Zacks Bull and Bear of the Day Highlights: Sanderson Farms, PHH, Cisco Systems, Juniper Networks and NiSource
CHICAGO, May 16, 2013 /PRNewswire/ -- Zacks Equity Research highlights Sanderson Farms (Nasdaq: SAFM) as the Bull of the Day and PHH Corporation (NYSE: PHH) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cisco Systems (Nasdaq: CSCO), Juniper Networks (NYSE: JNPR) and NiSource Inc. (NYSE: NI).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Remember the "original white meat?" Yes, chicken and more specifically a Zacks Rank #1 stock called Sanderson Farms (Nasdaq: SAFM) might be worth a look as part of your portfolio smorgasbord.
Aside from my love for the meat itself, chicken and the companies that produce them have been on my radar for some time. In 2011 I did quite a bit of research into the chicken industry titans such as Tyson, Pilgrim's Pride and today's bull, Sanderson Farms. I have mentioned Sanderson as a favorite on Fox Business several times, including this appearance just ahead of the New Year (chicken comments start around 3:30).
Chicken producers including Sanderson went on a tear from late 2011 into mid-2012 and then took at bit of a beating late last year due to skyrocketing feed costs, plummeting chicken prices and reduced consumption.
Sanderson has resumed its bullish run over the last 6 months and despite the fact that shares are up nearly 40% since late December, Sanderson continues to prove why it still should be part of your portfolio.
Declining revenues and an industry under pressure are not the descriptors you want to hear just before you invest in a company, but unfortunately PHH Corporation (NYSE: PHH) is experiencing both at the moment.
In its last earnings report, PHH reported a 6% decline in net revenues overall along with a decline in several of their business metrics that helped drive core earnings per share 77% lower versus the same period a year ago.
PHH is unique in that it offers both outsourced private-label mortgage solutions (originations mostly) and fleet management (two very different businesses) with over 580,000 automobiles and trucks under management in both sales and service fleets.
The mortgage side is struggling a bit as pre-tax core earnings for the combined mortgage production and servicing segments was a loss of $3 million for the first quarter, down from $45 million in pre-tax core earnings in the fourth quarter of last year.
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Cisco Systems Beats, As Expected
While no one is saying Big Tech is back on Easy Street these days, Cisco Systems (Nasdaq: CSCO) managed to notch its 19th straight positive earnings surprise after the bell Wednesday, with EPS of 46 cents. True, this was just a penny better than the expected 45 cents per share, but I'm sure John Chambers & Co. will take it.
That Cisco was able to post a 2% beat is not extraordinary in and of itself, but considering that Cisco rival Juniper Networks (NYSE: JNPR) earlier this week said the Enterprise market was "challenging," we'd have to think Cisco shareholders are pleased with the results. Cisco -- which had remained overall pretty flat during regular trading Wednesday -- is up pretty big in the after-market: more that 6% higher at this time.
Ahead of the earnings report, analysts have been moderately negative on Cisco: of the 10 estimates for the company's fiscal 3rd quarter 2013, 5 of them had been revised downward over the past 90 days, with no upward revisions. This, more than any single reason, is responsible for Cisco carrying a Zacks Rank #4 (Sell) before the earnings announcement.
As such, based on the earnings beat, we would suggest an uptick in Cisco's Zacks Rank may be forthcoming.
Though analysts were consistent in their slightly downward outlook, they hadn't really moved the needle in terms of magnitude of the revisions. Cisco shares were expected to generate 45 cents per share two months ago, as well.
Investing in new products, retaining the ability to increase its dividend yield when deemed necessary and keeping a mindful eye on margins going forward are some of the keys to Cisco's success, looking forward. Increasing strength in data center, switching and wireless businesses will help maintain company strength. Higher costs for new products last quarter might finally bear fruit in the coming quarters.
We may not see CSCO shares peak up near $8o per share again for awhile, but if Cisco can keeps its eye on the ball, perhaps we may see a nice run over time. We'll have more on Cisco's earnings tomorrow morning.
NiSource Boosts Dividend Rate
NiSource Inc.'s (NYSE: NI) board of directors approved a 4.2% hike in its quarterly dividend rate to 25 cents per share from the prior payout of 24 cents per share. The dividend will be paid on Aug 20, 2013 to shareholders of record as of Jul 31, 2013. This will bring the new annualized dividend to $1.00 per share from 96 cents earlier.
In 2012, NiSource had announced a target to increase the dividend annually in a band of 3% to 5%. The utility major said it intended to return 60%-70% of net adjusted earnings as dividends to its shareholders.
NiSource's prior quarterly dividend increase of 4.3% was announced in May 2012. The company has been paying healthy dividends since 1999. The recent acceleration confirms the company's commitment towards boosting shareholder value.
NiSource's confidence reflects its lofty long-term projects worth $30 billion and infrastructure-expansion steps that will ensure earnings growth in the range of 5% to 7%. This will be further reinforced by the company's favorable investment-grade credit ratings.
The company continues to maintain a strong cash balance and the hike will require an extra payment of $3.1 million. At the end of Mar 31, 2013, the company's cash balance shot up a whopping 179.3% to $101.4 million from $36.3 million at the end of Dec 31, 2012. Also, the company's robust liquidity position will enable it to pay the extra amount with ease.
NiSource's current annual dividend yield of 3.4% is substantially higher than the industry average yield. This will certainly make the stock look attractive and capture investor attention. Currently the company carries a Zacks Rank #3 (Hold).
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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