increased 55 million on a year-over-year basis and 13 million sequentially. DAUs at the end of the second quarter were 293 million.
The Zacks Consensus Estimate for global DAUs is currently pegged at 301 million, indicating growth of 20.9% from the year-ago quarter.
The consensus mark for the bottom line has remained steady at 6 cents per share in the past 30 days, which indicates an increase of 500% from the year-ago quarter.
Let’s see how things have shaped up for the upcoming announcement.
Factors to Consider
Snap has been benefiting from a spike in the usage of Snapchat. The growing adoption of Snapchat among Gen Z (13-24 years) is expected to have driven DAUs. It is a larger platform than Facebook and Instagram among this demography.
The company has been focused on continuously adding a set of innovative features like Lens Studio 2.0, Camera Kit, Snap Minis and Bitmoji for Games, which is making Snapchat more attractive for users and advertisers.
In the third quarter, the company released 3D Bitmoji with over 1,200 combinations of body poses, facial expressions, gestures, and backgrounds to choose from. Snapchatters can see their 3D Bitmoji in Snap Profiles, Friendship Profiles, and also have the option to share their customized 3D Bitmoji with friends on and off Snapchat.
Snap introduced the My Places feature for Snap Map where Snapchatters can discover more than 30 million businesses, log their favorite local spots, and find personalized recommendations informed by their friends and the global Snapchat community.
The company also launched a suite of creative tools, including custom Stickers and three Augmented Reality enabled Lenses that encourage Snapchatters to fingerspell, honoring International Week of the Deaf. Using SignAll’s AI and computer vision technology that recognizes and translates American Sign Language, these AR Lenses will inspire Snapchatters to fingerspell their name, as well as other common words like love, hug, and smile.
In addition to the strong adoption of AR Lenses, Discover content and Shows are expected to have driven user growth.
The Zacks Consensus Estimate for third-quarter ARPU is pegged at $3.65, suggesting an increase of 33.7% from the year-ago reported figure.
A steady ad-spending environment is expected to reflect on Snap’s third-quarter top-line growth. Creator Marketplace, launched in the second quarter, is expected to have been a key catalyst in the third quarter. Creator Marketplace integrates Creators directly into Snap’s advertising ecosystem for businesses to connect with Lens Creators, Lens Developers, Lens Partners, and eventually Snap Stars to help elevate their marketing presence on Snapchat.
This Zacks Rank #3 (Hold) company’s partnership with the cross-platform game engine Unity Software to extend the reach of Unity’s Ad supply to Snapchat advertisers is expected to have attracted ad revenues in the to-be-reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Advertising has been the only source of revenues for Snap, which has been facing significant competition from the likes of Twitter, Facebook, Google and Pinterest for ad dollars. Moreover, a persistent decline in price per ad impression is likely to have weighed on advertising revenues.
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Urban Outfitters, Inc. (URBN) : Free Stock Analysis Report
AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Snap Inc. (SNAP) : Free Stock Analysis Report
Unity Software Inc. (U) : Free Stock Analysis Report
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