For Immediate Release
Chicago, IL – July 23, 2013 – Zacks Equity Research highlights Krispy Kreme Doughnuts, Inc. (-Free Report) as the Bull of the Day and Joy Global Inc. ((JOY - Analyst Report) -Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Calgon Carbon Corporation (CCC - Analyst Report) -Free Report), MeadWestvaco Corporation -Free Report) and CECO Environmental Corp. (CECE - Snapshot Report) -Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
It is one of the biggest company turnarounds since the end of the Great Recession. Krispy Kreme Doughnuts, Inc. (-Free Report) was left for dead but defied naysayers and is expected to see double digit earnings growth in Fiscal 2014.
Krispy Kreme makes donuts and sells coffee in over 770 locations in 22 countries. It has an extremely loyal fan base for its signature product: the Original Glazed donut which is usually served warm, directly out of the oven.
Over-expansion early last decade tarnished the brand but it has slowly been able to turn it around.
On July 15, as testimony to the strength of the company, it announced that it had refinanced its secured credit facilities and retired the entire $22 million outstanding balance of its term loan. The retiring of the loan and the refinanced facilities was expected to save about $1 million in the first 12 months.
As of July 12, it had a cash balance of $55 million and an unused borrowing capacity on its revolving credit facility of $31 million.
It will also begin a new $50 million share repurchase program. That's significantly higher than the previous $20 million program that was completed in 2012.
Bear of the Day:
It's tough times for the mining equipment makers. Analysts slashed estimates on Joy Global Inc. ((JOY - Analyst Report) -Free Report) after the company lowered full year guidance. This Zacks Rank #5 (Strong Sell) is expected to see earnings fall both in fiscal 2013 and fiscal 2014 as the global economy remains sluggish.
Joy Global is one of the world's largest underground and surface mining equipment makers. It is usually one of the first beneficiaries of a global recovery, because the miners can lead a recovery but that also means it can be the first to see a slowdown.
On May 30, Joy Global reported second quarter results which confirmed that the slowdown in the mining industry had arrived.
Sales fell 12% to $1.4 billion from a year ago. Original equipment sales fell 16% while Aftermarket sank 8%. Bookings were also down 8% year over year to $1.1 billion with surface mining equipment bookings slumping 28%.
Calgon Carbon Raised to Outperform
On Jul 18, we upgraded our recommendation on pollution control company Calgon Carbon Corporation (CCC - Analyst Report) -Free Report) to Outperform factoring in the benefits from its cost-cutting actions and price increases.
Calgon Carbon’s earnings for first-quarter 2013, reported on May 6, topped the Zacks Consensus Estimate but sales missed. This Zacks Rank #1 (Strong Buy) stock is expected to gain from its cost reduction and pricing actions.
Following the release of the first quarter results, the Zacks Consensus Estimate for 2013 for Calgon Carbon went up 3.7% to 84 cents per share.
Calgon Carbon, which competes with MeadWestvaco Corporation -Free Report) among others, remains confident in its ability to balance the need for future investment with its responsibility to provide short-term returns. The company continues to see ballast water treatment, reactivation services and mercury removal as its basis for sustainable growth. It remains actively focused on improving margins across all regions.
Calgon Carbon’s strategic initiatives position it for significant growth in the longer term. Its reactivation facilities have remarkably supported its growth and have established its presence in several markets. The global demand for reactivation services is expected to climb as regulations for water quality strengthen around the world.
Calgon Carbon has also reduced its exposure to rising coal costs by identifying new sources of supply and a variety of coals that are effective in the manufacture of its high quality products. It has also embarked on aggressive cost reduction initiatives to boost margins. Calgon Carbon’s cost improvement program, which includes consolidation of operations and headcount reductions, is expected to contribute toward margin expansion.
Calgon Carbon’s price increase actions should also drive sales and profitability. It has implemented price hikes on activated carbon and service products which are expected have an impact of more than $10 million in 2013.
Other Stocks to Consider
Another company in the pollution control industry worth considering is CECO Environmental Corp. (CECE - Snapshot Report) -Free Report), which retains a Zacks Rank #1 (Strong Buy).
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