Castle Brands Inc. (NYSE:ROX) Stuns with Walmart Inc. (NYSE:WMT) Deal

Castle Brands Inc. (NYSE:ROX)

Castle Brands Inc. (NYSE:ROX) shares have been up over 91% on news that the company has reached an agreement to supply Goslings Stormy Ginger Beer and Goslings Stormy Diet Ginger Beer to all U.S. Walmart stores. Consumers can expect to find Goslings Stormy Ginger Beer in Walmart stores in March 2017. Walmart Inc. (NYSE:WMT) is one of the world’s most valuable companies in the world by market value, and is the largest grocery retailer in the U.S. In 2016, 62.3% of Walmart’s $478.6 billion sales came from its U.S. operations.

 Pre-market trading is seeing ROX at $1.39 – it closed at $0.73 yesterday. Castle Brands Inc. (NYSE:ROX) all-time high is just over $2 and its average daily volume is around 125,000 shares. However over 1 million shares have traded hands before the regular session opens.

On February 10, 2017 Castle Brands Inc.’s (NYSE:ROX) earnings broke even in FY Q3 2017, in line with street estimates. The company had posted a loss of a penny in the same quarter last year. Q3 revenues of $18.31 million missed estimates of $20.74 million by 11.7%. However, revenues reflected a 6.4% YoY increase.

The New York, NY-based company has had increasing sales every year since 2012 when the company reported $35.5 million in sales. EPS has been marginally negative for the past five years and in each of the last two years shareholders of Castle Brands Inc.’s (NYSE:ROX) experienced an EPS loss of $0.02. 

 

2/28/2017
Ticker Symbol ROX
Last Price a/o 9:18 AM EST  $                      1.34
Average Volume                    124,250
Market Cap (mlns)  $                  113.39
Sales (mlns) $74.70
Shares Outstanding (mlns) 155.35
Share Float (mlns) 85.57
Shortable Yes
Optionable No
Inside Ownership 1.80%
Short Float 1.31%
Short Interest Ratio 9.03
Quarterly Return -3.95%
YTD Return -3.96%
Year Return -16.08%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

 About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

 

Is Billionaire Mario Gabelli Plotting Shakeup Of Hertz Global Holdings, Inc (NYSE:HTZ)?

Hertz Global Holdings, Inc (NYSE:HTZ)

Hertz Global Holdings, Inc (NYSE:HTZ) reported feeble earnings results for both its 4Q2016 and full-year 2016. Financial performance in both periods was dragged by continued trouble in the company’s car-rental operation.

But as Hertz posted downbeat earnings results, Mario Gabelli, the billionaire founder of hedge fund Gamco Investors, disclosed an active stake of about 6.2% in the company. Gabelli’s disclosure of an active stake in Hertz suggests he could push for a shakeup of the company’s management.

Earnings results

Hertz posted adjusted EPS loss of $0.71 in 4Q2016, wider than $0.29 in the comparable quarter in the prior year. Revenue of $2.01 billion for the latest quarter was down 0.9% year-over-year. Analysts on the average were looking for adjusted EPS loss of $0.57 on revenue of $2.01 billion.

For full-year 2016, Hertz posted a loss of $491 million as revenue declined 2.4% to $8.8 billion.

Cash balance

Hertz Global Holdings, Inc (NYSE:HTZ) concluded 2016 with cash of $816 million, down from $1.43 billion in the prior quarter. But the company is carrying a heavy debt load as its debt stood at $13.54 billion at the end of the year, down slightly from $14.86 billion at the end of September quarter.

Asset write-downs

Hertz has struggled to prune costs to stabilize its operations. The company disclosed in the latest report that it wrote down the value of its Dollar Thrift business by about $120 million. It made a similar move in its European rental business where it wrote down the value of the operation by $172 million.

Leadership changes

Hertz Global Holdings, Inc (NYSE:HTZ) has been under three chief executives over the past few years. The current CEO, Kathryn Marinello, was hired in January. She said the disappointing 2016 results were caused by issues related to fleet and services, but promised that Hertz will continue to roll out new services to appeal to US customers as part of the efforts to grow revenue.

If Gabelli is interested in pushing for changes in Hertz, it is unclear what it is likely to focus on as the company only recently hired a new CEO. Perhaps Gabelli could attempt to reorganize Hertz’s board.

Carl Icahn is the largest shareholder in Hertz, and he has expressed confidence in Kathryn’s ability to turn around the company.

Stock movements

Shares of Hertz Global Holdings, Inc (NYSE:HTZ) rose 0.15% to $20 in the regulator session on Monday and continued to rise further by about 2% during after-hour trading. The stock is down more than 7% year-to-date and has retreated more than 97% over the last one year.

2/27/2017
Ticker Symbol HTZ
Last Price a/o, 4:02PM EST  $                         20.00
Average Volume (mlns) 2.19
Market Cap (blns)  $                  1.67
Sales (blns) $9.21
Shares Outstanding (mlns) 83.47
Share Float (mlns) 82.82
Shortable Yes
Optionable Yes
Inside Ownership 0.20%
Short Float 9.12%
Short Interest Ratio 3.45
Quarterly Return -23.55%
YTD Return -7.24%
Year Return

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

What’s On Focus As Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) Reports Q4?

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) reports Q4 2016 results on March 6. An earlier schedule showed the company would release the results on February 27. Arena has had a mixed track record of quarterly earnings. It has exceeded expectations twice, met expectations once and missed expectations once in the trailing four quarter.

As the company reports Q4, analysts are expecting EPS loss of $0.09. The company posted EPS loss of $0.13 in the same quarter a year earlier, meeting the consensus estimate.  Revenue in the year-ago quarter was $7.8 million, short of consensus estimate of $8.26 million.

For the last quarter, Q3 2016, ARNA produced EPS loss of $0.05, besting consensus estimate of EPS loss of $0.07. Revenue of $19 million also topped the consensus estimate of $13.99 million.

Focus on pipeline

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has only one approved product in its portfolio and that is obesity treatment called Belviq. Despite a large addressable market in the US, Belviq sales are yet to impress.

As Arena reports Q4, investors will be looking for clues about how the company intends to improve Belviq sales. Poor Arena sales have been linked to low coverage by third-party insurers, narrow focus on only a certain patients and the tendency of doctors to prescribe drugs for symptoms of obesity instead of the actual disease.

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has been working to extend the label of Belviq and a study for the label extension is underway, so positive outcome from the trial would allow Arena to extend the label of the drug. Extended label should expand the drug’s addressable market, potentially yielding more revenue for the company.

In another effort to squeeze more revenue from Belviq, Arena late last year introduced a once-daily formulation of the drug. Because Arena made the move last October, sales of the once-daily Belviq should be reflected in the upcoming 4Q results.

Other product candidates

Other than Belviq, Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) investors will also have their eyes and ears on the company’s pipeline update.

Arena has several candidates in its pipeline. They include ralinepag, which is being developed as a treatment for pulmonary arterial hypertension and is in Phase 2 clinical study. The other is etrasimod, which is also a Phase 2 candidate being developed as a treatment for ulcerative colitis.

Stock movement

Shares of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) rose 6.8% to $1.57 on Monday. The stock is up more than 10% since the beginning of the year, and has risen about 2% over the last one year.

2/27/2017
Ticker Symbol ARNA
Last Price a/o, 4:02PM EST  $                          1.57
Average Volume (mlns) 1.61
Market Cap (mlns)  $                  381.91
Sales (mlns) $46.40
Shares Outstanding (mlns) 243.25
Share Float (mlns) 242.12
Shortable Yes
Optionable Yes
Inside Ownership 0.59%
Short Float 3.78%
Short Interest Ratio 5.67
Quarterly Return -1.26%
YTD Return 10.56%
Year Return 2.61%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Nutrisystem, Inc. (Nasdaq:NTRI) Releases Fat Financials

Nutrisystem, Inc. (Nasdaq:NTRI)

Nutrisystem, Inc. (Nasdaq:NTRI) posted earnings after the bell Tuesday and saw their shares rocket in the after-hours market. NTRI shares closed the regular session at $39.20 but have hit a high of $46 (17%+) after the company released financial results for the fourth quarter and full year.

Q4 2016 EPS was $0.29 – expectations were for $0.22. Revenue was even more impressive as the company reported $108.95 million – beating expectations by $8.75 million. For the year, Nutrisystem, Inc. (Nasdaq:NTRI) revenues came in at $545 million – an increase over the 2015 figure of $462.6 million. Net income increased 36%, and diluted EPS was up 34% ($1.19). Adjusted EBITDA was up 31% and the company returned $21 million to shareholders through dividends. The company also provided 2017 guidance – “Full year revenue expected to be in the range of $630 to $650 million, net income between $46.8 and $49.7 million, diluted income per common share between $1.55 and $1.65, and adjusted EBITDA between $95.8 and $100.3 million.”

Nutrisystem, Inc. (NASDAQ: NTRI) is a leader in the weight loss industry. The company’s weight loss solutions include Nutrisystem® My Way®, Fast 5, and Turbo 10, all structured food delivery programs that come with the digital platform NuMi® by Nutrisystem. Additionally, the company offers multi-day kits and individual products available at select retail outlets. The Company’s current product line offers customers the most meal choices, including more than 150 foods with no artificial colors, flavors, or sweeteners. Nutrisystem, Inc. (NASDAQ: NTRI) provides customers the flexibility to align their diet with the US Healthy Eating Meal Pattern, as recommended by the USDA Dietary Guidelines. Plans include comprehensive counseling options from trained weight loss coaches, registered dietitians and certified diabetes educators and can be customized to specific dietary needs and preferences. In December of 2015, the Company purchased the South Beach Diet brand.

Sales increased modestly since 2013 when the firm reported $358.1 million. In 2015, $462.6 million in sales was posted. EPS has been much more impressive. Nutrisystem, Inc. (NASDAQ: NTRI) lost $0.10 EPS in 2012 but in each of the next three years that figure moved into positive territory and in 2015 there was a profit of $0.90 EPS.

2/27/2017
Ticker Symbol NTRI
Last Price a/o 4:31 PM EST  $                    43.55
Average Volume                    206,420
Market Cap (mlns)  $              1,120.00
Sales (mlns) $526.80
Shares Outstanding (mlns) 29.32
Share Float (mlns) 28.99
Shortable Yes
Optionable Yes
Inside Ownership 1.30%
Short Float 6.19%
Short Interest Ratio 8.7
Quarterly Return 2.83%
YTD Return 10.10%
Year Return 64.59%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

 

What Caused J C Penney Company Inc (NYSE:JCP) Shares To Drop 5.8%

J C Penny Inc (NYSE:JCP)

J C Penny Inc (NYSE:JCP) on Friday became the latest major retail brand to highlight the struggles of retailers. The company reported mixed results for the December quarter, or 4Q2016, and joined the chorus of retail footprint cutting. J C Penney said it will close at least 130 stores in the coming months and send 6,000 workers on early retirement. Those measures are expected to help the company prune costs and achieve more agility, but many investors have decided to distance themselves from the stock as seen the share price movement.

Shares of J C Penney pulled back more than 5.8% to close at $6.46 on Friday. The stock is down more than 22% year-to-date and has declined more than 32% over the last one year.

Investor worries over tough business environment for legacy retailers may have caused shares of J C Penney to tank.

Mixed quarterly earnings

J C Penney Company Inc (NYSE:JCP) generated revenue of $3.96 billion in 4Q2016, missing the consensus estimate of $3.98 billion. Revenue in the year-ago period was $4 billion. Sales at stores that remained opened for at least a year were down 0.7%, steeper than 0.3% decline that analysts expected on the average.

However, adjusted EPS of $0.64 in the latest quarter increased sharply from $0.39 a year ago and easily beat consensus estimate for $0.61.

Weak sales in the women’s category and continued competitive pressure from online retailers hurt J C Penney’s performance in the latest quarter.

Early retirement for workers

J C Penney Company Inc (NYSE:JCP) intends to buy out 6,000 workers as part of the measures to lower its payroll expenses. However, positions left by workers who choose to retire early will be filled by employees affected by the planned store closure. Perhaps that is a way to calm fears over massive job loss at a time when the Trump administration has focused on job creation as one of its signature agendas.

Amazon.com, Inc. (NASDAQ:AMZN), the disruptive online retailer that has caused problems for J C Penney and other legacy retailers, has pledged to add more than 100,000 full-time jobs over the next one and a half years.

Store closure

J C Penney is closing between 130 and 140 stores. The store restructuring is expected to save the company $200 million in annual expenses. However, the restructuring will initially cost $225 million.

In announcing store closure, J C Penney Company Inc (NYSE:JCP) has joined the ranks of Macy’s Inc (NYSE:M), Sears Holdings Corp (NASDAQ:SHLD) and other legacy retailers that are eliminating hundreds of jobs.

2/24/2017
Ticker Symbol JCP
Last Price a/o, 4:02PM EST  $                       6.46
Average Volume (mlns) 19.44
Market Cap (blns)  $                  2.11
Sales (blns) $12.58
Shares Outstanding (mlns) 327.38
Share Float (mlns) 303.26
Shortable Yes
Optionable Yes
Inside Ownership 1.00%
Short Float 23.29%
Short Interest Ratio 3.63
Quarterly Return -33.54%
YTD Return -22.26%
Year Return -22.73%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Why Upbeat China Economic Outlook Bodes Well For Coach Inc (NYSE:COH)

Coach Inc (NYSE:COH)

When Coach Inc (NYSE:COH) reported earnings results for the December quarter, which is its fiscal 2Q2017, China was one of the regions in which the company registered strong growth in its international segment. With that the International Monetary Fund (IMF) recently upgrading its economic outlook for China, the move seems to bode well for Coach in the country.

In China, economic stimulus measures by the government are expected to drive GDP expansion in 2017.  The IMF expects the economy to continue growing by 6% in 2018.

Coach’s Chinese sales increased 6% on a constant currency basis in F2Q2017. Strong results in Macau and Hong Kong largely contributed to the gains. The IMF is now projecting that China’s economy will expand 6.5% in 2017, which is 0.3% higher than the fund’s earlier growth projection. A more robust economic expansion rate in China means a larger market for Coach’s products in the country.

European sales up double-digit

Coach Inc (NYSE:COH) also fared well in Europe as sales in the region increased double-digit in F2Q2017. New distribution deals in Europe backed Coach’s gains in the region.

North America sales up

Coach’s business also grew in North America, with sales jumping 2%. Greater conversion and higher prices backed the company’s gains in the region.

F2Q2017 results

Overall, Coach Inc (NYSE:COH) generated revenue of $1.32 billion, up 3.8%. The revenue was in-line with consensus estimate for $1.32 billion. Adjusted EPS of $0.75 increased from $0.68 a year earlier and topped the consensus estimate of $0.74.

Outlook 2017

Coach expects fiscal 2017 revenue to increase at low-single digit pace, largely because of a stronger dollar that is causing international sales to be worth less when converted. However, the company expects fiscal 2017 operating margin to be in the range of 18.5% – 19.0%.

Stock movement

Shares of Coach edged up less than 1% to close at $38.02 on Friday. The stock has remained fairly steady since the beginning of 2017 and over the last one year. Year-to-date, the stock is up more than 8%, and over the last 12 months the stock is down less than 1.5%.

Like other legacy retailers, Coach Inc (NYSE:COH) has been rattled by the online shopping trends. While traditional retailers are trying to catch up with their online rivals such as Amazon.com, Inc. (NASDAQ:AMZN), they still have a long way to go and Coach proven that in its F2Q2017 earnings. The company said its e-commerce comps declined 3% in the latest quarter, driven down by a lack of aggressive promotions during the quarter.

2/24/2017
Ticker Symbol COH
Last Price a/o, 4:02PM EST  $                        38.02
Average Volume (mlns) 3.39
Market Cap (blns)  $                  10.65
Sales (blns) $4.55
Shares Outstanding (mlns) 280.1
Share Float (mlns) 280.02
Shortable Yes
Optionable Yes
Inside Ownership 0.10%
Short Float 2.82%
Short Interest Ratio 2.32
Quarterly Return -0.31%
YTD Return 8.57%
Year Return 1.22%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Tivity Health (NASDAQ:TVTY) Gets Nod of Approval After Restructuring

Tivity Health (NASDAQ:TVTY)

Tivity Health Inc. (NASDAQ:TVTY) received a vote of confidence in their new direction. Chairman Donato Tramuto was named CEO in 2015 and immediately set out to better define the brand and align the business with public perception. They divested themselves of business lines that addressed the entire population health market and directed the company’s efforts at the 50+ age bracket. Investors have responded favorably. TVTY was trading under $10 a year ago and last Friday hit $30.50.

Tivity Health offers the senior community health management programs such as physical and occupational therapy, chiropractic and acupuncture care, and fitness programs. Franklin, TN-based Tivity Health Inc.(NASDAQ:TVTY) uses a proprietary technology platform that produces analytics and predictive modeling to direct customized programs led by Tivity associates. The company’s flagship program is the SilverSneaker fitness program that pays homage to fitness center members that have passed away by spray-painting their sneaker silver and hanging it on the wall so that their memory will be honored.

Tivity Health Inc. (NASDAQ:TVTY) engages the corporate sector by presenting statistics demonstrating that employees with high well-being simply cost less. Tivity claims that the medical costs for high well-being employees are 20% lower than average, while emplyees who report low well-being cost 50% more. Low well-being also hurts performance. One analysis the company points to found an almost $20,000 gap in productivity between surveyed employees with the lowest and highest levels of well-being. Tivity Health (NASDAQ:TVTY) has over 68 million people enrolled in their programs throughout 16,000 fitness and wellness centers including three international facilities.

Sales have improved since 2013 when Tivity Health Inc. (NASDAQ:TVTY) reported a figure of $663.3 million. In 2015 that number improved to $770.6 million. However, the company reported an EPS loss in 2013-2015: -$0.25, -$0.16, and -$0.86. Its cash position is not strong – only $0.02 cash/share which could explain why over 10% of its outstanding shares are held short.

Last week Tivity Health Inc. (NASDAQ:TVTY) reported its Q4 2016 and full year results. For the quarter, revenues were up by 10.1% to $124.9 million. Net income from continuing operations was $12.1 million which represented a YoY increase of 31.2%. For the year, revenues increased from $452.1 million to $501 million and net income from operations rose from $1.18 to $1.47. Importantly 2017 guidance was for revenues in the range of $540 – $550 million. Investors, last Friday, rewarded the company by sending TVTY shares up over 8% on the news.

2/24/2017
Ticker Symbol TVTY
Last Price a/o 4:21 PM EST  $                    29.60
Average Volume                    416,850
Market Cap (mlns)  $              1,060.00
Sales (mlns) $562.30
Shares Outstanding (mlns) 35.65
Share Float (mlns) 35.65
Shortable Yes
Optionable Yes
Inside Ownership 1.30%
Short Float 10.86%
Short Interest Ratio 9.28
Quarterly Return 28.70%
YTD Return 30.11%
Year Return 171.56%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

RH (NYSE:RH) Shocks and Shorts React

RH (NYSE:RH)

Heavily-shorted Restoration Hardware announced a $300 million buy-back, reported Q4 2016 earnings and beat expectations by $0.03 – $0.68 vs $0.65. Revenues were reported down 8.8% YoY but that figure also beat expectations by $6.68 million. For 2016, the company reported profit of $4.7 million, or $0.12/share. Revenue was reported at $2.13 billion. The results in the share price have been dramatic and possibly due to short covering – RH is up over 25% at the time of this writing and had been up over 30%.

Corte Madera, CA-based RH (NYSE:RH) offers furniture, lighting, textiles, bathware, decor, outdoor and garden, tableware, and child and teen furnishings. The company sells products through its stores and catalogs, as well as through its Websites, such as restorationhardware.com, rh.com, rhbabyandchild.com, rhteen.com, and rhmodern.com. As of October 29, 2016, it operated 85 retail galleries that include 51 legacy galleries, 6 larger format design galleries, 7 next generation design galleries, 1 RH modern gallery, and 5 RH baby & child galleries throughout the United States and Canada; 15 Waterworks showrooms in the United States and the United Kingdom; and 28 outlet stores.

In December, RH was trading in the $39 handle then provided guidance lower based on weak holiday sales. That precipitated a slide that ended in early February with RH shares trading in the $24 handle. For the previous month RH (NYSE:RH) is down over 10% and down over 28% for the quarter. However the earnings report today set off trading in volumes over eight times their daily average and shares are trading over 35% above their February lows.

RH (NYSE:RH) sales have steadily improved each year since 2012 when they reported $960 million. By 2016 that number improved to $2.11 Billion. EPS has also improved since 2013 when the company reported a loss of $0.40. In 2016 EPS was a profit of $2.27. Of the thirteen forms that follow RH (NYSE:RH), ten give the shares a rating of “Hold” but three rate the shares as a “Strong Buy”.

2/24/2017
Ticker Symbol RH
Last Price a/o 1:11 PM EST  $                    31.94
Average Volume                2,160,000
Market Cap (mlns)  $              1,040.00
Sales (mlns) $2,200.00
Shares Outstanding (mlns) 41.35
Share Float (mlns) 38.37
Shortable Yes
Optionable Yes
Inside Ownership 0.00%
Short Float 40.77%
Short Interest Ratio 7.24
Quarterly Return -28.05%
YTD Return -17.95%
Year Return -51.48%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

 

Square Inc (NYSE:SQ)’s Stock Break Out Explained

Square Inc (NYSE:SQ)

How did Square Inc (NYSE:SQ) manage to hold on to its Wednesday gains and scale higher to a new 52-week peak on Thursday? The answer can now be provided. The company’s 4Q16 beat expectations and most analysts who have reviewed the results think the company is moving toward more growth.

Shares of Square settled at $17.15 on Thursday, after gaining more than 14%. Earlier, the stock rose to a new 52-week high of $17.75. Square is up more than 25% year-to-date, and has gained more than 72% over the last one year.

Q$ 2016 top expectations

Square Inc (NYSE:SQ) generated revenue of $452 million, up 21% year-over-year. EPS loss of $0.04 narrowed significantly from EPS loss of $0.34 a year earlier. Both the top and bottom line figures beat the consensus estimates that called for EPS loss of $0.09 and revenue of $450 million.

Square’s gains in the quarter were supported by robust growth in the company’s merchant payment processing service. The company processed nearly $50 billion in payments on behalf of merchants, up 39% compared to a similar quarter a year earlier. Square takes a 2.75% cut in payments it processes. The topline growth was also supported by success in newer businesses such as business credit line Square Capital. The company extended $798 million in business loans in 2016.

Upbeat outlook

On top of strong quarterly results for Q4 2016, Square Inc (NYSE:SQ) also issued upbeat guidance for 2017. The company expects revenue of $2.15 billion for the year, suggesting nearly 25% growth from the prior year.

To reach its revenue target in 2017, Square intends to introduce its services to all its customers. New products are also expected to drive growth in the coming years.

More growth awaits Square

Several rating firms have weighed in on Square Inc (NYSE:SQ) since the company reported Q4 2016 results on February 22. While the majority of the analysts think that the company’s prospects are bright, at least one feels that Square’s continued loss-making is dangerous for its future.

RBC Capital Markets analysts maintained their OUTPERFORM rating on Square stock, but raised their price target on the stock from $17 to $18. Pacific Crest analysts made a similar move by keeping their OVERWEIGHT rating but hiking their price target to $18 from $17.

Mizuho Securities analysts are a bit more optimistic, reiterating a BUY rating and hiking their price target to $19 from $16. However, SunTrust analysts are more cautious with their recommendation of Square, choosing to maintain a HOLD rating on the stock at a price target of $16 – up from $13.

2/23/2017
Ticker Symbol SQ
Last Price a/o, 4:02PM EST  $                       17.15
Average Volume (mlns) 4.48
Market Cap (blns)  $            5.80
Sales (blns) $1.63
Shares Outstanding (mlns) 338.02
Share Float (mlns) 162.82
Shortable Yes
Optionable Yes
Inside Ownership 1.00%
Short Float 6.35%
Short Interest Ratio 2.31
Quarterly Return 40.34%
YTD Return 25.83%
Year Return 73.41%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

What If The Government Loosened Its Grip On Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA)?

Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA)

Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA), also known as Fannie Mae, and Federal Home Loan Mortgage Corp (OTCMKTS:FMCC), also known as Freddie Mac, have been under the control of the government since 2008 when they were bailed out. What that means is that shareholders in the mortgage companies do not see a profit. Instead, the companies funnel all their profits to the US Treasury, and that has been a subject of serious legal dispute between shareholders and government on opposing sides.

Fannie and Freddie are turning nearly $10 billion in dividends to the government in March from their profits in the December quarter, or 4Q16. Fannie posted a $5 billion profit in the quarter and said it will send $5.5 billion to the Treasury, while Freddie generated $4.8 billion in profit in the quarter and said it will funnel $4.5 billion in dividends to the government.

If the government didn’t have a tight grip on these mortgage giants, shareholders would have benefited from these hefty dividend payouts. Instead, the best shareholders can come to enjoy Fannie and Freddie’s success is to profit from appreciation in their stocks as has happened every time they reported strong earnings results.

Fannie gives Treasury $160 billion

Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) posted net income of $12.3 billion in 2016, bringing its positive net worth at the end of the year to $6.1 billion. In the first nine months of 2016, Fannie paid $9.6 billion in dividends to the government. Combining the newly declared dividend of $5.5 billion to be released in March, the company has sent a total of $160 billion to the government since it returned on its feet after being bailed out in 2008.

Strengthening the business

The management of Fannie has recently focused on strengthening the company’s business model, especially reducing risk to taxpayers. Similar efforts are being made at Freddie.

As such, the mortgage giants reported lower serious delinquency rates at the end of 4Q16. For Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA), single-family delinquency rate dropped to 1.2%, while Freddie reported delinquency rate of 1%. Nationwide single-family delinquency was 2.96% in 3Q16, according to the Mortgage Bankers Association data. The association’s 4Q16 data isn’t out.

Fannie and Freddie’s upbeat 4Q16 and 2016 results showing improving fundamentals in the housing market.

Stock movements

While shareholders may be sitting out of profits from Fannie, strong performance by the company coupled by hopes that investors may someday find a way to share in future profits could continue to lift the stock.

Shares of Federal National Mortgage Association Fannie Mae (OTCMKTS:FNMA), have risen more than 117% year-to-date and are up more than 110% over the last 12 months. Shares of Freddie, on the other hand, are up more than 100% for both year-to-date and the last 12 months.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.