Acuity Brands, Wellcare Health Plans, Kimberly-Clark, Lorillard and Coca-Cola highlighted as Zacks Bull and Bear of the Day
CHICAGO, Feb. 27, 2014 /PRNewswire/ -- Zacks Equity Research highlights Acuity Brands (NYSE:AYI-Free Report) as the Bull of the Day and Wellcare Health Plans (NYSE:WCG-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onKimberly-Clark Corporation (NYSE:KMB-Free Report), Lorillard Inc (NYSE:LO-Free Report) and Coca-Cola Co (NYSE:KO-Free Report).
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Here is a synopsis of all five stocks:
When I think of the top three most exciting industries a company could be in, lighting fixture manufacturing does not come to mind. However, if you look at our Zacks Industry Rank you will see this business is the top industry of the 265 we rank. Granted there are only 2 stocks in the space but nonetheless it is surprising.
Acuity Brands (NYSE:AYI-Free Report) is the world's largest lighting fixture manufacturer and pegs our meter as a Zacks Rank #1 (Strong Buy). I am not an expert on the lighting fixture business but I know good numbers when I see them.
In the last 60 days, 10 analysts have revised their earnings estimates to the upside for the current year and next year. The magnitude of the consensus move is very encouraging with current year estimates up from $4.17 from $3.87 a share and next year to $5.07 from $4.70. Over the last 3 quarters the company has surprised earnings to the upside and the stock has followed suit as well.
Say what you want to say about Obamacare but I thought that insurance companies were supposed to benefit? Looking at the earnings revisions for a few of these stocks I guess I'm wrong about that too. While the Affordable Care Act may be good for the insurance business as a whole, the Medicare side of the business falls outside of the act. Companies offering a Medicare Advantage Plan like an HMO are not going to see any additional business from the Health Insurance Marketplace. This wrinkle in Obamacare has the HMO providers in the bottom 12% of our Zacks Industry Rank. Drudging up the bottom of these stocks currently is Wellcare Health Plans (NYSE:WCG-Free Report), the Bear of the Day.
Wellcare provides managed care services targeted exclusively to government-sponsored healthcare programs, focusing on Medicaid and Medicare. This puts the company firmly in a spot that does not benefit from the sweeping healthcare reform. In the face of further socialized medicine, the company is struggling to find earnings growth. Current quarter consensus has been revised down by 11 different analysts, dropping the target number from 65 cents per share just 60 days go to 5 cents. Next quarter and next year earnings numbers share a similar fate, each dropping by over a dollar. The downside revisions have been a negative drag on the share price.
The price and consensus chart shows consensus falling off a cliff. 2014 estimate revisions show earnings at levels not seen since 2011 when the stock was trading in the $40 range, well above the nearly $60 price it trades at today. This is not the kind of chart you want to see when you are looking for a long term winner.
Additional content:
Kimberly-Clark Boosts Shareholder Value
The board of directors of leading health care chain Kimberly-Clark Corporation (NYSE:KMB-Free Report) increased its dividend yet again on Feb 25, 2014. Kimberly-Clark hiked its dividend by 3.7% and will now pay 84 cents to its shareholders every quarter, up from 81 cents per share.
This means that Kimberly-Clark will now pay an annual dividend of $3.36 per share, which translates to an annualized dividend yield of 3.05%. However, the new annualized dividend yield is below the current yield of 3.5%. The new quarterly dividend will be paid on Apr 2 to shareholders of record as of Mar 7, 2014.
Kimberly Clark regularly returns value to its shareholders and has increased its dividend every year over the last 42 years. The last increase of 9.5% to 81 cents per share was made in Feb 2013.
The underlying strength of the business and management's inclination to return value to shareholders led to the dividend hike. Like Kimberly-Clark, other consumer staple companies like Lorillard Inc (NYSE:LO-Free Report) and The Coca-Cola Co (NYSE:KO-Free Report) recently hiked their dividend by 12% and 9%, respectively in Feb 2014.
Apart from boosting its dividend, the company also returns value to shareholders through share repurchases. The company returned $2.4 billion to its shareholders through share repurchases and dividends in 2013. For 2014, Kimberly-Clark expects to repurchase shares worth $1.3 billion to $1.5 billion.
Last month, Kimberly Clark delivered fourth-quarter 2013 earnings of $1.44 per share, beating the Zacks Consensus Estimate by 2.9% and the prior-year quarter earnings by 5.1%. The upswing in earnings was driven by organic sales growth and cost savings, which made up for increased input costs and currency headwinds.
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