Companhia Brasileira de Distribuicao

Companhia Brasileira de Distribuicao (CBD - Analyst Report) is expected to show earnings growth of 23.22% this year as the Brazilian economy rebounds from the global recession. Analysts expect 5-year sales growth of 19.75%.

Company Description

Companhia Brasileira de Distribuicao, otherwise known as Grupo Pão de Açúcar, is one of Brazil's largest retailers. The company operates over 600 stores in 14 Brazilian states with the State of Sao Paulo being its largest market at 60% of total sales.

The company operates food stores under the Pão de Açúcar and Barateiro names, hypermarkets under the name Extra, and home appliance stores under the Extra Electro name.

In June, the company also acquired Globex for R$1.16 billion, or US$590 million. Globex operates the Ponto Frio chain of electronics and home appliances and has a strong Internet presence in Brazil.

Third Quarter Same-store Sales Jumped 9.7%

On Oct 13, Grupo Pão de Açúcar reported third quarter gross sales which rose 35.8% to R$6,866.2 million compared to the year ago period.

Net sales jumped 38.2% year over year. Excluding the recently acquired Ponto Frio operations, gross and net sales climbed 11.8% and 15.1%, respectively.

Excluding Ponto Frio stores, which were just acquired, same store sales rose 9.7% over the year ago period. Non-food sales grew by 11.9% with electronics, household appliances, general merchandise and drugstore products boosting sales.

Food sales climbed 9%, led by personal care and household cleaning products.

For the Ponto Frio division, gross sales were up 12% year over year due to greater accessibility to credit as current holders of the Grupo Pão de Açúcar credit card were able to use it at the Ponto Frio stores.

Additionally, the division saw a major contribution to sales from the Pontofrio ecommerce site.

Full Year Zacks Consensus Estimates Rise

The 3 covering analysts are bullish about the rest of 2009. 1 out of 3 raised full year estimates in the last 30 days. The Zacks Consensus rose 6 cents to $2.19. That is up 25.9% from the estimate of $1.74 just 90 days ago.

Grupo Pão de Açúcar is scheduled to report third quarter earnings on Nov 4.

Growth Above the Industry Average

Analysts expect 5-year earnings growth of 22.3%, well above the industry average of 12.8%.

The company is a Zacks #1 Rank (strong buy) stock. In addition to its strong expected growth, shareholders are rewarded with a dividend yielding 1.00%.

CBD Has Tripled Off Its Lows

The stock has really rebounded from its October and March lows. The stock traded as low as $21.65 on Oct 27, 2008. It is currently trading with a forward P/E of 29.4.

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