Zacks Bull and Bear of the Day Highlights: Cabela's, Citi Trends, Barclays PLC, The Goldman Sachs Group and Deutsche Bank AG
CHICAGO, May 7, 2012 /PRNewswire/ -- Zacks Equity Research highlights: Cabela's, Inc. (NYSE: CAB) 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 on Barclays PLC (NYSE: BCS), The Goldman Sachs Group Inc. (NYSE: GS) and Deutsche Bank AG (NYSE: DB).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Cabela's, Inc.'s (NYSE: CAB) first-quarter 2012 earnings of $0.40 per share beat the Zacks Consensus Estimate of $0.33, and surged 60% from the prior-year quarter. The quarter witnessed healthy revenue growth and profitability at its retail segment, improved performance at Cabela's CLUB Visa program, increased merchandise gross margin and boost in market share.
Merchandise gross margin expanded 150 basis points to 34.5% during the quarter. Management reiterated its long-term goal of increasing the margin by 200-300 basis points. Driven by improving trends, the company expects earnings to increase at a double-digit rate in fiscal 2012.
The company looks to enhance its retail square footage growth by focusing on its next-generation store format and new Outpost store format. Moreover, the company remains committed on alleviating bad debt risk in its credit card business. The gradual improvement in the economy has lowered delinquencies and charge-offs.
Citi Trends, Inc.'s (Nasdaq: CTRN) falling comparable store sales, coupled with rising cost of goods sold and operating expenses, battered fourth-quarter 2011 results. The company incurred a quarterly loss of $0.18 per share, falling drastically from the year-ago quarter earnings of $0.64 per share. The results, however, bettered the Zacks Consensus Estimate of a loss of $0.20 per share.
Further, due to uncertainty hovering around sales, given the global economic unrest, 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. Our target price of $10.00 is based on P/CF (price-to-cash flow) multiple of 8.27x.
Latest Posts on the Zacks Analyst Blog:
Basel Proposes New Rules for Banks
Last Thursday, the Basel Committee on Banking Supervision came up with a series of new stringent capital rules for the largest U.S. banks, based on the fundamental review of trading book capital requirements. Basel proposed increased capital holding by banks to align with the risk of heavy losses in the trading market.
As per the newly proposed rules, banks will be restricted beyond an extent in transferring assets between trading and banking books. They need to provide regulators with details related to the selling and buying of securities in their trading books. Moreover, more capital would be required to maintain to avoid the risk of credit crunch.
In trading books, portfolios of securities, which are actively traded by banks, are represented while banking books enclose products that the banks plan to hold to maturity.
Trading activities of the banks would be reduced once the new rules get approved as capital requirements would be enhanced. Moreover, this is expected to reduce the profitability of large financial institutions involved in extensive trading activities such as Barclays PLC (NYSE: BCS), The Goldman Sachs Group Inc. (NYSE: GS) and Deutsche Bank AG (NYSE: DB).
Before the approval of the proposed rules, the Basel Committee awaits feedback until September 2012. When the review of responses is complete, the committee will declare the amendments to the Basel III framework.
In July 2009, the Basel Committee issued "Basel 2.5," which inculcated modifications to the market risk framework. These amendments significantly enhanced capital requirements for trading activities, mainly for securitizations and planned credit products, based on the losses incurred by the banks during the financial crisis.
The current proposal contains a revised market risk framework that includes the measures to enhance trading book capital requirements. However, Basel 2.5 did not consider the calculation methods in estimating capitals. According to the Committee, the Value at Risk (VAR) measure, which takes into account prospective losses on a portfolio for most situations mainly covering 95% of trading days, was proved to be a poor measure during the financial crisis.
Now, the Basel Committee plans to use "expected losses" while calculating banks' capital instead of using the VAR measure.
The oversight body of the Basel Committee on Banking Supervision is planning proactive actions to ensure that the world's largest banks are strengthening their capital and liquidity positions to confront another financial meltdown. The committee is set to carry out on-site assessments of the banks' financial conditions.
Previously, a global agreement, known as Basel III (named after the city of Switzerland), was passed in July 2011. Under the agreement, banking giants throughout the world would have to maintain an extra 1% to 2.5% of capital on their balance sheets in addition to the Basel III mandate of 7% by 2019. The percentage will vary depending on the size of their balance sheets. Based on a particular bank's importance and position in the overall financial system, the regulators will formulate a method to identify target banks.
A weak capital level is always a threat to the global economy. Needless to say, meeting new rules would act as building blocks of the still unstable world economy, with fewer bank collapses and less involvement of taxpayers' money for bailing out troubled financial institutions.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=7158.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.
Share this article