Zillow, Campbell Soup, Men's Wearhouse, Jos. A. Bank Clothiers and Citi Trends highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 11, 2013 /PRNewswire/ -- Zacks Equity Research highlights Zillow (Nasdaq: Z-Free Report) as the Bull of the Day and Campbell Soup (NYSE: CPB-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on theMen's Wearhouse (NYSE: MW-Free Report), Jos. A. Bank Clothiers Inc (Nasdaq: JOSB-Free Report) and Citi Trends Inc. (Nasdaq: CTRN-Free Report).
Here is a synopsis of all five stocks:
Zillow (Nasdaq: Z-Free Report) was the Bull of the Day on May 10, 2013 and over the last 5 months the stock saw price appreciation of nearly 40%. The stock is once again a Zacks Rank #1 (Strong Buy), and it is the Bull of the Day.
I already noted that the last time I highlighted this stock was May 10, but that was three days after the company reported 1Q13 earnings. The stock fell about 7% following the release which provided an excellent buying opportunity for investors.
Over the past five months, the company had another earnings report which was released on August 6. This was a solid beat, with revenue coming in 5.6% ahead of the Zacks Consensus Estimate and earnings that really surprised. In posting a loss of thirty cents for the quarter, Zillow delivered a 23% positive earnings surprise, beating the Zacks Consensus Earnings Estimate by nine cents.
The most recent quarter saw a significant increase in unique users. More than 54M uniques for 2Q13 represented growth of 16% ahead of the most recent quarter and 62% more than the same quarter in the previous year. That was an acceleration of 47% growth rate that was posted in the previous quarter. Clearly, more people are going to Zillow to learn about and shop for real estate.
Zillow operates of a real estate and home-related information marketplace on mobile and the Web. It covers 110 million homes and provides a "Zestimate" or a Zillow provided estimate for homes, townhomes and condominiums. The company has also expanded into the rental industry.
Dating back to the June 2012 quarter, Zillow has beaten the Zacks Consensus Estimate in four of the last five quarters. The June 2012 quarter saw the company post earnings of $0.04, $0.05 ahead of the Zacks Consensus estimate for a 500% positive earnings surprise. The following quarter saw a six cent beat which translated into a 600% positive earnings surprise.
The lone miss was the March 2013 quarter, as the company missed the Zacks Consensus Estimate by a penny.
Just beating the number all the time will not keep a stock from being a Zacks Rank #5 (Strong Sell). The rank is more about the estimate revisions that look forward as opposed to the earnings beats which are historical in nature.
That said, the Bear of the Day does have a two year win streak on its hands. Actually it is a quarter longer than that, as CPB has beat the Zacks Consensus Estimate in each of the last 9 quarters.
Campbell Soup produces branded convenience food products. The company operates in three business segments: Soup and Sauces, Biscuits and Confectionery, and Away From Home. Campbell Soup was founded in 1869 and is headquartered in Camden, New Jersey.
As mentioned earlier, the soup maker has had a great run of earnings beats. Despite all these beats, the stock has not reacted all that positively. In five of the last six earnings, the stock has traded lower in the session following the announcement. That does not leave a good taste in investors' mouths.
The most recent report saw a big negative surprise on the topline. The company reported revenue that was $107 million less than expected for a 5.85% negative revenue surprise. The marked only the second time in the last seven reports that the top line came in below expectations.
Estimates for CPB have slipped of late, the main reason the Zacks Rank has fallen. The Zacks Consensus Estimate for 2013 stood at $2.76 in July, but fell to $2.67 in August and then down to $2.59 in September.
Jos. A. Bank's Takeover Bid Rejected
Men's specialty retailer in North America, The Men's Wearhouse (NYSE: MW-Free Report), rejected smaller rival men's clothier, Jos. A. Bank Clothiers Inc's (Nasdaq: JOSB-Free Report) proposal to buy the former in an all-cash transaction, valued at $48 per share or a total of $2.3 billion.
Men's Wearhouse rejected the bid describing it as "opportunistic" and "inadequate", soon after Jos. A. Bank issued a public notice on Oct 9. Jos. A. Bank had privately communicated the proposal to Men's Wearhouse on Sep 17.
Men's Wearhouse's board believes that the proposal undervalues the company and its future prospects and is not in the best interest of its shareholders. The board stated that the recent downside in Men's Wearhouse's shares is due to its challenging second-quarter results and the removal of founder George Zimmer as the executive chairman over policy disputes in June. The company notes that the current market price does not reflect the intrinsic value of the company at the moment.
Simultaneous to the rejection, Men's Wearhouse adopted a poison pill (the Rights Plan) to protect itself against hostile or any other takeover tactics. The company revealed that its limited period shareholder rights plan, which expires on Sep 30, 2014, will prevent any single owner to own more than 10% stake (15% for a passive institutional investor) in the company.
In response to Men's Wearhouse's rejection, Jos. A. Bank stated that its $48 per share bid, values the former at a 42% premium at the time of the proposal. The company also noted that its offer price reflects a premium to the highest traded price of Men's Wearhouse in the last five years. Further, Jos. A. Bank revealed that Golden Gate, a leading investor in the industry, intends to invest about $250 million in the combined company.
Jos. A. Bank believes that the merger will prove beneficial to the shareholders and customers of both the companies, creating a behemoth men's wear retailer with nearly 2,000 stores.
Shares in Men's Wearhouse escalated 27.8% to $45.03 after rejecting Jos. A. Bank's bid, while despite facing rejection, Jos. A. Bank's shares were up 6.4% to $44.33.
Jos. A. Bank is a much smaller company, while Men's Wearhouse is a market leader in the men's clothing business. Men's Wearhouse reported annual sales of about $2.48 billion in the recently concluded fiscal year, more than double of Jos. A. Bank's annual sales of $1.05 billion.
Men's Wearhouse also has a higher market cap and almost twice the number of stores compared to Jos. A. Bank. Men's Wearhouse has a market cap of $2.15 billion, compared with Jos. A. Bank's $1.24 billion. As of Aug 3, 2013, Men's Wearhouse operated more than 1,200 stores, while Jos. A. Bank operated 623 stores in 44 states and the District of Columbia.
Men's Wearhouse currently carries a Zacks Rank #5 (Strong Sell), while Jos. A. Bank has a Zacks Rank #4 (Sell). A better-performing stock among apparel-shoe retailers is Citi Trends Inc. (Nasdaq: CTRN-Free Report), which carries a Zacks Rank #1 (Strong Buy).
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