Zacks Bull and Bear of the Day Highlights: Humana, Ferrellgas Partners, Sony, Campbell Soup and Advance Auto Parts
CHICAGO, May 24, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Humana Inc. (NYSE: HUM) as the Bull of the Day and Ferrellgas Partners (NYSE: FGP), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sony (NYSE: SNE), Campbell Soup (NYSE: CPB) and Advance Auto Parts Inc. (NYSE: AAP).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
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Humana Inc. (NYSE: HUM) posted strong first quarter earnings, beating both the Zacks Consensus Estimate and the prior-year earnings, owing to improved performance in the Employer Group and Health and Well-Being Services business segments. Humana benefited from the new rule of the health care reform, which led to an increase in the share repurchase authorization and Humana's 2011 outlook.
Humana also initiated a cash dividend to its shareholders on the strong outlook. The company's medical and specialty membership hiked on better-than-expected sales at the end of the quarter.
Overall, we believe that the increase reflects surplus cash flows generation, favorable prior-period claims development, and higher projected earnings for the company's segments. We retain our Outperform recommendation on Humana shares.
Ferrellgas Partners (NYSE: FGP), since the beginning of fiscal 2011, has already made four acquisitions. However, the partnership's results in the second quarter continued the past trend of poor earnings.
Moreover, we believe the absence of distribution growth for more than a decade has led the partnership to trade at a discount to its propane peers. We do not see any catalyst to change this situation in the near-term, which should affect the unit price going forward.
We also see increased competition for Ferrellgas from within and outside the industry. Thus, we have an Underperform recommendation on the stock.
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Delta to Trim Capacity Further
Euro Debt Fears Weigh on Stocks
In addition to lingering fears of Greek restructuring, Spain is in the news after the ruling party performed badly in regional elections, raising doubts on its ability to implement the tough austerity measures needed to ward off the need for a bailout. Renewed European concerns come at a time of growing anxieties about the U.S. growth picture.
We know how this plays out in the markets: the greenback strengthens at the expense of the common currency, pulling down commodities and stocks with it.
This week's busy economic calendar should help answer some of the questions that have cropped up about U.S. growth following a spate of recent soft readings. A strong Durable Goods report on Wednesday will help offset the decelerating momentum we saw in last week's industrial production and regional manufacturing surveys.
We will also get another look at the first-quarter GDP numbers on Thursday, originally reported at 1.8%, which will likely get revised upwards. Also important will be the Jobless Claims report on Thursday, where we want to see the recent downtrend towards the 400 thousand level remain in place.
The earnings season is effectively over, with only a handful of reports left. Sony (NYSE: SNE) announced a bigger than expected loss, driven largely by Japan's natural disaster. Campbell Soup (NYSE: CPB) beat EPS and matched top-line expectations.
With nothing else going on today, stocks will be reflecting the negative developments in Europe and the ongoing domestic growth debate. With none of these issues expected to be resolved soon, stocks will likely reflect this discourse through the summer months.
Advanced Auto Reports Flat Profits
Advance Auto Parts Inc. (NYSE: AAP) reported a profit of $109.6 million in the first quarter of fiscal 2011, which was flat compared with $109.4 million in the same quarter of prior fiscal year.
However, on per share basis, earnings improved 13% to $1.35 from $1.19 a year ago due to a decline in average shares outstanding to 81.0 million from 91.5 million in the first quarter of fiscal 2010. The auto parts retailer missed the Zacks Consensus Estimate by 4 cents per share.
The company maintained its profit based on aggressive store expansions, enabling better availability of parts to its customers, partially offset by increased supply chain costs.
Sales in the quarter inched up 4% to $1.90 billion, driven by a net addition of 138 stores during the past 12 months. It was lower than the Zacks Consensus Estimate of $1.92 billion. Sales per store increased to $1,697 from $1,619 a year ago. Comparable store sales gain declined significantly to 1.4% from 7.7% in the first quarter of fiscal 2010.
Gross margin improved 73 basis points to 50.5% from 49.8% in the first quarter of fiscal 2010. The improvement was attributable to enhanced merchandising and pricing capabilities, supply chain efficiencies and better availability of parts.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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