For Immediate Release
Chicago, IL – November 5, 2012 – Zacks Equity Research highlights Bayer AG's (BAYRY - Analyst Report) as the Bull of the Day and Universal Forest Products (UFPI - Analyst Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Macy’s Inc. (M - Analyst Report), J. C. Penney Company Inc. (JCP - Analyst Report) and Saks Incorporated .
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:
Bayer AG's (BAYRY - Analyst Report) earnings per share during the third quarter of 2012 came in at EUR1.68 (approx $1.50) compared to EUR1.12 (approx. $1.58) in the year-ago period. The company recorded an 11.5% (5.5% on an adjusted basis) growth in revenues to 9,665 million. Growth was witnessed across all major divisions at Bayer.
Bayer continues to expect 2012 earnings to increase by 10% year over year. We are impressed by Bayer's efforts to develop its pipeline. We are positive on Bayer's decision to buy nutritional supplement company Schiff Nutrition International.
Moreover, the decision of Bayer's HealthCare unit to buy Teva's animal health business in the U.S. is also a positive move. In view of these positives, we retain our Outperform recommendation on the stock.
Bear of the Day:
Universal Forest Products' (UFPI - Analyst Report) third quarter 2012 results were weak as earnings per share at $0.28 fell short both of the year-ago earnings of $0.29 and the Zacks Consensus Estimate of $0.38. Canadian anti-dumping duty resulting in a $2.0 million pre-tax contingency loss impacted results immensely.
Considering the top line, double-digit growth was witnessed in four out of five end markets, but offset by higher lumber prices in the quarter to a large extent. These were the prime contributors to our recommendation downgrade from Neutral to Underperform.
Moreover, slowly reviving global economy along with significant volatility in the cost of commodity lumber products from primary producers are the prime causes of concern for Universal Forest. Further, Universal's precarious dependence on general market conditions heightens top-line risks in the event of any adverse condition.
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Macy’s Comps Rise, Guides Up
Macy’s Inc. (M - Analyst Report) – one of the leading department store retailers in the U.S. – posted healthy comparable-store sales as well as sales for the four-week period ended October 27, 2012. Despite the damage caused by Hurricane Sandy, the company has raised its comps guidance for the second half of fiscal 2012 on the back of strong third-quarter sales along with anticipated positive response from the upcoming holiday season.
Comparable-store sales improved 4.1% year over year for the month of October, attributable to continued strength in its online business. Total sales increased 3.6% to $1.9 billion compared with $1.8 billion in the prior-year period.
Year-to-date, Macy’s sales augmented 3.7% to $18.3 billion compared with $17.7 billion in the same period last year, whereas comparable-store sales also witnessed a hike of 3.7%.
Online sales, which include sales from macys.com and bloomingdales.com, surged 44.6% in October 2012. On a year-to-date basis, online sales shot up 36.8% from the comparable period last year. The company remains on track to expand both Macy's and Bloomingdale's brands online.
Moreover, Macy’s revealed total sales and same-store sales for the third quarter. The company’s total sales grew 3.8% to $6.1 billion in the third-quarter 2012 from $5.9 billion in the prior-year period while comparable-store sales climbed 3.7%. Online sales during the quarter soared 40.4%.
Buoyed by the robust third-quarter sales, the company raised its guidance of comparable-store sales for the second half of fiscal 2012. Management now anticipates an increase of about 4% in comparable-store sales compared with its earlier guidance of 3.7%. This updated guidance for the second-half for comps reflects an increase of about 4.2% in the fourth quarter of fiscal 2012.
Despite secular headwinds, Macy’s has been performing well in the current fiscal. The company has been taking a number of initiatives in order to bolster its sales, profitability and cash flows. These steps include integration of operations, consolidation of divisions as well as developing e-commerce business and online order fulfillment centers.
We remain optimistic about the company’s customer-centric localization initiative called “My Macy’s.” The program aims at improving comparable-store sales and reducing operating expenses, with stores and merchandise assortments focusing on local customer needs and preferences.
Macy’s, which competes with J. C. Penney Company Inc. (JCP - Analyst Report) and Saks Incorporated , currently operates approximately 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico. The company is expected to release its third quarter financial results on Wednesday, November 7, 2012.
Currently, we have a long-term Neutral recommendation on the stock. However, Macy’s holds a Zacks #3 Rank that 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.
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