For Immediate Release
Chicago, IL - March 22, 2012 - Zacks Equity Research highlights
Macy's, Inc.
(
M
) as the Bull of the Day and
RadioShack Corp.
(
RSH
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
Caterpillar Inc.
(
CAT
),
Komatsu Ltd.
(
KMTUY
) and
Volvo AB
(
VOLVY
).
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's, Inc.
(
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
fourth-quarter 2011 results.
The quarterly earnings of $1.70 per share beat the Zacks
Consensus Estimate of $1.65, and rose 6.9% from the prior-year
quarter. Macy's now expects fiscal 2012 earnings between $3.25 and
$3.30 per share. The company hinted that it is seeking to expand
both the Macy's and Bloomingdale's brands, as the year present
enormous opportunity to enhance market share.
Macy's, which saw 4.6% increase in February comparable-store
sales, now expects comps growth of approximately 3.5% for fiscal
2012. We maintain our long-term Outperform recommendation on the
stock. Our target price of $42.00, 12.6X 2012 EPS, reflects this
view.
Bear of the Day
:
Difficulties for
RadioShack Corp.
(
RSH
) persists as the company continues with its disappointing
performance. A precipitous decline of the signature and consumer
electronics retail businesses, adverse product-mix toward
low-margin devices, and a volatile macro-economic scenario in the
U.S. are taking a toll on the company's financials.
Weaker-than-expected growth of the mobile platform and growing
marketing expenses are other near-term concerns. The company
provided a tepid outlook for fiscal 2012. In the previous quarter,
the U.S. RadioShack company-operated store segment, which is the
prime contributor of total revenue, was down 1.4% year over
year.
We believe RadioShack lost its market leadership as a
high-margin device retailer and is eventually turning out to be a
low-cost low-margin device supplier. We do not find any immediate
growth catalyst, and therefore downgrade our recommendation to
Underperform.
Latest Posts on the Zacks
Analyst Blog
:
Caterpillar Sales Dip Further
Caterpillar Inc.
(
CAT
) recorded machines sales growth of 21% for the three months ending
February 29, 2012, keeping up its 22-month run of positive sales
growth. However, the sales growth has dipped further from the
lowest growth rate of 30% last year and from the 27% clip recorded
in January 2012. Engine sales increased 13% across the globe.
Caterpillar's growth rate had hit rock bottom in 2011 in
November last year recording a growth rate of 30%. Caterpillar
suffered the same fate in December as well. Even though Caterpillar
has seen sales ramping in the last 22 months, the rate of increase
has of late been tempered by tougher year-on-year comparisons and
weakening economic conditions, especially in Europe. Sales growth
is now less than one-third of the highest level of 66% in 2011.
Fourth Quarter and Fiscal 2011 Recap, Guidance
During the recently reported fourth quarter, Caterpillar's
revenues surged 35% to a record $17.2 billion, driven by higher
sales volume, especially for new equipment. Excluding the impact of
the acquisition of Bucyrus International, revenues went up 24% to
$15.9 billion, comparing favorably the Zacks Consensus Estimate of
$15.6 billion.
For fiscal 2011, total revenue increased 35% to $57.6 billion,
excluding the impact of Bucyrus. Including the impact, Caterpillar
saw all-time record sales of $60.1 billion, up 41% from 2010,
driven by increased sales volume (particularly new equipment) on
higher end-user demand. Revenues sailed past the Zacks Consensus
Estimate of $58.1 billion.
For 2012, the company expects to record sales in a range of
$68.0 billion to $72.0 billion for 2012, which includes accretions
from Bucyrus and Motoren-Werke Mannheim Holding GmbH. EPS is
forecast at $9.25 per share on the back of strong revenues.
Our Take
In addition to the European debt crisis, signs of a slowdown in
China have triggered concerns. Earlier this month, China cut its
2012 growth target to an eight-year low of 7.5%. A slowing
Chinese economy will have a negative impact on infrastructure and
construction spending.
On a positive note, despite an economic slowdown in China,
Caterpillar's sales in that country were higher in the fourth
quarter of 2011 compared with the fourth quarter of 2010 as dealer
deliveries to end users, even though at low levels, were better
than the industry overall.
Furthermore machine production was sufficient to allow dealers
to build inventory for the upcoming 2012 selling season.
Caterpillar and its dealers have purposely built additional new
machine inventory in China to continue to improve its competitive
position during the critical selling season that typically follows
the Chinese New Year.
Despite the lingering doubts overhanging the economy at large
and Caterpillar's recent loss of sales momentum, we believe the top
line would continue to grow on the back of continuing demand for
construction and mining equipment, in the long term, triggered by
industrialization and urbanization. Besides, the Bucyrus
acquisition will bring in more synergies. The shares of Caterpillar
presently retain a Zacks #2 Rank (short-term Buy
recommendation).
Peoria, Illinois-based Caterpillar Inc. is the manufacturer of
construction and mining equipment, diesel and natural gas engines,
and industrial gas turbines. The company is one of the few leading
U.S. companies in an industry that competes globally from a
principally domestic manufacturing base.
Caterpillar operates two divisions - Machinery and Power Systems
(M&PS) and Financial Products. Caterpillar competes with the
likes of
Komatsu Ltd.
(
KMTUY
) and
Volvo
AB
(
VOLVY
).
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
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and events impacting stocks and the financial markets.
About Zacks Equity Research
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which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150
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which gives them keen insights to developments that affect company
profits and stock performance. Recommendations and target prices
are six-month time horizons.
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CATERPILLAR INC (
CAT
): Free Stock Analysis Report
MACYS INC (
M
): Free Stock Analysis Report
RADIOSHACK CORP (
RSH
): Free Stock Analysis Report
VOLVO AB ADR B (
VOLVY
): Free Stock Analysis Report
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