Zacks Bull and Bear of the Day Highlights: CEC Entertainment, Granite Construction, Arris Group, Google and Comcast
CHICAGO, May 17, 2013 /PRNewswire/ -- Zacks Equity Research highlights CEC Entertainment, Inc. (NYSE: CEC)as the Bull of the Day and Granite Construction Incorporated (NYSE: GVA) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Arris Group Inc. (Nasdaq: ARRS), Google Inc. (Nasdaq: GOOG) and Comcast Corp. (Nasdaq: CMCSA).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
CEC Entertainment, Inc. (NYSE: CEC) recently delivered a strong first quarter earnings beat as same-store sales increased 1.6%.
Management also provided 2013 earnings guidance ahead of consensus, prompting analysts to revise their estimates significantly higher. It is a Zacks Rank #1 (Strong Buy) stock.
Although shares have risen strongly since the Q1 report, valuation still looks reasonable with the stock trading at 13x forward earnings. So there is plenty of room for CEC to continue running higher.
CEC Entertainment and its franchisees operate 566 Chuck E. Cheese's stores located in 47 states and eight foreign countries and territories. Chuck E. Cheese's feature games, rides, play areas, musical and comic robotic entertainment, and several dining options including pizzas.
CEC reported first quarter results on May 2. Total revenues rose 3% to $255.3 million, ahead of the consensus of $250.0 million. This was driven by a 1.6% increase in same-store sales. Meanwhile, total company store operating costs declined 110 basis points to 67.8% of sales.
Granite Construction Incorporated (NYSE: GVA) reported a first quarter loss of 53 cents per share, missing the Zacks Consensus Estimate by a wide margin. This prompted analysts to revise their earnings estimates significantly lower for both 2013 and 2014. This sent the stock to a Zacks Rank #5 (Strong Sell).
Granite Construction is an infrastructure contractor and construction materials producer. It serves public- and private-sector clients in the transportation, power, federal, tunneling, underground, and industrial/mining and water resources markets.
Granite Construction reported its first quarter results on May 9. Excluding an acquisition, revenues rose 1.5% while the gross profit margin declined 10 basis points to 7.9%. Meanwhile, selling, general and administrative expenses increased 69 basis points to 15.2% of total revenue.
These factors led to a loss of 53 cents per share, well below the Zacks Consensus Estimate of -26 cents. It was the company's second straight earnings miss.
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Arris Restructures Business Model
In a major strategic move, Arris Group Inc. (Nasdaq: ARRS) announced that it has restructured its business model and provided the future financial guidance. The restructuring was necessary after its acquisition of the Home businesses of Motorola Mobility, a subsidiary of Google Inc. (Nasdaq: GOOG) in Apr. 2013.
From the second quarter of 2013, Arris will report in two business segments instead of the current three business segments. The new segments will be Network & Cloud and CPE (Customer Premises Equipments). The Network & Cloud segment will include Arris' existing CMTS EMP, Access, Transport & Supplies, Media & Communication Systems products. This segment will also include Arris' Home, Video, head-end, CMTS and the converged products. On the other hand, the CPE segment will represent Cable and DSL modems, EMTAs, gateways and set-top boxes of both Arris and Motorola Mobility.
Management estimated that for the ensuing second-quarter 2013, non-GAAP total revenue will be $1.028 - $1.078 billion and non-GAAP earnings per share will be 6 cents – 13 cents. Management also targeted annual revenues of $4.8 - $5.1 billion and earnings per share of $2 - $2.15 after one year of Motorola Mobility acquisition. The merged entity is expected to generate a cost synergy of $100 - $125 million per annum.
In relation to the above-mentioned proposed merger, in Jan 2013, Arris sold approximately 10.6 million of its common stock to Comcast Corp. (Nasdaq: CMCSA) for a consideration of about $150 million. The Motorola Mobility acquisition deal worth $2.35 billion was financed in cash by $2.05 billion. Initially, it was decided that Google will get the remaining $300 million worth of Arris' common stocks. The Comcast deal has reduced the total number of Arris' shares to be issued to Google while raising the cash consideration by $150 million.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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