Zacks Bull and Bear of the Day Highlights: Celanese, China Life Insurance, Urban Outfitters, Gap and Abercrombie & Fitch
CHICAGO, Dec. 14, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Celanese Corporation (NYSE: CE) as the Bull of the Day and China Life Insurance (NYSE: LFC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Urban Outfitters Inc. (Nasdaq: URBN), Gap Inc. (NYSE: GPS) and Abercrombie & Fitch Co. (NYSE: ANF).
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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:
Celanese Corporation (NYSE: CE) reported adjusted earnings of $1.27 per share for the third quarter of 2011, beating the Zacks Consensus Estimate of $1.11. Quarterly revenues grew 20% year over year to $1.81 billion, primarily driven by higher pricing across all operating segments and favorable currency impacts. The results surpassed the Zacks Consensus Estimate of $1.69 billion.
Celanese raised its full-year 2011 outlook, encouraged by the strength of its third-quarter 2011 performance, its confidence in its earnings growth programs, and its expectations for a continued modest global economic recovery. The company now expects 2011 operating EBITDA to be at least $280 million, higher than 2010's results of $1,122 million.
In addition, adjusted earnings per share are anticipated to be at least $1.30, higher than 2010's results of $3.37, based on a tax rate and diluted share count of 17% and 159 million shares, respectively. We maintain our Outperform recommendation on the stock with a target price of $52.00.
China Life Insurance's (NYSE: LFC) third-quarter earnings witnessed a steep decline from the comparable period of last year. High surrenders, low premium income and increased impairment losses led to a decline in the net income, while increased unrealized losses in the investment portfolio led to reduced shareholders equity.
Additionally, China Life inherently faces substantial interest rate, market and currency risk. Although the company has a strong brand name, it has to deal with considerable competition on the domestic front, which limits earnings growth.
Overall, we expect some downside in the near term due to lack of any significant growth catalyst. The quantitative Zacks Rank for China Life is currently #4, indicating slight downward pressure on the ADRs over the near term.
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Urban Outfitters Hears Cha-Ching
According to Reuters, the holiday season has started off well for Urban Outfitters Inc. (Nasdaq: URBN), the retailer of apparel, footwear and accessories.
So far in the fourth quarter of fiscal 2011, comparable store sales for the retail segment marked an increase of mid-single digits as per a recent filing by the company.
Urban Outfitters continues to offer a diversified merchandise mix with trendy products and a compelling shopping experience. We believe that the company's rapidly expanding online presence will bring in incremental sales during the holidays as increasing number of consumers are using smartphones and tablets to purchase items.
Prior to the holiday sales, Urban Outfitters, which competes with Gap Inc. (NYSE: GPS) and Abercrombie & Fitch Co. (NYSE: ANF), marked a 3% decline in the comparable store sales at its retail segment during the third quarter of fiscal 2011.
Comparable retail segment net sales by brands rose 14% at Free People but fell 7% at Anthropologie while remaining flat at Urban Outfitters. Direct-to-consumer comparable net sales surged 15%.
The company's gross profit during the third-quarter tumbled 8.4% to $216.1 million, whereas gross margin contracted 571 basis points to 35.4% due to higher merchandise markdowns to sell the slow-moving stock of women's clothing at both Anthropologie and Urban Outfitters.
Going forward, we believe that the company's increasing inventory level remains a matter of concern as it might weigh upon the margins in the coming quarters. Total inventories were $367.4 million at the end of the third quarter, reflecting an increase of 27% year over year. Besides, young men's and women's apparel market included extremely competitive players.
Moreover, the company's customers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels, which may negatively affect their discretionary spending, and in turn, the company's growth and profitability.
Currently, Urban Outfitters holds a Zacks #5 Rank, which translates into a short-term 'Strong Sell' rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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