The Zacks Analyst Blog Highlights: Macy's, J. C. Penney Company, Dillard's, Saks Incorporated and J.B. Hunt Transport Services

Dec 11, 2012, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Dec. 11, 2012 /PRNewswire/ -- 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 Macy's Inc. (NYSE: M), J. C. Penney Company Inc. (NYSE: JCP), Dillard's Inc. (NYSE: DDS), Saks Incorporated (NYSE: SKS) and J.B. Hunt Transport Services (Nasdaq: JBHT).


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Here are highlights from Monday's Analyst Blog:

Macy's Boosts Share Buyback Program

Macy's Inc. (NYSE: M) – one of the leading department store retailers in the U.S. – hiked its share repurchase program by $1.5 billion, bringing the total authorization outstanding to $1.861 billion.

During the first-nine months of fiscal 2012, Macy's bought back approximately 26.3 million shares aggregating $991 million. The company had share repurchase authorization worth approximately $361 million remaining at its disposal as of October 27, 2012.

Since the inception of the share repurchase program in August 2011, Macy's repurchased 42.6 million shares for a total investment of $1.491 billion.

The company has been actively managing its cash flows, returning much of its free cash to shareholders via share repurchases and dividends, while maintaining a healthy balance sheet and credit ratios that are crucial for an investment-grade rating.

We appreciate Macy's efforts to boost long-term shareholders' value and believe that the recent announcement affirms the company's positive outlook and reflects its confidence in its fundamentals. The share repurchases and strategies for increasing dividend not only enhance shareholders' return but also raise the market value of the stock.

Further, Macy's has been taking a number of initiatives in order to bolster its sales, profitability and cash flows. These steps include integration of operations, consolidation of divisions as well as developing e-commerce business and online order fulfillment centers.

We remain optimistic about the company's customer-centric localization initiative called "My Macy's." The program aims at improving comparable-store sales and reducing operating expenses, with stores and merchandise assortments focusing on local customer needs and preferences.

Macy's, which competes with J. C. Penney Company Inc. (NYSE: JCP), Dillard's Inc. (NYSE: DDS) and Saks Incorporated (NYSE: SKS), currently operates approximately 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico.

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

J.B. Hunt Hikes Dividend

J.B. Hunt Transport Services (Nasdaq: JBHT) has increased its quarterly dividend to 15 cents from 14 cents paid in November 2012. The company declares dividend hikes in February each year. However, this time the company announced the hike for 2013 earlier and expedited the payments in order to benefit from the lower prevailing tax rates.

The recent hike was made in order to benefit from the lower prevailing tax rates. Tax rates are expected to move up next year owing to government policies on fiscal cliff. Depending upon investors' dividend, income tax rates can move as high as 43.5%. Therefore, early payment would be a relief for investors shielding their dividend incomes from high tax cuts to some extent.

In 2013, the company does not intend to pay a quarterly dividend until its board meeting in April.

Despite the ongoing upheaval in the truck market, J.B. Hunt continues to maintain its yearly growth in shareholder returns. The company paid quarterly dividends of 11 cents, 12 cents and 13 cents per share in 2009, 2010 and 2011, respectively. For 2012, the company increased its quarterly dividend payment to 14 cents per share. Besides dividend payment, the company initiated a new share repurchase program of $500 million in 2011. As of September 30, 2012, the company had $503 million remaining in its share repurchase authorization under its two share buyback program initiated in 2010 and 2011.

We believe that the increase in returns to shareholders comes on the back of stronger freight demand, thanks to the company's diversified business model and improving price mix.

The company is greatly benefiting from two of its major segments, Intermodal and Dedicated Contract Services (DCS), which contributed more than 80% to the total revenue in the third quarter of 2012.

The company expects double-digit intermodal volume growth over the near term as the intermodal market fundamentals strengthen relative to trucking. We believe the company will continue to see solid intermodal volume growth in its eastern network. Also, volume growth in the West will gain momentum as intermodal services continue to benefit from shippers converting freight from truck to rail.

Going further, we believe the company's expansion of service offerings in countries like Mexico and pricing gains on contract maturities will provide a significant basis for Intermodal's growth. The other segment, DCS is evolving into a highly specialized fleet with greater focus on final mile (i.e., residential) delivery, which is expected to achieve double-digit revenue growth in the long term.

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