For Immediate Release

Chicago, IL – February 03, 2016– Zacks Equity Research highlights HCA Holdings (HCA) as the Bull of the Day and Mastercard (MA) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on GoPro, Inc. (GPRO),Transocean Ltd. (RIG) and Vornado Realty Trust (VNO).

Here is a synopsis of all five stocks:

Bull of the Day:

HCA Holdings (HCA) has seen a terrific recovery from recent lows and is basically showing the strongest signals that we have at Zacks. Estimates are moving higher after a recent beat and that has helped push the stock to a Zacks Rank #1 (Strong Buy). Today it is the Bull of the Day and worth a deeper look.

Strong Signals

It is not too often that I write a Bull of the Day on a stock that is a Zacks Rank #1 (Strong Buy) that also sports the best possible style scores. HCA has a grade of "A" for the value, growth and momentum style scores. Since the inception of this new signal that investors can use, I cannot recall another time when I have seen something like this.

Description

HCA Inc. is a non-governmental hospital in the U.S. providing health care and related services. The Company operates a network of acute care hospitals, outpatient facilities, clinics and other patient care delivery settings. The Company also owns and manages freestanding surgery centers, diagnostic and imaging centers, radiation and oncology therapy centers, rehabilitation and physical therapy centers, and various other facilities. HCA Inc. is headquartered in Nashville, Tennessee.

Earnings History

I was a little surprised to see the earnings history had as many misses as it did, especially after I saw recent big beat.

The December 2015 quarter saw a surprise of 30 cents or 21% above the Zacks Consensus Estimate. Revenue was ahead of expectations for that quarter.
The previous quarter was a miss of two cents, and it was the first miss since the March 2014 quarter. The miss ended the streak of four straight beats of the Zacks Consensus Estimate.

Estimates

Earnings estimate movements are the foundation of the Zacks Rank. The recent big beat of earnings helped push this year and next year's estimates much higher.

The Zacks Consensus Estimate for 2016 was calling for EPS of $5.81 in December of last year. Following the recent beat, the estimate jumped to $6.22.

More importantly is the move in earning estimates for the following year. The estimate moved from $6.38 to $6.81, which implies some strong earnings growth next year.

Valuation

Normally I like to highlight the growth stocks, and while there will be growth for HCA in 2016, the value players will like it even more. The forward PE for HCA is 11.4x compared to a 14.2x industry average. The stock also trades at 0.7x sales, a level that will excite most value investors.

Bear of the Day :

Mastercard (MA) recently beat the Zacks Consensus Estimate by $0.11 for a 16% positive earnings surprise. Problem is, estimates has move lower and that has pushed the stock down to a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.

Earnings Beat

On January 29, the company reported earnings of $0.79 per share, with the Zacks Consensus Estimate calling for $0.68. That $0.11 beat translates into a 16% positive earnings surprise. Despite the beat, estimates have moved lower - and future earnings estimates are the foundation of the Zacks Rank.

Description

Mastercard advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions and provides industry-leading analysis and consulting services to financial institution customers and merchants. Its family of brands include MasterCard, Maestro and Cirrus.

Earnings History

MA has a very strong earnings history, with the last two years seeing 6 beats, one meet and one miss. That is pretty good, so the issue must be the outlook. Lower earnings estimates are a key factor in why the stock is a Zacks Rank #5 (Strong Sell).

Earnings Estimates

The Zacks Consensus Estimate for 2016 has been falling for the last several months. It was as high as $4.04 and has since moved to $3.70.

The Zacks Consensus Estimate for 2017 also recently moved a lot lower. The number was $4.54 in December, but is now down to $4.29.

Additional content:

GoPro (GPRO) Q4 Earnings: Will Sales Slump Worsen Loss?

GoPro, Inc. (GPRO) is slated to report fourth-quarter 2015 results after the closing bell on Feb 3.

In the prior quarter, the company had disappointed investors by delivering a negative earnings surprise of around 36.4%, breaking its three quarter-long earnings streak. However, for the last four quarters, the stock has a positive average earnings surprise of 29.2%.

Let’s see how things have been shaping up before this announcement.

Factors to Consider

A sneak peek into GoPro’s preliminary earnings for fourth-quarter 2015, released a month ago, unveiled a bleak scenario which left investors flustered. Per the preliminary result forecasts, the company projects revenue to be roughly $435 million for the fourth quarter of 2015 and $1.6 billion for the full year. It had earlier forecast sales of $500 million to $550 million during the busy holiday season.

The company’s dismal top-line performance for fourth quarter stems from lower-than-expected sales of capture devices, primarily led by slowdown in retailer sales in the beginning of the quarter.

Revenues were also adversely affected by re-pricing charges of HERO4 Session cameras in Dec 2015. Additionally, the company expects non-GAAP gross margin in a range of 34.5–35.5%, and operating expenses within $150.0–$152.5 million. Moreover, factors like excess inventory, excess parts and obsolete tooling have compounded GoPro’s restructuring charges ($30–$35 million) and might erode margins for the quarter under review.

Also, the ongoing slump in business has triggered employee downsizing on the company’s part to optimize resource allocation. This, in turn, will escalate restructuring charges, going forward. Waning sales, coupled with a deteriorating bottom line in the second half of 2015, have turned into a nightmare for GoPro, as the stock continued to take a beating and nosedived lower than its IPO value.

GoPro has been severely burdened by its cannibalistic product launches which have hurt sales growth. For instance, sales of HERO4 session cameras plummeted during the quarter owing to surging popularity of its HERO4 black and silver products. Moreover, ongoing economic slump in China and weakening sales of action sports cameras in the U.S., fueled by slowdown in wearable camera markets, will likely stunt GoPro’s fourth-quarter earnings.

Despite these negatives, GoPro’s sly marketing moves, including a spate of deals with athletes, sponsorship events like Tour de France and partnerships with several industry giants like Toyota, are expected to boost its financial performance. In addition, sales of recently introduced products -- like portable, cost-efficient wireless HD micro transmitter HEROCast, 16-camera array ‘Odyssey’ and 6-Camera Spherical Array for VR and AR headsets like Oculus, Cardboard and HoloLens -- are projected to drive sales growth.

Moreover, the company’s thriving GoPro Channel business, which is helping it fully actualize the transition to a 'content maker’ from 'camera maker,’ is expected to emerge as a growth driver for the quarter. In this regard, the company’s Multichannel Video Programming Distributor partnerships with Comcast and Sky look encouraging for the fourth quarter and beyond.

Earnings Whispers?

Our proven model does not conclusively show that GoPro will beat earnings this season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP : Both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 7 cents. This translates into an Earnings ESP of 0.00% for GoPro.

Zacks Rank : GoPro’s Zacks Rank #4 (Sell), when combined with a 0.00% ESP, lowers the predictive power of ESP and makes surprise predictions difficult.

Stocks to Consider

Here are some companies you may want to consider instead as our model shows they have the right combination of elements to post an earnings beat this quarter:

Transocean Ltd. (RIG) has Earnings ESP of +15.49% and a Zacks Rank #2. The company is expected to release fourth-quarter results on Feb 24.

Vornado Realty Trust (VNO) has an Earnings ESP of +4.65% and a Zacks Rank #2. The company will release results on Feb 16.

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About the Bull and Bear of the Day

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HCA HOLDINGS (HCA): Free Stock Analysis Report
 
MASTERCARD INC (MA): Free Stock Analysis Report
 
GOPRO INC-A (GPRO): Free Stock Analysis Report
 
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
 
VORNADO RLTY TR (VNO): Free Stock Analysis Report
 
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