Zacks Bull and Bear of the Day Highlights: CNO Financial Group, Big Lots, Sunoco, Energy Transfer Partners and Sunoco Logistics Partners
CHICAGO, Oct. 8, 2012 /PRNewswire/ -- Zacks Equity Research highlights CNO Financial Group (NYSE:CNO) as the Bull of the Day and Big Lots, Inc. (NYSE:BIG) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sunoco Inc. (NYSE:SUN), Energy Transfer Partners L.P. (NYSE:ETP) and Sunoco Logistics Partners L.P. (NYSE:SXL).
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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:
CNO Financial Group's (NYSE:CNO) second quarter earnings surpassed the Zacks Consensus Estimate driven by modest revenue growth. Most segments showed improvement in operating earnings, while repayment of senior notes improved debt-to-total capital ratio and allowed the initiation of dividend.
Efficient capital deployment also improved book value per share and risk-based capital ratio, although it led to lower cash and investments. Moreover, the latest recapitalization plan should improve the capital structure and debt maturity profile. It is also expected to augment earnings per share and ROE.
Improved credit ratings, strong investment portfolio and declining expenses are the other positives. Although underwriting and pricing remain primary concerns, increasing new business volume, along with cost containment measures are expected to support the bottom line in the long run.
Big Lots, Inc. (NYSE:BIG) second-quarter 2012 earnings of $0.36 per share missed the Zacks Consensus Estimate of $0.41 and plunged 28% from $0.50 earned in the year-ago quarter. Though total revenue did increase 4.4% to $1,218 million, it fell short of the Zacks Consensus Estimate of $1,240 million. Margins also remained under pressure, while gross margin shriveled 30 basis points, operating margin contracted 190 basis points.
The disappointing results compelled management to lower its fiscal 2012 earnings guidance to a range of $2.80 to $2.95 per share from $3.25 to 3.40 forecasted earlier. For fiscal 2012, the company expects U.S. comparable-store sales to decline in the low-single-digit range.
We have a long-term Underperform recommendation on the stock. Our target price of $27.00, 9.4X 2012 EPS, reflects this view.
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Shareholders OK Sun-ETP Merger
The shareholders of oil refiner and marketer Sunoco Inc. (NYSE:SUN) have given green signal for the merger of the company with natural gas pipeline operator Energy Transfer Partners L.P. (NYSE:ETP) in a Special Meeting held on October 4, 2012. Both the companies expect to close the transaction, worth $5.3 billion, effective October 5, 2012.
In the meeting, shareholders controlling a total of 69,613,600 shares had put in their votes that represent 66% of Sunoco's shares. Of this, 97% of votes were cast in favor of the merger.
For the deal – which was first announced in late April, this year – Sunoco shareholders will get a combination of cash payment of $25.00 and 0.5245 in the form of an Energy Transfer Partners share. The stockholders also have an option to receive $50 in cash for each one of the shares along with 1.049 Energy Transfer units.
This transaction will enable Energy Transfer Partners to gain control of around 8,000 miles of Sunoco's pipeline, as well as 4,900 gas stations encompassing over 24 Eastern states. However, these stations will retain its logo and Sunoco's brand name, post acquisition. Logistics and retail business of Sunoco will also remain headquartered in Philadelphia.
Energy Transfer Partners will also have the ownership of Sunoco's branded retail business, general partner interest, plus a 32.4% stake and incentives distribution rights in Sunoco Logistics Partners L.P. (NYSE:SXL), a master limited partnership in which Sunoco has 34% stake.
With this acquisition, Energy Transfer Partners aims to penetrate further in the crude oil transportation business as natural gas supplies remain under pressure from decade-low prices. The Dallas-based partnership will also be able to diversify its portfolio and generate 70% of its cash flow-mix from natural gas and the remaining 30% from heavier hydrocarbons like crude oil, refined product and natural-gas liquids.
We are maintaining our long-term Neutral recommendation on both the shares of Sunoco and Energy Transfer Partners.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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