Zacks Bull and Bear of the Day Highlights: Cabot Oil & Gas, Applied Materials, Hibbett Sports, Dick's Sporting Goods and Big 5 Sporting Goods
CHICAGO, Sept. 1, 2011 /PRNewswire/ -- Zacks Equity Research highlights Cabot Oil & Gas (NYSE: COG) as the Bull of the Day and Applied Materials (Nasdaq: AMAT) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Hibbett Sports Inc. (Nasdaq: HIBB), Dick's Sporting Goods Inc. (NYSE: DKS) and Big 5 Sporting Goods Corporation (Nasdaq: BGFV).
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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:
We are maintaining our Outperform recommendation on shares of Cabot Oil & Gas (NYSE: COG), reflecting its impressive exposure to the high-return Marcellus and Haynesville Shale plays, as well as its above-average production growth. Furthermore, the capital infusion of over $200 million bodes well for Cabot, which will help it to bolster its natural gas operations.
Buoyed by the growth momentum from the company's drilling efforts, particularly in its North region, Cabot recently reported better-than-expected second-quarter earnings. A relatively low-risk profile and longer reserve lives are other positives in the Cabot story.
Considering these factors, we believe Cabot is well positioned going forward and consider it an attractive investment. This is reflected in our continued Outperform recommendation on the company's shares. Our $83 price objective is based on a multiple of 20.2X trailing twelve-month cash flow.
Applied Materials (Nasdaq: AMAT) is one of the world's largest suppliers of fabrication equipment to semiconductor, LCD and solar PV cell manufacturers. Applied Materials' third quarter results exceeded estimates, but guidance disappointed, due to utilization cuts at DRAM, NAND and foundry customers. Therefore, we think the shares will underperform in the near term.
Add to this a peaking cycle, the recent increase in debt and issuers in the TV market and we can expect significantly lower earnings. We are therefore downgrading AMAT shares from Neutral to Underperform.
We think the trend is moving downward rather than upward, not just because of our earnings growth expectation for Applied Materials, which is slightly lower than the peer group, but also because of recent adverse conditions in the market and the cyclical peaking.
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Hibbett Sports Stays at Outperform
We are maintaining a long-term 'Outperform' recommendation on Hibbett Sports Inc. (Nasdaq: HIBB) with a target price of $39.00 per share.
The company has a Zacks #2 Rank, implying a short-term 'Buy' rating on the stock.
Hibbett Sports operates sporting goods stores in small to mid-sized markets in the Southeast, Mid-Atlantic, and lower Midwest regions of the U.S. Hibbett is strongly focused toward small towns and counties with populations of 25,000 to 75,000.
The company has created a niche market for itself by strategically aligning its merchandise to regional/local sporting and community interests, which in turn, has given it a competitive edge over larger rivals, such as Dick's Sporting Goods Inc. (NYSE: DKS) and Big 5 Sporting Goods Corporation (Nasdaq: BGFV).
Hibbett's second-quarter 2011 adjusted earnings of 21 cents per share surpassed the Zacks Consensus Estimate of 19 cents and surged 50% from 14 cents in the prior-year period. The result was driven by a strong top-line performance and improved margins.
Bolstered by better-than-expected quarterly results, management now expects a mid single-digit increase in comparable store sales in the current fiscal year ending January 2012, instead of low to mid single-digit increase forecasted earlier. Accordingly, management has increased its earnings guidance for the fiscal year to between $1.90 and $2.00 per share from $1.80 to $1.95 per share.
Moreover, the company is in the midst of a brisk store expansion program and plans to augment its network by approximately 50 to 55 new stores during the fiscal year ending January 2012. Hibbett's management has already identified 350 to 375 potential locations for its future stores and recently ramped up its distribution center to support over 1,200 stores from 1,000 stores earlier. This has bolstered the company's position in the market.
Furthermore, Hibbett has a healthy debt-free balance sheet with cash and cash equivalents of $65.2 million at the end of the second-quarter, coupled with full availability under its $80 million unsecured credit facilities. This offers Hibbett the financial flexibility to drive future top-line expansion.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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