Zacks Bull and Bear of the Day Highlights: Tesoro, Strayer Education, EI DuPont de Nemours & Company, The Dow Chemical Company and BASF SE

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Jan 26, 2011, 09:30 ET

CHICAGO, Jan. 26, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Tesoro Corporation (NYSE: TSO) as the Bull of the Day and Strayer Education (Nasdaq: STRA) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on EI DuPont de Nemours & Company (NYSE: DD), The Dow Chemical Company (NYSE: DOW) and BASF SE (Nasdaq: BASFY).

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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:

Bull of the Day:

Buoyed by favorable trends in the refining industry along with company initiatives to improve reliability and reduce operating costs, we are upgrading Tesoro Corporation (NYSE: TSO) shares to Outperform from Neutral.

An uptick in economic activity overseas and prospects for stronger fuel demand in the domestic market make us optimistic about the sector. 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.

Bear of the Day:

Strayer Education (Nasdaq: STRA) reported a 20% fall in new student enrollment for the winter 2011 term. The company now projects that if annual enrollment drops 5%, its revenue may remain flat or fall 1% and fiscal 2011 earnings may lie between $7.50 and $7.70 per share.

This is in sharp contrast to what management had predicted previously. Earlier, the company had forecast a rise in enrollment by 13%, revenue between 17% and 18% and earnings in the range of $11.30 to $11.50 per share. Following this, a negative sentiment is palpable among the analysts and we are witnessing a fall in the Zacks Consensus Estimates.

The current potential risk looming over the education sector is the regulation proposed by the Department of Education creating an uncertainty over student enrollment trends. Consequently, we downgraded our recommendation on the stock to Underperform.

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DuPont Beats 4Q Consensus

Net earnings of chemical giant EI DuPont de Nemours & Company (NYSE: DD) plunged 14.7% to $376 million or 40 cents per share in the fourth quarter of 2010 compared with $441 million or 48 cents in the prior-year period.

The decline in earnings is attributable to the patent expiration in the Pharmaceutical business which affected profits by 14 cents. Reported earnings, however, were ahead of the Zacks Consensus Estimate of 32 cents.

For the year 2010 the company's earnings stood at $3.28 per share compared with $1.92 per share in the prior year and beat Zacks estimates of $3.11 per share.

Quarterly revenues grew 15% to $7.4 billion on a 12% volume gain, driven by higher international sales and a 6% rise in selling prices. Sales exceeded the Zacks Consensus Estimate of $6.9 billion. For full year 2010, revenues grew 21% year over year to $31.5 billion at par with the Zacks Consensus Estimates.

DuPont saw sales volumes rise in all the business segments, with the Elec.

DuPont saw sales volumes rise in all the business segments, with the Electronics & Communications and Performance Chemicals reporting a pronounced 37% and 18% year-over-year volume expansion. DuPont recorded a 19.5% year-over-year rise in costs to $5.9 billion.

Guidance

DuPont raised its earnings guidance for full year 2011 to a range of $3.45 to $3.75 per share versus its previous guidance of $3.30 to $3.60 per share. The earnings outlook reflects the expectation for continued steady global economic growth with increasing industrial production, favorable North American agricultural conditions, and the company's further penetration of developing markets. The company assumes earnings from Pharmaceuticals to decline by about $280 million pre-tax versus 2010.

DuPont entered into a definitive agreement for the acquisition of Danisco, expected to be completed early in the second quarter of 2011. The impact of this acquisition could reduce 2011 earnings by 30 cents to 45 cents per share on a reported basis.

Zacks Recommendation

DuPont has focused on aggressive cost-cutting, and plans to capture $1 billion each by way of fixed costs and working capital productivity gains during 2011-2013. It is executing strategies for further development and growth of new products, particularly for agriculture, photovoltaics, alternative energy and materials. Furthermore, the company's focus on the emerging markets, along with a strong performance in the Agriculture & Nutrition segment, is expected to generate top line growth in the future.

However, Pharmaceutical royalties declined after the expiration of patents and negatively affected profits in the reported quarter.

Its competitors include The Dow Chemical Company (NYSE: DOW) and BASF SE (Nasdaq: BASFY).

Currently, DuPont has a short-term (1 to 3 months) Zacks #3 Rank and a long-term (6 months and longer) Neutral recommendation.

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.

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