Zacks Bull and Bear of the Day Highlights: CB Richard Ellis, Universal Tech Institute, Clorox Corporation, Colgate-Palmolive and Procter and Gamble

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Feb 08, 2011, 09:30 ET

CHICAGO, Feb. 8, 2011 /PRNewswire/ -- Zacks Equity Research highlights: CB Richard Ellis (NYSE: CBG) as the Bull of the Day and Universal Tech Institute (NYSE: UTI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Clorox Corporation (NYSE: CLX), Colgate-Palmolive Company (NYSE: CL) and Procter and Gamble Company (NYSE: PG).

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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:

Bull of the Day:

CB Richard Ellis (NYSE: CBG) reported strong fourth quarter results, beating the Zacks Consensus Estimate by 2 cents. CB Richard Ellis is the largest commercial real estate services firm, with leading full-service operations in major metropolitan areas throughout the world.

The company operates as a single-source provider of real estate solutions with a broad range of real estate products and services and an extensive knowledge of domestic and international real estate markets. However, CB Richard Ellis faces stiff competition from regional as well as international players in the market.

We maintain our long-term Outperform recommendation for CB Richard Ellis as we anticipate the stock to perform well above the broader market. Our target price of $29.00, 28.7X 2011 EPS, reflects this view.

Bear of the Day:

Universal Tech Institute's (NYSE: UTI) first-quarter 2011 earnings beat the Zacks Consensus Estimate, and climbed 10.5% from the prior-year quarter. The average enrollment of the educational institute rose 8.5% but dropped 690 basis points sequentially.

Moreover, the rate of fall in the enrollment accelerated to 13% during the quarter, following a decline of 5% in fourth-quarter 2010. Management warned that enrollment of new students for fiscal 2011 will be below the prior-year level due to regulations proposed by the Department of Education, and will consequently result in single-digit revenue growth.

Hence, we maintain our Underperform rating on the stock. We have a long-term Underperform recommendation on the stock. Our target price of $17.00, 12.4X 2011 EPS, reflects this view.

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Clorox Beats Estimate

Clorox Corporation (NYSE: CLX) posted a marginal increase in second-quarter fiscal 2011 earnings of 68 cents a share compared with 66 cents in the year-ago quarter, surpassing the Zacks Consensus Estimate of 62 cents.

Clorox's net sales during the quarter declined 3.0% year over year to $1,179 million from $1,215 million in the year-ago quarter, marginally surpassing the Zacks Consensus Estimate of $1,176 million. The decline was primarily attributable to lower volume, unfavorable impact of the Venezuelan currency devaluation and higher trade-promotion spending, partially offset by increased pricing.

Total volume in the quarter dropped 3% due to lesser shipments of Clorox disinfecting wipes and other disinfecting products resulting from the H1N1 flu pandemic, as well as fragile trends across several of the company's U.S. categories.

Segment-wise Revenue

Clorox's sales in the Cleaning segment dipped 6% due to a 6% decline in volume. The decline in segment volume was mainly attributable to lower shipments of Clorox disinfecting wipes, other disinfecting products and Clorox laundry additives. The decline was partially offset by higher shipments of Pine-Sol dilutable cleaners and lower selling, administrative and sales promotion expenses.

Household segment sales inched down 4% primarily due to a decline in volume by 1%. Decrease in volume in the segment was primarily attributable to lower shipments of Glad food-storage products, Kingsford charcoal and Scoop Away cat litter.

Clorox's Lifestyle segment recorded a slender 3% sales growth on the back of a 3% rise in volume. The volume growth was primarily driven by volume growth in Burt's Bees natural care products and Hidden Valley salad dressing due to new products and incremental advertising, partially offset by lower shipments of Brita water-filtration products.

In the International segment, Clorox's sales inched down 1%, while volume surged by 3%. The top-line was primarily impacted by the Venezuela currency devaluation, partially offset by increased pricing and favorable exchange rates in other countries. Increase in volume was primarily driven by new home products launches and category growth in Latin America.

Margins

Clorox's gross margin decreased 180 basis points (bps) to 41.7% from 43.5% in the year-ago quarter due to unfavorable business and channel mix, increased commodity costs, unfavorable impact from foreign currency exchange rate and promotional expenses. This was, partially offset by the benefit of price increases and prudent cost savings in the quarter.

Balance Sheet and Cash Flow

At quarter end, Clorox had cash and cash equivalents of $379 million and long-term debt of $2,125 million compared with a cash balance of $154 million and a long-term debt of $2,435 million in the year-ago quarter. During the quarter, the company generated $44 million of cash from operations compared with $134 million in the year-earlier period.

Decline in operating cash flow was primarily driven by higher end-of-quarter sales leading to an increase in accounts receivable and timing of payments for accounts receivable and accrued liabilities.

Guidance and Zacks Consensus

Looking ahead, Clorox anticipates annual earnings of $3.85 to $4.00 per share on flat to 1% growth in sales.

Clorox Corporation, which competes with Colgate-Palmolive Company (NYSE: CL) and Procter and Gamble Company (NYSE: PG), currently has a Zacks #4 Rank, implying a short-term Sell rating on the stock. The company retains a long-term Neutral recommendation on the stock.

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.

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