Sanderson Farms, Masco, NovatelWireless, Qualcomm and L.M. Ericsson highlighted as Zacks Bull and Bear of the Day
CHICAGO, June 2, 2014 /PRNewswire/ -- Zacks Equity Research highlights Sanderson Farms, Inc. (Nasdaq:SAFM-Free Report) as the Bull of the Day and Masco Corporation (NYSE:MAS-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onNovatel Wireless Inc. (Nasdaq:NVTL-Free Report), Qualcomm (Nasdaq:QCOM-Free Report) and L.M. Ericsson (Nasdaq:ERIC-Free Report).
Here is a synopsis of all five stocks:
Sanderson Farms, Inc. (Nasdaq:SAFM-Free Report) is benefiting from the record high beef prices as more consumers switch to chicken. This Zacks Rank #1 (Strong Buy) recently blew by the Zacks Consensus in the fiscal second quarter by 32% as chicken volumes spiked.
Sanderson Farms produces fresh and frozen chicken in the United States.
On May 29, Sanderson Farms reported its second quarter results and beat the Zacks Consensus by 53 cents. Earnings were $2.21 compared to the consensus of just $1.68.
Sales rose 6.4% to $660.7 million from $621.2 million a year ago. The company saw a higher gross profit per pound as volumes spiked on strong demand, there were lower grain costs and chicken prices remained stable.
The summer is usually the peak season for chicken demand simply due to the fact that everyone is grilling out. This year, however, beef prices are at record highs. Already, Sanderson Farms has seen consumers rotating into chicken due to cost.
The company said it was "reasonably optimistic" heading into the summer. Chicken demand is expected to remain strong and supply is still constrained which should keep prices elevated.
Masco Corporation (NYSE:MAS-Free Report) hit a bump in the road in April when it posted a surprising first quarter earnings miss. This Zacks Rank #5 (Strong Sell) got hit by the slowing home sales and polar vortexes but is it seeing improvement?
Masco makes faucets, cabinets and windows under several well-known brands including Delta faucets and KraftMaid cabinets.
It is directly impacted by the recovery in both consumer spending and housing.
On Apr 25, Masco missed the Zacks Consensus by 3 cents. Earnings were $0.15 compared to the consensus of $0.18.
Sales were up 5% to $2 billion from $1.9 billion a year ago.
The deceleration of housing starts at the end of 2013, in addition to extreme weather, hurt sales in the first quarter.
Analysts were wary of several warning signs in the quarter.
Plumbing margins were an astounding 15% but even the company admitted that was unsustainable. Masco also raised prices on its cabinets through the retail channel but its competitors did not which meant a loss of market share in the quarter.
It also warned on April sales, which were trending in the low-to-mid single digits despite improvement in the weather.
Additional content:
Novatel Slips to Sell
On May 30, 2014, Zacks Investment Research downgraded Novatel Wireless Inc. (Nasdaq:NVTL-Free Report), provider of wireless broadband access solutions for the global mobile communications market, by a notch to Zacks Rank #4 (Sell).
Why the Downgrade?
The Zacks Consensus Estimates have been trending downwards, following the company's dismal first-quarter 2014 performance reported on May 7, 2014. Total revenue in the reported quarter stood at $48.3 million, down 77.8% year over year and also below the Zacks Consensus Estimate of $52 million. However, adjusted loss per share of 22 cents was in line with the Zacks Consensus Estimate.
Following the downward revision, the Zack Consensus Estimate of loss for the current year has widened to a loss per share of 63 cents from a loss of 51 cents in the past 30 days. For the second quarter as well, loss estimate has gone up to 19 cents from 16 cents. Novatel has registered negative earnings surprises in two of the last four quarters, with an average miss of 5.4%. Additionally, Novatel's shares have fallen 7.2% in the past one month.
Intensifying competition for embedded modules is a major concern for Novatel. In addition to its traditional rival – Sierra Wireless, the company is facing significant challenges from newly launched products by large manufacturers like Qualcomm (Nasdaq:QCOM-Free Report) and L.M. Ericsson (Nasdaq:ERIC-Free Report). Qualcomm offers the Gobi chipset that combines broadband modem technology for high-speed 3G networks with GPS functionality.
Going ahead, we anticipate increasing competition for Novatel's MiFi product line. Several latest versions of smart phones have inbuilt WiFi capability. Low-cost Asian manufacturers, including ZTE and Huawei Technologies, have already launched their own version of intelligent mobile hot spots creating competitive pressure on Novatel.
For the second quarter of 2014, management expects revenues within $37–$43 million while Mobile Computing and M2M revenues are estimated in the range of $27–$32 million and $10–$11 million, respectively. Non-GAAP gross margin is projected between 21% and 23%. Non-GAAP earnings per share are anticipated in the band of a loss of 15 to 22 cents a share.
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