The Zacks Analyst Blog Highlights: The Boeing Company, General Dynamics, Lockheed Martin, J.C. Penney and Kohl's

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Oct 10, 2011, 09:30 ET

CHICAGO, Oct. 10, 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: The Boeing Company (NYSE: BA), General Dynamics Corporation (NYSE: GD), Lockheed Martin Corporation (NYSE: LMT), J.C. Penney Company Inc. (NYSE: JCP) and Kohl's Corporation (NYSE: KSS).

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Here are highlights from Friday's Analyst Blog:

Boeing Delivery Sheet for Q3

The international commercial airplane producer, The Boeing Company (NYSE: BA) maintained its delivery level in the third quarter of 2011 with deliveries of 127 airplanes versus 124 in the third quarter of 2010. The 737 model continues to be a major pillar of Boeing's strength in the commercial airplane sector with deliveries of 100 airplanes, followed by its 777 model with 21 deliveries.

Both these models continue to do well due to their fuel efficiency and lower operating costs compared with competing models. The company during the quarter also delivered five 767s and one 787. Boeing year-to-date has delivered 349 airplanes, which include its first delivery of the 787 to Japanese carrier, All Nippon Airways in September.

Boeing is on course to meeting its commercial airplane delivery target for 2011, which is expected to be in the range of 485 to 500 airplanes. In fiscal 2010 Boeing delivered 462 commercial planes compared with 510 for EADS, the European owner of aircraft maker Airbus.

Boeing's deliveries in the defense and space business were at 29 in the third quarter of 2011. Of this 13 came from F-18 and EA-18G fighter jets, and Apache and Chinook helicopters.

Boeing has a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Besides, it is one of the largest aerospace and defense contractors in the world. Also, its revenues are spread across more than 90 countries around the globe.

Strong performance from the commercial airplanes business and stable core operations allowed Boeing to register a solid second quarter 2011. The company surpassed both the year-ago results and the Zacks Consensus Estimates. Boeing has raised its earnings per share guidance range for fiscal 2011 to $3.90 - $4.10 from the earlier band of $3.80 - $4.00, encouraged by the solid performance in the most recently reported quarter.

The Zacks Consensus Estimates for third quarter 2011, fiscal year 2011 and fiscal year 2012 currently stand at $1.07 per share, $4.24 per share and $5.27 per share, respectively.

Boeing currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock. This is in sync with other aerospace and defense behemoths like General Dynamics Corporation (NYSE: GD) and Lockheed Martin Corporation (NYSE: LMT).

Weak September for J.C. Penney

J.C. Penney Company Inc. (NYSE: JCP), a leading retailer of apparel and footwear, accessories, fashion jewelry, beauty products and home furnishings, recently reported sales results for the five-week period ended October 1, 2011. The company's comparable-store sales for September inched down 0.6% compared with an increase of 5.1% for the same month last year.

Total sales also fell 3.6% to $1,426 million from $1,480 million in September last year.

Failing to impress with its performance, management now projects loss in the range of 12 cents to 7 cents per share, including restructuring charges of approximately 22 cents a share.

Earlier, management forecasted third-quarter 2011 earnings between 15 cents and 20 cents a share, including restructuring charges of about 5 cents.

However, excluding restructuring charges, the company expects earnings in the range of 10 cents to 15 cents per share.

The company also trimmed its comparable store sales guidance. The company now expects third quarter 2011 comparable store sales to remain flat compared to the year ago quarter. Earlier, J. C. Penney expected comparable store sales to increase in the range of 2% to 3%.

During the period under review, The Plano, Texas-based J. C. Penney registered comparable-store sales growth across women's accompaniments and children's apparel, with the southeast region recording maximum sales.

The company's comparable-store sales for the thirty five-week period crept up 1.6%. However, total sales inched down 1.3% to $10,649 million.

The in-store Sephora departments continue to attract younger and more affluent customers. These are part of J. C. Penney's strategy to gain competitive advantage over drug stores, which gave their cosmetic sections facelifts in the recent years. The Sephora concept instigates confidence and is expected to be a significant revenue driver.

Thus, the company announced the extension of the in-store Sephora and Call it Spring by the ALDO Group, with total number of locations reaching to 308 and 505, respectively.

J.C. Penney's well diversified supplier base, compelling private and national brands, marketing campaigns, point-of-sale technology initiatives as well as effective cost and inventory management should bode well for sales and margin trends over the long term. The company also remains on track to deliver comparable-store sales growth and boost its market share.

However, the global credit markets have recently undergone significant disruption creating difficulties for the companies to obtain financing on reasonable terms. This could considerably increase cost of borrowings, diminish the ability to obtain additional financing or refinance the existing long-term obligations, and may also deter J.C. Penney's expansion plans.

Moreover, the company's customers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels, which may negatively impact their discretionary spending, and in turn, the company's growth and profitability.

J.C. Penney, which competes with Kohl's Corporation (NYSE: KSS), currently operates more than 1,100 department stores in the United States and Puerto Rico.

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