Zacks Analyst Blog Highlights: Nordstrom, EOG Resources, Allscripts Healthcare Solutions, E*TRADE Financial Corporation and Discover Financial Services

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Feb 22, 2011, 09:30 ET

CHICAGO, Feb. 22, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: Nordstrom Inc. (NYSE: JWN), EOG Resources Inc. (NYSE: EOG), Allscripts Healthcare Solutions (Nasdaq: MDRX), E*TRADE Financial Corporation (Nasdaq: ETFC) and Discover Financial Services (NYSE: DFS).

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Here are highlights from Friday's Analyst Blog:

Nordstrom Tops Profit, Ups Top Line

Nordstrom Inc. (NYSE: JWN) posted earnings growth of 35.0% to reach $1.04 per share in the fourth quarter of fiscal 2010 from 77 cents per share earned in the year-ago period. Earnings per share beat the Zacks Consensus Estimate of $1.00 per share.

For fiscal 2010, earnings per share came in at $2.75 per share, up 36.8% year over year and ahead of the Zacks Consensus Estimate of $2.71 per share.

Quarterly Details

Nordstrom's same-store sales and top-line trends were also encouraging. Total revenue grew 10.9% to $2,916 million from $2,640 million in the prior-year period on the heels of a 6.7% growth in same-store sales. Total revenue marginally fell short of the Zacks Consensus Estimate of $2,918 million.

During the quarter, Multi-channel same-store sales jumped 7.2%, driven by the Jewelry, Dresses and Women's Shoes categories. Full-line same-store sales growth was driven by strong performances in the Midwest and the South. Nordstrom Rack same-store sales increased by 3.9%. The company expects same-store sales to grow in the range of 2% to 4% in fiscal 2011.

Improved merchandise margin coupled with lower buying and occupancy costs led to a 34 basis point (bps) year-over-year expansion in gross margin to 39.7% in the quarter. Conversely, retail selling as well as general and administrative expenses increased $66 million to $697 million in the quarter, primarily due to increased marketing and technology expenses as well as higher volume of sales. However, credit selling, general and administrative expenses fell 48.1% year over year to $55 million. The company expects 2011 gross margin to range from down-to-up 10 basis points.

Consequently, Nordstrom's operating income posted an increase of $96 million year over year to $406 million, while operating margin expanded 210 bps to 13.9%.

Guidance

The company sees fiscal 2011 earnings per share in the range of $2.95 to $3.10.

Nordstrom currently has a short-term Zacks #3 Rank ('Hold') rating. We retain our long-term Neutral recommendation on the company.

EOG Beats on Oil Volumes

EOG Resources Inc. (NYSE: EOG), a major independent oil and gas exploration and production company, reported better-than-expected adjusted fourth-quarter 2010 results. Quarterly earnings of 36 cents per share topped the Zacks Consensus Estimate of 25 cents. However, earnings fell short of 92 cents earned in the year-earlier quarter.

Despite volume expansion and higher commodity prices, steeper operating expenses resulted in the annual earnings decline. The company also increased its quarterly dividend to 16 cents per share (64 cents annualized).

Full-year 2010 profit plunged 61% to $1.16 per share from the year-ago level of $3.00. However, full-year earnings surpassed the Zacks Consensus Estimate of $1.07.

Total revenue increased nearly 2% year over year to $1.79 billion, and exceeded the Zacks Consensus Estimate of $1.481 billion. Revenue also improved 27% year over year to $6.99 billion in 2010, beating the Zacks Consensus Estimate of $5.62 billion.

Allscripts Beats Squarely

Allscripts Healthcare Solutions (Nasdaq: MDRX), a leading player in the healthcare information technology ("HCIT") market, reported fourth quarter adjusted (excluding one-time items) earnings per share of 20 cents, beating the Zacks Consensus Estimate of 16 cents and surpassing the year-ago earnings of 17 cents. Reported net loss for the quarter was $6.2 million (3 cents per share), partly due to merger-related charges.

On August 24, 2010, Allscripts accomplished its merger with Eclipsys Corporation, following which; its board of directors altered the fiscal year end from May 31 to December 31. As a result, the company's latest quarterly financial statement includes combined results for both Allscripts and Eclipsys. The corresponding prior-year adjusted results include data from both Allscripts and Eclipsys for the fourth quarter of fiscal 2009, which ended on November 30, 2009, for Allscripts (and Dec. 31, 2009 for Eclipsys).

Revenues

Allscripts reported revenues of $316.2 million in the fourth quarter. Adjusted revenues were $337.1 million, up 10% year over year, beating the Zacks Consensus Estimate of $336 million.

Bookings amounted to $288.2 million in the reported quarter, up 34% on a sequential basis, with Allscripts contributing $140.4 million and Eclipsys providing $147.8 million.

E*TRADE Sees Improving Activity

Online broker E*TRADE Financial Corporation (Nasdaq: ETFC) released its Monthly Activity Report for January 2011 on Wednesday, recording a sequential gain of 22.0% in average U.S. trades.

For the month of January 2011, Daily Average Revenue Trades (DARTs) were 180,967, up 22% sequentially and 5% on a year-over-year basis. Broker performance is generally measured through DARTs. DARTs represent a number of trades from which brokers can expect commissions or fees.

At the end of the month, total accounts were approximately 4.3 million, including more than 2.7 million brokerage accounts, 1.1 million stock plan accounts and 0.5 million banking accounts.

Total brokerage accounts include gross new brokerage accounts of 37,005 and net new brokerage accounts of 12,504 during the month. In January, net new brokerage assets were $1.2 billion, the highest since October 2008. Total brokerage accounts and net new brokerage accounts indicate the company's ability to attract and retain trading and investing customers.

During January, customer security holdings were $124.3 billion, up 2.6% sequentially. Further, brokerage-related cash inched up 2.9% sequentially to $25.2 billion, as customers were net buyers of approximately $0.7 billion in securities in January. Bank-related cash and deposits inched down 2.2% sequentially to $8.8 billion in the reported month.

The competitive position in the market for brokerage business depends on trading customers, predominantly active traders. As the long-term investing customer group is less developed compared with the trading customers, there is an opportunity for future growth as and when the long-term customers expand.

Developing innovative online trading and long-term investing products and services, providing advanced customer services, creative and cost-effective marketing and sales initiatives, and expense discipline can be considered as key factors in executing E*TRADE's strategy to profitably grow trading and investing business.

During March 2010, E*TRADE sold $1 billion of savings accounts to Discover Financial Services (NYSE: DFS), which enabled the company to grow brokerage business as the savings accounts sold were primarily with customers and were not allied with an active brokerage account.

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