Zacks Bull and Bear of the Day Highlights: Ryder System, Corning, FedEx, Discover Financial Services and Bed Bath & Beyond

Sep 23, 2011, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Sept. 23, 2011 /PRNewswire/ -- Zacks Equity Research highlights Ryder System (NYSE: R) as the Bull of the Day and Corning, Inc. (NYSE: GLW) as the Bear of the Day. In addition, Zacks Equity Research provides analysis FedEx Corporation (NYSE: FDX), Discover Financial Services (NYSE: DFS) and Bed Bath & Beyond Inc. (Nasdaq: BBBY).

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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

We maintain our Outperform recommendation for Ryder System (NYSE: R) on strong second quarter results and a solid earnings projection. Despite the negative impacts of the Japan disruption and an uncertain economic outlook, earnings beat the Zacks Consensus Estimate on higher pricing, acquisitions, and increased sales in commercial rental and used vehicle sales.

Ryder's continued investments in fleets and technology upgrades will fuel earnings growth despite high maintenance costs and the negative in the near-term impact of the disaster in Japan. The strong balance sheet encourages the company to expand its footprint via acquisitions.

Further, Ryder remains committed to its shareholders via dividends and share repurchases. Thus, we remain optimistic on the company's growth prospects.

Bear of the Day:

Corning, Inc. (NYSE: GLW) is a leading developer of advanced glass substrates for multiple markets. June quarter earnings beat the Zacks Consensus Estimate by a penny, but guidance was soft, reflecting inventory builds at TV manufacturers, which impacted both the Display and Specialty Materials segments.

We continue to believe in Corning's longer-term prospects, especially with respect to GG and strong position at OEMs. However, while efforts to diversify operations continue, Corning remains highly dependent on display markets. Price erosion in this market and the higher debt level will remain a drag on earnings.

Given the above, we are downgrading the shares from Neutral to Underperform. We think downside potential is greater, given the extreme dependence on the display market and the possibility of further weakness in earnings.

Latest Posts on the Zacks Analyst Blog:

FedEx: Mixed Results, Lower Outlook

Before the opening bell, FedEx Corporation (NYSE: FDX), the world's second-largest package delivery company, reported first quarter fiscal 2012 adjusted earnings of $1.46 per share. The quarter's earnings fell short of the Zacks Consensus Estimate by a penny but increased 22% from $1.20 earned in the year-ago quarter.

Total revenue climbed 11% year over year to $10.52 billion and surpassed the Zacks Consensus Estimate of $10.33 billion. The outperformance was attributable to improved FedEx Ground and FedEx Freight performance as well as strong yield initiatives.

Operating income increased 17% year over year to $737 million, resulting in operating margin of 7% compared with 6.6% in the year-ago quarter. Operating expenses grew 11% year over year to $9.78 billion mainly due to 40% higher fuel cost from the year-ago quarter.

Guidance

FedEx has projected earnings in the range of $1.40 to $1.60 per share for the second quarter of 2012. The mid-point ($1.50) is lower than the current Zacks Consensus Estimate of $1.59.

Based on rising fuel prices and moderate economic growth, FedEx has lowered its fiscal 2012 earnings projection from $6.35–$6.85 to $6.25–$6.75 per share. But the mid-point ($6.60) is still above the current Zacks Consensus Estimate of $6.42.

FedEx continues to expect capital spending of $4.2 billion for fiscal 2012. The company intends to buyback shares over the fiscal year under its existing repurchase authorization of 5.7 million shares.

Discover Beats Estimates

Discover Financial Services (NYSE: DFS) reported third-quarter earnings per share of $1.18, dramatically ahead of both the Zacks Consensus Estimate of 91 cents and 47 cents recorded in the year-ago quarter. Net income spiked substantially by over 148.7% year over year to $649 million from $261 million.

Net income allocated to common shareholders also surged to $642 million from $258 million in the year-ago quarter.

The surge in profits was driven by strong sales volume complemented by lower interest expense, reduced provision for loan losses and delinquency rates based on improved credit quality. The profit was also boosted by the escalated income from both direct banking and payment services business, which also drove the book value per share. However, these were partially offset by increased operating and tax expenses.

Total revenue, net of interest expense, increased 4.6% year over year to $1.79 billion, also exceeding the Zacks Consensus Estimate of $1.48 billion. Net interest income increased 7.8% year over year to $1.24 billion. However, total expenses also increased 13.4% year over year to $642 million.

Bed Bath & Beyond Beats on Both

Bed Bath & Beyond Inc. (Nasdaq: BBBY) reported better-than-expected second-quarter 2011 results on the heels of strong growth in sales and higher margins.

Earnings rose approximately 33% to 93 cents per share from the year-ago quarter earnings of 70 cents a share, handily surpassing its earnings guidance range of 77 cents to 82 cents per share. Bed Bath & Beyond also outpaced the Zacks Consensus Estimate of 84 cents a share.

Earnings Guidance

Bed Bath & Beyond expects to deliver third-quarter 2011 earnings per share between 82 cents and 87 cents. Fiscal 2011 earnings per share are expected to increase by 22% to 25%, up from the previous forecast of 15% and 20%.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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.

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