2014

The Zacks Analyst Blog Highlights:IBM, Textron, Lockheed Martin, Northrop Grumman and General Dynamics

CHICAGO, Oct. 17, 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 the IBM (NYSE: IBM-Free Report), Textron Inc. (NYSE: TXT-Free Report), Lockheed Martin Corp. (NYSE: LMT-Free Report), Northrop Grumman Corp. (NYSE: NOC-Free Report) and General Dynamics Corp. (NYSE: GD-Free Report).

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Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

IBM Mixed, Stock Paying Price

Sometimes it's tough reporting after the bell when the regular trading day was up big: first sign of trouble and your stock gets flicked behind the ear in the after-market.IBM (NYSE: IBM-Free Report) reported Q3 earnings of $3.99 per share on revenues of $23.72 billion -- that's a bottom-line beat by 3 cents but a modest top-line miss. IBM shares have been down between 3-6% in late trading.

Both hardware and software sales were a bit light in the quarter, and services backlog was even with a year ago. Fitting with early Q3 earnings season in general, the narrative still stands: no major disappointments, but nothing to flow anyone's juices, either.

Big tech like Big Blue are slowly but surely morphing into the Alcoas and other industrials of the market: huge, unsurprising, relatively stable but often without much of a pop. IBM's sell-off after the bell is either a good buying opportunity or alleviating some of the loftiness in the share price, near-term. In any case, it ain't going away any time soon.

Analysts had been mixed prior to the earnings announcement, for this quarter, next quarter, fiscal 2013 and 2014. This has earned IBM a Zacks Rank #3 (Hold) and a longer-term Neutral recommendation. Depending on how big this sell-off is, analysts may eventually see some buyable value in the shares.

IBM has brought in rather lackluster earnings reports for the past few quarters now. Actually, Q3 is the best of the year so far, and it's still kind of a yawner. Down roughly 10% year-over-year, however, investors could have really used some unexpected good news. I suppose, for now, it will settle for "not too bad" news.

Will Textron (TXT) Miss Earnings This Quarter?

Textron Inc. (NYSE: TXT-Free Report) is set to report third quarter 2013 results on Oct 18 before the market opens. Last quarter, the company posted a 5.26% positive surprise. Let's see how things are shaping up for this announcement.

Factors to Consider this Quarter

Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components, and industrial tools. The company's geographically-diverse network of aircraft, defense & intelligence, industrial and finance businesses negates any specific business risk.

Textron succeeded in beating the Zacks Consensus Estimate last quarter on the back of strong performance at Textron Systems and Industrial businesses. However, the quarterly figure came below the year-ago level by 31%, reflecting lower business jet deliveries.

However, the company, like its peers, continues to face defense budget deficits and political uncertainty. Though the company received a number of contracts this quarter, those were not sizeable. Budget cuts from sequestration have reduced the number of contracts awarded by the Department of Defense.

Again, on Oct 1, 2013, the U.S. government began a partial shutdown after the two houses of Congress, the House of Representatives and the Senate, failed to reach a consensus on a new budget and pass a budget before the start of the financial year.

In view of the current defense budget uncertainty, threat of sequestration and partial U.S. government shutdown, we remain apprehensive for the time being.

Earnings Whispers?

Our proven model does not conclusively show that Textron is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Zacks ESP is 0.0%.

Zacks Rank #3 (Hold): Textron Inc. carries a Zacks Rank #3 (Hold). However, the Zacks #3 Rank when combined with a 0.0% ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Lockheed Martin Corp. (NYSE: LMT-Free Report), with Earnings ESP of +2.21% and a Zacks Rank #2 (Buy).

Northrop Grumman Corp. (NYSE: NOC-Free Report), with Earnings ESP of +2.21% and a Zacks Rank #2 (Buy).

General Dynamics Corp. (NYSE: GD-Free Report), with Earnings ESP of +1.80% and a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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 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.

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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.

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