The Zacks Analyst Blog Highlights: General Motors, Hewlett-Packard, Ford Motor, FedEx and United Parcel
CHICAGO, Oct. 30, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include General Motors Company (NYSE: GM), Hewlett-Packard Company (NYSE: HPQ), Ford Motor Co. (NYSE: F), FedEx Corporation (NYSE: FDX) and United Parcel Service, Inc. (NYSE: UPS).
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Here are highlights from Monday's Analyst Blog:
General Motors Inks Deal with HP
General Motors Company (NYSE: GM) recently announced the signing of new multi-year project services and software contracts with Hewlett-Packard Company (NYSE: HPQ). This new move will enhance General Motors' growth in IT transformation and will support the delivery of global services and products to its business partners, and reduce costs involved in the ongoing IT operations.
General Motors plans to hire up to 3,000 Hewlett-Packard employees, who are already engaged in the company's projects, to further improve the software deployed by the company.
General Motors primarily outsources most of its IT work. But the company now plans to reverse the situation and bring innovation and development in its IT segment. The company plans to hire workers devoted to innovations rather than operations at four new technology centers in Austin, Texas, and Warren and Michigan, over the next three to five years.
General Motors, in the second quarter of 2012, registered a 41% decline in its profit to $1.49 billion or 90 cents per share from $2.52 billion or $1.54 in the corresponding quarter of 2011. Nevertheless, the earnings per share exceeded the Zacks Consensus Estimate by 15 cents.
Total revenues fell 4.5% year over year to $37.60 billion in the quarter, missing the Zacks Consensus Estimate of $37.98 billion. The decline in the profit and revenues was attributable to strengthening of the U.S. dollar against most of the major currencies as well as weak macroeconomic conditions globally, especially in Europe and South America.
Detroit, Michigan-based General Motors is the largest automobile manufacturer in the world. However, like its competitor Ford Motor Co. (NYSE: F), the company's significant exposure to troubled Europe has adversely affected its operations in the continent.
Currently, General Motors retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock.
FedEx Intros New Expansion Plans
FedEx Corporation (NYSE: FDX), a leading U.S. package delivery company, is expanding its services across U.S., Canada and Mexico. The company aims to tap a potential business opportunity in NAFTA (North American Free Trade agreement) markets through its expansion plans.
The company is expanding its Priority next-day services in its FedEx Freight segment by opening a new service centre in Rochester, New York. The new service centre will cater to 13 U.S. and Canadian markets dealing in cross border shipments to and from Toronto and Montreal.
In Mexico, the company added two new service centers – one each in Culiacán and Silao. By introducing these two centers, FedEx would strengthen its freight network in northwestern and north central part of Mexico. Further, in its Freight segment, management intends to invest in technology to upgrade network and equipment and automation planning in order to enhance customer service levels.
FedEx' other improvement plans include productivity enhancements in the Ground segment like automation of the planning and execution of free load and pickup and delivery processes. The segment's trailers are also expected to be equipped with GPS devices to improve fleet management.
We believe near-term earnings growth will be aided by increasing profitability in Freight coupled with continued growth in the Ground segment. Additionally, improving international revenues and operational efficiency in FedEx Express will also support earnings going forward.
FedEx is boosting its international business through substantial investments to enhance its existing routes and make strategic acquisitions. The company is building a new hub in Guangzhou, China, for catering to100 new Chinese cities within the next five years. Recently, the company announced to invest $100 million in China in order to strengthen its competitive position in the Chinese markets against its rival –United Parcel Service, Inc. (NYSE: UPS)
As for acquisitions, the company completed the takeover of Polish courier Company Opek Sp. z o.o. in June this year and French B2B Express transportation company, TATEX in July.
Following this, the company acquired Rapidão Cometa, a Brazilian transportation and logistics company. We believe the investments in organic growth as well as acquisitions will lead to greater operational efficiencies, providing a competitive edge, generating significant long-term synergies, supporting international business growth, and driving higher profitability.
The stock currently has a Zacks #3 Rank, implying a short-term Hold rating. For the long-term, we have an Underperform recommendation on FedEx.
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