Zacks Bull and Bear of the Day Highlights: AAR, Deckers Outdoor, Noble Energy, Atwood Oceanics and Apache
CHICAGO, Oct. 1, 2012 /PRNewswire/ -- Zacks Equity Research highlights AAR Corporation (NYSE:AIR) as the Bull of the Day and Deckers Outdoor Corp. (Nasdaq:DECK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Noble Energy Inc. (NYSE:NBL), Atwood Oceanics Inc. (NYSE:ATW) and Apache Corporation (NYSE:APA).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
AAR Corporation (NYSE:AIR) reported a solid fiscal first quarter 2013 results with earnings per share of $0.45 surpassing the year-ago earnings by 10% and in line with the high-end of management's guidance range. Revenue jumped 13% on the back of strong commercial aviation services business.
Based on strong sales growth, operational efficiency, enhanced product availability and increased management's FY13 earnings guidance, we upgrade our recommendation on AAR Corp. from Neutral to Outperform. We believe that the company has a competitive advantage over its peers based on its market expertise and technical/financial capabilities.
The company's strategic contract wins hold future potential. Our $19.00 target price, 10.8x 2013 EPS, reflects this view.
Deckers Outdoor Corp. (Nasdaq:DECK) posted a second-quarter 2012 loss of $0.53 per share. This fared better than the Zacks Consensus Estimate of loss of $0.59, but widened from a loss of $0.19 delivered in the year-ago quarter due to sluggishness in the European market. International sales during the quarter dropped 14.7%. UGG brand net sales fell marginally by 0.3%, whereas Teva brand net sales tumbled 15.4%.
Despite 14% growth expected in the top line, management projects fiscal 2012 earnings to decline between 9% and 10%, and anticipates 1% growth in total revenue and a 31% decline in earnings per share for the third quarter. Deckers also forecasts a gross profit margin contraction of 250 basis points due to increase in costs of goods sold and higher closeout sales level for fiscal 2012.
Further, over-reliance on the UGG brand, intense competition and sluggish economic recovery still remain matters of concern. Consequently, we downgraded our recommendation on Deckers to Underperform.
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Noble, Atwood Join for New Rig
Independent energy company, Noble Energy Inc. (NYSE:NBL) inked a three-year agreement with a subsidiary of Texas-based drilling contracting company, Atwood Oceanics Inc. (NYSE:ATW) for the construction of a new build drillship to enhance its major deepwater exploration and development activities.
The drillship, Atwood Advantage, has the capability to reach at greater depths. The first exploration prospect to be drilled is at the Eastern Mediterranean play. Currently the drillship is under construction by South Korea-based Daewoo Shipbuilding & Marine Engineering Corporation, Limited. The product is expected to be received in the fourth quarter of 2013.
The presence of dual BOP systems, 40,000 feet drill depth ratings, improved offline capabilities and increased mobility will certainly boost Noble Energy's worldwide exploration projects. The implementation of BOP systems would enable the company to save on its increasing spread costs which will spur margins in the near term.
The contract signifies Noble Energy's hardened focus on the growth of its overseas offshore exploration programs. We believe the company's new strategy of optimizing its global oil and natural gas assets will generate favorable returns.
Moreover, the steady rise in crude oil and slowly recovering natural gas prices in the international market will propel the revenue performance of the company. Also, Noble Energy's series of non-core asset sale of over $1.1 billion during the second quarter 2012 will stimulate the pace of the company's core deepwater exploration projects. This will lead to smooth and timely execution of the programs.
Noble Energy's Galapagos prospect in the Gulf of Mexico has made tremendous progress with all the three wells producing at levels higher than originally projected. The company's net production of 13,000 barrels of oil per day and 8 million cubic feet of natural gas per day outstripped earlier projection by about 30%. However, unexpected rig accidents in the deepwater operations and unplanned outages are risks that Noble Energy needs to watch out for.
Noble Energy expects its sales volumes to improve due to higher contribution from Galapagos, continuation of the drilling programs in DJ Basin and Marcellus Shale, and increased sales in Israel. For 2012, sales volume is expected to be in the range of 236 thousand barrels of oil equivalent per day (Mboe/d) to 244 Mboe/d.
Currently, the Zacks Consensus Estimates for the third quarter and full year 2012 for Texas-based Noble Energy are pegged at $1.05 per share and $4.91 per share, respectively.
One of the company's closest peers, Apache Corporation (NYSE:APA), recently announced its decision to divest a 20% stake in Kitimat liquefied natural gas ("LNG") export project for $15 billion.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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