Zacks Bull and Bear of the Day Highlights: Walgreen, Skechers, General Electric Company, Bank of America and Skyworks Solutions

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Jan 24, 2011, 09:30 ET

CHICAGO, Jan. 24, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Walgreen Co. (NYSE: WAG) as the Bull of the Day and Skechers U.S.A. (NYSE: SKX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on General Electric Company (NYSE: GE), Bank of America Corporation (NYSE: BAC) and Skyworks Solutions, Inc. (Nasdaq: SWKS).

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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:

Walgreen Co. (NYSE: WAG) reported an EPS of $0.62 in the first quarter of fiscal 2011, well above both the Zacks Consensus Estimate of $0.54 and the year-ago quarter's $0.49.

The company's strategy of slow-paced store expansion along with operating expertise has made it a leader in the retail drug store industry. We are also encouraged by the company's progress in customer-centric retailing (CCR) rollout and cost-saving initiatives. Meanwhile, the company is trying to grab a share of the growing US immunization market.

Although Walgreen has been affected due to high unemployment and lower discretionary spending, we expect the situation to improve gradually as the economy recovers. Subsequent to first quarter results, we have raised estimates for both revenues and earnings. Given these factors, we upgrade the stock to Outperform.

Bear of the Day:

Skechers U.S.A. (NYSE: SKX) third-quarter 2010 results missed the Zacks expectations for the top and bottom lines, reflecting sluggish sales trends and order cancellations. Consequently, total inventories increased 70.3% to $326.7 million, over the prior-year quarter.

Management hinted that extended delivery times also led to the inventory pile-up. However, Skechers indicated that it would try to lower its inventory level over the next two quarters, while generating reasonable margins.

We believe that international business should act as a catalyst to normalize the inventory level. Currently, we are maintaining our Underperform recommendation on the stock until we find any catalyst triggering a change in our opinion.

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General Electric Outperforms

General Electric Company (NYSE: GE) released its fourth quarter 2010 earnings results before the opening bell today, reporting earnings per share from continuing operations of $0.36, above the Zacks Consensus Estimate of $0.32, up 33% year over year. This was the third consecutive quarter in which the company witnessed strong growth in earnings.

For full year 2010, earnings per share from continuing operation were $1.15, beating the Zacks consensus Estimate by 3 cents and increasing by 15% from 2009.

Revenue

Total revenue in the quarter inched up for the first time in nine quarters by 1% to $41.4 billion, above the Zacks Consensus Estimate of $33.7 billion. The company continues to benefit from the improving economic environment. Full year revenues were $150.2 billion, down 3% year over year but above the Zacks Consensus Estimate of $144.4 billion.

Total orders in the quarter increased by 12% year over year, with the total backlog reaching a record level of $175 billion, up $3.1 billion. Orders for equipments increased by 20% and for services were up 5%. Orders in Energy Infrastructure surged 4%.

Segment Details

Energy Infrastructure revenue for the quarter decreased by 3% year over year to $11.0 billion. Technology Infrastructure revenue was $10.9 billion, up 9%. Revenues at NBC Universal increased by 12% to $4.8 billion.

GE Capital revenue declined by 4% to $11.9 billion, while Home & Business Solutions revenue increased by 5% to 2.3 billion.

BofA Disappoints on Writedown

Bank of America Corporation's (NYSE: BAC) fourth quarter earnings came in at 4 cents per share, substantially lower than the Zacks Consensus Estimate of 19 cents. However, this compares favorably with the loss of 60 cents in the prior-year quarter.

Earnings for the reported quarter excluded a previously announced goodwill impairment charge of $2 billion related to its Home Loans and Insurance business. Considering this charge, BofA reported a net loss of $1.2 billion or 16 cents per share, compared with a net loss of $194 million or 60 cents per share in the year-ago quarter. Results for the year-ago quarter included a $4 billion charge related to Troubled Asset Relief Program (TARP).

Results were also marred by a $3.0 billion increase in provision expense related to the Government Sponsored Enterprises (GSEs) and $1.5 billion in litigation expenses.

Lower credit costs, higher net interest income and increased card income were among the positives. However, reduced mortgage banking income, lower non-interest income and higher non-interest expense were the downside.

For full year 2010, excluding a goodwill impairment charge of $12.4 billion, the company earned 86 cents per share, compared with a loss of 29 cents in 2009. Results missed the Zacks Consensus Estimate of $1.03.

Skyworks Misses by a Penny

Skyworks Solutions, Inc. (Nasdaq: SWKS) posted a net income of $60.9 million or 32 cents in the first quarter of fiscal 2011, more than double from a net income of $28.0 million or 16 cents in the year-ago quarter. Excluding one-time items, but including stock-based compensation expenses, net income per share came in at 38 cents, missing the Zacks Consensus Estimate by a penny.

Revenues of $335.1 million were up 37% from the year-ago quarter and up 7% sequentially. The reported was slightly ahead of the management's guidance of $330 million – $335 million and beat the Zacks Consensus Estimate of $332 million.

Skyworks continues to benefit from strong underlying demand in the mobile Internet market driven by market share gains and new product ramps. The market for smartphones is growing by leaps and bounds – four times the growth rate of the traditional cellular handset. Skyworks continues to benefit from the rising tide of increasing radio frequency (RF) content associated with 3G and 4G platforms.

The products from Skyworks support all smartphone and tablet operating systems including Android, Symbian, Windows Mobile and others.

Skyworks continues to gain traction on the network infrastructure side of the mobile Internet connection as operators install new base stations, new routers, and back-haul equipment to expand coverage of data services and prepare for next generation LTE deployments. As carriers like Verizon and AT&T accelerate their LTE plans, Skyworks expects a solid opportunity for growth in the coming years with its broad product portfolio.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

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