The Zacks Analyst Blog Highlights:Big Lots, Target, G-III Apparel Group, PriceSmart and Marathon Oil

Dec 16, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Dec. 16, 2013 /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 the Big Lots Inc. (NYSE: BIG-Free Report), Target Corp. (NYSE: TGT-Free Report), G-III Apparel Group, Ltd. (Nasdaq: GIII-Free Report), PriceSmart Inc. (Nasdaq: PSMT-Free Report) and Marathon Oil Corp. (NYSE: MRO-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

Big Lots Downgraded to Strong Sell

On Dec 12, 2013, Zacks Investment Research downgraded Big Lots Inc. (NYSE: BIG-Free Report) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

The company reported dismal third quarter fiscal 2013 results on Dec 5, 2013; wherein its consolidated adjusted loss per share of 16 cents was wider than the Zacks Consensus Estimate of loss of 8 cents as well as the prior-year quarter loss of 11 cents.

Adjusted consolidated net sales increased 1.6% year over year to $1,152.4 million but missed the Zacks Consensus Estimate of $1,164.0 million.  Consolidated comparable-store sales fell 2.5%. U.S. comparable-store sales declined 2.5%. Net sales for its Canadian operations fell 1.9% to $38.3 million in the quarter. Also, comparable-store sales dropped 0.9%.

The unprofitable Canadian markets have been a big concern for Big Lots and hence, it has decided to wind up its operations there. For the fourth quarter of fiscal 2013, Big Lots anticipates loss from Canadian operations to be around 65–75 cents per share. However, by first-quarter fiscal 2014, the company expects to shut down all primary operations and stores and report these as "discontinued."

Additionally, the company operates in a highly competitive discount retail space and faces stiff competition from bigger players like Target Corp. (NYSE: TGT-Free Report). The rivals having larger number of stores, greater market presence and financial resources will continue to weigh on the Big Lots' results.

This Ohio-based company provided a conservative outlook for fourth-quarter 2013. The soft quarterly performance triggered a downtrend in the Zacks Consensus Estimate, as analysts are less constructive on the stock's future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that fell 21.4% to $2.31 for fiscal 2014 and 21.2% to $2.56 per share for fiscal 2015 in the past 30 days.

Other Stocks That Warrant a Look

Not all retail stocks are performing as disappointingly as Big Lots. Other better-ranked stocks in the retail sector are G-III Apparel Group, Ltd. (Nasdaq: GIII-Free Report), holding a Zacks Rank #1 (Strong Buy), and PriceSmart Inc. (Nasdaq: PSMT-Free Report) that carries a Zacks Rank #2 (Buy).

MRO to Increase Output in U.S. Plays

On Dec 11, 2013, oil and natural gas exploration and production (E&P) firm Marathon Oil Corp. (NYSE: MRO-Free Report) reported that it intends to ramp up its rig operations in U.S resource plays, namely, Eagle Ford, Bakken and Oklahoma Woodford in 2014. This is expected to result in a 30% hike in oil and gas production from the plays. Marathon Oil also projects its total output to increase 4% in the coming year.

Moreover, with a target to divest non-core assets, Marathon Oil will likely vend its North Sea properties in 2014. To date, the company has divested assets worth roughly $3.5 billion since 2011.

Marathon Oil also offered a glimpse into its 2014 capital spending plans. The Houston, Texas-based upstream operator has set the total capital, investment and exploration budget for 2014 at $5.9 billion.

The company is expected to allocate $3.6 billion or 60% of the total 2014 budget toward liquids-rich plays in North America. $1.4 billion will likely be directed for exploration and production activities in conventional assets. $529.0 million and $294.0 million are expected to be spent for exploration and oil sands mining operations, respectively. And the remaining $105.0 million will be utilized for corporate activities.

Of the amount due for North American liquids-rich plays in 2014, roughly $2.3 billion will be invested for drilling 250-260 net wells in the Eagle Ford play. Over 1.0 billion will be expended to drill Bakken shale based 80-90 net wells. While the remaining, $236.0 million will likely be used for drilling 17-23 net wells in the Woodford asset. Marathon Oil expects those North American resource plays to have a high growth potential.  

Marathon Oil also reveals that its board of directors has approved the expansion of the residual stock buyback program to roughly $2.5 billion.     

The news was out in the press release of Marathon Oil before the market opened on Wednesday. The stock opened at $36.47 per share that day, reflecting a nominal increase from the closing price of $36.10 on Dec 10, 2013.

Marathon Oil presently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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