Zacks Bull and Bear of the Day Highlights: V.F. Corporation, DryShips, Ford Motor, General Motors Company and H&R Block
CHICAGO, April 11, 2011 /PRNewswire/ -- Zacks Equity Research highlights V.F. Corporation (NYSE: VFC) as the Bull of the Day and DryShips, Inc. (Nasdaq: DRYS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford Motor Co. (NYSE: F), General Motors Company (NYSE: GM) and H&R Block Inc. (NYSE: HRB).
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V.F. Corporation's (NYSE: VFC) fourth-quarter 2010 earnings of $1.78 per share outpaced the Zacks Consensus Estimate, and jumped almost 10% from the prior-year quarter on the heels of robust sales across all brands and improved margins. We believe the acquisition of Rock and Republic will allow V.F. Corp. to compete in the premium-denim space dominated by Los Angeles designers.
Furthermore, the company's capital strength allows it to sustain its focus on international expansion, increasing direct-to-consumer business, and investments in key brands going forward. In addition, V.F. Corp. expects full-year 2011 earnings in the range of $7.00 to $7.10 per share.
Currently, we are maintaining a long-term Outperform rating on the stock. Our target price of $108.00, 15.3x 2011 EPS, reflects this view.
We reiterate our Underperform recommendation on DryShips, Inc. (Nasdaq: DRYS). The company's fourth quarter of fiscal 2010 financial results were well below the Zacks Consensus Estimates. The drybulk shipping industry is facing serious challenges, where the vessel rate collapsed even below the rate during the recession.
We believe the sole reason for this dismal condition is the sheer increase of ships under operation that have resulted in intense price competition. The spot rate has fallen to such a low level that even surging commodity prices in the Asian markets failed to offset the loss of the vessel owners.
We believe continuation of this pricing trend may significantly jeopardize DryShips future financials. The company is highly leveraged with nearly $2.33 billion of net debt at the end of fiscal 2010. We also remain skeptical regarding the long-term growth prospect of the oil tanker market.
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China Buys More Fords
Ford Motor Co. (NYSE: F) posted a 20% rise in sales to 53,440 vehicles in China during March. The company's joint venture partner in China, Chongqing Changan Automobile delivered 42,157 vehicles during the month. This has brought the total sales to 140,566 vehicles for the first quarter of the year, an increase of 19% from the year-ago quarter.
In contrast, Ford recorded a 19% gain in sales to 212,777 vehicles during the same month in the U.S. The company's sales were driven by small cars including Fiesta subcompact, new Explorer crossover, Fusion sedan and Escape small SUV. Ford F-Series remained the best-selling vehicle in the U.S. Its sales increased 25% to 53,272 units during the month.
Recently, Ford revealed its plan to invest 7 billion yuan ($1.1 billion) in China in order to expand production capacity. The automaker will enhance the production capacity at its new plant in Chongqing, operated by Changan Automobile Co, to 650,000 units by 2012. It will also increase power train and engine capacity to 750,000 units from 400,000 units in the country.
Ford has been pursuing a major expansion plan in the emerging countries, including Argentina, Brazil, China, India and Thailand. Through the expansion plan, the automaker aims to tap the growing market potential in the countries, especially those in Asia. Since last year, Ford has invested $510 million in China and $500 million in India as part of its expansion plan.
Last year, Ford has added 40 new dealerships in China as a part of its expansion plan. Further, the automaker plans to add 66 new dealerships by the end of the year, raising its total dealerships to 340 in the country.
Ford's sales in China grew 40% in 2010 driven by higher sales of Focus compact and Fiesta subcompacts. Changan Ford sold 403,283 vehicles, an increase of 34% from the last year. Meanwhile, Ford's commercial vehicle venture in China, Jiangling Motors Corp., reported an impressive 56% rise in sales to 178,999 units.
Ford's domestic rival, General Motors Company (NYSE: GM), posted a 29% increase in sales in the country to 2.35 million vehicles in 2010. J.D. Power and Associates has predicted sales in China to grow by 10.5% for 2011.
H&R Block Reports Interim Results
H&R Block Inc. (NYSE: HRB) reported a 5.7% year over year increase in total tax returns prepared for the period November 1, 2010 to March 31, 2011. Total retail returns prepared grew 2.6%, while total digital returns increased 13.3% (including 29.2% increase in online filings).
The 29.2% growth in online filings and a 1.4% increase in software-based returns were somewhat offset by a 10.2% decline in returns prepared through the Free File Alliance. Total digital tax returns, including online, software and Free File Alliance, increased 13.3%. Total digital returns excluding Free File Alliance increased 17.0%.
Net retail tax preparation fees improved from down 4.1% at February 28 to down 2.2% at March 31. The improvement resulted from continuing growth in tax return volumes during the month. Net retail tax preparation fees for the month of March improved 3.7% year over year.
For fiscal 2011, H&R Block projects 2%-2.5% year over year increase in total retail tax returns prepared. However, the company estimates retail net average fee per return to decline 2.5 to 3.5 percentage points from fiscal 2010 level.
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