Zacks Bull and Bear of the Day Highlights: Pool, Excel Maritime Carriers, Hewlett-Packard, Dell and Safeway
CHICAGO, Feb. 23, 2012 /PRNewswire/ -- Zacks Equity Research highlights: Pool Corp. (Nasdaq: POOL) as the Bull of the Day and Excel Maritime Carriers (NYSE: EXM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Hewlett-Packard (NYSE: HPQ), Dell, Inc. (Nasdaq: DELL) and Safeway (NYSE: SWY).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Although Pool Corp. (Nasdaq: POOL) is expected to face tougher comparisons ahead amid weak growth in new pool construction and faltering consumer confidence, the company boasts a strong market position and earnings power. Pool is an acknowledged leader in the industry.
The potential for further market share gains and cost-containment initiatives augur well for the company. Pool's results reflect continued growth in its struggling green business. Amid tough business environment, Pool's revenue has been marching ahead.
The company also expects the market condition to improve beyond 2012. Hence, we rate the stock Outperform. Our six-month target price of $45.00 equates to 26.2x our earnings estimate for 2012. This price target implies an expected total return of 20.1% over that period.
We downgrade our recommendation on Excel Maritime Carriers (NYSE: EXM) to Underperform ahead of its fourth quarter of 2011 financial results. We believe the drybulk shipping industry has a gloomy outlook, facing serious challenges since spot vessel rates collapsed significantly.
The sole reason for this dismal condition is the sheer increase of newbuild ships under operation, which resulted in intense price competition. The spot rates of drybulk vessels have fallen to such low levels that even surging commodity prices in the Asian markets have failed to offset the loss of the vessel owners. We believe continuation of this pricing trend will certainly jeopardize the company's future financials.
In the last couple of quarters, Excel Maritime took a severe hit on its time charter equivalent rate. Additionally, its balance sheet is highly leveraged. We do not find any near-term catalyst.
Latest Posts on the Zacks Analyst Blog:
H-P Earnings Beat, Revs Miss
Times are tough these days for PC makers. Hewlett-Packard (NYSE: HPQ), which reported fiscal first quarter 2012 earnings after the bell Wednesday, beat the Zacks Consensus Estimate for earnings but is seeing its shares selling off in the after-market, similar to the way Dell, Inc.'s (Nasdaq: DELL) did yesterday.
Hewlett-Packard reported earnings of 92 cents per share, a 5.75% positive surprise, on revenues totaling $30 billion in the quarter. But this was a pretty low hurdle to get over; in fact, the Zacks Consensus Estimate for the quarter had not moved from 87 cents per share the entire quarter, despite 2 analysts upwardly revising estimates within the past month.
This is typical of H-P's relationship with the analysts covering the company: tepid, modest growth expected, and a tepid, modest beat on the bottom line. H-P has averaged a positive earnings surprise of 3.8% over the past 4 quarters.
So Why the Sell-Off?
Though the bottom line posted a beat, revenues missed. The Zacks Consensus was looking for $30.8 billion in sales for the quarter.
Further, guidance for H-P's Q2 fell to 90-91 cents, lower than the 95 cents expected from the Zacks Consensus. Also, consumer client PC sales fell 25% in the quarter, and consumer printer sales were down 15%. These are obviously not very good numbers, so the headline earnings beat looks to be masking some deeper issues at H-P.
Everyone knows CEO Meg Whitman is doing plenty of heavy lifting to get H-P back on track following the tenure of her predecessor Leo Apotheker. And the world's biggest PC maker is looking for volume growth to increase considerably in 2012 from the previous couple years. But just when H-P will finally gain some traction and see top-line growth is the question.
Earnings Preview: Safeway
Safeway (NYSE: SWY), a leading food and drug retailer in North America, is scheduled to report its fourth quarter and fiscal 2011 results on Thursday, February 23 before the opening bell. The current Zacks Consensus Estimate for revenues and earnings per share for the quarter are pegged at $13.5 billion and 64 cents, respectively. For fiscal 2011, earnings are expected to be $1.72 on revenues of $43.45 billion, according to the Zacks Consensus Estimate.
Safeway had witnessed sluggish revenue growth primarily due to unemployment, deflation and price competition, which makes budget-conscious shoppers more alert. However, the company expects the scenario to improve going forward, aided by better volume and pricing. We are also encouraged by the company's cost-saving activities, which is likely to improve margins further.
Moreover, Safeway intends to strengthen its presence in international markets. The company is expanding its international business, especially in Canada, Australia and the UK.
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
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=7158.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.
Share this article