For Immediate Release
Chicago, IL – October 16, 2012 – Zacks Equity Research highlights Pinnacle West Capital Corporation (PNW - Analyst Report) as the Bull of the Day and AmBev's as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Volkswagen AG (VLKAY - Snapshot Report), General Motors Company (GM - Analyst Report) and Ford Motor Co. (F - 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:
Bull of the Day:
We have upgraded our recommendation on Pinnacle West Capital Corporation (PNW - Analyst Report) to Outperform from Neutral owing to the company's strong financial position, improvement in credit rating along with steady inorganic growth strategy. We remain confident about Arizona's fundamentals, which are allowing Pinnacle West to achieve higher levels as the economic environment improves.
The company expects annual customer growth of approximately 2% for 2012 through 2015 will benefit its results. In addition, favorable renewable energy prospects and the recent rate case approval will ensure increased returns.
Over the last five years, the company's shares have traded in the P/E multiple range of 11.4x to 17.9x on trailing 12-month earnings. Our target price of $63.00 is based on the P/E multiple of 18.4 on 2012 EPS.
Bear of the Day:
Anticipating negative impact on AmBev's future financial performance due to Brazilian government's decision to raise taxes on beer, we are maintaining our long-term Underperform recommendation on AmBev. To shield against the higher taxes, AmBev might inflate its prices in an effort to somewhat offset the negative impact, which may result in lower volumes.
Consequently, the net income may be pulled down. Moreover, the company reported a lower-than-expected second-quarter 2012 earnings of $0.29 per share, missing the Zacks Consensus Estimate of $0.35. Intense competition from global and regional players, coupled with seasonal nature of business, may undermine the company's future operating performance as well.
Our long-term Underperform recommendation on the stock indicates that it would perform below the broader market. Our target price of $36.00, 21.6x 2012 EPADR, reflects this view.
Latest Posts on the Zacks Analyst Blog:
Earnings Preview: Alcoa
Volkswagen Cuts Production Goal
In the wake of the economic uncertainties in Europe, Volkswagen AG (VLKAY - Snapshot Report) recently announced that it will halt the production of Passat cars for a week in Germany, according to Reuters. The move is a part of the company’s initiative to reduce its group output by 300,000 vehicles this year.
According to sources, the company has reduced the global production target for the group to 9.4 million vehicles from the previous estimate of 9.7 million. However, the target is well above the previous year’s output of 8.5 million vehicles. In addition, owing to the declining orders from the customers, the company also plans to close its production facility in Emden in northwestern Germany for a couple of days.
One of the company’s major competitors, General Motors Company (GM - Analyst Report), also remains challenged by the ongoing financial crisis in the euro zone. Its European operation Opel expects to incur an operating loss of €1 billion ($1.3 billion) in 2012 due to fewer-than-anticipated car sales.
Ford Motor Co. (F - Analyst Report), which also competes with Volkswagen, expects to lose between $500 million and $600 million in 2012 in the 19 European markets covered by the automaker, owing to the ongoing debt crisis in the region. Ford recorded a loss of $27 million in 2011.
Volkswagen, in the second quarter of 2012, registered a 20% increase in earnings per share to €12.05 ($15.2) from €10.04 per share in the corresponding quarter of 2011. Total revenues went up 19% year over year to €48.1 billion ($60.4 billion).
Headquartered in Wolfsburg, Germany, Volkswagen is the manufacturer and distributor of automobiles globally. The company operates in Europe, North America, South America, and the Asia-Pacific.
Currently, Volkswagen retains a Zacks #3 Rank, which translates into a short-term 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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=7158.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339