Zacks Bull and Bear of the Day Highlights: Hibbett Sporting Goods, CONSOL Energy, Humana, Aetna and Coventry Healthcare
CHICAGO, May 1, 2012 /PRNewswire/ -- Zacks Equity Research highlights: Hibbett Sporting Goods (Nasdaq: HIBB) as the Bull of the Day and CONSOL Energy, Inc. (NYSE: CNX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Humana (NYSE: HUM), Aetna (NYSE: AET) and Coventry Healthcare (NYSE: CVH).
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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:
Backed by double-digit sales growth along with operational efficiencies, Hibbett Sporting Goods' (Nasdaq: HIBB) earnings of $0.59 per share for fourth-quarter 2012 surged 34.1% from the prior-year quarter, beating the Zacks Consensus Estimate of $0.56. Bolstered by strong quarterly results, management expects fiscal 2013 earnings to be in the range of $2.35 to $2.55, up 9.3%-18.6% from the fiscal 2012 level.
Management also remains committed of expanding its store network by 55 to 60 new stores in fiscal 2013. Moreover, Hibbett's sharp focus on mid-sized and smaller markets and strategic mix of branded as well as localized merchandise provide an edge over its rivals.
In addition, the company has a healthy balance sheet with no debt. Currently, we maintain a long-term Outperform recommendation on the stock.
CONSOL Energy, Inc.'s (NYSE: CNX) first quarter earnings per share were below our expectation as low gas prices and the increase in the cost per ton of coal production impacted the performance of the company. The weak demand and declining prices per ton has prompted the company to idle two coal mines.
CONSOL has decided to make more capital investment in the oil prone areas and shy away from gas investment due to depressed gas prices. However, dependence on a small group of consumers for bulk sales, rising cost for producing coal along with stricter legislations and rigid penalties on underground mining remain concerns for underground miners like CONSOL Energy.
We are maintaining our Underperform rating on the stock. Our target price of $30.00 is based on a 2012 P/E multiple of 14.8.
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Earnings Heavy, but Spotlight Shifts
Monday morning's positive Personal Income & Outlays report is welcome, but the essence of this reading was already captured in the consumer spending component of the first quarter GDP report last Friday.
This monthly report showed that both Personal Income and spending grew at better than expected rates in March. Consumer spending increased at a 0.3% pace, compared to February's upwardly revised 0.9% growth pace (originally up 0.8%). The Personal Income component of today's report showed a 0.4% increase, up from February's upwardly revised 0.3% increase (originally at up 0.2%).
The March Personal income gain is particularly welcome given the recent run of fairly modest income readings. With income outpacing spending this month, the personal savings rate inched up to 3.8% from February's 3.7% rate.
The most reassuring part of Friday's advance look at the first quarter GDP was the consumer spending component, which increased at a better-than-expected 2.9% rate, compared to the preceding quarter's 2.1% pace. This morning's strong Personal Income & Outlays reading not only reconfirms that report, but improves the odds of further positive revisions in the GDP's subsequent iterations.
The focus this week no doubt will be on the labor market, but we are still in the midst of the first quarter 2012 reporting season. We are past the mid-point of the reporting cycle with about 60% of the results already in. But this week brings reports from another 124 S&P 500 companies, which means that by end of this week we will seen first quarter results from roughly 84% of the companies in the S&P 500.
The earnings miss Monday morning from Humana (NYSE: HUM) notwithstanding, this has overall been a very good earnings season. The roughly 60% of the companies that have already reported, total earnings growth is tracking 9.4%, with roughly 71% coming out with positive earnings surprises.
Most of the growth is coming through revenue gains, with aggregate margins essentially flat from the year-earlier level. This is a far cry from pre-season expectations, when aggregate earnings were expected to be down modestly from the year-earlier period. The Humana earnings miss does not appear that surprising when we realize that fellow health insurers Aetna (NYSE: AET) and Coventry Healthcare (NYSE: CVH) also posted negative earnings surprises last week.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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