Zacks Bull and Bear of the Day Highlights: BJ's Restaurants, Bank of America, Macy's, J. C. Penney and Martha Stewart Living Omnimedia
CHICAGO, Jan. 26, 2012 /PRNewswire/ -- Zacks Equity Research highlights BJ's Restaurants (Nasdaq: BJRI) as the Bull of the Day and Bank of America Corp. (NYSE: BAC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Macy's Inc. (NYSE: M),J. C. Penney Company Inc. (NYSE: JCP) and Martha Stewart Living Omnimedia Inc. (NYSE: MSO).
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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:
BJ's Restaurants (Nasdaq: BJRI) remains well positioned to sustain its growth momentum, while generating improved earnings on the heels of efficient operations and innovative offerings. These also help the company to drive traffic and post robust same-store sales growth. The company also boasts a debt-free balance sheet.
The company remains committed to its unit growth beyond 2011 and believes that there is room for at least 300 restaurants. Additionally, the core Californian market, which had been badly hit during the housing downturn, has also begun to turn around. The gradual betterment of this market, one of the major operational locations for the company, is an important tailwind for BJ's.
Our six-month target price of $55.00 equates to about 41.7x our estimate for 2012. The target price implies an expected total return of 20.6% over that period. We recommend an Outperform rating on the shares.
Bank of America Corp.'s (NYSE: BAC) fourth-quarter earnings came in substantially lower than the Zacks Consensus Estimate. The sale of non-core assets and accounting gains made it possible for the company to remain profitable during the quarter. However, excluding nonrecurring items, the company would have incurred a loss.
Higher non-interest expense was the primary headwind in the quarterly numbers. Also, capital and liquidity remained weak. For the full year 2011, the company reported earnings of $0.01 per share, a nickel lower than the Zacks Consensus Estimate.
Our six-month target price of $6.50 per share equates to about 7.0x our earnings estimate for 2012. This price target implies an expected negative total return of 8.1% over that period, which is consistent with our long-term Underperform recommendation on the shares.
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Macy's Sues Martha Stewart
Macy's Inc. (NYSE: M) did not welcome the licensing deal between J. C. Penney Company Inc. (NYSE: JCP) and Martha Stewart Living Omnimedia Inc. (NYSE: MSO) that took place in December 2011, and it went on to file a lawsuit in New York State Supreme Court against the latter for the breach of contract, the Associated Press reported.
Since 2007, Macy's has been selling an exclusive line of products by Martha Stewart under a five-year deal. Macy's now claims that Martha Stewart's agreement to sell certain home and lifestyle merchandise at J. C. Penney's stores violates that exclusive pact, which it shares with Martha.
It seems Martha Stewart's recent accord with J. C. Penney has resulted in a bitter relationship with Macy's, who is now seeking a preliminary injunction from the court to scuttle the deal.
By virtue of the deal, J. C. Penney acquired a 16.6% stake in Martha Stewart Living, and plans to open Martha Stewart retail departments within its stores in February 2013 under a mutual 10-year pact.
J. C. Penney invested $38.5 billion (or $3.50 per share) to buy 11 million newly-issued shares of Martha Stewart Living. Thus, it become a major stockholder and now owns two seats in the latter's board. The deal was viewed as a turning point for J. C. Penney, which has been losing its foothold in the market as it struggles against retail chains such as Macy's.
Macy's decision of blocking the deal might also boomerang, since Martha Stewart brands are known for their extensive range of lifestyle products and helps in drawing customers into the stores.
On the other hand, if the deal does not come to fruition, it would hurt Martha Stewart Living, as the contract with J. C. Penney would fetch the company $200 million in royalties, design fees and advertising commitments over the initial period. The company, which operates through three divisions: Publishing, Broadcasting and Merchandising, has long been grappling with waning sales, and the deal might help it regain its lost pace.
Currently, we have a long-term Outperform rating on Macy's. The stock holds a Zacks #2 Rank that translates into a short-term Buy rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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