Zacks Bull and Bear of the Day Highlights: Augme Technologies, Badger Meter, Goodrich Corporation, Honeywell International and United Technologies
Apr 25, 2011, 09:42 ET
CHICAGO, April 25, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Augme Technologies (OTC: AUGT) as the Bull of the Day and Badger Meter (NYSE: BMI) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Goodrich Corporation (NYSE: GR), Honeywell International Inc. (NYSE: HON) and United Technologies Corp. (NYSE: UTX).
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Augme Technologies (OTC: AUGT) is a provider of interactive mobile advertising systems. The company has reached critical mass, and fiscal 2012 should be profitable with positive cash flow.
Mobile marketing is being driven by new technology and the expanding use of Internet enabled cell phones. The process is interactive and mobile marketing is more effective than traditional passive advertising.
Augme has increased its guidance for fiscal 2012 revenue from $12 million to $16 million and expects to achieve positive cash flow during the current fiscal year.
Badger Meter (NYSE: BMI) delivered disappointing first quarter results, as EPS declined 39% year over year to $0.22 and fell short of the Zacks Consensus Estimate at $0.43.
Net sales dropped 7.2% year over year to $57.4 million, compared to the Zacks Consensus Estimate of $69 million. The increased sales of manual meters were not enough to offset the dismal sale of automatic meters.
This resulted in decreased gross margins as manual meters have lower margins compared with the automatic meters. However, the long-term prospects of the company seem positive, mainly due to water conservation. We reiterate our Underperform recommendation on the stock with a target price of $33.00.
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Goodrich's Good Start to the Year
Goodrich Corporation (NYSE: GR) announced first quarter 2011 operating earnings of $1.52 per share versus 86 cents in the year-ago quarter, reflecting a growth of 9.6%. The first quarter results surpassed the Zacks Consensus Estimate by 27 cents.
The strong earnings of the company during the quarter was mainly due to growth in sales in all market channels of the company, benefits from cost cutting initiatives, strong operational performance and favorable changes in estimates for certain long-term contracts.
Total Revenue
Goodrich's total operating revenue in first quarter 2011 was $1,895.9 million versus $1,695.2 million in the year-ago quarter, reflecting a growth of 12%. The actual results of the company were higher than the Zacks Consensus Estimate of $1,860 million.
Commercial aftermarket sales growth of 12% and solid performance from all three segments of the company were catalysts for the top-line growth. Even though all three segments bettered results from the comparable quarter last year, contribution from Nacelles and Interior Systems to total revenue increased 184 basis points while inputs from Actuation and Landing Systems and Electronic Systems decreased 7 basis points and 176 basis points, respectively, from the year-ago quarter.
Guidance
Goodrich expects to sustain its strong performance in the first quarter through the rest of the year. As a proof, the company raised its sales guidance to $7.8 billion for 2011, the high end of the previously expected range of $7.7 billion to $7.8 billion.
The expected 2011 total sales reflect a growth of 12% from the 2010 level. The sales forecast for 2011 takes into consideration 15% growth in large commercial airplane original equipment sales, a 30%–35% growth in regional, business and general aviation airplane original equipment sales, including incremental sales associated with the DeCrane acquisition, as well as 8%–10% growth in defense and space sales of both original equipment and aftermarket products and services.
Goodrich expects earnings per share to be in the range of $5.40 to $5.55 for 2011, up from the previous estimate of $5.30 to $5.45, and a growth of 20%–23% from 2010 levels.
Management expects a 30% effective tax rate for 2011 and 32% in the next three quarters of 2011. The total worldwide pre-tax pension expense of the company is expected to be $88 million, down from $162 million in 2010.
Our Take
Goodrich surpassed both our revenue and earnings forecast for the first quarter on the strength of its operating segments. The projected sales growth of the company, for 2011, will be driven by internal sources with as much as 10% derived from organic sources out of the projected 12%.
Goodrich currently retains a Zacks #2 Rank (short-term Buy rating). The positive catalysts for the company are its diverse customer base and strong balance sheet. However, we maintain a Neutral rating on the stock given the regulatory risks, high research and development expenses and dependence on international sales. The company competes with Honeywell International Inc. (NYSE: HON) and United Technologies Corp. (NYSE: UTX)
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