CHICAGO, Jan. 13, 2014 /PRNewswire/ -- Zacks Equity Research highlights Southwest Airlines (NYSE:LUV-Free Report) as the Bull of the Day and Ruby Tuesday (NYSE:RT-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Crown Castle International Corp. (NYSE:CCI-Free Report), American Tower Corp. (NYSE:AMT-Free Report) and Arris Group Inc. (Nasdaq:ARRS-Free Report).
Here is a synopsis of all five stocks:
2013 was an amazing year for the often-overlooked airline industry, as oil prices remained stable and demand for travel picked up. It also didn't hurt that the broad transportation industry—a highly cyclical sector—was leading the huge market recovery last year.
Yet with such incredible gains, some might be dialing back their exposure to this corner of the market on valuation concerns. While this might be a good strategy overall, you could miss out on some companies which appear well positioned for further gains this year in the space, such as Southwest Airlines (NYSE:LUV-Free Report).
Southwest Airlines has become a major discount carrier in the United States, with operations spanning the continental U.S. And with the company's acquisition of AirTran, LUV has gained a foothold in international markets, and it appears as though this will only increase in the coming years.
Thanks to these expansion opportunities, and the generally positive reputation of Southwest Airlines, it does seem as though there is more room to run for LUV in the near future. This is especially true after looking at the December traffic numbers for the airline sector.
Southwest reported that its available seat miles grew 3.4%, while its passenger revenue per available seat mile increased as much as 15%. This was great news—and it easily beat competitors and their gains—which has prompted many analysts to raise their estimates for LUV's stock as of late.
Although the consumer is starting to come back and spend more on discretionary items, many restaurants have not found a way to capitalize on this trend. In particular, Ruby Tuesday (NYSE:RT-Free Report) has been a chronic underperformer in this time frame, and may be headed for more trouble in the near future too.
Ruby Tuesday is a Tennessee-based restaurant operator, best known for its roughly 700 Ruby Tuesday branded restaurants. These dining establishments generally fall into the 'casual dining' realm, putting it into competition with places like TGI Friday's, Chili's, and the like.
However, RT has clearly been falling behind these foes, as the company has seen a struggling stock price, and it continues to have an extremely bearish outlook too. RT has also struggled in earnings season, and its most recent report was no different, as the company missed expectations by a huge margin.
RT was expected to deliver a loss of 24 cents a share to investors, but the reality was a 43 cent loss (with one-time items excluded), a nearly -80% surprise. The firm also announced that it would be closing 30 restaurants over the next few months as it tries to salvage this once solid brand.
Crown Castle Functions as REIT
Crown Castle International Corp. (NYSE:CCI-Free Report) – a leading independent operator of wireless communication towers in the U.S. – has started functioning as a Real Estate Investment Trust (REIT) from Jan 1, 2014. Earlier, in 2012, the company's closest rival American Tower Corp. (NYSE: AMT-Free Report) also converted itself into a REIT.
A REIT status will benefit the company in terms of tax savings and enhancing long-term shareholders wealth. Moreover, it will also minimize the weighted average cost of capital. Following the conversion, Crown Castle will distribute 90% of its earnings through dividends every year, reducing tax.
Recently, Crown Castle decided to pay a quarterly cash dividend on its 4.50% Mandatory Convertible Preferred Stock on Feb 3, 2014 to holders of record as on Jan 15, 2014. The rate of dividend is $1.1625 per share.
In the third quarter of 2013, Crown Castle reported mixed financial results with the bottom line missing the Zacks Consensus Estimate but the top line surpassing the same. The company exited the third quarter with $218.6 million of cash and a huge debt of $10,660.1 million. Crown Castle expects Site Rental revenues for the fourth quarter to be in the range of $625 to $630 million while AFFO is estimated in the $318 – $323 million band.
Crown Castle currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
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