The Zacks Analyst Blog Highlights: Limited Brands, Gap, Hanesbrands, FedEx and United Parcel Service

News provided by

Dec 06, 2011, 09:30 ET

CHICAGO, Dec. 6, 2011 /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 Limited Brands Inc. (NYSE: LTD), Gap Inc. (NYSE: GPS), Hanesbrands Inc. (NYSE: HBI), FedEx Corporation (NYSE: FDX) and United Parcel Service (NYSE: UPS).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday's Analyst Blog:

Limited Brands' Sales Rise

Limited Brands Inc. (NYSE: LTD), a specialty retailer of women's intimate and other apparel, beauty and personal care products, recently posted better-than-expected sales results for the four-week period ended November 26, 2011 on the heels of healthy sales at its Victoria's Secret Stores and Bath & Body Works.

The owner of Victoria's Secret Direct and La Senza chains has sustained its growth momentum. Limited Brands' comparable-store sales for November 2011 rose 7% following an increase of 6% in October 2011 and compared with a 10% jump in November 2010.

Comparable-store sales for November increased 11% at Victoria's Secret Stores & Victoria's Secret Beauty and 6% at Bath & Body Works & The White Barn Candle Co. but declined 7% at La Senza. Sales at Victoria's Secret Direct dropped 3%.

Limited Brands, which competes with Gap Inc. (NYSE: GPS) and Hanesbrands Inc. (NYSE: HBI), said that net sales for November fell 2.3% to $872.6 million from $893 million posted in the same month last year.

For the forty-three week period ended November 26, 2011, comparable-store sales surged 10%, whereas net sales jumped 9.5% to $7,721 million from $7,050 million reported in the prior-year period.

Limited Brands is also actively managing its cash flows, and returning much of its free cash via dividends and share repurchases. The company announced a special dividend of $2 per share payable on December 23, 2011, to shareholders of record as of December 12, 2011. Considering this dividend, the company would have returned $12 billion to stockholders since 2000.

Management expects to generate free cash flows of about $700 million during fiscal 2011, and exit the year with a cash balance of about $800 million, taking into account the special dividend that has been declared.

Currently, we have a long-term Neutral recommendation on the stock. Moreover, Limited Brands holds a Zacks #3 Rank that translates into a short-term Hold rating.

FedEx Raises Domestic Rates Again

FedEx Corporation (NYSE: FDX) will reportedly raise its freight service prices for the next year. The company's ground and home delivery rates have been raised by 4.9%, effective January.

The hike follows an average rate hike of 3.9% in U.S. domestic, export and import services implemented in October. Concurrently, FedEx had also introduced a general rate hike of 6.75%.

FedEx, along with its peers like United Parcel Service (NYSE: UPS) have been successful in implementing rate hikes even amid a gloomy economic outlook, given the strengthening of freight market fundamentals. Further, the softness in U.S. postal service's business has also aided these companies to gain significant market share.

Despite the price hike, FedEx expects to sustain top-line growth in Ground and Freight segments on strong yields. Part of this momentum is expected to come from international expansion. Moreover, FedEx expects growth in Asia, Latin America, China, India, Mexico and Brazil to augur well. The company also aims at enhancing existing routes and making strategic acquisitions. Accordingly, it bought AFL Pvt. Ltd, a logistics, distribution and express business in India that improved its position in the freight market. Its acquisition of MultiPack, a Mexican domestic express package delivery company, in the second quarter this year was also in sync with its growth strategy.

Further, the company is realigning its network capacity to match weak international volumes due to the drop in Asian demand. Consequently, FedEx has taken several initiatives including reducing flights and frequencies as well as redeploying equipment in other networks to reduce costs.

We believe all these strategic decisions would lead to improved revenue, margins, earnings and cash flow this year and beyond. However, increased investments, competitive threats, unionized workforce and steeper fuel prices could limit the upside potential of the stock.

We are currently reiterating our long-term Neutral rating on FedEx. The stock retains a Zacks #3 (Hold) Rank for the short term.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

SOURCE Zacks Investment Research, Inc.