The Zacks Analyst Blog Highlights: Lorillard, Altria Group, Reynolds American, B&G Foods and American Eagle Outfitters

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Aug 07, 2013, 09:30 ET

CHICAGO, Aug. 7, 2013 /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 Lorillard, Inc (NYSE:LO-Free Report), Altria Group Inc (NYSE:MO-Free Report), Reynolds American Inc (NYSE:RAI-Free Report), B&G Foods Inc (NYSE:BGS-Free Report) and American Eagle Outfitters, Inc. (NYSE:AEO-Free Report).

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Here are highlights from Tuesday's Analyst Blog:

Lorillard's blu Cigs Launch Starter Pack

Cigarette maker Lorillard, Inc's (NYSE:LO-Free Report) e-cigarette brand blu eCigs has recently introduced a new rechargeable Starter Pack for its e-cigarette users. The new Starter Pack is affordable and portable due to its slim design. Its flexible USB and car plug charging options make it appealing. It has two rechargeable batteries that ensure long lasting performance.

The Starter Pack is available in a five-pack of replaceable flavor cartridges and provides its users a choice of tobacco, menthol, or a variety pack. Once fully charged, this blu eCigs Starter Pack can recharge the included batteries 2-3 times before its plugged in again.

E-cigarettes like blu eCigs is a revolution in the tobacco industry, which is struggling of late with declining volumes. Increasing health consciousness and significantly higher prices of cigarettes have further pressurized volumes.

Moreover, cigarette making companies like Altria Group Inc (NYSE:MO-Free Report) and Reynolds American Inc (NYSE:RAI-Free Report) have to deal with increased regulation on packaging (graphic warning labels) in some international markets and heightened FDA concerns about health issues related to menthol cigarettes, which significantly impacts consumption. The company has been forced to look for other alternatives such as e-cigarettes.

E-cigarettes from blu eCigs, which was acquired by Lorillard in Apr 2012, look like traditional cigarettes but do not produce smoke, ash or smell. Moreover, they are less hazardous than traditional cigarettes.

Lorillard's blu eCigs also focuses on innovation and strong marketing to remain ahead in the industry. The introduction of a new Starter Pack is one such innovation in the e-cigarette industry, which keeps it ahead in the competitive market.

We believe that the new Starter Pack is pocket-friendly and easy to carry and is also ideal for users who are out for work or 2-3 day trips. Lorillard carries a Zacks Rank #2 (Buy). B&G Foods Inc (NYSE:BGS-Free Report), a consumer staples stock, with a Zacks Rank #1 (Strong Buy), is also worth considering.

American Eagle Lowers Guidance

American Eagle Outfitters, Inc. (NYSE:AEO-Free Report) lowered its second-quarter fiscal 2013 earnings per share guidance to nearly 10 cents, compared with 21 cents delivered in the prior year. The company is slated to announce the results on Aug 21, 2013.

The company at its last earnings call had forecasted earnings between 19 cents to 21 cents a share. We would also witness a downward revision in the Zack Consensus Estimate, which currently stands at 21 cents.

The downward revision for the second quarter was mainly driven by lower-than anticipated sales. Sales were negatively impacted by dismal performance of women's collections and comparatively lower traffic. Further, an intensified promotional retail atmosphere dampened the quarterly sales figures.

While total net revenue dropped about 2% in the quarter, total comparable sales, including AEO Direct, declined 7% against an increase of 8% in the prior-year period.

The company had also reported disappointing first-quarter 2013 results, mainly due to weak sales trends in seasonal merchandise owing to cooler-than-usual weather conditions and higher operating expenses. Moreover, the company's conservative guidance has stalled the positive outlook of investors.

However, we believe that American Eagle's focus on its Direct business, AEO men's business, aerie, factory stores and overseas markets and sustained efforts to improve women's business segment are likely to augment its results in the long term.

Further, we are impressed by American Eagle's rewards program, strategic store expansion, and emphasis on inventory control that position the company well for future growth. Moreover, we believe that the company's cost-saving initiatives and long-term growth strategy will not only provide financial flexibility, but will help drive the stock's value as well.

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