Stocks in focus on May 11, 2018

NEW DELHI: Domestic shares are likely to see a positive opening on Friday, tracking Nifty on Singapore Stock Exchange (SGX) and firm global cues. At 08:01 am, the Nifty futures on SGX were trading 52.50 points or 0.49 per cent higher.

Here is a list of top stocks that are likely to be in focus in today’s trading session:

Fortis, DaburNSE -0.38 %: Fortis Healthcare’s board picked the acquisition offer made jointly by Sunil Kant Munja of Hero Enterprise and the Burman family, giving it victory in a hotly contested race that saw the combine beating out bids by TPG-backed Manipal Hospitals, IHH Healthcare and Radiant Life Care-KKR. The decision was made late on Thursday evening following a marathon meeting during which the board considered the recommendations of an advisory committee it had set up last month to evaluate binding proposals, the company said in a statement.

The company on Thursday approved buyback of up to 1.21 crore shares at Rs 350. The company said the aggregate amount will not exceed Rs 424 crore. The board of directors of the company in a meeting on Thursday approved the buy back up to 1,21,14,286 fully paid-up equity shares of Rs 10 each, comprising 3.07 per cent of the total paid-up equity capital of the company at a price of Rs 350 per equity share for an aggregate amount not exceeding Rs 424 crore.

Key Q4 results today:Allahabad bank, Canara Bank, Sun TV, Tata Global Beverages, UCO Bank, Dena Bank, Gillette, Gujarat Gas, Havells India, Khadim, Relaxo Foorwears and NDTV would be among the companies scheduled to report their quarterly numbers during the day.


Titan: The company on Thursday reported 40.56 per cent YoY rise in net profit at Rs 282.12 crore for March quarter, which was largely in line with Rs 285 crore estimated by analysts in an ETNow poll. The company had reported Rs 200.71 crore profit in the corresponding quarter last year.

Asian Paints: Mumbai-headquartered paint major Asian Paints on Thursday reported a 4 per cent YoY rise in consolidated profit at Rs 480.99 crore. The figures were below ETNow poll of Rs 542 crore. The company had reported a profit of Rs 462.22 crore in the corresponding quarter last fiscal.

Zee Entertainment: The media company on Thursday reported a 84.75 per cent YoY fall in net profit at Rs 231 crore for March quarter, which fell short of Rs 247 crore profit anticipated by a Reuters poll. It had reported a profit of Rs 1,515.20 crore in the corresponding quarter last year. The numbers in the year-ago profit was boosted by one-time gain of Rs 1,223 crore on account of sale of TEN Sports sale to Sony Pictures.

Telecom companies: Reliance Jio Infocomm has expanded the tariff war to the postpaid segment, launching a plan at almost half the price and with more data than those offered by its rivals. The telecom arm of  Mukesh Ambani-controlled Reliance Industries will start offering the Rs 199 a month plan to consumers from May 15, which will include 25 GB of data, international calls starting at 50 paise per minute and international roaming at Rs 2 each per minute of voice, per MB of data and per text message, besides free access to all Jio apps.

Jaypee Infratech: Jaypee group has offered 2,000 equity shares of Jaypee Infratech for free to each home buyer as part of its Rs 10,000 crore proposal to revive the bankruptcy-hit real estate firm, PTI reported citing sources.

Bharti Airtel: Telecom secretary Aruna Sundararajan expects the Department of Telecommunications (DoT) to approve Bharti Airtel’s acquisition of Telenor India within a month, and the Vodafone India-Idea Cellular merger by June end, two deals which highlight the rapid consolidation under way in a brutally competitive market. The Bharti-Telenor deal approval “is expected very shortly and will be much faster than a month”, Sundararajan told reporters on the sidelines of CII-EY Broadband Summit 2018.

Vesuvius India: Centrum Broking has maintained ‘buy’ rating on Vesuvius India with a target price of Rs 1,500. It remains positive on Vesuvius India led by positive long-term growth outlook. The brokerage is positive on the company also because of its entry into new segments and value addition from local R&D centre at Vizag as well as enough scope of growth from existing capacity coupled with productivity improvements. Shares of Vesuvius India ended up 1.3 per cent at Rs 1,3 cent at Rs 1,339.25 on Thursday.

Union Bank: Public lender Union Bank of IndiaNSE -4.73 % reported a standalone net loss of Rs 2,583 crore for fourth quarter ended March 2018, hit by higher provisions and contingencies and loss in investment. The bank said this loss in March quarter included investment depreciation of Rs 1,120 crore. It had registered a net profit of Rs 108 crore in the corresponding January-March quarter of 2016-17.

Nestle: FMCG major Nestle India on Friday reported a 35.98 per cent jump in profit at Rs 424.03 crore for the first quarter ended March 31, 2018. The company, which follows January-December financial year, had posted a profit of Rs 311.83 crore in the same period a year ago, Nestle India said in a BSE filing. Revenue from operations was at Rs 2,757.24 crore during the quarter under review. It stood at Rs 2,601.46 crore in the corresponding period last year, it added.

Mphasis: IT services firm Mphasis reported 29.6 per cent growth in net profit to Rs 250.8 crore for the January-March quarter. The blackstone-backed firm posed revenues of $1.15 billion for fiscal 2018. The company’ revenue for the quarter grew 5 per cent to Rs 1,744.5 crore including one-time revenue from India Government business of $119 million. During the year-ago period, Mphasis posted a net profit of Rs 193.4 crore on revenues of Rs 1505.9 crore.

Exide Industries: Battery-maker Exide IndustriesNSE -0.69 % on Thursday reported 15.4 per cent rise in standalone profit for fourth quarter. The company posted profit of Rs 189.56 crore compared with Rs 164.26 crore a year ago. Revenue from operations during the period under review stood at Rs 2,459.41 crore. The company, in a notice to the bourses, said the revenues are not comparable to previous quarters since there has been a change in accounting treatment of indirect taxes post the roll-out of GST.

Reliance Infratel: Reliance Infratel on Thursday stressed on its desperate need to sell its towers and fibre to Reliance Jio to pare debt, saying it was in public interest. The company’s views were backed by lenders headed by State Bank of India in an ongoing case between the tower arm of Reliance Communications and minority shareholders, including HSBC Daisy Investments, in the National Company Law Appellate Tribunal (NCLAT). During the day, the minority shareholders countered SBI’s stand, arguing that lenders had no locus standi in the matter.

What Happened in the Stock Market Today

On a day the market rose on encouraging economic data, Roku reported strong growth and investors cheered Ubiquiti Networks’ expanding margins.

May 10, 2018 at 5:10PM
Stocks made gains on Thursday after the Labor Department reported that consumer prices rose less than expected in April, easing worries about inflation. The Dow Jones Industrial Average(DJINDICES:^DJI) rose nearly 200 points and the S&P 500 (SNPINDEX:^GSPC) added almost a percentage point.

Today’s stock market

Index Percentage Change Point Change
Dow 0.80% 196.99
S&P 500 0.94% 25.28


Long-term interest rates fell back today, helping utility stocks bounce back from recent weakness; the Utilities Select SPDR ETF (NYSEMKT:XLU) gained 1.4%. Gold and gold mining stocks rose, with the VanEck Vectors Gold Miners ETF (NYSEMKT:GDX) up 1.4%.

As for individual stocks, Roku (NASDAQ:ROKU) reported earnings for the third time since going public, and Ubiquiti Networks (NASDAQ:UBNT) jumped after announcing higher sales and improving profits.

Rising line charts.


Roku’s superb quarter

Roku announced first-quarter results that beat expectations, but the stock closed down 1.7% despite initially rising on the news. Revenue grew 36% to $136.6 million, well above guidance of $120 million to $130 million and the analyst consensus of $127 million. The company reported a net loss of $6.6 million or $0.07 per share, compared with guidance for a loss of $15 million to $21 million, and Wall Street expectations of a loss of $0.15 per share.

Platform revenue grew 106% and player revenue declined as expected, falling 3%. Gross margin jumped to a new record after slipping a point sequentially last quarter, coming in at 46.2% compared with 39% last quarter and 38.8% in the year-ago period. The company added 1.5 million accounts in the quarter, to a total of 20.8 million, a 47% increase year over year. Growth in streaming hours outpaced account growth, rising 56%, and average revenue per user jumped 50% to $15.07.

Looking forward, the company raised its outlook for the full year, now expecting revenue between $685 million and $705 million, above the $675 million analysts have been expecting. The company also expects to operate at or near breakeven on an adjusted EBITDA basis.

Last quarter the stock plummeted when Roku issued Q1 revenue guidance below analyst expectations, but the company delivered results that not only beat that guidance, but the original Wall Street expectations as well. The stock remains well below its level of that time, suggesting it’s a better bargain now.

Ubiquiti Networks soars on higher margins

Shares of Ubiquiti Networks jumped 11% after the company released fiscal third-quarter results that exceeded analyst estimates. Revenue increased 14.7% to $250.4 million and adjusted EPS grew 25.6% to $0.98. Analysts were expecting the company to earn $0.93 on sales of $247.9 million.

Revenue from the service provider technology segment fell 3.6%, but enterprise technology sales grew 31.6% to $149.5 million. The Europe, the Middle East, and Africa geography generated the highest sales of any region, and also had the highest growth this quarter, with sales up 29.6%.

Ubiquiti reversed a decline in gross margin last quarter that was caused by disappointing sales of a newly released consumer product. Gross margin was 45.7% compared with 38.6% in Q2, and beating the 45.4% reported in the quarter last year.

The company has bought back $292 million of its stock through May 7, reducing share count by 6.4% since last year, and has repatriated $677.2 million from foreign subsidiaries that will be used partly for future share repurchases. The company didn’t comment on the SEC subpoena that was filed in February, but said in its 10-Q filing that it was in the process of responding.

Ubiquiti’s revenue beat and the big improvement in margins helped address investor concernsthat arose earlier in the year, and the market responded by boosting the stock to a new 52-week high.

Jim Crumly has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ubiquiti Networks. The Motley Fool has a disclosure policy.

Stocks Close With Strong Gains; Nvidia Blows Past Q1 Targets

The stock market closed with strong gains Thursday, just off its intraday highs. Graphics-chip maker and top stock Nvidia (NVDA) reported better-than-expected Q1 earnings and sales results after the close in the stock market today, but shares dipped about 3% to around 254 in after-hours trade.


Shares of Nvidia are extended from a recent double-bottom entry, according to MarketSmith’s chart analysis. After rising as much as 1% each Thursday, all three major indexes — the Dow, S&P 500 and Nasdaq — closed with gains of about 0.9% each. The Dow and S&P 500 moved further above their recently reclaimed 50-day moving average lines, while the tech-heavy Nasdaq extended its win streak to five trading sessions.

See the 50-day lines, painted in red, via an IBD chart, as well as the General Market Indicators PDF link at the bottom of the daily Big Picture column. Volume was modestly lower on the NYSE and Nasdaq exchanges vs. the same time Wednesday, according to preliminary data.

Among the Dow stocks, Apple (AAPL) traded higher for a ninth straight day with a 1.4% advance. Shares are extended from a double bottom’s 179.04 buy point.

FANG stocks were mixed Thursday, despite the general market’s solid gains. On the upside, Facebook (FB) and Alphabet (GOOGL) moved up 1.6% and 1.5%, respectively. Shares of Facebook are etching the right side of a cup-shaped base with a 195.42 buy point.

On the downside, Leaderboard member (AMZN) was flat, while Netflix(NFLX) declined 0.2%. Both are above their 50-day lines after recent tests of that key support level.

Besides Nvidia, hot IPO Casa Systems (CASA) and computer software leader HubSpot (HUBS) reported earnings after the bell. Casa Systems reported non-GAAP EPS of 23 cents a share, a penny better than estimates. Revenue of $89.1 million topped views for $85.7 million, Reuters said. Casa Systems has fallen drastically over the last month and is about 34% off its high. Shares fell 3.4% in late trading.

Meanwhile, HubSpot reported $114.6 million revenue, up 39% vs. a year ago, and 15 cents non-GAAP diluted share EPS. HubSpot is trading right at its 117.70 double-bottom entry. Shares edged up in extended trading.

Top Chinese stock Alibaba (BABA) was approaching a double bottom’s potential buy point with a 0.5% gain. The stock is about 3% up from an earlier 201.60 entry.

Inside The IBD 50

TAL Education (TAL) is breaking out above a late-stage cup-shaped base’s 41.85 buy point. Later-stage bases are more prone to failure than earlier-stage formation. Shares advanced 5%.

On the downside, Diamondback Energy (FANG) declined nearly 5%. Shares broke out past a short cup-shaped base’s 134.70 entry Wednesday.

Why Ubiquiti Networks Inc. Stock Popped Today

The wireless networking technology specialist handily beat expectations with its latest quarterly report. Here’s what investors need to know.

May 10, 2018 at 4:01PM

What happened

Shares of Ubiquiti Networks Inc. (NASDAQ:UBNT) were up 13.6% as of 3:30 p.m. EDT Thursday after the wireless networking products specialist announced better-than-expected fiscal third-quarter 2018 results.

Quarterly revenue climbed 14.7% year over year to $250.4 million and translated to adjusted net income of $76 million, or $0.98 per diluted share. By comparison, Ubiquiti’s guidance — provided last quarter — called for adjusted earnings per share of $0.92 to $0.99, and revenue between $245 million and $260 million. And analysts, on average, were only looking for earnings of $0.93 per share on revenue of $247.9 million.

Ubiquiti Networks wireless networking hardware sitting on a small wooden shelf.


So what

Ubiquiti bolstered its per-share earnings by repurchasing nearly 4.4 million shares of common stock through May 7, 2018 at an average price of $66.53 per share. Earlier today, the company followed by initiating a new $200 million stock repurchase program.

Within its top line, Ubiquiti Networks’ growth was composed of a 31.6% increase in Enterprise Technology revenue, to $149.5 million, partially offset by a 3.6% decline in Service Provider Technology revenue, to $100.9 million.

Now what

Looking to the full fiscal year, Ubiquiti reiterated last quarter’s assertion that it’s on track to meet the low end of its previous guidance ranges. As a reminder, that guidance was initially provided with Ubiquiti’s fiscal fourth-quarter 2017 report last August, and called for revenue of $1.0 billion to $1.15 billion, with earnings per share of $3.70 to $4.30. Here again, that compares favorably to Wall Street’s latest expectations for full fiscal-year earnings of $3.61 per share on revenue of $1.01 billion.

In the end, this was a relatively straightforward quarterly beat from Ubiquiti Networks. With shares still yet to fully recover from two big drops in February — the first following its mixed quarterly report, and the second after the company disclosed it was cooperating with vague subpoenas from the SEC “relating to a range of topics” — it’s no surprise to see the stock rebounding today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ubiquiti Networks. The Motley Fool has a disclosure policy.

Why Darling Ingredients Inc. Stock Popped Today

The rendering and biodiesel leader delivered a strong first quarter. Here’s what investors need to know.
Steve Symington (TMFSymington)
May 10, 2018 at 3:49PM
What happened
Shares of Darling Ingredients Inc. (NYSE:DAR) climbed as much as 11.6% early Thursday, then settled to trade up 8.6% as of 12:30 p.m. EDT after the rendering and biodiesel specialist announced strong first-quarter 2018 results.

Darling’s quarterly revenue fell 0.4% year over year as reported, to $875.4 million — though revenue would have arrived at $921.6 million had it not been for a $46.2 million reduction from the adoption of new (ASC 606) accounting standards at the start of the year. On the bottom line, that translated to net income of $97.3 million, or $0.58 per diluted share, up from $0.04 per share in the same year-ago period. Just as management noted would be the case last quarter, this included $12.6 million from the reinstated blenders tax credit, which was passed retroactively for 2017 in February 2018.

In any case, these results compared favorably to investors’ expectations for earnings of $0.11 per share on revenue of $881.4 million.

Person pumping diesel into a vehicle

So what
That’s not to say Darling is firing on all cylinders. Company chairman and CEO Randall Stuewe noted that while earnings steadily improved at their food and fuel segments, harsh weather in North America led to pricing pressure from excess supply in the feed segment.

Meanwhile, Darling’s Diamond Green Diesel (DGD) joint venture with Valero delivered 33.4 million gallons of sales, with adjusted EBITDA of $1.28 per gallon during the quarter. DGD is also now debt free after making a $53.7 million debt payment during the quarter.

Now what
Darling also touted made “substantial progress” on the cost analysis for DGD’s Phase III expansion to 600 million gallons per year, with the plans expected to be finalized later this summer.

In addition, Stuewe noted that Darling significantly improved its liquidity and capital structure through a private offering of 515 million Euros (or roughly $614.2 million) of unsecured senior notes due 2026 at 3.625%, while simultaneously conducting a cash tender offer of all the company’s outstanding 4.75% senior notes due 2022.

“This gives us financial flexibility by extending maturity and improving our cost of borrowing,” Stuewe explained. “[…] We will continue to focus on maintaining the strength of our balance sheet as we capitalize on our world of growth opportunities, and we’re off to a good start in 2018.”

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Darling Ingredients. The Motley Fool has a disclosure policy.

PC Jeweller announces Rs 424-cr share buyback, price fixed at 67% premium over Thursday’s closing price

The PC Jeweller board has announced a share buyback worth Rs 424 crore, at a price of Rs 350 per unit, 67 percent higher than the closing price of Rs 209 on Thursday. The buyback involving 1.21 crore or (3.07% stake) shares comes at a time when the stock has seen highly volatile phases of late due to various issues faced by the company ahead of its Q4 earnings later this month.

The stock opened 18% higher in early trade today on the news of share buyback. It hit an intra day high of  247 in trade. It has been volatile for the last few sessions and is down 53% since the beginning of this year. The PC Jeweller stock logged a rally of nearly 88 percent in just six trading sessions, rising to Rs 209 on May 10 from Rs 110.65 on May 2. The stock closed 3.76% or 7.85 points lower at 201.15 on BSE.

The promoters and the promoters group will not participate in the buyback of shares. Data at the end of March quarter show, the promoters have 57.63 percent stake in the company. LIC holds about 1.93 percent.

On May 3, the stock hit its 52-week low of 95.05 after falling 14% intra day. The stock fell to new yearly lows amid news that FMR LLC, a fund managed by Fidelity International on April 30, sold over 1.3 crore shares of PC Jeweller through open market transaction.

Before the disposal, Fidelity managed funds had 2.77 crore shares in the company equivalent to 7.04 per cent stake. The company said FMR LLC sold nearly 47 lakh shares of PC Jeweller through open market transaction taking the two day stake sale to nearly 1.77 crore shares.

Before the share sale, the stock was hit by two issues.

First, there has been speculation that the company’s promoters might have held back information on a business relationship with e-governance service provider Vakrangee, a company, which according to reports came under Sebi’s scanner for alleged price and volume manipulations of its own stock on BSE and NSE. However, Vakrangee on February 3 clarified that rumours of involvement of company in price and volume manipulation were completely baseless and factually incorrect.

On January 25, 2018, Vakrangee bought 20 lakh shares of PC Jeweller at Rs 561.71 on NSE.

Secondly, according to reports, PC Jewellers promoter Padam Chand Gupta gifted some his stake to family members via off -market transactions. Even as the firm has said it would make requisite disclosures in this regard from time to time, there are fears about more such deals taking place in the future.

Meanwhile, PC Jeweller will announce its earnings for the quarter ending March 31 2018 in a meeting of the board of directors of the company on May 25, 2018.

The board will also consider recommendation of dividend on preference shares for the period from April 1, 2017 to September 1, 2017.

PC Jeweller is engaged in the business of manufacture, retail and export of jewellery. The firm offers a range of products including 100% hallmarked gold jewellery, certified diamond jewellery and other jewellery, including silver articles, with a focus on diamond jewellery and jewellery for weddings. Established in 2005, PC Jeweller is the second-largest listed jewellery retailer in India.

Why Macy’s Inc Stock Was Sliding Today

Shares of the department store chain took a hit on an analyst downgrade.

May 10, 2018 at 12:49PM

What happened

Shares of Macy’s Inc (NYSE:M) were heading south today as the department store chain got downgraded by Morgan Stanley ahead of its earnings report. The investment bank said it expected Macy’s to report lower-than-expected earnings this year due to ongoing operating challenges. As a result, shares of the retailer were down 4.7% as of 11:14 a.m. EDT.

So what

Analyst Kimberly Greenberger lowered her rating on the department store chain from equal-weight to underweight. “Macy’s continues to undergo core operating challenges, similar to peers in the department store space,” Greenberger said. “Despite closing stores proactively, store-only comps remain negative and we forecast them to remain so in the future.” She also said the company could face an “uphill battle” after the first quarter, though she gave the company credit for expense cuts, real estate monetization, and new retail initiatives. She lowered her price target from $27 to $25.

The exterior of the Macy's location in New York's Herald Square.


Now what

Indeed, Macy’s comparable sales growth has consistently lagged that of peers like NordstromKohl’s, and J.C. Penney, and the company just snapped a streak of 12 quarterly comparable sales declines in its fourth-quarter earnings report. While its core department stores may continue to struggle, the company is making smart moves, adding its off-price Backstage chain to more department stores, expanding the Bluemercury beauty brand it acquired in 2015, and it recently bought the concept store Story — largely to make its founder Rachel Shechtman its brand experience officer. Macy’s hopes Shechtman can remake its stores to drive traffic and correct some of the issues Greenberger noted.

We’ll learn more about Macy’s prospects when the company reports first-quarter earnings on May 16. Analysts are expecting revenue of $5.39 billion, up 1% from a year ago, and for earnings per share to increase from $0.24 to $0.35.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Here’s Why Green Dot Stock Is Soaring Today

The prepaid-card provider reported strong results and an improved outlook.

May 10, 2018 at 11:29AM

What happened

Green Dot (NYSE:GDOT), a leader in prepaid cards and other consumer financial services, reported strong first-quarter results. As of 10:45 a.m. EDT on Thursday, Green Dot’s stock price was up by nearly 15%.

The company reported revenue of $315 million for the quarter, 25% more than a year ago and handily surpassing expectations of $297 million. Earnings of $1.29 per share met estimates, achieving impressive 72% year-over-year income growth.

Man and woman looking at a tablet, man holding a payment card.


Green Dot’s purchase volume soared 36% from a year ago, and direct deposit volume was especially strong. The company also processed 150,000 more tax refunds than in the first quarter of last year, and had nearly 1 million more active accounts than it did at the end of the first quarter of 2017. The company also referred to its new TurboTax-branded prepaid card as a “material contributor” to the company’s strong revenue growth.

So what

Perhaps most significantly, Green Dot increased its guidance for the rest of 2018. The company now expects revenue in the range of $1.002 billion to $1.012 billion and EPS in the range of $2.93 to $3. These are up by 1.8% and 4.2% at their midpoints, respectively, from the company’s previous guidance ranges.

In simple English, Green Dot not only expects more revenue, but it expects this revenue to generate significantly more profit. And since stocks essentially trade on their future earnings potential, the increased guidance is a primary reason Green Dot is shooting higher today.

Now what

This quarter shows that Green Dot’s plans are coming to fruition, and the company has now beaten its own expectations for several quarters in a row. With several new product lines showing promising growth, Green Dot’s growth story could still be in the early chapters.

Matthew Frankel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Market Now: Midcaps in sync with Sensex; Mphasis leads pack of midcap gainers

NEW DELHI: The BSE Midcap index was in sync with benchmark Sensex in Friday’s trade.

Around 11:10 am, the midcap index was 0.40 per cent up at 16,344, while Sensex was 0.35 per cent up at 35,368. The Nifty50 index was 0.37 per cent up at 10,756.

MphasisNSE -0.79 % (up 5.74 per cent) was the top gainer among the midcap stocks, buoyed by decent March quarter earnings.

IT services firm Mphasis reported on Thursday 29.6 per cent growth in net profit to Rs 250.8 crore for the January-March quarter.

Berger Paints (India) (up 4.15 per cent), Jindal Steel & Power (up 3.09 per cent), Container Corporation of India (up 2.99 per cent), Larsen & Toubro Infotech (up 2.62 per cent) and Tata Communications (up 2.53 per cent) were also among the top gainers in the midcap index.

On the other hand, VakrangeeNSE -4.93 % (down 4.93 per cent) extended its losses.