The Zacks Analyst Blog Highlights: Raytheon, Keurig Green Mountain, Dunkin' Brands Group, Starbucks and Unilever
CHICAGO, April 1, 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 Raytheon Company (NYSE:RTN-Free Report), Keurig Green Mountain Inc. (Nasdaq:GMCR-Free Report), Dunkin' Brands Group Inc. (Nasdaq:DNKN-Free Report), Starbucks Corp. (Nasdaq:SBUX-Free Report) and Unilever plc (NYSE:UL-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:
Why Raytheon Is a Strong Buy
On March 28, 2014, we issued an updated research report on Raytheon Company (NYSE:RTN-Free Report). This defense major surpassed the Street consensus in its fourth quarter 2013 earnings release. For the last four quarters the company came out with higher-than-expected earnings with an average surprise of approximately 19.7%.
Given the declining U.S. defense spending trend, Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus. Its diversified military products and GaN technology have helped the company gain a mixture a small and big defense contracts.
Foreign military contracts continue to be the vital growth driver for Raytheon. International sales (sales to customers outside the U.S. including foreign military sales through the U.S. government) represented 27% of total revenues in 2013, up 3% year over year. International sales are expected to rise in the mid single digit, contributing 30% of projected 2014 sales.
Approximately 80 countries procure Raytheon products and hold a higher margin mix upon full production. This mix will likely aid Raytheon's overall industry-leading margin performance well into mid-decade.
Although budget sequestration has taken its toll on defense contractors, Raytheon appears to have clinched high-value contracts during the fourth quarter. Orders were even stronger with a book to bill in the quarter of 1.28x.
Recently, this Zacks Rank #1 (Strong Buy) defense prime boosted its annual dividend by 10.0%, marking the 10th consecutive annual increase. The company has increased the quarterly dividend to 60.5 cents per share from 55 cents per share, bringing the annualized payout to $2.42 per share. With this the dividend yield comes to 2.4%, outpacing the industry yield of 1.8%.
The company had approximately $2.4 billion of free cash flow in 2013. Hence, its solid financial position well cushions the payout. Raytheon ended 2013 with cash and cash equivalents of $3.3 billion, up 3.4% from the year-ago figure of $3.2 billion.
Keurig Green Mountain Bringing Rivo to Canada
Specialty coffee retailer Keurig Green Mountain Inc. (Nasdaq:GMCR-Free Report) is enhancing the Keurig single-cup brewing system through technological innovations in order to remain competitive, especially after its K-Cup patents expired in Sep 2012. In this regard, the company's Canadian subsidiary — Keurig Canada — partnered with Italian coffee company, Luigi Lavazza SpA, to launch the Keurig Rivo Espresso, Cappuccino and Latte system in Canada.
The brewer uses Rivo packs and has the ability to brew hot or iced cappuccinos, lattes and mochas within a minute.The machine offers almost 32 espresso-based beverage options. The machine can also froth milk for making espresso and cappuccinos at homes. Each Rivo pack contains approximately 7.5 grams of 100% Arabica beans.
The current agreement extends a prior partnership between Keurig Green Mountain and Luigi Lavazza SpA signed in 2012. Under the deal, the two companies developed the Keurig Rivo Cappuccino and Latte System which marked the former's entry into the growing category of espresso, cappuccino and latte brewers.
The Rivo Systems launched during 2012 were sold only at select Bloomingdales stores until Mar 2013 when the brewers were made available at other retail stores as well. The current partnership will bring the brewer to Canada for the first time which will be available on the official website of Keurig Canada at a proposed price of $229.99.
The deal will boost Lavazza's coffee sales as the convenience of Keurig brewers will enhance the popularity of its beverage among Keurig fans. Moreover, the pact furthers Keurig Green Mountain's goal of sustaining its dominance in the single-serve brewing market after the K-cup patents expired.
Green Mountain offers coffees, teas and other hot beverages in K-Cup and Vue portion packs. These portion packs can be used on its single-serve Keurig brewers for making hot beverages.
The Zacks Rank # 3 (Hold) company aims to popularize the single-cup brewing system in America through strategic distribution agreements and has roped in popular brands like Dunkin' Brands Group Inc. (Nasdaq:DNKN-Free Report), Starbucks Corp. (Nasdaq:SBUX-Free Report) and Unilever plc (NYSE:UL-Free Report) into its portion pack systems.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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