The Zacks Analyst Blog Highlights:Michael Kors Holdings, Baker Hughes, Halliburton, Schlumberger and Willbros Group
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 Michael Kors Holdings Limited (NYSE:KORS-Free Report), Baker Hughes Inc. (NYSE:BHI-Free Report), Halliburton Co. (NYSE:HAL-Free Report), Schlumberger Ltd. (NYSE:SLB-Free Report) and Willbros Group Inc. (NYSE:WG-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:
Michael Kors Can't Be Ignored
Michael Kors Holdings Limited (NYSE:KORS-Free Report) is looking promising now and the underlying factors are capable of carrying the momentum further. The stock holds a Zacks Rank #1 (Strong Buy) and has surged roughly 13% year-to-date, demonstrating its inherent strength and long-term earnings growth projection of 26.3%. We believe the stock could prove to be a solid bet for investors.
Michael Kors' primary strength is its earnings surprise history. The company had outperformed the Zacks Consensus Estimate in the past 9 quarters. Looking at its earnings surprise history of the last four quarters, this global luxury lifestyle brand has topped the Estimate by an average of 23.3%, including an earnings surprise of a whopping 29.1% in third-quarter fiscal 2014.
Shares of Michael Kors have shot up approximately 21%, since posting solid third-quarter results. The quarterly earnings came in at $1.11 per share, surpassing the Zacks Consensus Estimate of 86 cents and surging 73.4% year over year. Revenue for the first time surpassed the $1 billion mark at $1.01 billion, handily beating the Zacks Consensus Estimate of $860 million and escalating nearly 59% year over year.
A good performance prompted management to provide an upbeat guidance. Management expects fourth-quarter revenue to be $790 million to $800 million and earnings between 63–65 cents a share. For the full year, revenue is likely to be in the range of $3.18 billion to $3.19 billion and earnings are forecasted in the band of $3.07 to $3.09 per share.
Ever since Michael Kors posted better-than-expected results and provided a solid guidance, the Zacks Consensus Estimate has been trending upwards. The Zacks Consensus Estimate for fiscal 2014 and 2015 increased 10.2% and 9.8% to $3.12 and $3.82, respectively, in the last 60 days.
Michael Kors is seeking to carve a niche in the high-end retail sector by broadening its footprint in strategic markets and offering merchandise that caters to the elite.
U.S. Drilling Rig Count Up by 6
In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (NYSE:BHI-Free Report) reported a rise in the U.S. rig count (number of rigs searching for oil and gas in the country).
This can be attributed to the increase in oil rig count, partially offset by cutbacks in the tally of gas-directed rigs. In particular, the natural gas rig count dropped to a new 19-year low, while oil drilling jumped to another 27-year high.
The Baker Hughes data, issued since 1944, acts as an important yardstick for energy service providers in gauging the overall business environment of the oil and gas industry.
Analysis of the Data
Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 1,809 for the week ended Mar 28, 2014. This was up by 6 from the previous week's rig count.
The current nationwide rig count is more than double the lowest level reached in recent years (876 in the week ended Jun 12, 2009) and is above the prior-year level of 1,748. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending Aug 29 and Sep 12.
Rigs engaged in land operations increased by 11 to 1,741, offshore drilling was down by 5 to 50 rigs, while inland waters activity remained steady at 18 units.
Natural Gas Rig Count: Natural gas rig count decreased for the third successive week to 318 (a drop of 8 rigs from the previous week). As per the most recent report, the number of natural gas-directed rigs is at their lowest level since May 5, 1995 and is down approximately 60% from its recent peak of 811, achieved in 2012. In fact, the current natural gas rig count remains 80% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 389 active natural gas rigs.
Oil Rig Count: The oil rig count was up by 14 to 1,487. The current tally – the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987 – is way above the previous year's rig count of 1,354. It has recovered strongly from a low of 179 in June 2009, rising 8.3 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 4 remained unchanged from the previous week.
Rig Count by Type: The number of vertical drilling rigs was flat at 384, while the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) was up by 6 to 1,425.
Gulf of Mexico (GoM): The GoM rig count was down by 4 to 49.
Conclusion
A Key Barometer of Drilling Activity: An increase or decrease in the Baker Hughes rotary rig count heavily depends on the demand for energy services – drilling, completion, production, etc. – provided by companies that include large-cap names likeHalliburton Co. (NYSE:HAL-Free Report) and Schlumberger Ltd. (NYSE:SLB-Free Report).
However, our preferred pick in this group is Willbros Group Inc. (NYSE:WG-Free Report). The Houston-based firm – sporting a Zacks Rank #1 (Strong Buy) – has a solid secular growth story with potential to rise significantly from the current level.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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