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For Immediate Release
Chicago, IL – September 14, 2012 – Zacks Equity Research highlights Cabela's, Inc. (CAB - Analyst Report) as the Bull of the Day and Advance Auto Parts (AAP - Analyst Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Patterson Companies (PDCO - Analyst Report), Henry Schein Inc. (HSIC - Analyst Report) and Sirona Dental Systems (SIRO - Snapshot Report).
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:
Cabela's, Inc. (CAB - Analyst Report) second-quarter 2012 earnings of $0.47 per share beat the Zacks Consensus Estimate of $0.39, and surged 46.9% from the prior-year quarter. The quarter witnessed healthy revenue growth and profitability at its retail segment, improved performance at Cabela's CLUB Visa program, increased merchandise gross margin and boost in market share.
Total revenue grew 11.6% to $627.3 million, whereas merchandise gross margin expanded 70 basis points to 37.4% during the quarter. Driven by improving trends, management expects earnings to go beyond the current estimates by 1% to 3% in fiscal 2012. The company looks to enhance its retail square footage growth is focusing on its next-generation store and new Outpost format.
Moreover, the company also remains committed on alleviating bad debt risk in its credit card business. The gradual improvement in the economy has lowered delinquencies and charge-offs.
Bear of the Day:
Advance Auto Parts (AAP - Analyst Report) aims to improve its supply chain and vendor terms by pursuing an aggressive store expansion strategy. However, the sluggish economy, volatile gasoline prices and pricing are some of the challenges facing the company. AAP's profits fell 8.2% in the second quarter of 2012, missing the Zacks Consensus Estimate by $0.06 per share.
The company's revenues also dipped marginally by 1.3% due to lower store sales and lagged the Zacks Consensus Estimate of $1.48 billion. These factors have led us to downgrade our recommendation on the stock from Neutral to Underperform and set a target price of $64.00.
The stock is trading at a discount to the peer group, based on forward earnings estimates. The current P/E, which is close to the lower-end of the historical range, is at a 14% discount to the peer group for 2012.
Latest Posts on the Zacks Analyst Blog:
Patterson Cos Acquires IDS
Patterson Dental, the dental division of Minnesota-based distributor of dental, veterinarian and rehabilitation medical supplies,Patterson Companies (PDCO - Analyst Report), recently announced the acquisition of Iowa Dental Supply, LLC (IDS) a full service distributor of dental products. The financial details of this all-cash transaction were not disclosed.
Des Moines, Iowa-based IDS caters to Midwestern dental markets such as Iowa, South Dakota, Nebraska, Illinois and Missouri. Its long-established reputed sales force comprises 11 field representatives and equipment specialists.
The acquisition of IDS should boost Patterson Dental’s foothold in the Midwestern U.S. markets and provide a competitive edge to the company. Patterson competes head-to-head with Henry Schein Inc. (HSIC - Analyst Report) in the dental market.
With IDS generating annual revenues of $13 million in 2011, management at Patterson Dental expect the deal to be modestly accretive in fiscal 2013. In its first quarter fiscal 2013 results, Patterson had forecast its earnings to be in the range of $2.10–$2.16 per share for the fiscal year. The company also anticipates that the integration process will be quick and hassle-free.
The acquisition is in line with the company’s long-term strategy to grow through internal expansion and acquisitions. Earlier, in April 2012, Patterson Medical acquired Australia-based distributor of rehabilitation, physiotherapy, and mobility products, Surgical Synergies Pty Ltd. for $10 million to expand its market size in Australia and New Zealand.
One of the two largest distributors of dental offerings in North America, Patterson Dental provides a wide range of consumables, equipment and software, and value-added services to its customers. Although patient demand for dental services was tepid at the height of recession, Patterson should benefit from the gradual recovery in the dental market.
We also remain upbeat about the prospects of the dental equipment business (especially CEREC) and the distribution agreement with Sirona Dental Systems (SIRO - Snapshot Report). The company’s focused promotional activities should result in higher demand for this product category moving ahead.
However, consumable sales from the dental business are expected to be a drag due to the weak economy, high unemployment rate and lack of consumer confidence. We currently have a Neutral recommendation on the stock, which carries a short-term Zacks #3 Rank (Hold rating).
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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