The Zacks Analyst Blog Highlights: POSCO, Avis Budget Group, Zipcar, United Rentals and Hertz
CHICAGO, Feb. 14, 2013 /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 POSCO (NYSE: PKX), Avis Budget Group Inc. (Nasdaq: CAR), Zipcar Inc. (Nasdaq: ZIP), United Rentals (NYSE: URI) and Hertz (NYSE: HTZ).
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Here are highlights from Wednesday's Analyst Blog:
POSCO Upgraded to Strong Buy
Zacks Investment Research upgraded POSCO (NYSE: PKX) to a Zacks Rank #1 (Strong Buy) on Feb 12, 2013.
Why the Upgrade?
Posco is the world's third largest steelmaker on the basis of output and currently has a market capitalization of approximately $25 billion. Long-term prospects are compelling for this Korean steelmaker, making it an attractive investment option.
Global steel demand is likely to grow by 3% year over year in 2013; being largely pushed by restocking activities in China and strong demand from the U.S, India and Southeast Asian countries.
To leverage from the growing demand, the company has been expanding its operations in the domestic market as well as in the international arena, especially the fast growing and emerging markets worldwide. Moreover, higher proportion of value-added products like cold-rolled steel, automotive steel plates and electric steel sheets in its product mix will work in favor of the company.
In 2012, crude steel production was at its highest level at 37.986 million tons and represented a 1.8% increase over 2011. Finished product sales were up 1.6%; export ratio of finished product sales was at 41.7% versus 38.6% in 2011. Demand for finished products was strong from the Automobile end-market while weaknesses were noticed in Home Appliances and Shipbuilding markets.
For 2013, management expects consolidated revenue to be approximately KRW 66 trillion. Finished product sales are estimated to be roughly 34 million tons; crude steel production about 37 million tons while consolidated investments are likely to be approximately KRW 7 to 8 trillion.
Avis Set to Complete Zipcar Buyout
Global vehicle rental giant Avis Budget Group Inc. (Nasdaq: CAR) has successfully completed the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 for its pending acquisition of the world's leading car sharing network company, Zipcar Inc. (Nasdaq: ZIP), on Feb 11, 2013.
Following this, the conclusion of the deal is dependent on the approval by Zipcar shareholders and review by UK authorities. The company now expects to complete the deal in March or April this year.
Avis had agreed to buy Zipcar in Jan 2013 for a total worth of $500 million. This strategic move will facilitate the company in expanding its offerings from car rental to car sharing and compete with rivals United Rentals (NYSE: URI) and Hertz (NYSE: HTZ), which has its own car sharing service, Hertz On Demand.
To finance this deal, Avis Budget will opt for corporate borrowings and use its available cash. At the end of Sept 30, 2012, this Zacks Rank #3 (Hold) stock had cash and marketable securities of nearly $554 million.
Avis Budget believes that the transaction will generate an annual synergy in the range of $50–$70 million. Further, we believe that the acquisition will lead to increasing revenues and reduce costs by augmenting fleet utilization.
In the United States alone, car sharing is currently a lucrative business worth nearly $400 million and it is growing rapidly in other parts of the world. With over 760,000 members, Zipcar has presence in 20 major cities of U.S., Canada and Europe.
We believe that by capitalizing on Zipcar's strong network along with its leading-edge technology, Avis Budget will definitely be able to boost its top and bottom lines.
Zipcar is engaged in operating car sharing network, providing self-service vehicles to members located in reserved parking spaces throughout the neighborhoods where they live and work. The company's vehicles are available for use through its reservation system accessible by phone, internet or wireless mobile devices.
Avis Budget will today release its financial results for fiscal 2012. The company had earlier forecasted revenue of approximately $7.3 billion and earnings in the range of $2.35–$2.45 per share for fiscal 2012. The Zacks Consensus Estimate for fiscal 2012 stands at $2.41 per share, which is within the company's projected guidance range.
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