Zacks Bull and Bear of the Day Highlights: Marathon Petroleum, CSN, Research In Motion, Apple and Google
CHICAGO, April 12, 2012 /PRNewswire/ -- Zacks Equity Research highlights Marathon Petroleum Corp. (NYSE: MPC) as the Bull of the Day and CSN (NYSE: SID) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Research In Motion Ltd. (Nasdaq: RIMM),Apple Inc (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOG).
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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 are initiating coverage on Marathon Petroleum Corp. (NYSE: MPC) with an Outperform recommendation and a target price of $51. Spun out of parent Marathon Oil Co. in June 2011, the company is a leading refiner and marketer of petroleum products in the U.S.
Our bullish investment theme stems from Marathon Petroleum's scale advantage, impressive asset quality, and an extensive midstream/retail network that diversifies its portfolio and provides more stable revenue streams. We believe management's recently approved $2 billion share repurchase program and potential formation of a midstream MLP could further boost shareholder value.
Marathon Petroleum's low debt ratio and hefty cash balance add to the positive sentiment. All in all, we believe the company is well positioned going forward and view it as an attractive investment.
Brazilian steel company Companhia Siderurgica Nacional, or CSN (NYSE: SID) posted satisfactory fourth quarter results with EPADR of roughly 31 cents per share, much above the Zacks Consensus Estimate of 20 cents per share. Despite a few positives, there are a few irrefutable downsides pertaining to the stock of the company at present.
These downsides include rising costs of goods sold, presence of serious competition and foreign market fluctuations, which are adversely affecting sales of the company in the clouded fiscal scenario. Earnings estimates for 2012 have decreased on a year over year basis.
Thus, we are downgrading shares to an Underperform recommendation from a previous sideline view on the stock at present. Our target price on the stock is $8.50, based on a 2012 P/E multiple of 8.6x.
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Earnings Scorecard: Research In Motion
Research In Motion Ltd. (Nasdaq: RIMM) reported dismal fourth quarter 2012 financial results, with both earnings per share (EPS) and revenue missing the Zacks Consensus Estimates. Moreover, the company reported a weak financial outlook for the first quarter of fiscal 2013.
Fourth Quarter Highlights
GAAP net loss in the reported quarter of fiscal 2012 was $125 million or 24 cents per share compared with a net income of $934 million or $1.78 per share in the year-ago quarter. Fourth quarter adjusted EPS stood at 80 cents, a penny shy of the Zacks Consensus Estimate.
Total revenue in the fourth quarter of fiscal 2012 was $4,190 million, down 24.6% year over year and also missed the Zacks Consensus Estimate of $4,528 million.
After adjusting for inventory provision, gross margin for the company stood at 39.8%, well below the 44.2% recorded in the year-ago quarter. Research In Motion sold 11.1 million BlackBerry devices, down 21% sequentially. The company also sold over 500,000 BlackBerry Playbook tablets, up 70% sequentially. However, Playbook tablets were sold at a discounted rate of $200 compared with its original price of $500.
Agreement of Analysts
Of the 33 analysts covering the stock in the last 7 days, none revised their estimates for the first quarter of 2013. Similarly, for second quarter of fiscal 2013, none out of the 32 analysts revised the estimates.
Likewise, for fiscal 2013, none of the 32 analysts covering the stock in the last 7 days changed the estimates. However, for fiscal 2014, out of the 25 analysts covering the stock in the last 7 days, only one analyst lowered the EPS estimate.
Currently, the Zacks Consensus EPS Estimate for the first quarter of 2013 is pegged at 43 cents, reflecting an annual decline of 67.67%. Similarly, for the second quarter of 2013, the current Zacks Consensus EPS Estimate of 33 cents indicates a year-over-year decline of 59.14%.
We believe that analysts by and large have a defensive mindset given the uncertainty surrounding the core BlackBerry business. Moreover, the delayed launch of user-friendly QNX-based BlackBerry smartphones further increase uncertainty about the success of BlackBerry handsets.
Magnitude of Estimate Revisions
Given the limited estimate revisions, the Zacks Consensus Estimate for the first quarter 2013 remained at 43 cents. However, for the second quarter of fiscal 2013, it dropped a penny during the last 7 days.
For fiscal 2013, the Zacks Consensus Estimates remains unchanged at $1.89 while for fiscal 2014, it dropped 3 cents to $2.04.
Earnings Surprises
The company's recent performance history has not been that great. While earnings beat the Zacks Consensus Estimate in two of the last four quarters, the average surprise during the last four quarters stood at a negative 1.62%.
Estimate revision trends also indicate that there is no upside or downside potential for the current and following quarters. However, fiscal 2013 and fiscal 2014 reflect downside potentials of 4.23% and 8.33%, respectively.
Our Recommendation
The nightmare for Research In Motion started when Apple Inc'.s (Nasdaq: AAPL) iPhone hit the market. The situation worsened once Google Inc. (Nasdaq: GOOG) launched its Android software and several handset manufacturers adopted that operating system. Currently, Research In Motion's BlackBerry operating system is obsolete and continues to lose market share. Moreover, the recent launch of Apple's iPhone 4S has further hampered its market share. We, therefore, maintain our long-term Underperform recommendation for Research In Motion Ltd.
Currently, Research In Motion Ltd has a Zacks #5 Rank, implying a short-term Strong Sell rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
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