The Zacks Analyst Blog Highlights: Chevron, Exxon Mobil, Nordstrom, Gap and Commerce Bancshares

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Nov 06, 2012, 09:30 ET

CHICAGO, Nov. 6, 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 Chevron Corporation (NYSE:CVX), Exxon Mobil Corp. (NYSE:XOM), Nordstrom Inc. (NYSE:JWN), Gap Inc. (NYSE:GPS) and Commerce Bancshares, Inc. (Nasdaq:CBSH).

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Here are highlights from Monday's Analyst Blog:

Chevron Expands in Sumatra

PT Chevron Pacific Indonesia (CPI) – an affiliate of Chevron Corporation (NYSE:CVX) – announced the start of an expansion plan at Duri field in Sumatra. The company will spend around $500 million for the same.

The project involves building of 539 new wells, which includes 358 producing wells, 36 temperature observation wells, and 145 steam injection wells. These steam injection wells will be utilized to infuse steam into wells so that oil can flow easily.

The project – which is likely to boost Chevron's growth prospects in Indonesia – comes on the heels of the Area 12 expansion, which was completed by the company in 2009. It added 40,000 barrels of oil per day (bpd) to production.

Management expects the North Duri Development Area 13 project to contribute 17,000 bpd at peak production level. It is also anticipated that Chevron Pacific will produce 343,212 bpd or 39% of Indonesia's total estimated production (870,000 bpd) by 2013 end.

The second-largest U.S. oil company by market value after Exxon Mobil Corp. (NYSE:XOM), Chevron currently holds a Zacks #3 Rank (short-term Hold rating). We also maintain our long-term Neutral recommendation on the stock.

In recent times, management has made significant progress in re-balancing Chevron's asset portfolio by divesting non-core and high-cost assets. The company's decision to sell its marketing businesses in Kenya, Nigeria, Uganda, Western Africa and Brazil is part of that strategy. In particular, Chevron plans to exit the low profit generating business and concentrate on the discovery of oil and gas worldwide.

However, Chevron's production growth profile depends on the timely development of upstream projects, almost all of which have inherent risk factors. Time and cost overruns on these programs may lead to lower returns going forward.

Nordstrom October Comps Gain

October sales results for leading fashion retailer, Nordstrom Inc. (NYSE:JWN), remained robust with a 9.8% rise in comparable store sales (comps) compared with the year-ago period. Nordstrom's two business segments – Nordstrom full-line and Nordstrom Rack – reported comps increase of 10.2% and 10.5%, respectively, compared with the year-ago period.

For the four weeks ended October 27, 2012, total retail sales climbed 11.5% to $835 million from $749 million reported for the five-week period ended October 29, 2011.

Comps for the third quarter of fiscal 2012 gained 10.7% on top of the year-ago quarter, primarily benefiting from the shift in timing of the company's Anniversary Sale event. Quarterly comps at the company's business segments also came in strong, comprising an 11.2% increase in Nordstrom full-line store comps and an 8.1% augmentation in Nordstrom Rack store comps. Net sales for the quarter rose 13.8% to $2,713 million.

Year-to-date through October 27, 2012, Nordstrom's total retail sales elevated 11.4% to $8,166 million driven by a 7.7% increase in comparable store sales. During the period, the company's comparable store sales at Nordstrom full-line and Nordstrom Rack segments augmented 8.1% and 7.5%, respectively.

Peer Performance

One of Nordstrom's competitors, Gap Inc. (NYSE:GPS), registered a 4% rise in comparable store sales for the month of October, while net sales came in at $1.22 billion, up 7.0% compared with the prior-year period.

Geared up for More Stores

During October, Nordstrom successfully executed its plan of opening three new Nordstrom Rack stores in different locations. These stores were opened at Town & Country in Phoenix, Arizona; Alamo Quarry Market in San Antonio, Texas; and Huntington Shopping Center in Huntington, New York. Further, the company relocated its Nordstrom Rack store in White Plains, New York, to another floor at the same location.

The company's plans for November include opening two Nordstrom Rack stores at Warwick Mall in Warwick, Rhode Island; and Northgate Mall in Seattle, Washington.

Over the longer term, Nordstrom targets to open four Nordstrom Rack stores beginning 2013, including stores in Manhasset Center in Long Island, New York; Promenade in Crocker Park in Cleveland, Ohio; Collection Anex in Chicago, Illinois.; and Baldwin Commons in Auburn Hills, Michigan.

Our Recommendation

Based in Seattle, Washington, Nordstrom Inc. offers high quality apparel, shoes, cosmetics and accessories for men, women and kids. The company offers both branded and private label merchandise, as well as a private label card, two Nordstrom VISA credit cards and debit cards for Nordstrom purchases.

Nordstrom maintains a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.

Commerce Bancshares to Reward Shareholders

Commerce Bancshares, Inc. (Nasdaq:CBSH) announced major capital deployment actions to enhance shareholders' value. Apart from the regular quarterly cash dividend, the company declared special cash dividend and stock dividend.

Commerce Bancshares' Board of Directors approved a 5% stock dividend. The dividend is payable on December 17 to the shareholders of record as of November 30. Moreover, the shareholders will be receiving cash for fractional shares. The cash amount will be determined on the basis of the company's share price on November 30.

In addition, Commerce Bancshares announced a regular cash dividend of 23 cents per share and a special cash dividend of $1.50 per share. Both these dividends will be paid on December 17 to the shareholders of record as of November 30. However, these two dividends will not be paid on any shares that would be issued in connection with the 5% stock dividend.

The announcement of the special dividend comes on the heels of a probable rise in tax rates on dividends from next year and Commerce Bancshares' strong capital position. As of September 30, 2012, the company's tier I leverage ratio came in at 10.00%, up from 9.73% in the prior quarter and 9.74% in the prior-year quarter.

Commerce Bancshares continues to meaningfully enhance shareholders' value. Even during the financial crisis, the company has continuously hiked quarterly dividends. The last hike was made in February when the company raised its quarterly dividend by nearly 5% to the current 23 cents per share.

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