The Zacks Analyst Blog Highlights: Big 5 Sporting Goods, Kinder Morgan Energy Partners LP, Kohlberg Kravis Roberts, El Paso and Kinder Morgan

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May 01, 2012, 09:30 ET

CHICAGO, May 1, 2012 /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 Big 5 Sporting Goods Corp. (Nasdaq: BGFV), Kinder Morgan Energy Partners LP (NYSE: KMP), Kohlberg Kravis Roberts & Co. (NYSE: KKR), El Paso Corp. (NYSE: EP) and Kinder Morgan Inc. (NYSE: KMI).

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Here are highlights from Monday's Analyst Blog:

Earnings Preview: Big 5 Sporting Goods

Sporting products retailer Big 5 Sporting Goods Corp. (Nasdaq: BGFV) is scheduled to report its first-quarter 2012 financial results after the market closes on May 1, 2012. The current Zacks Consensus Estimate for the quarter is 3 cents per share. For the quarter under review, revenue is expected to be $221 million, according to the Zacks Consensus Estimate.

Guidance for Fiscal 2012

For the first quarter of 2012, management expects earnings per share to range from break-even to 6 cents per share compared with 13 cents per share in the first quarter of fiscal 2011. Same store sales are pegged in the negative low-single digit range.

The company's outlook for first quarter is based on expectations of merchandising margins, which continue to struggle due to impacts of higher promotional and product costs, as well as shift in the product sales mix resulting from unfavorable winter weather.

Looking ahead, Big 5 targets to open nearly 10 new stores and relocate about 7 stores during fiscal 2012.

Zacks Consensus

The analyst covered by Zacks expects Big 5 to post first-quarter 2012 earnings of 3 cents a share, lower than 13 cents delivered in the prior-year quarter. Currently, the Zacks Consensus Estimate ranges between earnings of 2 cents and 6 cents a share.

For fiscal 2012, the Zacks Consensus Estimate stood at 61 cents per share, higher than its previous fiscal earnings of 46 cents. The current Zacks estimate ranges between 44 cents and 75 cents per share.

Agreement of Estimates

In the last 7 and 30 days, no movement in estimates has been noticed in either direction, either for first-quarter 2012 or fiscal 2012.

Magnitude of Estimate Revisions

In the last 30 days, the Zacks Consensus Estimates for first-quarter as well as for fiscal 2012 has been lowered by a penny to 3 cents and 61 cents per share.

Surprise History

With respect to earnings surprises, Big 5 has missed as well as topped the Zacks Consensus Estimate over the last four quarters in the range of negative 31.6% to positive 60%. The average remained at positive 28.1%, indicating that Big 5 has missed the Zacks Consensus Estimate by that measure in the trailing four quarters.

Our Recommendation

Big 5 Sporting is in midst of its store expansion strategy in the emerging markets. During the period of recession in 2009, the company slowed down its store expansion program. Big 5 have now resumed its strategy of store expansion, which we believe will boost its top and bottom line in future. Looking ahead, Big 5 targets to open nearly 10 new stores and will relocate about 7 stores in fiscal 2012.

Further, Big 5 Sporting is introducing a business intelligence system, which will help in making decision for merchandising and assortment selection at the store level. Moreover, the company has opened a new distribution center in Oregon, which will service about 75 stores in Pacific Northwest. The new distribution channel is expected to save about $800,000 in transportation expense annually.

Kinder Morgan to Buy KKR JV Stake

Natural gas pipeline operator Kinder Morgan Energy Partners LP (NYSE: KMP) has entered into an agreement with a private equity and venture capital firm, Kohlberg Kravis Roberts & Co. (NYSE: KKR) to purchase the latter's 50% interest in a joint-venture for $300 million.

The joint-venture was originally formed by Kohlberg Kravis Roberts & Co. (hereafter referred to as KKR) and Houston-based El Paso Corp. (NYSE: EP) in the latter half of 2010. KKR had paid $125 million to secure a 50% stake in Altamont assets and Camino real gathering system.

The deal is expected to close by the end of next month, following the completion of the El Paso takeover by Kinder Morgan Inc. (NYSE: KMI), for $21.1 billion. Kinder Morgan Inc. – which owns the general partner interest and incentive distribution rights of Kinder Morgan Energy Partners – will have a 100% stake in the joint venture following the finalization of the deal.

The Altamont asset comprises 1,100 miles of pipeline infrastructure, natural-gas processing capacity of 60 million cubic feet per day, natural-gas liquid-fractionation capacity of 5,600 barrels per day and 450 well connections with producers. On the other hand, Camino Real Gathering System consists of oil gathering capacity of 110,000 barrels per day together with gas gathering capacity of 150 million cubic feet per day.

Houston-based Kinder Morgan Energy Partners L.P is the largest independent owner and operator of petroleum- product pipelines in the U.S. Founded in 1992, its pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide and other products, while its terminals store petroleum products and chemicals and handle bulk materials such as coal and petroleum coke.

It owns or operates more than 29,000 miles of pipeline and approximately 180 terminals. The terminals store petroleum products and chemicals, besides handling bulk materials such as coal and petroleum coke.

Founded in 1976, New York-based KKR is a leading investment firm which manages $59.0 billion worth of assets on behalf of its investors as of last year-end. The company uses its operational efficiencies and expertise knowledge to provide best results to its portfolio group and is engaged in various activities related to acquisitions, leverage buy-out, management buy-out etc.

Both Kinder Morgan Energy Partners LP and Kohlberg Kravis Roberts & Co. maintain Zacks #3 Ranks, which is equivalent to a short-term Hold rating.

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