The Zacks Analyst Blog Highlights: Aetna, Costco Wholesale, Target, Wal-Mart Stores and Burlington Stores
CHICAGO, Sept. 17, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Aetna Inc. (NYSE:AET-Free Report), Costco Wholesale Corporation (Nasdaq:COST-Free Report), Target Corporation (NYSE:TGT-Free Report), Wal-Mart Stores Inc. (NYSE:WMT-Free Report) and Burlington Stores, Inc. (NYSE:BURL-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Tuesday's Analyst Blog:
Aetna Poised for Growth - Both Organic & Inorganic
On Sep 16, we issued an updated research report on the U.S. health insurer Aetna Inc. (NYSE:AET-Free Report). The insurer churned out second-quarter earnings of $1.69 per share, zooming past the Zacks Consensus Estimate of $1.61. Earnings also grew 4% year over year. Aetna's better-than-expected earnings came on the back of higher underwriting margins in the Health Care business and accretion from the Coventry acquisition.
Aetna is among the top five health insurers in the U.S. Regardless of facing significant business challenges and uncertainties in 2014, Aetna did not fail to post strong earnings. The company's average positive surprise over the trailing four quarters has been 7.3%
Aetna has taken several measures both organic as well as inorganic to grow its business. The acquisition of Coventry has significantly improved its market position in both the commercial and government markets.
The insurer is also actively working on its ACO strategy, to manage medical cost.
The health insurer has been successfully increasing its membership. The second quarter of 2014 marked its ninth sequential quarter of medical membership growth.
Costco Sustains Sales Momentum Amid Intense Competition
Costco Wholesale Corporation (Nasdaq:COST-Free Report) appears unfazed by the soft recovery in the U.S. economy. The company has managed to keep an upbeat note and sustain its sales momentum amid heightened competition to grab a bigger share of the market.
Costco continues to be a dominant retail wholesaler, based on the breadth and quality of the merchandise it offers. The company's strategy to sell products at heavily discounted prices has helped it to remain on the growth track, as cash-strapped customers continue to see it as a viable option for low-cost necessities.
Riding on Positive Comps
Costco is well positioned in the warehouse club industry, having delivered positive comparable-store sales consistently so far in 2014.
Despite facing competition from Target Corporation (NYSE:TGT-Free Report) and Sam's Club, a division of Wal-Mart Stores Inc. (NYSE:WMT-Free Report), Costco has steadily registered comparable-store sales growth from January to August. Within this period, comps growth touched a low of 2% and hit a high of 7%, thereby recording an average growth of approximately 5%. In the first eight months of 2014, comps increased 4% in January, 2% in February, 5% in March and April, 6% in May and June each, 5% in July and 7% in August.
In the current macroeconomic environment, monthly sales data for Costco is also encouraging, reflecting consistent growth. The company, within the span of January to August, registered sales growth in the range of 4–10%, reflecting average growth of approximately 7.8%. The company registered sales growth of 6% in January, 4% in February, 8% in March, 7% in April, 8% in May, 10% in June, 9% in July and 10% in August.
Growth Drivers
A differentiated product range enables Costco to provide an upscale shopping experience to its members, resulting in market share gains and higher sales per square foot. Moreover, the company continues to maintain a healthy membership renewal rate. Costco also remains committed to open new clubs in domestic and international markets. The company's diversification strategy is a natural hedge against risks that might crop up in specific markets.
Costco's Zacks Rank
Costco currently carries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the retail sector is Burlington Stores, Inc. (NYSE:BURL-Free Report), which holds a Zacks Rank #1 (Strong Buy).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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