Party City, NetScout Systems and United Continental as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – January 24, 2018 – Zacks Equity Research highlights Party City Holdco Inc. PRTY as the Bull of the Day and NetScout Systems, Inc. NTCT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on United Continental Holdings, Inc. UAL.

Here is a synopsis of all three stocks:

Bull of the Day:

Party City Holdco Inc., a Zacks Rank #1 (Strong Buy), is involved in designs, manufactures, contracts for manufacture and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery. It also operates specialty retail party supply stores primarily in the United States and Canada.

Recent Earnings Data

In the most recent reported quarter, the company saw year over year gains in total revenues, adjusted EBITDA, income from operations, and free cash flows.  Further, during the quarter, Party City opened 6 new stores while closing just one store.  Also, the company guided in line with Q4 and FY 17 estimates.

Growth Drivers Going Forward

Management has been focused on executing its retail initiatives, elevating its e-commerce, and cost controls.  And due to the success of these initiatives management now expects revenue growth between 4%-6%, EBITDA growth and EPS Growth to be between 8%-12% over the next three to five years.  Further, the company now expects their tax rate to drop from 37% in 2017 to 25% in 2018.  Also during the earnings call, management announced a $100 million share repurchase program.  Lastly, the company stated that they are also open to another strategic acquisition in its wholesale business, which would help further margin expansion.  

Management’s Take

According to James Harrison, CEO, “Our bottom-line performance in the third quarter once again demonstrated the inherent benefits of our unique vertical model. Despite modest topline growth, and slightly softer than expected retail brand comps, in part driven by the hurricane disruptions, we delivered solid financial performance which was largely in-line with expectations, as we focused on the core fundamentals of gross margin expansion and disciplined cost control, resulting in Adjusted EPS growth of over 8%.”  

Mr. Harrison continued, “We are encouraged by the progress made on our strategic growth initiatives during the quarter, and remain focused on enhancing the shopping experience both in our stores and online. We are also encouraged by the comp sales performance across our permanent stores and the improved trend for the core Everyday business. However, our web business experienced platform performance issues that negatively affected traffic levels on our site and drove the overall brand comp sales decline in the quarter, and we are aggressively addressing these issues.”

Bear of the Day:

NetScout Systems, Inc., a Zacks Rank #5 (Strong Sell) is a leading provider of business assurance - a powerful combination of service assurance, cybersecurity, and business intelligence solutions - for today's most demanding service provider, enterprise and government networks. NETSCOUT's Adaptive Service Intelligence (ASI) technology continuously monitors the service delivery environment to identify performance issues and provides insight into network-based security threats, helping teams to quickly resolve issues that can cause business disruptions or impact user experience.

Recent Earnings Data

In the most recently reported quarter, the company met the Zacks consensus earnings estimate, and beat the revenue estimate.  On a year over year basis, the company saw losses in total revenues -5.6%, and product revenue -11.6%.  Further, the NTCT posted $1.2 million in losses from operations vs. a $0.8 million income from operations in the year ago quarter.  Also, the company’s operating margins was -0.5%, much lower than the +0.3% margins in the year ago quarter.  Lastly, cash and cash equivalents fell to $313.4 million from $464.7 million in just two quarters.

Management’s Take

According to Anil Singhal, President and CEO, “NETSCOUT’s second-quarter fiscal year 2018 results demonstrate solid execution on multiple fronts. We exceeded our quarterly targets primarily due to stronger-than-expected orders from certain service provider customers. We have continued to see good adoption of our new ISNG platform in its software form factor from service providers who are using it to cost-effectively extend visibility. We were also pleased by the growing interest of customers and prospects in the many new products that we’ve recently launched.”

Management Reduces Guidance for Q3 18

Before its January 30th, earnings report for Q3 18, management gave preliminary guidance for the quarter; the company now expects revenues to come in between $270-274 million, well below the previously expected range of $300-320 million.  This quarterly revision is also expected to cause total FY 2018 revenues to come in below the previously anticipate area of $1.2 billion, to between $1.0-1.025 billion.  Management stated that the reason for the decline in revenues was due to continued slowness in CAPX spending for its network assurance products.  This includes both enterprise, and service provider markets.

Management did mention that they would increase it stock buy-back program, but as you can see in the graph below, this was not enough to support the stock price and future earnings estimates. 

Additional content:

United (UAL) Tops Q4 Sales and Earnings Estimates

United Continental Holdings, Inc. just released its fourth-quarter 2017 financial results, posting adjusted earnings of $1.40 per share and revenues of $9.44 billion. Currently, United is a Zacks Rank #3 (Hold), and is up over 2% to $79.58 per share in after-hours trading shortly after its earnings report was released.

UAL:

Beat earnings estimates. The company posted adjusted earnings of $1.40 per share, beating the Zacks Consensus Estimate of $1.34 per share.

Beat revenue estimates. The company saw revenue figures of $9.44 billion, just topping our consensus estimate of $9.43 billion.

United reported fourth-quarter net income of $408 million and full-year net income of $2.1 billion. The airline giant’s Q4 sales jumped by 4.3% year-over-year, while full-year revenues climbed 3.2% from $36.56 billion to $37.74 billion.

United’s Q4 consolidated passenger revenue per available seat mile (PRASM) rose just 0.2%, while cargo sales surged by 21.6% to $304 million.

"I am incredibly proud of how our employees delivered in 2017, achieving our best-ever operational performance. Reliability is an important pillar in our continued focus on further improving the customer experience," CEO Oscar Munoz said in a statement.

"Looking ahead, we are committed to improving profitability over the long-term by building on the strong foundation we have laid over the past two years. Everyone at United is excited to enter 2018 with a clear set of priorities and a renewed sense of purpose around unlocking the full potential of United Airlines."

Here’s a graph that looks at UAL’s Price, Consensus and EPS Surprise history:

United Continental Holdings, Inc. Price, Consensus and EPS Surprise | United Continental Holdings, Inc. Quote

United Continental Holdings, Inc. is the holding company for United Airlines and Continental Airlines. The Company operates its businesses through two reporting segments: Mainline and Regional Affiliates. The Company manages its business as an integrated network with assets deployed across its Mainline and regional carrier networks.

Check back later for our full analysis on UAL’s earnings report!

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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.

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