Zacks Bull and Bear of the Day Highlights: Dollar Financial, Grupo Televisa S.A., United Parcel Services, 3M Company and The Hershey Company
CHICAGO, July 27, 2011 /PRNewswire/ -- Zacks Equity Research highlights Dollar Financial (Nasdaq: DLLR) as the Bull of the Day and Grupo Televisa S.A. (NYSE: TV) as the Bear of the Day. In addition, Zacks Equity Research provides analysis United Parcel Services (NYSE: UPS), 3M Company (NYSE: MMM) and The Hershey Company (NYSE: HSY).
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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:
Dollar Financial's (Nasdaq: DLLR) third-quarter 2011 earnings came modestly ahead of the Zacks Consensus Estimate, benefiting primarily from a solid performance at core business units as well as successful implementation of a business diversification strategy.
A solid liquidity position, exposure to a somewhat recession-proof sector and cost containment measures are expected to drive growth in future. Going ahead, the company is also expected to grab the opportunities through acquisitions and deploy the available funds in a manner that will further enhance future earnings.
Our six-month target price of $27.00 per share equates to about 13.2x our earnings estimate for fiscal 2011. With no dividend to supplement, the expected total return equates to 20.5% over that period.
We downgrade our recommendation on Grupo Televisa S.A. (NYSE: TV) to Underperform following its second-quarter 2011 financial results, which fell below the Zacks Consensus Estimates. Televisa lost a significant amount of advertising revenue from businesses of Mexican telecom tycoon Carlos Slim.
Intensifying competition in the Mexican pay-TV market has forced Televisa to spent more in order to retain and solidify its customer base. Therefore, depreciation and amortization charges increased by leaps and bounds while significantly hurting the company's bottom line.
Televisa is trying hard to enter into the lucrative wireless market of Mexico. However, we remain concerned that the company may not get the regulatory approval. We believe a prolonged legal battle with Carlos Slim-controlled entities will continue to affect the overall financials of Televisa in the rest of 2011. We do not find any near-term catalyst for the company.
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UPS Posts Record 2Q
Before the opening bell, United Parcel Services (NYSE: UPS), the world's largest package delivery company, reported second quarter adjusted earnings of $1.05 per share that outpaced the Zacks Consensus Estimate by a penny. Earnings per share showed substantial 25% growth from 84 cents in the year-ago quarter.
UPS generated record earnings per share in the second quarter. Healthy US Domestic Package revenue, strong export volumes in International Package as well as improved performance in its Supply Chain and Freight segment led to the quarter's outperformance.
Total revenue grew 8.1% year over year to $13.2 billion and beat the Zacks Consensus Estimate of $13.1 billion. The year-over-year increase reflects consolidated volume growth of 1% and a 7.1% increase in total revenue per piece. Adjusted operating income climbed 18.8% year over year to $1.67 billion, reflecting an operating margin of 12.6%, which was up 110 basis points (bps).
3M Outpaces Estimates
3M Company (NYSE: MMM) reported second-quarter 2011 results before the market opened today, reporting earnings per share from continuing operations of $1.60, in line with the Zacks Consensus estimate. Earnings per share increased by 3.9% year over year.
Total Revenue
Total revenue in the quarter increased by 14.1% year over year to $7.7 billion. In March 2011, the earthquake in Japan negative affected sales growth by 2.4 percentage points. The company's sales increased in all regions, with 24.1% growth in Europe, 20.2% in Latin America/Canada, 11.0% in Asia Pacific and 8.7% in the US.
Outlook
3M expects sales growth for full-year 2011 to be negatively impacted by the Japan earthquake by approximately one percentage point, operating margins by 30 basis points and earnings by $0.11 to $0.12 per share.
The company generated significant free cash flow in second-quarter 2011. A strong cash flow position and continuously expanding sales revenue provide 3M ample resources to expand through acquisition and innovation of new products.
3M is globally recognized for its innovations, which is supported by some of its well-known brands, such as Nexcare, Post-it, Scotch, Scotch-Brite, and Scotchgard leading the market. We believe that continued capital expenditure with new product launches should bolster its prospects across most end markets.
However, the company's growth objectives are largely dependent on timing and market acceptance of its new product offerings, including its ability to continually renew its pipeline of new offerings and bring those to the market at acceptable price points.
Further, the results have been impacted by worldwide economic and capital market conditions. Negative consumer sentiment is affecting the retail store traffic. On the corporate side, lower employment levels are negatively reducing office supply purchases in most companies.
3M Company, together with its subsidiaries operates as a diversified technology company with manufacturing operations spread over 60 countries worldwide.
Hershey Exceeds by a Penny
The Hershey Company (NYSE: HSY) has posted adjusted quarterly earnings of 56 cents a share in the second-quarter 2011 financial results, which slightly exceeded the Zacks Consensus Estimate of 55 cents. It also surpassed the prior-year adjusted earnings of 51 cents per share.
On a reported basis, earnings for the quarter came in at 56 cents, up from 20 cents per share delivered in the year-ago quarter.
The adjusted earnings in the second quarter of 2011 exclude credits related to the Project Next Century program announced in June 2010. The results also exclude pre-tax charges of $9.4 million, or 2 cents per share, more than offset by an adjustment of $11.2 million, or 2 cents a share, resulting in a net credit of $1.8 million due to a reduction of previous estimates.
The prior-year quarter excludes net pre-tax charges of $86.2 million, or 31 cents per share, comprised of Project Next Century costs of $41.5 million, or 11 cents, and a non-cash goodwill impairment charge of $44.7 million, or 20 cents related to the Godrej Hershey Ltd. joint venture in India.
Management expects its total pre-tax GAAP charges and non-recurring project implementation costs related to the Project Next Century program to be $140 million to $160 million for 2011.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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