The Zacks Analyst Blog Highlights:Susser Petroleum Partners, Boeing, Textron, Lockheed Martin and Raytheon
CHICAGO, Sept. 4, 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 Susser Petroleum Partners L.P. (NYSE:SUSP-Free Report), The Boeing Company (NYSE:BA-Free Report), Textron Inc. (NYSE:TXT-Free Report), Lockheed Martin Corp. (NYSE:LMT-Free Report) and Raytheon Company (NYSE:RTN-Free Report).
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Here are highlights from Tuesday's Analyst Blog:
Strong Buy on Susser Petroleum Products
On Aug 31, Zacks Investment Research upgraded Susser Petroleum Partners L.P. (NYSE:SUSP-Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
This partnership focused on the distribution of motor fuel reported a positive earnings surprise of 2.33% in the second quarter. The long-term expected earnings growth rate for this stock is 8.0%.
Susser Petroleum Partners' earnings per unit in the second quarter were 44 cents, a penny higher than the Zacks Consensus Estimate.
Second quarter revenues were $1.12 billion, a 2.8% increase from $1.09 billion reported in the comparable year-ago quarter. The 5.4% year-over-year increase in gallons sold primarily benefited the results, offset marginally by a decline in the selling price per gallon.
The partnership continues to expand its business through purchase and leaseback transactions. Since its initial public offering in Sep 2012, the partnership has completed the purchase and leaseback of 22 Stripes stores for a cumulative cost of $89.7 million. These 22 stores are expected to generate annual rental income of $7.2 million.
Consistently strong performance also enables Susser Petroleum Partners to reward its unitholders through regular distribution payments. The partnership's current quarterly distribution rate of 45.28 cents reflects a 3.5% sequential increase from 43.75 cents distributed in the first quarter.
The present valuation also makes the partnership attractive. The forward P/E multiple of 17.44% is at a discount of 14.5% to the peer group average of 20.4%. The ROE of the partnership is 36.2%, which is higher than the peer group average of 25.3%.
The Zacks Consensus Estimate for 2013 has risen 4.1% in the last 30 days to $1.77 per unit, reflecting whopping year-over-year growth of 321.8%. For 2014, the Zacks Consensus Estimate increased 7% in the past 30 days to $1.98 per share, reflecting year-over-year growth of 12.02%.
Boeing Gets DoD Contracts
The U.S. Department of Defense (DoD) dispersed 35 contracts worth $1.78 billion on Aug 30, 2013. Though not sizeable, The Boeing Company (NYSE:BA-Free Report) received two full contracts and a part of a third contract shared with Textron Inc. (NYSE:TXT-Free Report).
The first contract worth $24.1 million calls for the supply of rotary wing blades for U.S. Army helicopters. The contract is scheduled to be completed through Aug 31, 2015.
Per the second modification contract, worth $22.7 million, the company will develop and demonstrate a new version of the AH-64 Apache Block III attack helicopter. Post modernization, the helicopter will have in-flight control of unmanned aerial vehicles and a new split-torque face gear transmission that enhances the power by more than 20% compared to the previous versions of the Apache.
The third contract was for the Bell Boeing Joint Project Office, a joint venture of Boeing and Textron, for the production of V-22 Osprey tiltrotor aircraft. Per this contract, worth $8.9 million, the joint venture will supply 10 V-22 Block A to B 50-69 series upgrade kits and 10 V-22 Block A to B 50-69 series and install it for the U.S. Naval Air System Command.
Despite the threat of sequestration, we note that the DoD is continuing to award contracts to defense players – both big and small, publicly traded or private firms.
On Aug 20, 2013, the DoD offered a string of contracts to Lockheed Martin Corp. (NYSE:LMT-Free Report), Textron, Raytheon Company (NYSE:RTN-Free Report) and other privately held firms like BAE Systems, Odyssey International Inc. and Berger Cummins Joint Venture.
Boeing is also one of the major players in the defense business, which accounts for approximately half of its top line. Boeing's defense business stands out among its peers by virtue of its broadly diversified programs, strong order bookings and order backlog. Also, the U.S. DoD has a focus on Boeing's programs like the F/A-18 fighter jet and its carrier based version, EA-18G Growler, P-8A Chinook helicopter, Apache and Osprey rotorcraft, and the brigade combat team modernization program.
Internationally, the company is witnessing strong demand for its defense products, such as, fighter jets, the C-17 series transport aircraft, the rotorcraft line-up and 737-based military derivatives. Despite the threat of domestic defense budget cuts, the company will likely continue to boost profits from its more profitable programs (737, 777 and 787-10), going forward. The company presently retains a short-term Zacks Rank #3 (Hold).
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