Tuesday, May 29, 2018

Intel Could Pay Dearly for Its 10nm Chip Production Delay

On a day when Intel (NASDAQ:INTC) crushed Wall Street's expectations with a stellar first-quarter report, investors were worried about something else. Chipzilla revealed that its move to the 10-nanometer (nm) chip production process will be delayed once again due to yield issues, this time to an unspecified date in 2019.

When CEO Brian Krzanich said that the chipmaker might have gone overboard�with its 10nm chip development targets, investors were unsettled, as the company has now officially lost its manufacturing lead in the chip industry. An advanced chip manufacturing process�would have allowed Intel to reduce production costs, increase processing power, and make its chips more power efficient. And all of this is crucial in warding off the ever-growing competition.

But Intel investors will now have to wait until�2020 (assuming there are no further delays) for the volume production to begin, and this could spell trouble.

Drones forming Intel insignia in the sky.

Image Source: Intel�

CPU dominance is in danger

Intel is the dominant supplier of central processing units (CPUs) used in PCs, holding an estimated 88% of this market at the end of 2017, according�to Mercury Research. But rival Advanced Micro Devices (NASDAQ:AMD) has done well to make its mark in the CPU space with its Ryzen CPUs, which are based on the 14nm chip manufacturing process.

AMD increased�its CPU market share to 12% at the end of last year from 9.9% the year before. However, AMD can inflict more damage on Intel this year as its latest second-generation Ryzen CPUs are based on an improved�12nm process (a refined version of last year's 14nm process).

AMD claims that the new Ryzen CPUs are 16% faster�and 11% more power efficient than last year's first-gen offerings. But the bigger play for AMD lies elsewhere, as the second-gen Ryzen chips are just a steppingstone to something more important.

AMD plans�to leapfrog Intel's chip manufacturing technology by next year with its Zen 2 architecture, which is based on a 7nm manufacturing process and is slated for a commercial launch next year. The fact that AMD's foundry partner�TSMC has already started�volume production of 7nm chips lends credibility to AMD's ambitions to attack Intel's manufacturing lead. This doesn't bode well for Intel's client computing group (CCG), which accounted�for almost 51% of revenue last quarter.

Intel has been relying on higher average selling prices (ASPs) of its processors to drive growth in CCG and beat the flat PC shipment volumes. For instance, the segment's revenue increased�3% year over year in the latest quarter on the back of a 7% increase in desktop ASPs and a 1% increase in notebook ASPs. But the company could be forced to reduce prices of its CPUs to overcome AMD's threat and defend market share, and Intel is no stranger�to such a strategy.

This spells trouble for its CCG segment profitability. The segment's operating margin was down�4% last quarter to 34%, with Intel blaming the drop on 10nm transition costs. With the transition to 10nm still some time away and competitive threats rising, Intel's CCG business looks set for a rough ride.

More bad news

The fallout from Intel's 10nm delay won't be restricted to the CPU business. The data center group (DCG), which is the company's second-largest�source of revenue with a third of the total top line, will also feel the heat.

Intel has relied big time on DCG to drive growth. The segment reported�24% year-over-year growth in the latest quarter and could exceed $20 billion in revenue this year if it keeps growing at its current pace. Intel credits its Xeon processors for this impressive growth. They are witnessing strong demand thanks to their application�in areas such as artificial intelligence (AI) and high-performance computing.

The segment's terrific growth clearly indicates that Intel's latest�Xeon processors (which are also based on a 14nm platform) have helped it maintain a near�monopoly in server chips. But AMD has managed to make a mark here, thanks to its EPYC server chips that were launched�at aggressive prices last year.

Server original equipment manufacturers have been warming up to EPYC, giving AMD hope that it could get a mid-single-digit share of the server chip market by the end of 2018. But AMD can do much more, as its "Rome" server chips -- based on Zen 2 architecture -- are expected to succeed EPYC next year.

AMD's data-center roadmap�clearly indicates that it will start manufacturing chips on the 7nm process between now and 2020. Now that AMD has completed�its Zen 2 design, its next-gen server chips are expected to come out in late 2018, and deployment is expected to begin in 2019.

The EPYC Rome is expected to pack stronger technical specifications thanks to the improved manufacturing process. And it will probably help AMD grab a bigger piece of the server chip market in the long run.

Meanwhile, Intel's progress in the programmable solutions group (PSG) could also hit a speed bump thanks to market leader Xilinx's technology�lead.

PSG has been gaining impressive traction recently as the likes of Microsoft and Baidu have selected�Intel's programmable chips to accelerate�AI workloads in data centers. In fact, Intel saw a 150% increase�in sales of programmable data center chips last quarter, boosting the segment's revenue by 17% to $498 million.

But Xilinx has a new weapon in the form of Project Everest, which is based on a 7nm architecture and is expected to start shipping next year. Xilinx is claiming that its Everest chips will be 20 times faster�at running AI workloads, compared to the existing products on the market. Intel, meanwhile, will be stuck on its Stratix 10 programmable chips built on the 14nm�Tri-Gate process that's three�years old already.

Brace for impact

Turn the clock back two years, and you would see Intel dominating rivals such as AMD. But times have changed, and Intel's customers have been choosing rivals' products. For instance, AMD now has over 40 EPYC-based server�systems on the market thanks to the likes of Hewlett-Packard Enterprise, Dell EMC, and Cray, among others. Amazon, Huawei, and Alibaba, meanwhile, chose Xilinx's programmable chips last year as the company enjoys a significant technology lead over Intel that could expand further.

There will be no immediate impact on Intel because of its 10nm delay. Rivals are still working on advanced manufacturing processes, and even they could run into trouble. But if Intel is unable to keep up as its rivals take the next step, the chip giant could be in choppy waters.

Monday, May 28, 2018

Eternity Price Tops $0.0366 on Major Exchanges (ENT)

Eternity (CURRENCY:ENT) traded 14.6% lower against the U.S. dollar during the 1 day period ending at 7:00 AM ET on May 28th. Over the last seven days, Eternity has traded 31.6% lower against the U.S. dollar. Eternity has a market capitalization of $156,350.00 and $1,349.00 worth of Eternity was traded on exchanges in the last day. One Eternity coin can currently be bought for approximately $0.0366 or 0.00000506 BTC on exchanges including YoBit, Trade Satoshi and Livecoin.

Here’s how other cryptocurrencies have performed over the last day:

Get Eternity alerts: Tao (XTO) traded down 20.6% against the dollar and now trades at $0.41 or 0.00005682 BTC. Syndicate (SYNX) traded down 5.3% against the dollar and now trades at $0.29 or 0.00004011 BTC. Monkey Project (MONK) traded down 3.1% against the dollar and now trades at $2.97 or 0.00040999 BTC. TrustPlus (TRUST) traded 10.5% lower against the dollar and now trades at $0.0560 or 0.00000773 BTC. Capricoin (CPC) traded down 1.5% against the dollar and now trades at $0.80 or 0.00011002 BTC. Magnet (MAG) traded down 6.9% against the dollar and now trades at $0.0515 or 0.00000711 BTC. Centurion (CNT) traded 13.4% higher against the dollar and now trades at $0.0124 or 0.00000172 BTC. SuperCoin (SUPER) traded up 184.1% against the dollar and now trades at $0.0156 or 0.00000216 BTC. Piggycoin (PIGGY) traded 12.7% lower against the dollar and now trades at $0.0011 or 0.00000015 BTC. Regalcoin (REC) traded down 10.5% against the dollar and now trades at $0.0335 or 0.00000462 BTC.

Eternity Coin Profile

Eternity (CRYPTO:ENT) is a PoW/PoS coin that uses the
X11 hashing algorithm. Eternity’s total supply is 4,269,933 coins. Eternity’s official Twitter account is @Eternity_Group. The official website for Eternity is ent.eternity-group.org.

Buying and Selling Eternity

Eternity can be bought or sold on the following cryptocurrency exchanges: Trade Satoshi, YoBit and Livecoin. It is usually not currently possible to buy alternative cryptocurrencies such as Eternity directly using U.S. dollars. Investors seeking to trade Eternity should first buy Bitcoin or Ethereum using an exchange that deals in U.S. dollars such as GDAX, Gemini or Coinbase. Investors can then use their newly-acquired Bitcoin or Ethereum to buy Eternity using one of the aforementioned exchanges.

new TradingView.widget({ “height”: 400, “width”: 650, “symbol”: “ENTUSD”, “interval”: “D”, “timezone”: “Etc/UTC”, “theme”: “White”, “style”: “1”, “locale”: “en”, “toolbar_bg”: “#f1f3f6”, “enable_publishing”: false, “hideideas”: true, “referral_id”: “2588”});

Saturday, May 26, 2018

Top 10 Financial Stocks To Buy For 2019

tags:SAFT,MCBC,RNR,SAR,TREE,NDAQ,INTL,CBOE,DB,NBTB,

I love it when a Nobel Prize winner gives humanity a gift everyone can use and enjoy. That was the case when Prof. Richard Thaler won the Nobel Prize in Economics on Monday.

Prof. Thaler's work over the past 30 years has changed we the way we view financial decisions. As a behavioral economist, he's studied the way we actually think and act instead of hewing to some wrong-headed theories.

We often act on emotion: Buying stocks at their highest prices, then selling when we should be buying; getting the costliest credit and thinking that we know more than than market and the computers running it.

Per Stromberg, Secretary General of the Royal Swedish Academy of Sciences announces that the Nobel Economics Prize goes to US economist Richard Thaler (on screen) for his pioneering work to bridge the gap between economics and psychology on October 9, 2017 in Stockholm (JONATHAN NACKSTRAND/AFP/Getty Images)

Top 10 Financial Stocks To Buy For 2019: Safety Insurance Group Inc.(SAFT)

Advisors' Opinion:
  • [By Jordan Wathen]

    Safety Insurance Group (NASDAQ:SAFT) reported that winter weather activity and an accounting change were drags on its first-quarter results, though a lower tax rate was a net positive to the Massachusetts-based insurance company.�

Top 10 Financial Stocks To Buy For 2019: Macatawa Bank Corporation(MCBC)

Advisors' Opinion:
  • [By Ethan Ryder]

    BidaskClub upgraded shares of Macatawa Bank (NASDAQ:MCBC) from a buy rating to a strong-buy rating in a research note released on Friday morning.

    Separately, Hovde Group set a $11.00 price target on Macatawa Bank and gave the stock a hold rating in a research report on Monday, January 29th.

Top 10 Financial Stocks To Buy For 2019: RenaissanceRe Holdings Ltd.(RNR)

Advisors' Opinion:
  • [By Logan Wallace]

    RenaissanceRe (NYSE: RNR) is one of 73 publicly-traded companies in the “Fire, marine, & casualty insurance” industry, but how does it compare to its rivals? We will compare RenaissanceRe to similar companies based on the strength of its dividends, earnings, analyst recommendations, institutional ownership, valuation, risk and profitability.

Top 10 Financial Stocks To Buy For 2019: Saratoga Investment Corp(SAR)

Advisors' Opinion:
  • [By Max Byerly]

    Headlines about Saratoga Investment (NYSE:SAR) have been trending somewhat positive this week, according to Accern Sentiment. Accern rates the sentiment of media coverage by analyzing more than 20 million news and blog sources. Accern ranks coverage of publicly-traded companies on a scale of negative one to positive one, with scores closest to one being the most favorable. Saratoga Investment earned a daily sentiment score of 0.17 on Accern’s scale. Accern also gave headlines about the financial services provider an impact score of 45.4912059514825 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the company’s share price in the near future.

  • [By Ethan Ryder]

    Get a free copy of the Zacks research report on Saratoga Investment (SAR)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

  • [By Logan Wallace]

    ValuEngine downgraded shares of Saratoga Investment (NYSE:SAR) from a buy rating to a hold rating in a research report released on Wednesday.

    A number of other analysts have also issued reports on the stock. National Securities reiterated a neutral rating and set a $24.00 price target (up from $23.00) on shares of Saratoga Investment in a research note on Friday, January 12th. Zacks Investment Research lowered shares of Saratoga Investment from a hold rating to a sell rating in a research note on Friday, March 2nd. Finally, B. Riley initiated coverage on shares of Saratoga Investment in a research note on Tuesday, March 27th. They set a buy rating and a $23.50 price target on the stock. Four investment analysts have rated the stock with a hold rating and four have assigned a buy rating to the company. Saratoga Investment presently has a consensus rating of Buy and an average price target of $24.38.

Top 10 Financial Stocks To Buy For 2019: Tree.com Inc.(TREE)

Advisors' Opinion:
  • [By Logan Wallace]

    Rhumbline Advisers decreased its position in LendingTree (NASDAQ:TREE) by 13.9% in the first quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). The fund owned 13,988 shares of the financial services provider’s stock after selling 2,252 shares during the period. Rhumbline Advisers’ holdings in LendingTree were worth $4,590,000 as of its most recent filing with the Securities and Exchange Commission (SEC).

  • [By Joseph Griffin]

    These are some of the media headlines that may have effected Accern’s rankings:

    Get LendingTree alerts: Zacks: Brokerages Expect LendingTree (TREE) to Post $1.24 EPS (americanbankingnews.com) Form 4/A LendingTree, Inc. For: Apr 12 Filed by: LEBDA DOUGLAS R (streetinsider.com) Form 4/A LendingTree, Inc. For: May 08 Filed by: LEBDA DOUGLAS R (streetinsider.com) LendingTree to acquire Ovation Credit for $20.75 million (wraltechwire.com) LendingTree to buy credit-service provider (mpamag.com)

    LendingTree opened at $271.05 on Wednesday, Marketbeat.com reports. The company has a market capitalization of $3.49 billion, a P/E ratio of 89.75, a price-to-earnings-growth ratio of 2.15 and a beta of 1.77. LendingTree has a 12-month low of $269.95 and a 12-month high of $278.10. The company has a current ratio of 3.33, a quick ratio of 3.33 and a debt-to-equity ratio of 0.73.

  • [By Dan Caplinger]

    The stock market climbed sharply on Thursday, responding well to favorable earnings results from several corners of the market. Major benchmarks were up 1% to 2%, with particularly good performance from the Nasdaq Composite thanks to the tech sector's outperformance during the day. Yet some stocks suffered from bad news that cast doubt on companies' ability to benefit from generally favorable business conditions. MGM Resorts International (NYSE:MGM), Arch Coal (NYSE:ARCH), and LendingTree (NASDAQ:TREE) were among the worst performers on the day. Here's why they did so poorly.

Top 10 Financial Stocks To Buy For 2019: The NASDAQ OMX Group Inc.(NDAQ)

Advisors' Opinion:
  • [By Asit Sharma]

    In its last sequential quarter, Nasdaq Inc.�(NASDAQ:NDAQ)�relied on non-trading segments for growth as its market-services segment turned in a near flat performance. In the first quarter of 2018, however, healthy trading volumes resumed, and Nasdaq achieved expansion in each of its four operating segments. Before sifting through important highlights for the quarter, let's briefly review the top-level performance:

  • [By Sean Williams]

    However, Canada becoming the first developed country in the world to legalize adult-use cannabis is far from the only "marijuana first" we've witnessed this year. In February, Canadian weed investment company Cronos Group (NASDAQ:CRON), which has three core assets, announced that it was becoming the first Canadian pot stock to uplist to the Nasdaq (NASDAQ:NDAQ). Moving from the over-the-counter (OTC) exchange to a more reputable exchange like the Nasdaq allowed for improved liquidity, as well as cleared the way for institutional investors to take a position in Cronos Group. Wall Street traditionally shies away from investing in OTC-listed companies.�

  • [By Lisa Levin] Companies Reporting Before The Bell Thermo Fisher Scientific Inc. (NYSE: TMO) is projected to report quarterly earnings at $2.4 per share on revenue of $5.63 billion. Ford Motor Company (NYSE: F) is expected to report quarterly earnings at $0.41 per share on revenue of $37.16 billion. Twitter, Inc. (NYSE: TWTR) is projected to report quarterly earnings at $0.11 per share on revenue of $605.26 million. Comcast Corporation (NASDAQ: CMCSA) is expected to report quarterly earnings at $0.59 per share on revenue of $22.75 billion. General Dynamics Corporation (NYSE: GD) is estimated to report quarterly earnings at $2.52 per share on revenue of $7.6 billion. The Boeing Company (NYSE: BA) is expected to report quarterly earnings at $2.58 per share on revenue of $22.24 billion. Anthem, Inc. (NYSE: ANTM) is estimated to report quarterly earnings at $4.91 per share on revenue of $22.52 billion. Viacom, Inc. (NASDAQ: VIAB) is projected to report quarterly earnings at $0.79 per share on revenue of $3.04 billion. Northrop Grumman Corporation (NYSE: NOC) is estimated to report quarterly earnings at $3.61 per share on revenue of $6.61 billion. Rockwell Automation Inc. (NYSE: ROK) is expected to report quarterly earnings at $1.81 per share on revenue of $1.66 billion. Wipro Limited (NYSE: WIT) is projected to report quarterly earnings at $0.07 per share on revenue of $2.15 billion. The Goodyear Tire & Rubber Company (NASDAQ: GT) is expected to report quarterly earnings at $0.46 per share on revenue of $3.82 billion. Owens Corning (NYSE: OC) is projected to report quarterly earnings at $0.97 per share on revenue of $1.62 billion. T. Rowe Price Group, Inc. (NASDAQ: TROW) is estimated to report quarterly earnings at $1.71 per share on revenue of $1.29 billion. Dr Pepper Snapple Group, Inc. (NYSE: DPS) is expected to report quarterly earnings at $1.04 per share on revenue of $1.57 billion. Sirius XM Holdings Inc. (NASDAQ: SI

Top 10 Financial Stocks To Buy For 2019: INTL FCStone Inc.(INTL)

Advisors' Opinion:
  • [By Max Byerly]

    INTL FCStone (NASDAQ:INTL) shares reached a new 52-week high and low during trading on Monday . The company traded as low as $47.87 and last traded at $47.95, with a volume of 2050 shares trading hands. The stock had previously closed at $47.30.

  • [By Shane Hupp]

    INTL FCStone (NASDAQ:INTL) was upgraded by investment analysts at TheStreet from a “c” rating to a “b-” rating in a note issued to investors on Monday.

  • [By Logan Wallace]

    INTL FCStone (NASDAQ:INTL) released its earnings results on Tuesday. The financial services provider reported $1.18 earnings per share (EPS) for the quarter, beating the Zacks’ consensus estimate of $0.98 by $0.20, Bloomberg Earnings reports. INTL FCStone had a positive return on equity of 3.32% and a negative net margin of 0.02%.

Top 10 Financial Stocks To Buy For 2019: CBOE Holdings Inc.(CBOE)

Advisors' Opinion:
  • [By Dustin Blitchok]

    After CBOE Global Markets Inc (NASDAQ: CBOE) launched bitcoin futures in December, Charles Schwab Corporation (NYSE: SCHW) didn't immediately make the product available to clients, said Barry Metzger, the brokerage’s senior vice president of global, trading and advice.

  • [By Sean Williams]

    But times have changed, the virtual-currency market has matured a bit, and institutional investors have had a means to bet on the crypto market in a more traditional sense over the past couple of months. By this, I mean that both the CME Group�and CBOE Global Markets (NASDAQ:CBOE) have offered bitcoin futures on their trading platforms since December, providing a more traditional avenue for Wall Street to place its bets.

  • [By Dan Caplinger]

    Last December, two major futures exchanges started offering futures contracts on bitcoin. CBOE Global Markets (NASDAQ:CBOE) was the first to market with its futures offering, and CME Group (NASDAQ:CME) didn't waste any time coming out with its own version of a bitcoin contract.

  • [By Motley Fool Staff]

    Cboe Global Markets (NASDAQ:CBOE) Q1 2018 Earnings Conference CallMay. 4, 2018 8:30 a.m. ET

    Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

    Operator

  • [By Asit Sharma]

    Cboe Global Markets, Inc. (NASDAQ:CBOE) reported expansive earnings growth in its first-quarter 2018 report, issued on May 3. In addition to revenue tacked on from its acquisition of Bats Global Markets in March 2017, Cboe enjoyed increased volume in trading of the company's proprietary VIX (Cboe Volatility Index) futures and options.

  • [By Max Byerly]

    Deutsche B枚rse (OTCMKTS: DBOEY) and Cboe Global Markets (NASDAQ:CBOE) are both large-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, dividends, institutional ownership, profitability, valuation and analyst recommendations.

Top 10 Financial Stocks To Buy For 2019: Deutsche Bank AG(DB)

Advisors' Opinion:
  • [By ]

    Here's everything you must know before Thursday's opening bell:

    Facebook (FB) posted first-quarter earnings and revenue that beat analysts' expectations. Ford (F) plans to shed most of its North American car lineup as customer preference has shifted to pickups and crossovers.  Deutsche Bank (DB) said it was planning "significant" job cuts for its global investment banking division. Investors will analyze earnings from Amazon (AMZN) and Microsoft (MSFT) .    U.S. stock futures pointed toward a modestly higher open.

    Subscribe to our Youtube Channel for extended interviews, Cramer Replays, feature content, and more!

  • [By Paul Ausick]

    Deutsche Bank AG (NYSE: DB) dropped about 6.9% Thursday to post a new 52-week low of $11.99. Shares closed at $12.88 on Wednesday and the stock’s 52-week high is $20.23. Volume of around 10 million shares was more than double the daily average.The bank is cutting thousands of jobs and some demands have been made to kick out the bank’s chairman.

  • [By Paul Ausick]

    Deutsche Bank AG (NYSE: DB) fell by about 2.9% Wednesday to post a new 52-week low of $12.90 after closing at $13.29 on Tuesday. The 52-week high is $20.23. Volume of about 6.3 million was about 40% higher than the daily average of about 4 million. The bank had no specific news.

  • [By Elizabeth Balboa]

    Creditanstalt was saved when the First Austrian Republic, the National Bank of Austria and the Rothschild family took up the costs. The firm eventually became state-owned following a forced merger with Wiener Bankverein, and the resulting entity was later subsumed by Deutsche Bank AG (USA) (NYSE: DB).

  • [By Garrett Baldwin]

    Merger mania has been hitting Wall Street all month. Today, 21st Century Fox Inc. (Nasdaq: FOXA) has been urged by activist investor Chris Hohn to make a deal with Comcast Corp.�(Nasdaq: CMCSA) if that company's offer is better than the deal they could receive from The Walt Disney Co.�(NYSE: DIS). Hohn's firm disclosed in an SEC filing that it has a 7.4% stake in FOXA. Four Stocks to Watch Today: BBY, DB, KR, APRN Best Buy Corp.�(NYSE: BBY) leads a busy day of earnings reports in New York. The Big Box retailer easily topped Wall Street expectations, with earnings per share of $0.82 on $9.11 billion in revenue. The average analyst expectation came in at $0.75 on $8.78 billion. The largest bank in Europe is facing problems again. This morning, Deutsche Bank AG�(NYSE: DB) announced plans to slash 7,000 jobs as the firm attempts to restore profitability to its balance sheet. The announcement comes as the company's chair faces a vote of no confidence at an annual general meeting taking place today. In other deal news, Kroger Inc. (NYSE: KR) has purchased Home Chef, the biggest privately owned meal kit delivery firm in the United States. The deal includes $200 million upfront and could be worth $700 million should Home Chef hit certain targets over its next five years. It is an interesting acquisition, given that rival Blue Apron Holdings Inc. (NYSE: APRN) has struggled since its IPO. Though APRN stock was up 3.8% this morning on news of the Home Chef deal, the stock is trading at just $3.07. It hit the market at $11.00 in June 2017. Look for additional earnings reports from Splunk Inc. (Nasdaq: SPLK), Deckers Outdoor Corp. (Nasdaq: DECK), Gap Inc. (NYSE: GPS), Ross Stores Inc.�(Nasdaq: ROST), Autodesk Inc. (Nasdaq: ADSK), and Hormel Foods Corp. (NYSE: HRL).

    Follow�Money Morning��on��Facebook,�Twitter, and�LinkedIn.

  • [By ]

    Deutsche Bank AG (DB) announced plans in its Thursday morning earnings report to cut a "significant" number of jobs in its global investment banking division. DB reported net income falling to 120 million euros, down 79% from the same period last year and well below the FactSet analyst forecast of 377 million euros. The bank's core tier one capital ratio, a measure of the cash it can set aside to cover potential losses, slipped 60 basis points from the end of last year to 13.4%.

Top 10 Financial Stocks To Buy For 2019: NBT Bancorp Inc.(NBTB)

Advisors' Opinion:
  • [By Stephan Byrd]

    Get a free copy of the Zacks research report on NBT Bancorp (NBTB)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

  • [By Ethan Ryder]

    NBT Bancorp (NASDAQ:NBTB) was downgraded by analysts at BidaskClub from a “buy” rating to a “hold” rating in a note issued to investors on Saturday.

Monday, May 21, 2018

Dave & Buster's: It's All Fun And Games With Nearly 30% Upside

Casual-dining chains have not been winners during this economic expansion. Millenials, with their need for more social media-worthy experiences, have been blamed for the decline in conjunction with Baby Boomers moving onto fixed incomes as they retire.

Dave & Buster's Entertainment Inc (NASDAQ: PLAY) provides an eat, drink, play, and watch experience for consumers. This hybrid entertainment/dining experience has fared well since going public in 2012, attracting higher-income adults in the 21-39 age range. Poor same-store sales last quarter knocked the premium off the stock price, but top and bottom-line growth were still strong. Margins and efficiency ratios top its competitors, and Wall Street and quant valuation models agree that there is a strong upside for this diamond in the casual-dining rough. You'll Probably Want to Sit Down for This

Casual dining, the traditional sit-down, full-service restaurant experience is getting hit by demographics. Millennials want hip, social-media worthy experiences and retiring Baby Boomers are thrifty on their fixed incomes. Headlines such as "Millennials Are Killing Chains Like Buffalo Wild Wings And Applebee's" are not uncommon.

Overall, the food service industry has seen increasing growth over the last eight months. The chart below indicates restaurant sales have grown around 3.8 percent YoY (blue line) after bottoming out at 1.6 percent in September 2017. Employee growth sits just below 2 percent, showing that operators have not regained much confidence with the sales uptick.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: BLS, U.S. Census, FRED

Growth within the industry is a bit lumpy, with limited-service restaurants, such as Wendys Co (NASDAQ: WEN) and Chipotle Mexican Grill, Inc (NYSE: CMG), growing at 5.3 percent in 2017 as compared to 3.5 percent for casual dining establishments according to the National Restaurant Industry.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: National Restaurant Association

Restaurants are doing everything they can to make the experience better for diners. Chili's, a subsidiary of Brinker International, Inc (NYSE: EAT), reduced their menu by 50 items. Applebee's, owned by Dine Brands Global Inc (NYSE: DIN) invested in tablets for every table to give the appearance of more on-demand service. "Endless Apps" at TGIF is an example of older chains playing the value card.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Picture Credit: TGI Fridays

Meanwhile, Dave & Buster's Entertainment, Inc. (NASDAQ: PLAY) has focused on the experience side of an evening out. Over the last decade, it has flipped the share of revenue from food and games, with entertainment now responsible for 56 percent of sales and driving a more than 2x increase in EBITDA margins.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside Source: Dave & Buster's Jan. 2018 Investor Presentation

Dave & Buster's Owns It Niche

Dave & Buster's is best known for its "Eat Drink Play Watch" tagline. Its restaurants provide full-service dining, a wide variety of alcohol, the latest video games, and plenty of televisions to follow sporting events. The chain owns all of its domestic stores, 106 as of February 2018, and has increased the count by 11.2 percent annually since 2012.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: Dave & Buster's Jan. 2018 Investor Presentation

D&B features the highest sales per store in the casual-dining industry, even compared to higher-end restaurants.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: Dave & Buster's Jan. 2018 Investor Presentation

Its demographics are a bit surprising. It is less a Chuck E. Cheese and more an adult experience. D&B's target audience is 21 to 39 years-old, and it has a 58 percent to 42 percent adults to family visitor mix.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: Dave & Buster's Jan. 2018 Investor Presentation

Since Dave and Buster's went public in October 2012, it has consistently grown revenues.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

Along with this revenue growth, the company has grown its margins. Net Profit Margin sits at 10.2 percent, impressive for the food industry.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

In addition to Net Profit Margin, D&B leads its peers in managerial efficiency ratios including Return on Invested Capital, ROE, and Return on Assets.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

A well-executing management team also shows through in the restaurant chain's growth comps. It far outpaces its peers, and the Consumer Discretionary sector as a whole, with sales growth, net profit growth, and projected sales and net income growth.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

However, when it comes to a firm that is constantly opening new locations, same-store comps are an important measure. D&B features the two-year stacked metric in its latest Investor Presentation (chart below) versus Knapp-Track same-store sales estimates, which are based on a survey of 50+ casual-dining chains. With strong past performance, it is not surprising that the firm would focus on a two-year combination of same-store sales, but there are cracks starting to show. The stock has suffered after comps dropped in late 2017 and into 2018. For Q4, ended on February 4, same-store sales fell -5.9 percent, dragging the fiscal year down to -0.9 percent growth. Despite the weak comps, net income increased 34.9 percent on the quarter and 35.2 percent for the year. Management noted in the earnings call that while weather played a part, it had seen a fall-off on the entertainment side with its younger audience, and is focusing on improving the gaming experience while also offering more value opportunities with food and cocktail specials.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: Dave & Buster's Jan. 2018 Investor Presentation

Wall Street expectations remain strong for D&B. All ten analysts suggest accumulating the stock with four strong buys and six buy recommendations. Management has been doing a good job of managing expectations with four quarters of earnings surprises, but barely scraped by last quarter when everyone was caught off-guard with the weak same-store comps. Sales estimates are near double-digit for this and next year, but EPS estimates have fallen since the earnings release. Expectations are for negative EPS growth over the next quarters and years. D&B is dealing with the repercussions of strong past comps, but it is good to see that analysts have accepted a slower trajectory for the company.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finance.yahoo.com

PLAY Should Trade at a Premium But Is Now Priced to Move

Dave & Buster's has the lowest trailing P/E among its peers (pink bars). Its Forward P/E is around average for the pack, but the expectations for declining earnings does leave it as the only one to see a higher future P/E. This can be seen as a positive, as it allows for easier earnings surprises compared to its peers.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

Price/Sales show the company as averagely valued relative to its peers. Sales can be a purer comparison among firms as they are typically less engineered than earnings.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

The firm's Enterprise Value multiples also do not show relative cheapness. While D&B's EV/EBITDA is lowest among its peers, the more honest Free Cash Flow metric is around average for the chains.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

Showing D&B's relative debt load is a bit difficult due to two of its competitors featuring negative equity. Compared to Darden Restaurants, Inc. (NYSE: DRI), and the Consumer Discretionary sector's 45 percent Debt/Equity ratio (pink bars), D&B's is a bit high. However, Debt/Total Capital provides more comps and shows the chain more favorably relative to its peers. The firm has focused on reducing debt bringing it down from $486 million in 2014 to $264 million last year.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

Dave & Buster's can easily afford its current leverage. Its 22.4x Interest Coverage ratio is highest among its peers. Its Cash Flow/Total Debt was an impressive 81.9 percent in 2017 according to finbox.io.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

While the stock appears fairly priced compared to its peers, it has clearly been a better performing company with higher per-store sales, better margins, and industry-best efficiency ratios. Wall Street believes in the management team with an average target price across nine analysts pointing to 41.8 percent upside. Finbox.io's quantitative valuation model also expects positive returns from the stock, but at a more conservative move of 28.2 percent.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside
Source: finbox.io

Dave & Buster's: Outplaying the Competition for a 28 percent+ Upside

With tepid wage growth, the feared impact of Millennials, and poor results from casual-dining chains in general expect the market to take a conservative view of the group. This sets Dave & Buster's up to easily beat Wall Street's expectations if it continues its strong performance.

Its margins and efficiency ratios show that management has been out-executing its peers. The fact that the stock shows up valued similarly to these competitors, rather than at a premium, points to an opportunity to invest in a star at an average valuation. Wall Street experts agree, forecasting nearly 42 percent upside for Dave & Buster's. Acting as a check against the sometimes qualitative view of analysts, Finbox.io's quantitative valuation composite also sees upside from the restaurant chain, calling for a gain of 28.2 percent. Dave & Buster's is positioned right to allow investors to eat up some stock gains.

Author: Matt Hogan

Expertise: Valuation, financial statement analysis

Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset's fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.

His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron's, Seeking Alpha and investing.com.

Matt can be reached at matt@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Dave & Buster's: It's All Fun and Games With Nearly 30% Upside

Photo Credit: DaveandBusters.com