Brown Shoe, Regis, Cognizant Technology Solutions, Infosys and Wipro highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 09, 2013 /PRNewswire/ -- Zacks Equity Research highlights Brown Shoe Company (NYSE: BWS-Free Report) as the Bull of the Day and Regis Corporation (NYSE: RGS-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheCognizant Technology Solutions (Nasdaq: CTSH-Free Report), Infosys Technologies (NYSE: INFY-Free Report) and Wipro Ltd. (NYSE: WIT-Free Report).
Here is a synopsis of all five stocks:
- a positive sales surprise
- a positive earnings surprise, and
- increased guidance from management.
This prompted analysts to revise their estimates significantly higher for both 2013 and 2014, sending the stock to a Zacks Rank #1 (Strong Buy).
The valuation picture looks attractive too with shares trading at a significant discount to the industry median on both a forward P/E and P/TBV basis.
Brown Shoe Company is a footwear retailer and wholesaler. It operates over 1,000 Famous Footwear stores and over 200 specialty retail stores. Its products are also sold in department stores around the globe and through various online retailers. The company was founded in 1878 and incorporated in 1913.
Brown Shoe Company delivered solid second quarter results on August 27. Net sales rose 10% to $621.7 million, ahead of the consensus of $598.0 million. This was driven in large part by a 6.8% jump in same-store sales at Famous Footwear. Sales in the wholesale segment were strong too, rising 12% year-over-year.
Gross profit as a percentage of net sales improved 70 basis points to 41.0%. Meanwhile, selling, general and administration expenses improved 30 basis points to 37.2% of net sales.
Adjusted earnings per share more than doubled to 33 cents. This beat the Zacks Consensus Estimate of 27 cents. It was the company's 6th consecutive positive earnings surprise.
Analysts revised their estimates significantly lower for Regis after the latest miss, sending the stock to a Zacks Rank #5 (Strong Sell). Despite the negative earnings momentum, the valuation picture does not look attractive for Regis at this point. Investors should consider avoiding this stock until it can turn things around.
Regis Corporation is focused primarily on hair salons. It owns, franchises or holds ownership interests in approximately 10,000 locations across the globe under the brands Supercuts, Sassoon Salon, Regis Salons, MasterCuts and Cost Cutters, among others.
Regis Corporation reported disappointing results for the fourth quarter of its fiscal 2013 on August 27. Sales fell -5% to $502.3 million, which was below the Zacks Consensus Estimate of $514.0 million. This was driven by a -3.1% decline in same-store service sales as guest count fell -3.7%.
The adjusted cost of service and product as a percentage of revenues increased 180 basis points to 57.7%. This was driven in part by negative leverage of fixed expenses.
Adjusted earnings per share came in at 6 cents, missing the Zacks Consensus Estimate of 10 cents. It was below the 36 cents earned in the same quarter last year.
Following the lackluster Q4 results, analysts revised their 2014 estimates for Regis Corporation significantly lower. This sent the stock to a Zacks Rank #5 (Strong Sell).
Cognizant Makes Back-to-Back Acquisitions
Consulting, technology and outsourcing company Cognizant Technology Solutions (Nasdaq: CTSH-Free Report) recently announced back to back acquisitions. The company acquired a French financial services consulting company, Equinox to enhance its consulting services, followed by the acquisition of a unit of ValueSource NV.
Founded in 2004, Equinox provides service to investment banking, retail banking, insurance and asset management. Equinox's expertise in regulatory consulting that spans Basel III, Solvency II, EMIR/Dodd-Frank, FATCA and MiFID will boost Cognizant's consulting portfolio. Moreover, Equinox's strength in strategy consulting, organization and operations management, change management, and HR consulting will also improve the company's competitive position going forward.
Lately, Cognizant has been scouting for companies with deep consulting experience. We believe that the acquisition of Equinox will fulfill that requirement. Cognizant management expects approximately $40 million of annualized revenues from this acquisition. Post-acquisition, around 160 consulting professionals from Equinox will join Cognizant.
Meanwhile, Cognizant also announced that it will acquire a subsidiary of Belgium-based integrated bank insurance group ValueSource NV as part of a five-year contract with the group.
Acquisitions have been a key growth catalyst for Cognizant over the years. The company has made seven acquisitions since 2010, which includes three consulting firms.
In the past few years, Cognizant outpaced its Tier-1 peers such as TCS, Infosys Technologies (NYSE: INFY-Free Report) and Wipro Ltd. (NYSE: WIT-Free Report) on the back of its exposure to fast-growing verticals, like Financial Services and Healthcare.
A key strategy of Cognizant is to align its business with vertical industries, such as financial services, healthcare & life sciences, retail, manufacturing and logistics. The company has gained deep industry expertise and knowledge of the domain by acquiring and partnering some leading companies across the globe.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
SOURCE Zacks Investment Research, Inc.