Zacks Bull and Bear of the Day Highlights: Avis Budget Group, Citi Trends, Netflix, Walt Disney and Sony
CHICAGO, Sept. 19, 2011 /PRNewswire/ -- Zacks Equity Research highlights Avis Budget Group (Nasdaq: CAR) as the Bull of the Day and Citi Trends, Inc. (Nasdaq: CTRN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Netflix Inc. (Nasdaq: NFLX), Walt Disney Co. (NYSE: DIS) and Sony Corp. (NYSE: SNE).
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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:
Continued focus on productivity and cost containment initiatives coupled with better travel trends and lower fleet costs drove Avis Budget Group (Nasdaq: CAR) to post better-than-expected financial results for second-quarter 2011. The quarterly earnings of $0.63 per share surpassed the Zacks Consensus Estimate of $0.31 and surged more than 2.5 times from the prior-period earnings.
We believe Avis Budget's strong focus on cost reductions will help the company achieve its goal of higher operating margins. Moreover, the new sales force in the European region is expected to further augment its fiscal 2011 revenue.
Further, with continued improvement in travel volume, the combination of better pricing and effective cost management will likely boost the company's performance. Currently, we are maintaining a long-term Outperform recommendation on the stock.
Citi Trends, Inc. (Nasdaq: CTRN) falling comparable store sales, coupled with rising input costs and operating expenses battered the second-quarter 2011 results. The company witnessed a quarterly loss of $0.69 per share that broadened 17 folds from the prior-period loss of $0.04. The Zacks Consensus Estimate for the quarter was a loss of $0.64 per share.
Further, due to uncertainty hovering around sales given the global economic unrest, the company rolled back its earnings guidance range of $1.25 to $1.35 per share for fiscal 2011. The company decided not to provide any guidelines unless it finds any near- term catalysts to drive sales.
Intense competition from other retailers, seasonal nature of business, and risks associated with sourcing merchandise from developing countries may further undermine the company's future growth prospects. Currently, we are maintaining a long-term Underperform recommendation on the stock.
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Netflix Lowers Subscriber Forecast
Netflix Inc.'s (Nasdaq: NFLX) shares plummeted almost 19% in yesterday's trade after the company cut down on the projected subscriber base for its third quarter of fiscal 2011. Estimates for the total subscriber base declined by a million.
The new estimate pins the company's DVD-only subscriber count at 2.2 million, down from the previously projected estimate of 3 million. Netflix also lowered its estimates for its streaming subscriber base to 9.8 million, down from the previously-guided estimate of 10 million.
However, the company retained its projection of 12 million customers in the third quarter using both services. Netflix also has not changed its financial forecast for the third quarter despite the projected loss of its subscriber base.
Netflix's subscriber loss is likely on account of its new subscriber plan that was formulated in July, which divided its mail-order and streaming services into two separate plans. It raised the prices by 60% to $15.98 a month. The new rates were immediately effective for new subscribers that opted for both DVDs and online streaming services. For existing subscribers the new rental plan becomes effective from this month.
Netflix had expected a decline in its subscriber base when it announced the new rental plan, but the company never expected this type of repercussion. This would be the second time Netflix has posted a net loss in domestic subscribers, the last time being in 2007 due to stiff competition from Blockbuster.
This recent development is likely to be a heavy blow to Netflix after the license renewal talks between Netflix and Starz Entertainment LLC failed in Sept 1, 2011. With that deal falling through, Netflix lost out on content from Walt Disney Co. (NYSE: DIS) and Sony Corp. (NYSE: SNE) movies.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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