For Immediate Release
Chicago, IL - May 7, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
Costco Wholesale Corporation
Wal-Mart Stores Inc.
EI DuPont de Nemours & Co.
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Here are highlights from Friday's Analyst Blog:
Costco Sales Rise
Costco Wholesale Corporation
), one of the leading U.S. warehouse club operators, recently
posted sales data for the four-week period ended April 29,
Sales climbed on the back of higher gasoline prices but fell
short of analysts expectations as unfavorable foreign currencies
fluctuation remained a drag.
After a 6% increase in March, Costco's comparable-store
sales for the month of April climbed 4%, reflecting comparable
sales growth of 4% at its U.S. locations and 3% at its
international divisions. In the prior-year period, the company
delivered comparable-store sales growth of 11%.
For the 35-week period ended April 29, 2012, the company
registered comparable-store sales growth of 8%, with U.S. and
international sales also rising by the same percentage.
Excluding the effects of higher gasoline prices and foreign
currencies fluctuation, Costco's comparable-store sales for April
climbed 5%, with U.S. and international comparable sales increasing
4% and 7%, respectively. For the 35-week period, the company
registered comparable-store sales growth of 7%, with U.S. sales
rising 6% and international sales climbing 9%.
Total net sales for April jumped 7% to $7.25 billion from $6.80
billion in the same month last year. For the 35-week period, sales
increased 10% to $63.59 billion from $57.59 billion in the same
period last year.
Costco continues to be a dominant retail wholesaler based on the
breadth and quality of merchandises it offers. The company's
strategy to sell products at heavily discounted prices has helped
it to sustain growth amidst beleaguered economic conditions, as
cash-strapped customers continue to reckon Costco as a viable
option for low-cost necessities. Having delivered consistent
comparable-store sales growth, Costco is strongly positioned in the
warehouse club industry.
However, Costco faces stiff competition from
) and Sam's Club, a division of
Wal-Mart Stores Inc.
), which follows a similar business model that pushes through high
volumes of merchandise at low prices in membership-only warehouse
clubs. Thus, aggressive pricing to gain market share and drive
traffic amid stiff competition may depress sales and margins.
Costco currently operates 602 warehouses, which include 435 in
the United States and Puerto Rico, 82 in Canada, 32 in Mexico, 22
in the United Kingdom, 13 in Japan, 8 in Taiwan, 7 in Korea and 3
in Australia. The company plans to open 7 more new warehouses
during the remainder of fiscal 2012.
Going by the pulse of the economy, we believe that
budget-constrained consumers will remain watchful on their spending
and look for discounts. Consequently, the company could see more
competitive pricing, compelling products and innovative ways to
Given the pros and cons, we maintain our long-term Neutral
recommendation on the stock. However, Costco holds a Zacks #4 Rank
that translates into a short-term Sell rating.
Earnings Scorecard: Dow Chemical
) started 2012 with mixed results in the first quarter, beating the
Zacks Consensus Estimate on earnings while lagging behind on the
Highlights from the Quarter
The Michigan-based company logged adjusted (excluding one-time
charges) earnings of 61 cents a share in first-quarter 2012, which
topped the Zacks Consensus Estimate 59 cents while falling below
the year-ago adjusted earnings of 82
Profit (as reported) slid 34% year over year to $412 million (or
35 cents a share), hit by restructuring charges of roughly $357
million associated with plant closures and downsizing.
Revenues fell narrowly year over year to $14,719 million,
missing the Zacks Consensus Estimate of $15,342 billion. Healthy
growth across agricultural and feedstock/energy businesses were
neutralized by declines in performance materials and performance
Volumes declined 1% year over year, but were up 3% barring the
impact of divestitures. On an adjusted basis, the company saw gains
across Europe, Middle East and Africa (EMEA) and North America and
declines in Latin America and Asia Pacific.
We have discussed the quarterly results at length here:
Dow's Profit Sags on Charges.
Agreement - Estimate Revisions
Estimates for Dow for the second quarter and current fiscal have
been weighted on the negative side following the first quarter
results. Out of 12 analysts covering the stock, 8 have lowered
their estimates for the second quarter over the past 7 days with
just 1 moving in the reverse direction. Likewise, over the past
month, 8 analysts have lowered their forecast for the quarter with
2 raising their estimates.
Estimates for fiscal 2012 reflect a somewhat similar trend with
8 (out of 16 analysts) chopping their estimates over the past 7
days with a couple of upward revisions. Over the last 30 days,
there were 8 downward revisions coupled with 4 reverse
The bearishness appears to partly reflect the concerns
surrounding the U.S. and European economies and the impact of the
company's planned turnaround costs, which it expects to increase by
$100 million sequentially in the second quarter.
Magnitude - Consensus Estimate Trend
Given the downside pressure from the negative revisions,
estimate for the second quarter has gone down by 8 cents and 6
cents over the last week and month, respectively. For fiscal 2012,
there has been a decrease of 5 cents and 3 cents in the estimate
over the past 7 and 30 days, respectively.
Dow is witnessing softness in the electronics and construction
end-markets, which may weigh on its second-quarter 2012 results.
The construction market in Europe remains soft. Moreover, the
company will continue facing challenges in Western Europe due to
weak demand and the sovereign debt crisis.
We currently have a long-term Neutral recommendation on Dow
Chemical. The company, which competes with
EI DuPont de Nemours & Co.
), currently holds a short-term Zacks #3 Rank (Hold).
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COSTCO WHOLE CP (COST): Free Stock Analysis
DU PONT (EI) DE (DD): Free Stock Analysis
DOW CHEMICAL (DOW): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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