Zacks Bull and Bear of the Day Highlights: AGCO, Urban Outfitters, Monsanto, Syngenta AG and The Dow Chemical Company
CHICAGO, Jan. 6, 2012 /PRNewswire/ -- Zacks Equity Research highlights AGCO Corporation (NYSE: AGCO) as the Bull of the Day and Urban Outfitters (Nasdaq: URBN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Monsanto Company (NYSE: MON),Syngenta AG (NYSE: SYT) and The Dow Chemical Company (NYSE: DOW).
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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:
Driven by strong global demand for agricultural equipment, AGCO Corporation (NYSE: AGCO) reported third quarter EPS of $0.87 versus $0.66 in the year-earlier quarter, surpassing the Zacks Consensus Estimate of $0.75. For fiscal 2011, AGCO expects EPS of $4.30.
Global industry sales are anticipated to grow in 2011. With a full product line of farm equipment and a wide network of dealers and distributors, we believe AGCO is well positioned over the long term to capitalize on the need for increased food production, which is being driven by worldwide population growth.
Moreover, the company is also looking to expand operations in high-growth emerging markets, which bode well for future operating performance. We maintain our Outperform recommendation with a target price of $51.00, based on a P/E of 11.7 and our fiscal 2011 earnings estimate.
We are initiating the coverage on Urban Outfitters (Nasdaq: URBN) with an Underperform recommendation. Despite registering growth of 6.3% in the top line, the company's third-quarter 2012 earnings of $0.33 per share fell 23.3% from the prior-year quarter due to the rise in cost of sales and SG&A expenses.
The company's inventory level, which rose 27%, remains a matter of concern. The company, in order to clear its inventory, is selling the slow-moving stock of women's clothing at increased markdowns, which in turn, is weighing upon margins. Its gross margin contracted 571 basis points to 35.4% during the quarter.
Management now expects the fourth quarter gross margin to be lower than the third quarter. Fashion obsolescence remains the key issue for the company's business model. In the past, this has weighed down on the company s comparable-store sales and operating margins. The company is presently inflicted with the same fashion risk.
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Monsanto Beats, Guides High
Monsanto Company (NYSE: MON) posted a strong financial result in the first quarter of fiscal 2012 with an EPS (excluding restructuring expense) of 23 cents, breezing past a meager 2 cents recorded a year ago. The result exceeded the Zacks Consensus Estimate of 19 cents.
The company generated revenues of $2,439 million, up from $1,836 million registered in the year-ago quarter. The revenue exceeded the Zacks Consensus Estimate of $2,034 million based on improved sales in the growing Latin America market.
Outlook
Management affirmed its free cash flow guidance for fiscal 2012 in the range of $1.3 billion to $1.5 billion, reflecting an investment of $600 to $700 million in capital expenditures.
For fiscal 2012, the company expects net cash provided by operating activities to be $2.2 billion to $2.5 billion, and net cash required by investing activities to be approximately $900 million to $1 billion.
The company guided high on full-year 2012 ongoing EPS, expecting to achieve $3.39 to $3.44 of ongoing and as-reported EPS.
Going forward, a strong US Order book coupled with a pipeline of advanced R&D appears to add momentum to the stock.
During early December 2011, Monsanto Company declared a quarterly dividend on its common stock of $0.30 per share. The dividend will be payable on January 27, 2012 to shareowners of record as of January 6, 2012.
Monsanto Company is a leading global provider of agricultural products for farmers, operating in Seeds and Genomics and Agricultural Productivity segments. Monsanto's biotechnology research and innovations position it as a market leader above its peers, such as Syngenta AG (NYSE: SYT) and The Dow Chemical Company (NYSE: DOW).
We currently maintain a long-term Outperform recommendation on the stock. Monsanto has a Zacks #2 Rank, which translates into a short-term Buy rating (1-3 months).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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