Hanesbrands, Campbell Soup, Hilton Worldwide Holdings, Choice Hotels International and La Quinta Holdings highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 7, 2014 /PRNewswire/ -- Zacks Equity Research highlights Hanesbrands (NYSE:HBI-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 onHilton Worldwide Holdings Inc. (NYSE:HLT-Free Report), Choice Hotels International Inc. (NYSE:CHH-Free Report) and La Quinta Holdings Inc. (NYSE:LQ-Free Report).
Here is a synopsis of all five stocks:
I'll admit it. I have a problem. It's not something I can easily shake off either. It's deeply embedded in my psyche and a result of countless childhood experiences that have cemented themselves in my mind. It's a problem a lot of us who grew up in the Chicagoland area. I love all things Ditka, Harry Caray and Michael Jordan. Especially the Michael Jordan part. I wear something Jordan related every day. Who knew the man that brought six Larry O'Brien trophies to Chicago would be instrumental in my shopping decisions nearly two decades later?
Jordan is the spokesman for our Bull of the Day, Hanesbrands (NYSE:HBI-Free Report). The Hanes portfolio extends well beyond just white tees and underwear. Hanes has a strong portfolio of great brands around the world including Champion, Playtex, and Leggs. Their brands represent five of the top twenty apparel brands. The Winston-Salem, N.C. based company is a global consumer goods company with over a century of history.
It's easy to see why this stock has done so well and why analysts have held a broad bullish stance. Net sales have a CAGR of 8%, Operating Profit 17%, and Diluted EPS 28%, since 2009. All the while gross margins have remained remarkably consistent near 35%. During Q2 2014, HBI grew its operating profit by $50 million over the last year. Slightly more than half of the increase was due to continued profitability improvement in its core business. The main drivers of this were its "Innovate-to-Elevate strategy and efficiency gains from its self-owned global supply chain.
Most of the remainder of the gains was from the contribution of Maidenform. Through Q2, Maidenform contributed $25 million to operating profit. For the full year, Hanesbrands looks for the Maidenform brand to contribute a total of $35 to $40 to profit.
Let's face it, this has been a pretty tough market recently. Just yesterday morning it looked like the rally that began Thursday morning was going to continue into this week. Everything was smooth sailing and most stocks on the radar were flying through the roof. Well, what happened? By the close Monday we had most major indexes in the red and a market that didn't look like it wanted to rally at all. I saw huge swings on individual stocks all day, going from huge winners to the biggest loser.
With so many troubled stocks out there, I'm trying to use the power of the Zacks Rank to help you avoid some stocks that look very safe on the surface, but actually are dwindling their earnings estimates and heading in the wrong direction. Among these stocks is today's Bear of the Day, Campbell Soup (NYSE:CPB-Free Report).
I feel like the Seinfeld character the Soup Nazi because I'm yelling "NO SOUP FOR YOU" with this one. Campbell's currently is a Zacks Rank #5 (Strong Sell) among an industry that currently ranks in the Bottom 27% of our Zacks Industry Rank. I'm sure most of us have had several cans of Campbell's soup in our lives but the brand nowadays is more than just soup. Campbell Soup Company is a global manufacturer and marketer of high quality, branded convenience products. The company operates in three business segments: Soup and Sauces, Biscuits and Confectionary, and Away From Home.
Campbell's has worked hard to come back from a devastating earnings miss in Q3 2013. At the time, analysts were looking for 87 cents per share out of the company but were very disappointed by the 66 cents print that came across as the final number. This 21 cent miss caused many analysts to rethink their expectations for the company.
Additional content:
3 Picks for Hotel Industry Growth
Latest data compiled by Smith Travel Research (STR) suggests a bullish trend for the U.S. hotel industry. After occupancy rate, revenue per available room (RevPAR) and average daily rate (ADR) improving significantly in August, the first three weeks of September witnessed a stellar performance. Let's take a look at the industry's recent progress:
Robust Growth in August
According to STR, the hotel industry's occupancy rate in August went up 3.8% to 71.6% year over year. Year-to-date, the basis occupancy rate stands at 66%, representing its best performance in the last 17 years.
August witnessed second highest RevPAR growth in 2014. The RevPAR climbed 9.4% to $84.90 year over year. Strong demand across the country boosted growth in RevPAR. Demand gained 4.8% or 5 million rooms in August from the year-ago period. The year-to-date demand went up 4.3%. Demand was fueled by increase in business and leisure trips along with strength in group occupancy.
Strong demand helped hoteliers to increase room rates in August. ADR rose 5.4% to $118.49 year over year, the highest rate since Jan 2008.
Among the top 25 markets in the U.S., none reported a decline in ADR or RevPAR in August. Also, the Baird/STR Hotel Stock Index increased 5.4% to 3,689 in August. It did better than S&P 500 (+3.8%) and the MSCI REIT (RMZ) (+2.7%) in the same month. According to e-forecasting.com's Hotels' future business conditions (HIL), future business activity also went up 0.7% to 118 in August, more than the 0.3% increase in July.
Promising September
Week ending Sep 6: Occupancy rate increased 4.5% year on year to 59%. RevPAR for the week surged 10.6% to $64.20. ADR increased 5.9% to finish the week at $108.87.
Week ending Sep 13: Occupancy rate increased 4.5% to 68%. RevPAR for the week soared 11.8% to $80.04. ADR increased 6.9% to end the week at $117.73.
Week ending Sep 20: Occupancy rate increased 4.4% to 70.6%. RevPAR for the week jumped 10.7% to $84.5. ADR increased 6% to finish the week at $119.71.
Week ending Sep 27: Occupancy rate gained 1.2% to 68.6%. RevPAR for the week went up 2.7% to $80.37. ADR increased 1.5% to end the week at $117.15.
Momentum to Continue
The industry is expected to continue its strong performance in 2014 and 2015. A recent report by PricewaterhouseCoopers (PwC) shows that lodging demand is expected to increase 4% in 2014, while supply is forecasted to grow just 1%. This, in turn, will boost occupancy level. PwC expects the hotel occupancy rate to advance almost 2 percentage points this year to 64.1%. PwC also forecasted RevPAR growth of 7.6% in 2014, driven by increased ADR of 4.4%, better than 3.9% recorded in 2013.
PwC expects the U.S. hotel occupancy rate to rise to 64.8% in 2015, the highest level since 1995. RevPAR is expected to grow steadily at 6.9% in 2015. The ADR is projected to rise 5.7% in 2015, the highest increase since 2007.
In a separate report, KF Hospitality Research (PKF-HR) expects U.S. hotel occupancy rate to rise to 65% in 2015. PKF-HR forecasted industry's demand growth to be 2.2% in 2015, more than supply growth of 1.3%. This will place hoteliers in the driver's seat when it comes to pricing power.
Further, the economy is gaining traction. This will help the U.S. hotel and lodging industry. According to the third estimate by the Bureau of Economic Analysis, second-quarter output of goods and services increased at an annual rate of 4.6%, up from an earlier estimate of 4.2%. Disposable personal income also increased $35.2 billion or 0.3% in August, more than the increase of $24.6 billion or 0.2% in July.
3 Hotel Stocks to Buy Now
Given the encouraging trend it can be concluded that hotel industry is well positioned to show improvements in the near future. Below we present three stocks which will gain from these trends, each of which also has a good Zacks Rank.
Hilton Worldwide Holdings Inc. (NYSE:HLT-Free Report) is a hospitality company engaged in the ownership, management and franchising of hotel properties worldwide. As of Sep 29, 2014, it had approximately 4,200 owned and leased hotels. The company is headquartered in McLean, Virginia.
Current year expected earnings growth rate for this Zacks Rank #2 (Buy) stock is 29.7%, way above the industry growth rate of 8.3%. Next year's projected earnings growth rate is 19.2%, more than industry growth rate of 15.9%.
Choice Hotels International Inc. (NYSE:CHH-Free Report) together with its subsidiaries operates as a hotel franchisor worldwide. As of May 29, 2014, it franchised approximately 6,300 hotels and is based in Rockville, Maryland. In the past two months, the Zacks Consensus Estimate for the current year was revised 1% higher.
This year's expected earnings growth rate for this Zacks Rank #2 (Buy) stock is 2.3%. Next year's projected earnings growth rate for this stock is 11.6%.
La Quinta Holdings Inc. (NYSE:LQ-Free Report) owns, operates and franchises select-service hotels. As of Aug 12, 2014, it owned and franchised 850 La Quinta Inn & Suites. The company is headquartered in Irving, Texas. Over the past two months, the Zacks Consensus Estimate for the current year was revised 2.4% higher.
Earnings growth rate for this Zacks Rank #3 (Hold) stock is 20.2% in 2014 and another 58.4% in 2015.
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on HBI - FREE
Get the full Report on CPB - FREE
Get the full Report on HLT - FREE
Get the full Report on CHH - FREE
Get the full Report on LQ - FREE
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO
SOURCE Zacks Investment Research, Inc.
Share this article