Zacks Bull and Bear of the Day Highlights: Central Garden & Pet, Universal Technical Institute, Ford, Procter & Gamble and Starbucks Coffee Company
CHICAGO, June 3, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Central Garden & Pet Co. (Nasdaq: CENT) as the Bull of the Day and Universal Technical Institute (NYSE: UTI), as the Bear of the Day. In addition, Zacks Equity Research provides analysis Ford (NYSE: F), Procter & Gamble (NYSE: PG) and Starbucks Coffee Company (Nasdaq: SBUX).
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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:
Central Garden & Pet Co. (Nasdaq: CENT) recently posted better-than-expected second-quarter 2011 results. The quarterly earnings of $0.54 per share beat the Zacks Consensus Estimate of $0.49 and rose 10.2% from the prior-year quarter. Being the leading producer of garden and pet supplies products in the U.S. with a diversified portfolio of brands, Central Garden & Pet has developed a healthy commercial relationship with giant retailers.
This provides significant upside potential for the company. The company's effective inventory management is also helping it to optimize merchandise levels in accordance with sales trends.
The stock is trading at a discount to the peer group, based on forward earnings estimates. We have a long-term Outperform recommendation on the stock. Our target price of $11.00, 12.4X 2011 EPS, reflects this view.
Universal Technical Institute's (NYSE: UTI) average enrollment of the educational institute rose 8.5% in the first quarter but dropped 690 basis points sequentially. Moreover, the rate of fall in the new enrollments 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 a single-digit revenue growth.
We have a long-term Underperform recommendation on the stock. Our target price of $16.00, 12.5X 2011 EPS, reflects this view.
Latest Posts on the Zacks Analyst Blog:
1Q Productivity Revised Higher
In the first quarter, non-farm business sector labor productivity increased at a 1.8% annual rate, an upward revision from the initial estimate of 1.6%. The consensus expectation was that the number would be unrevised. The gain in productivity was due to a gain of 3.2% in output (was 3.1%) and a rise of 1.4% in hours worked (unrevised, seasonally adjusted annual rate).
The increase in productivity growth is welcome, but it still represents a slowdown. The fourth quarter productivity growth was 2.9%. On a year-over-year basis output increased 3.2%, while hours rose 1.9%, for an increase in productivity of 1.3%. Clearly, productivity growth is slowing, but it is doing so from very strong levels.
Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors and unpaid family workers. Over the long term, productivity is probably the single-most important economic indicator. It is what will govern per capita income.
In the short term, however, when there is a high level of unemployment, rising productivity is a mixed blessing. Rising output is great, but if the same number of people can produce that higher output, you are not going to make a lot of progress on bringing down unemployment.
Manufacturing: Durable vs. Non-Durable Goods
The real star in the Manufacturing sector is among the durable goods makers, such as Ford (NYSE: F). Durable goods productivity increased 7.5% (revised from 9.8%). At non-durable goods makers, such as Procter & Gamble (NYSE: PG) productivity growth was lower, but still very respectable at 2.6% revised from 4.5%) for the quarter. Durable goods increased output by 14.0% (revised down from 16.4%) and did so while increasing hours worked by just 6.1% (unrevised). Non-durable goods production rose 1.5% (down from 3.3%) while hours fell 1.1% (revised from a decline of 1.2%).
On the unit cost front, durable goods saw a 4.5% (from 6.7%) decline for the quarter and a 2.5% (revised from 3.4%) year-over-year drop. Non-durable goods manufacturing saw a 0.5% (revised from 2.2%) decline for the quarter, and a 0.3% (revised from 0.8%) decline year over year.
The rise in non-durable output is not going to provide any help on the employment front. The next chart shows the year-over-year changes in overall manufacturing productivity and labor costs over the last twenty years.
Starbucks All Over China
Starbucks Coffee Company (Nasdaq: SBUX) finally has taken full control of majority of its stores in mainland China based on a contractual agreement with its long time joint-venture partner in South China, including Hong Kong and Macau, Maxim's Caterers Ltd.
The agreement allows Starbucks to assume 100 percent equity in the important China provinces of Guangdong, Hainan, Sichuan, Shaanxi and Hubei, and the municipality of Chongqing.
Also as part of the agreement, Maxim's has acquired Starbucks remaining equity stake in the Hong Kong and Macau markets, assuming 100 percent equity in them. Maxim's Caterers saw a 10-year extension in its Hong Kong operating term until 2037 and gained a 30 percent stake in a joint venture with Starbucks in Chengdu, the capital of the Sichuan Province in southwestern China.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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