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For Immediate Release
Chicago, IL – November 30, 2011 – Zacks Equity Research highlights Cabela's, Inc. ( CAB - Analyst Report ) as the Bull of the Day and Willis Group Holdings, Plc ( WSH - Analyst Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Guess? Inc. ( GES - Analyst Report ) , Abercrombie & Fitch Co. ( ANF - Analyst Report ) and Gap Inc. ( GPS - Analyst Report ) .
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Cabela's, Inc. ( CAB - Analyst Report ) third-quarter 2011 earnings of $0.50 per share beat the Zacks Consensus Estimate of $0.44, and surged 61.3% from the prior-year quarter. The quarter witnessed healthy revenue growth and profitability at its retail segment, sturdy performance at Cabela's CLUB Visa program, strong merchandise gross margin and increased market share.
Merchandise gross margin expanded 140 basis points to 35.9% during the quarter. Management reiterated its long-term goal of increasing the margin by 200-300 basis points. Driven by improving trends, the company now expects earnings to beat the consensus in fiscal 2011 and increase at a low double-digit rate in fiscal 2012.
The company also remains focused on alleviating bad debt risk in its credit card business. The gradual improvement in the economy has lowered delinquencies and charge-offs.
We are downgrading our recommendation on Willis Group Holdings, Plc ( WSH - Analyst Report ) to Underperform from Neutral due to the headwind from The Loan Protector business that is expected to weigh on North American results. The soft insurance market is likely to continue.
Additionally, the weakness in the US economy will remain a headwind and restrict any significant top-line growth in the company. Willis also expects to incur pre-tax charges of approximately $160 million in 2011, up from $130 million expected earlier.
Our six-month target price of $31.00 equates to about 11.2x our earnings estimate for 2011. This target price along with an annual dividend of $1.04 implies an expected negative return of about 8% over that period, which is consistent with our Underperform recommendation.
Latest Posts on the Zacks Analyst Blog:
Earnings Preview: Guess? Inc.
Guess? Inc. ( GES - Analyst Report ) , one of the world’s leading designer and distributor of lifestyle apparels, is scheduled to report its third quarter 2012 financial results before the opening bells on November 30, 2011.
The current Zacks Consensus Estimate for the quarter’s earnings is pegged at 74 cents a share. The Zacks Consensus Estimate projects revenues for the quarter to come in at $658 million.
Second Quarter 2012 Recap
Guess? Inc., which faces stiff competition from Abercrombie & Fitch Co. ( ANF - Analyst Report ) and Gap Inc. ( GPS - Analyst Report ) , posted second quarter 2012 adjusted earnings per share (EPS) of 84 cents, which surpassed the Zacks estimate by 3 cents. It also exceeded the year-ago earnings of 72 cents by 16.7%.
Revenues in the quarter soared 17.3% year over year to $677.2 million. In constant dollar terms, net revenue went up 9.5% from the previous year.
Operating income grew 17.3% to $113.0 million, reflecting favorable currency, volume/mix gains and lower overheads.
Operating Income margin remained flat with the prior year quarter at 16.7%. Product margin climbed up owing to higher relative occupancy, distribution and selling expenses.
Read The Whole Story at Guess? Beats; Profits Overseas
Based on the results posted in the second quarter, the company estimated the third quarter diluted earnings to be in the range of 71 cents to 74 cents. For fiscal 2012, the company expects earnings in the range of $3.25 to $3.35 and GAAP diluted earnings per share between $3.06 and $3.16.
Third-Quarter 2012 Zacks Consensus
Earnings estimates for the third quarter of 2012, as provided by the analysts, range from a low of 70 cents to a high of 77 cents. Thus, the current Zacks Consensus Estimate for the quarter is pegged at 74 cents per share, reflecting a year-over-year decline of one penny.
Over the past 30 days, none of the analysts have revised the earnings estimate. Hence, the Zacks Consensus Estimate did not change. However, the estimate increased by 1 penny over the last 90 days.
Earnings History: Ahead of Zacks
With respect to earnings surprises, Guess? topped the Zacks Consensus Estimate in all the preceding four quarters. Over the last four quarters, the earnings surprise ranged from 3.70% to 27.12%, with the average earnings surprise being 15.14%, suggesting that Guess? has always outperformed the Zacks Consensus Estimate over that period.
The company’s in-house team of dedicated designers and product specialists enable the company to stay ahead in the face of changing lifestyle and fashion trends by bringing innovative and unique products to its customers. However, stiff competition from numerous manufacturers, importers and distributors; having significantly greater financial, distribution, advertising and marketing resources concerns us.
Currently, we prefer to rate the stock as Neutral. However, Guess? holds the Zacks #4 Rank, which translates into a short-term 'Sell' rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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