Zacks Bull and Bear of the Day Highlights: Tesoro, Campbell Soup, Benihana, McCormick & Schmick's Seafood Restaurants and P.F. Chang's China Bistro
Apr 06, 2011, 11:49 ET
CHICAGO, April 6, 2011 /PRNewswire/ -- Zacks Equity Research highlights Tesoro Corp. (NYSE: TSO) as the Bull of the Day and Campbell Soup Co. (NYSE: CPB) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Benihana Inc (Nasdaq: BNHN), McCormick & Schmick's Seafood Restaurants Inc. (Nasdaq: MSSR) and P.F. Chang's China Bistro Inc. (Nasdaq: PFCB).
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Supported by continued favorable trends in the refining industry, along with its initiatives to improve reliability and reduce operating costs, we are maintaining our Outperform recommendation on Tesoro Corp. (NYSE: TSO) shares. We are optimistic about the sector given the improvement in economic activity overseas and prospects for stronger fuel demand in the domestic market.
Additionally, we believe Tesoro's strategic actions to improve its performance and competitiveness in a cost-effective manner will drive the company's profitable growth and boost its stock valuation. Tesoro's scale and diversification benefits, afforded by its portfolio of seven refineries, add to the positive sentiment.
As such, we believe Tesoro is well positioned going forward and view it as an attractive investment. Our $33 price objective reflects a 2011 P/E multiple of 14.8x.
Campbell Soup Co. (NYSE: CPB) posted second-quarter 2011 earnings of $0.71 that remained in line with the Zacks Consensus Estimate but declined 4% from the prior-year period. Due to sluggish demand in the U.S., the sales of U.S. Soup, Sauces and Beverages division and North America Food Services division inched down 4% and 1%, respectively.
Moreover, Campbell is highly leveraged, which could adversely affect its credit worthiness and make it more susceptible to macro-economic factors and competitive pressures. Additionally, intense competition from other established players and exposure to unfavorable foreign currency translations undermines the company's growth prospects.
Consequently, we have downgraded our recommendation on the stock to Underperform from Neutral. Our long-term Underperform recommendation on the stock indicates that it will perform well below the broader market. Our target price is $30.00 or 12.4x of 2011 EPS.
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Benihana Reports Higher Sales
The largest U.S. chain of Japanese restaurants, Benihana Inc (Nasdaq: BNHN), posted restaurant sales of $27.9 million for the four-week period ending March 27, 2011, up 7.0% from $26.1 million recorded in the year-ago period. The increased sales were driven by higher customer visitation.
The company's comparable restaurant sales climbed 7.0% for the same period, representing the fourteen consecutive period of growth. In the first and second four-week period of the fourth quarter of 2011, same-store sales spiked up 4.4% and 5.1%, respectively.
The comparable restaurant sales jumped 9.9% at Benihana Teppanyaki restaurants, on the back of higher guest count (up 8.6%) resulting from the Benihana Teppanyaki Renewal Program. In the first and second four-week period, restaurant sales climbed 5.7% and 6.8%, respectively.
The same-store sales also increased 3.7% at RA Sushi restaurant benefiting from higher traffic in the third four-week period of the fourth quarter of 2011. In the first and second four-week period, same-store sales at RA Sushi restaurant rose 5.2% and 1.2%, respectively.
However, due to inclement winter weather in New York, same-store sales plummeted 2.7% at Haru, but were less than 6.1% drop recorded in the first four-week period ending January 30, 2011. In the second four-week period ending February 27, 2011, same store-sales jumped 2.1% at Haru.
Store operating weeks during the period were 0.5% lower than the year-ago period.
For the twelve-week period, Benihana reported restaurant sales of $81.4 million, up 5.6% year over year, driven by company-wide comparable restaurant sales growth. Benihana recorded sales growth of 6.3% at Benihana Teppanyaki and 3.4% at RA Sushi, but witnessed a drop of 2.7% at Haru.
The company has a Zacks #2 Rank, which implies a short-term Buy rating on the stock. We also reiterate our long-term Neutral recommendation.
Benihana's prime competitors are McCormick & Schmick's Seafood Restaurants Inc. (Nasdaq: MSSR) and P.F. Chang's China Bistro Inc. (Nasdaq: PFCB).
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