The Zacks Analyst Blog Highlights: Wynn Resorts, J. C. Penney, Macy's, Target and Wal-Mart Stores
CHICAGO, Oct. 21, 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 Wynn Resorts Limited (Nasdaq:WYNN-Free Report), J. C. Penney Company Inc. (NYSE:JCP-Free Report), Macy's Inc. (NYSE:M-Free Report), Target Corporation (NYSE:TGT-Free Report) and Wal-Mart Stores Inc. (NYSE:WMT-Free Report).
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Here are highlights from Friday's Analyst Blog:
Will Wynn Resorts (WYNN) Beat Estimates?
Casino-resort operator Wynn Resorts Limited (Nasdaq:WYNN-Free Report) is scheduled to report third quarter fiscal 2013 earnings after markets close on Oct 21, 2013. Last quarter, Wynn Resorts posted a negative earnings surprise of 2.58%. Let's see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Positive Zacks ESP:The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +6.79%. This is meaningful and a leading indicator of a likely positive earnings surprise for the shares.
Zacks Rank #2 (Buy): Wynn Resorts carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.
The combination of Wynn's Zacks Rank #2 (Buy) and a positive ESP of +6.79% makes us confident of an earnings beat on Oct 21.
What is Driving the Better-than-Expected Earnings?
Wynn generates over 70% of its revenues from Macau. The casino boom in Macau, the only Chinese city where gambling is legal and one of the largest gaming destinations in the world, is expected to be the one of the key drivers of its third quarter results. Although, Wynn Macau has experienced weakness in the last three quarters of 2012, the situation seems to have improved buoyed by the mass market boom and will likely benefit the company ahead.
Also, Wynn Resorts is experiencing improved business in Las Vegas as leisure demand continues to improve with the gradual recovery of the U.S. economy. The visitation pattern in Las Vegas is improving and management remains hopeful on the prospective business for the rest of 2013 as average daily rates are trending higher.
Additionally, to boost performance in Las Vegas, the company has remodeled rooms and the baccarat pit at its properties. We expect this trend to boost third quarter sales too.
JC Penney's Holiday Season Strategy
"The early bird catches the worm," as they say, and J. C. Penney Company Inc. (NYSE:JCP-Free Report) will open its stores at 8 p.m. on Thanksgiving evening, Associated Press reported. This holiday season, the company intends to draw shoppers who start early and seek attractive deals. The move is a strategic attempt by the department store retailer to take a more competitive stance against its brick-mortar and online rivals.
Macy's Inc. (NYSE:M-Free Report) also recently announced its plans to open its doors on Thanksgiving Day for the first time. Other retailers that count upon a similar game plan include Target Corporation (NYSE:TGT-Free Report) and Wal-Mart Stores Inc. (NYSE:WMT-Free Report). Retailers need to be 'hawk-eyed' this holiday season to make the most of it. They need to capitalize on every opportunity as and when they arise, and try to attract cautious, budget-constrained consumers to the stores as the season may be a tough one.
What further makes this holiday season challenging for retailers is the time frame, as 2013 presents only 25 days between Black Friday and Christmas as against 31 days last year. Moreover, retailers, which witness more traffic during weekends, will have only 4 full weekends this time around versus 5 in 2012.
We believe retailers will leave no stone unturned to tap this holiday season. Be it early-hour store openings, promotional events, free shipping on online purchases or heavy discounts, retailers will try all tricks to boost sales.
Earlier, J. C. Penney holding a Zacks Rank #3 (Hold) stated that it will deploy approximately 35,000 temporary staff members to better serve its patrons.
J. C. Penney has been in troubled waters for quite some time, and has been grappling with waning revenues and higher losses. The company has not shown any signs of recovery in the recent past. Shares of this beleaguered S&P 500 retail chain operator have nosedived 64.7%, since the beginning of the year.
In a significant development, the company's board of directors in Apr 2013 discharged the Chief Executive Officer (CEO) Ron Johnson of his duties after 17 months, as his ambitious transformational ideas failed to materialize. Consequently, the company's former CEO, Myron E. (Mike) Ullman, III was reinstated in his post.
Since then the company has taken several strategic initiatives to drive traffic. The company reverted to promotions, which could be a successful sales driver this holiday season. However, investors remain cautious about the stock, as the company attempts to recoup and give itself a major facelift.
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