The Zacks Analyst Blog Highlights:Staples, JetBlue Airways, U.S. Airways Group, Boeing and Southwest Airline
CHICAGO, Oct. 8, 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 Staples, Inc. (Nasdaq:SPLS-Free Report), JetBlue Airways Corp. (Nasdaq:JBLU-Free Report), U.S. Airways Group Inc. (NYSE:LCC-Free Report), The Boeing Co. (NYSE:BA-Free Report) and Southwest Airline Co. (NYSE:LUV-Free Report).
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Here are highlights from Monday's Analyst Blog:
Staples Downed to Strong Sell
On Oct 3, 2013, Zacks Investment Research downgraded Staples, Inc. (Nasdaq:SPLS-Free Report) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Estimates for Staples have shown a downtrend since the company reported disappointing second-quarter fiscal 2013 results on Aug 21, 2013. The company continues to disappoint on the sales and profitability front for the second consecutive quarter in the fiscal year, as decline in business and consumer spending in the wake of the global meltdown and the deterioration of credit markets have resulted in soft demand for big-ticket items.
Lower sales on account of store closures and lower product margins took a toll on the second quarter performance of Staples. The quarterly earnings of 16 cents a share missed the Zacks Consensus Estimate by a couple of cents and decreased 15.8% year over year. Total sales also declined 2.2% year over year to $5,314.7 million and fell short of the Zacks Consensus Estimate of $5,381 million.
Given the near-term challenges, the company lowered its earnings and sales guidance for fiscal 2013. Staples now expect earnings to be in the range of $1.21 to $1.25, down from its earlier guidance range of $1.30 to $1.35. Moreover, total revenue is expected to decline in the low single-digits compared with its earlier guidance of low single-digits increase in sales.
The lower-than-expected results triggered a downtrend in the Zacks Consensus Estimates, as analysts become less constructive on the stock's future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that fell 7.5% to $1.23 for fiscal 2013 and 7.7% to $1.31 per share for fiscal 2014 in the past 60 days.
U.S. Shutdown Delays Airline Delivery
The troubles of the U.S. government partial shutdown have started to spread to the U.S. airline industry, with passenger carries facing delayed delivery of aircraft from Europe due to the closure of Federal Aviation Administration (FAA). Nevertheless, stock prices of the airlines are so far indifferent to the setback.
The U.S. government shut down operations after almost 17 years after the Democrats rejected the Republican demand to delay Obamacare by a year and other alterations to pass the emergency funding bill. The shutdown has affected 800,000 domestic federal workers, in particular those employed in National museums, parks and other civil attractions.
In the airline sector, budget carrierJetBlue Airways Corp. (Nasdaq:JBLU-Free Report) was the first victim of the shutdown as the delivery of its Airbus A-321's got delayed. Another major U.S. carrier,U.S. Airways Group Inc. (NYSE:LCC-Free Report) also returned empty handed from Europe for the FAA closure. All U.S. aircraft must be registered with the national aviation authority before flying but FAA employees are presently on leave due to the government shutdown.
JetBlue narrowly avoided a shutdown-related delay and took the delivery of an A-320 from Toulouse, France the manufacturing base of Airbus. The delayed A-321's of JetBlue were apparently scheduled for service in Dec 2013. The delay could hit hard the company's newly launched premium service, Mint, which was supposed to use the wide-bodied A-321s.
The Boeing Co. (NYSE:BA-Free Report), being an FAA organization designation authorization (ODA) holder, continues to certify aircraft, as it has the authority to perform certain certification on behalf of FAA. However, the Chicago-based company has warned that the partial shutdown could impact the anticipated delivery of some of its 787-8 Dreamliners. This means that Southwest Airline Co. (NYSE:LUV-Free Report) could be impacted as this discount carrier is expected to receive several of its new wide bodied jets in 2013.
Nevertheless, the shutdown has not affected airline service so far. However, we believe a prolonged shutdown could hurt the demand of other private companies that rely on government agencies. This would eventually affect the workers, which in turn could squeeze their liquidity, thus reducing travel demand.
Both JetBlue and U.S. Airways currently carry a Zacks Rank #3 (Hold).
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