The Zacks Analyst Blog Highlights: Jack in the Box, Comcast, Lowe's, Walt Disney and Time Warner Cable
CHICAGO, March 11, 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 Jack in the Box Inc. (Nasdaq:JACK-Free Report), Comcast Corp. (Nasdaq:CMCSA-Free Report), Lowe's Companies Inc. (NYSE:LOW-Free Report), Walt Disney Company (NYSE:DIS-Free Report) and Time Warner Cable Inc. (NYSE:TWC-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday's Analyst Blog:
Jack in the Box Upgraded to Strong Buy
On Mar 8, 2014 Zacks Investment Research upgraded Jack in the Box Inc. (Nasdaq:JACK-Free Report) to a Zacks Rank #1 (Strong Buy) driven by the strong fiscal first quarter 2014 results posted by the company in Feb 2014.
Why the Upgrade?
Jack in the Box posted strong fiscal first quarter 2014 results with earnings of 75 cents beating the Zacks Consensus Estimate of 66 cents by 13.6%. Earnings increased 27.1% year over year. The upside is attributable to top-line growth, decline in operating costs and lower share count. The decline in operating costs can be attributed to the company's continuous efforts to improve its costs structure by identifying opportunities to reduce general and administrative expenses.
Though revenues declined marginally year over year, it easily surpassed the consensus mark by 3.4%, which we believe was due to year over year improvement in comparable same store sales. Improved comps during the fiscal first quarter reflect less discounting and continued growth in catering sales. The company operates and franchises Jack in the Box quick-service restaurants and Qdoba Mexican Grill fast-casual restaurants. As in the fiscal first quarter, the company expects same store sales at both of its brands to continue to grow year over year in the fiscal second quarter as well as fiscal 2014.
Driven by the strong results and an optimistic outlook, estimates for 2014 largely moved upwards. Moreover, the average positive surprise for the last four quarters came in at 8.42%.
Jack in the Box is also working on its refranchising strategy. We believe franchising a large chunk of its brands would allow it to generate strong free cash flow, thereby helping it to maintain a healthy balance sheet. Moreover, if a major portion of its business is franchised, the company will less likely be affected by inflation compared to its peers.
Menu innovation is also a driving force and the key to the success of restaurateurs. In order to improve brand recognition and cater to changing consumer demand, Jack in the Box is upgrading its offerings to provide differentiated value propositions. Recently, the company came up with new Monster Taco flavors, Bacon Ranch and Nacho, which would aid in improving traffic. Going forward, the company aims at further innovation and intends to provide limited time offers.
Comcast Strengthens Theme Park Biz
Comcast Corp. (Nasdaq:CMCSA-Free Report), the largest cable MSO of the U.S., is investing a substantial amount in the theme parks of California and Florida. Through this, the company intends to diversify its revenue streams beyond its core telecommunications business (cable TV, high-speed Internet and telephony).
Comcast owns Universal Orlando Resorts since 2011 as part of its acquisition of NBCUniversal. The company is also preparing to introduce a Harry Porter ride at a second theme park in the Universal grounds – Universal Studios Florida. Comcast has also entered into a 50-50 partnership with Lowe's Companies Inc. (NYSE:LOW-Free Report) to construct Cabana Bay Beach Resort with 1,800 rooms on the Universal complex. Scheduled to open by the end of this year, the Cabana Bay Beach project will raise the hotel room count at Universal by 75%, bringing the figure to 4,200.
In the recently concluded quarter, the company's NBCUniversal segment generated $6,464 million in revenues, up 7.5% year over year. Operating cash flow was $1,338 million, reflecting a 14.3% year-over-year rise. In 2013, the company's revenue from the theme park and resort business stood at $2.2 billion while operating cash flow was $1 billion.
We believe that Comcast's decision to venture beyond its core telecommunications business will pose significant threat to The Walt Disney Company's (NYSE:DIS-Free Report) tourism business in Orlando and will also help in safeguarding its position against rivals.
Last month, Comcast reached an agreement to acquire the second largest cable MSO (multi-service operator) in the U.S. –Time Warner Cable Inc. (NYSE:TWC-Free Report). The deal is likely to be an all-stock one. Comcast will offer approximately $159 per share of Time Warner Cable, which amounts to a total consideration of around $45.2 billion. Each share of Time Warner Cable will be converted into 2.875 shares of Comcast.
Currently, Comcast carries a Zacks Rank #3 (Hold).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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