CHICAGO, March 21, 2011 /PRNewswire/ -- Zacks Equity Research highlights: AMERCO Inc. (Nasdaq: UHAL) as the Bull of the Day and Nike Inc. (NYSE: NKE) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Expedia Inc (Nasdaq: EXPE) and Priceline.com ((Nasdaq: PCLN).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
AMERCO Inc. (Nasdaq: UHAL) is the parent company of U-Haul International, the largest consumer truck rental company in the world. It is also the second largest self-storage company in North America.
The impact of the decline in housing and a decrease in apartment occupancy rates appears to have ended. We expect continued improvements in operating parameters.
The stock has usually been valued on EBITDAL (EBITDA plus lease expense) per share, selling between two and three times EBITDAL. The stock has reached our low-end target price and we have upgraded the stock to outperform with a target price of $110.
Companhia Siderurgica Nacional (NYSE: SID), or CSN, stands well-positioned to benefit from its diversified businesses and improving global steel markets. However, it posted rather disappointing third quarter results -- well below the Zacks Estimate of US$0.36 per ADR.
We therefore expect weak results going forward, as the de-stocking process in the Brazilian steel market will lower domestic shipments (87% of sales) and induce exports. Moreover, rising manufacturing cost is a constant cause for worry.
In addition, its mounting debt level, high cyclicality and growing competition in the industry will act as impediments to the company's growth. Anticipating a lack of upside catalysts, we maintain an Underperform recommendation on the stock.
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Nike Misses, Stock Falls
Nike Inc. (NYSE: NKE) posted strong fiscal 2011 third-quarter earnings of $1.08 per share, up 7% from the year-ago earnings of $1.01 per share. However, earnings for the quarter compared unfavorably with the Zacks Consensus Estimate of $1.12 per share.
Despite macroeconomic headwinds, Nike's total revenue grew 7% to $5,079 million from $4,733 million in the prior-year quarter. The company continued to benefit from its strategy of consistently focusing on innovative products that provide a competitive edge over its rivals. Revenue for the quarter fell short of the Zacks Consensus Estimate of $5,168 million.
Revenues for the NIKE Brand grew 8%. Excluding currency impact, NIKE Brand revenues rose 9% led by growth in all seven NIKE Brand key categories and geographic regions except Japan.
Nike's quarterly gross profit increased 5% year over year to $2,327 million, while gross margin contracted 110 basis points to 45.8%. The decline was primarily attributable to higher product and freight cost, which was partially offset by favorable profitability from Direct to Consumer operations, positive foreign currency impact and benefits from cost reduction initiatives.
Asia Travel & the Japan Crisis
Preliminary figures from the Pacific Asia Travel Association (PATA) reveals that the Asia/Pacific region saw an 11% increase in arrivals in 2010, with 2011 growth rates expected to double that of the average growth rates across the world. Countries other than China and India that posted record growth rates in 2010 include Vietnam, Singapore, and the Philippines.
While South East Asian countries will see most of the growth in the next few years, other Asian countries will also benefit. Industry analyst PhoCusWright expects the total travel market in the Asia/Pacific to reach $212 billion this year, or a 5% increase from 2010.
Online travel booking penetration is also very low. PhoCusWright says that the online travel market in Asia is 21%, well below the 38% penetration rate in the U.S. and 34% in Europe. Therefore, with increased connectivity through computing devices (both mobile and otherwise), as well as smartphones, online penetration rates are likely to accelerate.
The potential in these markets is not lost on online travel companies such as Expedia Inc (Nasdaq: EXPE) and Priceline.com ((Nasdaq: PCLN), as well as a host of other smaller players, including some new Chinese companies.
Among the big multinational players, Expedia appears to be best positioned. The company has for long had a presence in the region and has now announced major expansion plans. These include the launching of local sites in Malaysia and Thailand by the end of April and in another five countries soon after.
Expedia already offers a number of services in Japan, including a 24/7 telephone service in Japanese and a "Dynamic Tour" (online search services to 70,000 hotels across 30,000 cities, combination flight/hotel bookings through which fetches significantly discounted rates).
Effect of the Japan Crisis
Asian travellers have traditionally tended to head to Asian destinations. Japanese travellers had the thickest wallets and were also the most frequent travellers. According to the latest available data from the United Nations World Tourism Organisation as recently quoted in the media, in 2009, Japanese nationals spent $25 billion in the tourist destinations of Thailand, Taiwan, Vietnam, Malaysia and South Korea, compared to $44 billion spent by Chinese nationals.
The PATA has stated that Japanese spending has been on a decline over the last few years (although 2010 was stronger). It expects the recent Tsunami and earthquake in Japan to significantly impact this spending. Taiwan is likely to be one of the worst affected, since Japanese tourists comprised nearly a fifth of total tourists to the country in 2010. South Korea, which sees nearly a third of its tourism traffic coming from Japan, will also be affected. Japanese travel to Hawaii will also be hit.
It is expected that the overall travel market in Asia will remain robust despite the Japan crisis, as spending by Chinese and Indian nationals is likely to remain strong.
Dealing With the Crisis
For Expedia, the crisis in Japan comes as a big blow. The company's efforts in Japan were just beginning to pay off and a company official recently stated in a Japanese daily that revenue from Japan had grown 50% from 2009 to 2010. Expedia had big plans for Japan, especially on the mobile platform, but it looks like some of these plans will now be put on the back burner.
Expedia appears to be pushing sales in other attractive Asia/Pacific destinations, particularly, Australia and New Zealand. Australia was voted most desired among Americans, Britons and Japanese nationals in a survey commissioned by the PATA last year. Expedia recently started an advertising campaign in Australia and New Zealand, promoting its booking fee waiver (which it actually waived in late 2009).
Given the conditions in Japan and its impact on Expedia, we expect some more pressure on the company's earnings profile. Estimates for 2011 as well as 2012 have come down in the last two months, which triggered our short-term Strong Sell recommendation (Zacks Rank #5) on Expedia shares. Our long-term recommendation, however, remains Neutral.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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