Zacks Bull and Bear of the Day Highlights: Citrix Systems, Staples, McDonald, Abercrombie & Fitch and Wal-Mart
CHICAGO, June 6, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Citrix Systems (Nasdaq: CTXS) as the Bull of the Day and Staples, Inc. (Nasdaq: SPLS), as the Bear of the Day. In addition, Zacks Equity Research provides analysis McDonald (NYSE: MCD), Abercrombie & Fitch (NYSE: ANF) and Wal-Mart (NYSE: WMT)
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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 upgrade our recommendation on Citrix Systems (Nasdaq: CTXS) to Outperform backed by its excellent performance in first-quarter 2011. The company is growing gradually as virtualization and cloud computing becomes essential for large enterprises to reduce costs when the economy begins to recover from recession.
As a leading provider of enterprise software with desktop virtualization at its core, Citrix will benefit from the increasing trend of globalization. Management raised its financial forecast for full fiscal 2011. We believe the virtualization market will flourish in the near future with desktop virtualization as its central point.
The company's major products such as XenDesktop, NetScaler and Online Collaboration are generating huge revenue. As enterprises throughout the world are rapidly moving into virtualized environment, Citrix is witnessing massive demand for either new licensing or system upgrade contract.
Staples, Inc. (Nasdaq: SPLS) posted lower-than-expected first-quarter 2011 results. The quarterly earnings of $0.28 per share missed the Zacks Consensus Estimate of $0.32 and remained flat compared with the prior-year quarter. Given the underperformance, the company took a cautious stance and trimmed its fiscal 2011 earnings guidance.
The company now expects earnings between $1.35 and $1.45 per share, down from a range of $1.50 to $1.60 projected earlier. Management now forecasts sales to be flat to marginally positive in the second quarter and to increase in the low single-digits in fiscal 2011.
We remain cautious about the macroeconomic environment and sluggish job market. As a result, consumers and small businesses still remain watchful on their spending. We observe that the demand for office products is closely tied to the health of the economy.
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Demographics of Joblessness
In the overall big picture, men have fared far worse than women in this downturn. There are two possible reasons for that. The first is that the industries that have been particularly hard hit in this downturn tend to be far more male-dominated than the industries that have skated though this recession more or less unscathed. The most glaring example of this would be the construction industry versus the health care industry.
The second explanation is that on average, women tend to still be paid far less than men do, and employers might be more prone to let their relatively high priced male employees go first before their cheaper female employees. The industry effect is probably the bigger one, but the two are not mutually exclusive and both might be playing a role.
Teens, regardless of gender have had a very hard time of it in this recession. Just go to a McDonald's (NYSE: MCD) and you will see this for yourself. Normally the blemishes you see on the cashier's face are acne, not wrinkles and age spots as is the case now.
Things got a little bit better teens in May. The teen unemployment rate fell to 24.2% from 24.9% in April, and is down from 26.4% a year ago. The trend looks encouraging, but don't get too excited about it, as it is mostly an illusion. The participation rate fell to 33.3% from 33.7% in March, and is well below the 35.4% rate a year ago. The percentage of teens who actually have a job fell to 25.2% from 25.3% in April, and is down from 26.1% a year ago.
While for the most part the earnings from teen jobs tend to go towards clothes from Abercrombie & Fitch (NYSE: ANF) and other teen clothing stores, for many it is a significant part of paying for college. Also, when teens work, they learn important job skills, such as the importance of actually showing up, and doing so on time. The extremely low levels of teens working is not a good sign for the future.
Overall, this was an awful report. It doesn't really matter if you just look at the headline numbers or you dig further into the details. The internals of the report were on the weak side. The unemployment rate rise was not due to a rise in the participation rate, it was unchanged. If it had been a rising participation rate, one could safely ignore the bump in the unemployment rate.
A rising participation rate would be a good sign for the economy even if it raised the unemployment rate. The 0.1 point increase in the unemployment rate puts us back to the highest level since December. The job creation pace was much lower than expected, particularly on the private sector side.
The drop in government jobs was expected. The household survey was only a little bit more upbeat, and still pointed to an anemic gain of just 105,000 jobs. The cuts in government employment were bit larger than what the consensus was looking for, but not exactly shocking.
All things considered, it is better to see the job creation in the private sector, but those public sector jobs are held by real people. Wal-Mart (NYSE: WMT) does not ask if you are in the public or private sector at the checkout counter. The loss of those local government jobs has been a serious drag on job creation and thus the overall economy.
The pace of job creation is not going to put a dent in the huge numbers of people who are without work and want it. Yes, the pace of job creation in this recovery is much better than it was coming out of the last recession, but that is pretty cold comfort for those who are being forced into abject poverty because they can't find work despite months and months of pounding the pavement (or the keyboard, as is more likely these days).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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