The Zacks Analyst Blog Highlights: Sears Holdings, CF Industries, Mosaic, China Bluechip and Scotts Miracle-Gro
CHICAGO, Oct. 31, 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 the Sears Holdings Corporation (Nasdaq:SHLD-Free Report), CF Industries Inc. (NYSE:CF-Free Report), The Mosaic Company (NYSE:MOS-Free Report), China Bluechip ADR (OTC:CBLUY-Free Report) and The Scotts Miracle-Gro Co. (NYSE:SMG-Free Report).
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Here are highlights from Wednesday's Analyst Blog:
Sears Soars on Initiatives Taken
Shares of Sears Holdings Corporation (Nasdaq:SHLD-Free Report) rose approximately 11.8% yesterday and closed at $62.09, as against the previous day's closing price of $55.56. The stock price appreciated following the company's announcement of certain strategic initiatives to enhance liquidity and improve operating performance.
Sears Holdings has long been grappling with weak top-line performance and even weaker bottom-line results. In its streak to optimize its financial performance, the company recently announced string of measures to enhance its growth prospects by dipping investment in sections of the company that no longer contributes significantly to its growth.
In doing so, Sears Canada Inc. – a unit of the cash-strapped broadline retailer – announced the sale of its five stores leased to Cadillac Fairview Corporation Limited. The transaction, which is expected to close within ten business days, will fetch C$400 million.
Further, Sears Holdings has decided to spin off its Lands' End and Sears Auto Center businesses. The separation is expected to provide an additional liquidity while focusing on its core business.
Apart from this, Sears Holdings has provided an update on its third quarter ending Nov 2 operating performance. The company registered a decline of 3.7% in its comparable-store sales for the twelve-week period ended Oct 26, with sales in the Sears Domestic and Kmart stores falling 4.8% and 2.6%, respectively.
Sears Holdings expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to come in the range of negative $250 million to $300 million in the third quarter. The company believes that its efficient inventory and capital management will mitigate the impact of increased operating loss on its cash flow. Moreover, Sears Holdings has reduced inventory levels by $500 million on a year-over-year basis and lowered fixed expenditure by $200 million on a full-year basis, thereby generating $700 million through asset monetization.
Sears Holdings will announce third quarter fiscal 2013 results on Nov 21, 2013.
Notably, Sears Holdings is focusing on cost containment, inventory management and merchandise initiatives to inflate margins. We commend the company's strategy of capitalizing on opportunities, while increasing profitability through its revamped organizational structure and new operating model. All these measure will expectedly drive top and bottom–line growth.
CF Sells Phosphate Biz to Mosaic
Shares of CF Industries Inc. (NYSE:CF-Free Report) rose around 5% during the trading session following the news that it has signed a definitive agreement to sell its phosphate mining and manufacturing business to fertilizer producer The Mosaic Company (NYSE:MOS-Free Report) for $1.4 billion in cash (including $200 million to fund CF Industries' asset retirement obligation escrow).
CF Industries has agreed to dispose the Hardee County phosphate rock mine, the Plant City phosphate complex, an ammonia terminal, phosphate warehouse and dock at the Port of Tampa and the site of the former Bartow phosphate complex to Mosaic.
Under the deal, Mosaic will be shouldering responsibilities related to the closer of the agreement and long-term maintenance and monitoring of the phosphogypsum stacks at the Plant City and Bartow complexes. The facilities to be acquired by Mosaic currently produce roughly 1.8 million tons of phosphate fertilizer per year
The deal is also subjected to a long-term ammonia supply agreement, under which, CF Industries will supply ammonia to Mosaic from its Donaldsonville, La., nitrogen complex, and another agreement to supply ammonia to Mosaic from CF Industries' 50% owned Point Lisas Nitrogen Ltd. (PLNL) facility in the Republic of Trinidad and Tobago.
Under the Donaldsonville Ammonia Agreement, CF Industries will supply between 600,000 and 800,000 tons of ammonia per year for up to 15 years, which is expected to begin by 2017. The ammonia to be supplied will be used for phosphate production and its price will depend on the cost of natural gas delivered to Donaldsonville. The agreement is however not conditional on the phosphate sale transaction.
The Trinidad ammonia agreement is conditional on the phosphate sale transaction and will be effective after the closure of the deal. Pricing of ammonia, under the deal, will be in sync to the existing agreement under which CF Industries purchases ammonia from PLNL.
Both companies' Board of Directors has approved the transaction. The deal is subject to customary closing conditions and necessary regulatory approvals including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act and certain environmental related approvals for the phosphate business. The deal is expected to complete by 2014.
CF Industries, headquartered in Deerfield, IL, is one of the largest manufacturers and distributors of nitrogenous and phosphatic fertilizer products in the world. The company's principal products in the nitrogenous fertilizer business are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN).
CF Industries currently retains a Zacks Rank #3 (Hold) and is scheduled to release its third-quarter 2013 results on Nov 4.
Other companies in the fertilizer industry worth considering are China Bluechip ADR (OTC:CBLUY-Free Report) and The Scotts Miracle-Gro Co. (NYSE:SMG-Free Report). Both hold a Zacks Rank #1 (Strong Buy).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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