For Immediate Release
Chicago, IL - December 16, 2011 - Zacks Equity Research
highlights
Macy, Inc.
(
M
) as the Bull of the Day and
Meritor, Inc.
(
MTOR
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
FedEx Corporation
(
FDX
),
The Boeing Company
(
BA
) and
United Parcel Service Inc.
(
UPS
).
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
:
Macy, Inc.'s
(
M
) has been taking prudent steps to increase sales, profitability
and cash flows. These include integration of operations,
consolidation of divisions and customer-centric localization
initiatives. To help drive traffic, Macy's continues to focus on
price optimization, inventory management and merchandise planning.
These help the company to deliver better-than-expected
third-quarter 2011 results.
The quarterly earnings of $0.32 per share beat the Zacks
Consensus Estimate of $0.16, and portrayed a fourfold increase from
$0.08 earned in the prior-year quarter. Following this management
raised its outlook. Macy's now expects fiscal 2011 earnings between
$2.70 and $2.75 per share.
The company hinted that it is also seeking to expand both the
Macy's and Bloomingdale's brands. Macy's, which saw 4.8% growth in
November comparable-store sales, expects comps increase between
4.8% and 5% for fiscal 2011.
Bear of the Day
:
Meritor, Inc.
(
MTOR
) is a globally recognized automotive parts supplier. However, the
company has high customer concentration, which implies limited
scope for margin expansion. Further, the recent turmoil in the
global economy is expected to continue to mar its results.
We are also disappointed about Meritor's deteriorating cash
flow. Although the company's fiscal fourth quarter profit was ahead
of the Zacks Consensus Estimate by $0.19 per share, we remain
concerned about its long-term outlook.
Our long-term Underperform recommendation on the stock indicates
that it will perform lower than the broader market. Our $5.50
target price, 3.8X our 2012 EPS estimate, reflects this view.
Latest Posts on the Zacks
Analyst Blog
:
FedEx Beats EPS, Keeps Guidance
Before the opening bell,
FedEx Corporation
(
FDX
), the world's second-largest package delivery company, reported
second quarter fiscal 2012 adjusted earnings of $1.57 per share.
The quarter's earnings outpaced the Zacks Consensus Estimate of
$1.52 and were 35% above $1.16 earned in the year-ago quarter.
Total revenue climbed 10% year over year to $10.59 billion and
missed the Zacks Consensus Estimate of $10.605 billion. The
year-over-year improvement was attributable to continued
improvement in FedEx Ground, healthy performance by FedEx Freight
and strong yield initiatives.
Operating income shot up 66% year over year to $780 million in
the reported quarter. Operating margin also showed an increase of
250 basis points (bps) to 7.4%from 4.9% in the year-ago
quarter.
Operating expenses rose 7% year over year to $9.8 billion mainly
due to a 28% rise in the fuel cost from the year-ago quarter.
Segment Results
FedEx Express
revenue was $6.58 billion in the reported quarter, up 10% year over
year. Operating income climbed 30% year over year to $342 million,
resulting in an 80 bps expansion in operating margin to 5.2%.
The FedEx International Priority (
IP
) average daily package volume fell 3% year over year due to weak
Asian demand while revenue per package (yield) grew 11% on higher
fuel surcharge. U.S. domestic revenue per package rose 12% year
over year despite a 4% decline in the U.S. domestic average daily
package
volume.
FedEx Express is rightsizing its aircraft fleet. The company
intends to replace the old MD10 aircraft with the new 767-300F from
The Boeing Company
(
BA
) between 2014 and 2018. Additionally, FedEx is also delaying the
delivery of 11 Boeing 777F aircraft to balance the demand for air
network capacity.
FedEx Ground
revenue rose 13% year over year to $2.34 billion attributable to
package volume growth at FedEx Ground as well as FedEx SmartPost.
Operating income grew 34% year over year to $398 million, resulting
in operating margin of 17% compared with 14.3% in the year-ago
quarter. FedEx Ground average daily package volume increased 4% and
revenue per package grew 8%. FedEx SmartPost average daily volume
expanded 17% and revenue per package rose 4%.
FedEx Freight
revenue increased 9% year over year to $1.33 billion, reflecting 8%
higher LTL (less-than-truckload) yield, partially offset by lower
average daily LTL shipments (down 3%). FedEx Freight recorded an
operating income of $40 million compared with an operating loss of
$91 million in the year-ago quarter.
Operating margin was 3% versus (7.5%) in the year-ago quarter.
The strong performance was driven by operational efficiency from
the combination of FedEx Freight and FedEx National LTL completed
early this year.
Guidance
FedEx has projected earnings in the range of $1.25 to $1.45 per
share for the third quarter of 2012. The mid-point ($1.35) is
higher than the current Zacks Consensus Estimate of $1.33.
Based on rising fuel prices and moderate economic growth, FedEx
reaffirmed its fiscal 2012 earnings projection of $6.25-$6.75 per
share. The mid-point ($6.60) is above the current Zacks Consensus
Estimate of $6.30.
FedEx continues to expect capital spending of $4.2 billion for
fiscal 2012.
Our Analysis
Despite economic volatility, we believe all three segments of
FedEx will continue to perform well. The company expects continued
top-line growth in Ground and Freight based on strong yields,
ongoing efficiency plans, volume expansion and cost management.
At FedEx Express, the company is realigning its network capacity
to match weak international volumes due to the drop in Asian
demand. Further, FedEx has taken several initiatives like reducing
flights and frequencies as well as redeploying equipment in other
networks to lower costs.
Nevertheless, huge investments in aircraft and vehicles,
competitive threats from
United Parcel Service Inc.
(
UPS
), a unionized workforce and steeper fuel prices may limit the
upside potential of the stock.
We are currently maintaining our long-term Neutral rating on
FedEx. The stock retains the Zacks #3 Rank (Hold) for the short
term (1-3 months).
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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Updated throughout every trading day, the
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BOEING CO (
BA
): Free Stock Analysis Report
FEDEX CORP (
FDX
): Free Stock Analysis Report
MACYS INC (
M
): Free Stock Analysis Report
MERITOR INC (
MTOR
): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis
Report
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Research