Chicago, IL - April 07, 2015- Zacks Equity Research highlights BJ's Restaurants ( BJRI -Free Report) as the Bull of the Day and Abercrombie & Fitch ( ANF -Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Alcoa ( AA - Free Report ), RTI International Metals, Inc. ( RTI - Free Report ) and Golden Star Resources, Ltd. ( GSS - Free Report ).
Here is a synopsis of all five stocks:
Thanks to savings from lower gas prices, consumers have started spending more on dining out. Rising consumer spending bodes well for the restaurant industry and makes this Zacks rank #1 (Strong Buy) restaurant stock quite appetizing.
Founded in 1978 and headquartered in Orange County, CA, BJ's Restaurants ( BJRI -Free Report) owns and operates a chain of 147 high-end casual dining restaurants in 17 states. Their signature menu items include deep dish pizza and craft beer. They call their positioning "contemporary, high-quality, casual plus."
The company reported adjusted earnings of $0.31 per share for Q4, beating the Zacks Consensus Estimate of $0.21 by 48%. Earnings were also up significantly year-over-year. The improvement was thanks mainly to improved revenues and margins.
Revenues of $213.9 million were up 7.1% year over year, resulting from an improvement in comps to 1.2%, compared to the prior quarter comps growth of only 0.3% and the year-ago quarter comps decline of 2.7%. Restaurant level margins were 18.4%, up 330 basis points year-over-year.
The company opened three restaurants during the quarter and plans to opening of at least 15 restaurants in 2015.
A number of steps taken recently such as introduction of a new menu in February 2014, simplifying kitchen processes under project Q and cost control initiatives appear to be delivering results.
The landscape continues to be challenging for many retailers despite improving economy and healing labor markets. Further those catering to teens have found it even more difficult to please their fickle clients.
Abercrombie & Fitch ( ANF -Free Report) is a specialty retailer of casual apparel for men, women, and kids. The company was founded in 1892 and is headquartered in New Albany, Ohio. At the end of last year, they operated 799 stores in the U.S. and 170 stores in Canada, Europe, Asia, Australia and the Middle East.
The company reported its Q4 results on March 4. Net sales for the quarter were $1.12 billion, down 14% with foreign currency impact accounting for approximately 270 basis points of the decline. The decline was led by international markets where sales were down 17%; US sales were also weak, down 6%.
Adjusted earnings of $1.15 per share were slightly ahead of the Zacks Consensus Estimate of $1.13, but were down 14.2% year over year. Further, the management warned of continued pressure on results in the months ahead.
Analysts have been cutting their estimates for the company after quarterly results and lowered guidance. Zacks Consensus Estimates for the current and next year are currently $1.07 per share and $1.18 per share respectively, down from $1.66 per share and $1.91 per share, 30 days ago. Declining estimates sent the stock back to Zacks Rank #5 last month.
Can Alcoa Beat Earnings Estimates Again?
Alcoa ( AA - Free Report ) is set to release its first-quarter 2015 results after the close on Apr 8. In the last quarter, the New York-based aluminum giant notched up a 26.92% positive earnings surprise on strength across aerospace and automotive markets, higher metals pricing and productivity gains. Alcoa has logged positive surprises in the trailing four quarters, with an average beat of 48.25%.
While many no longer see Alcoa as a major earnings season bellwether following its exclusion from the Dow Jones Industrial Average in 2013, there is no denying that its results still matter as it provides a spotlight on demand trends for aluminum across a wide gamut of industries, which is closely linked to levels of economic activity.
Investors will look particularly for the company's commentary on global aluminum demand trends and expectations for key end-use markets, especially aerospace and automotive.
Let's see how things are shaping up for this announcement.
Factors to Watch For
Strong demand for aluminum across aerospace and automotive markets should continue to drive Alcoa's results in the March quarter. Aggressive cost-cutting and productivity improvement actions should also support its earnings in the quarter.
Alcoa is witnessing healthy airline fundamentals and expects the aerospace market to grow 9%-10% in 2015 on the back of strong demand for large commercial aircraft, regional jets and jet engines.
Alcoa is increasingly looking for expansion opportunities beyond its legacy primary aluminum business and diversify into other materials such as those (nickel and titanium-based) used to make aircraft parts.
The $2.85 billion acquisition of U.K.-based leading jet engine components maker - Firth Rixson - has allowed Alcoa to penetrate into a highly specialized segment of jet engine forgings and has further strengthened its robust aerospace portfolio. Moreover, the takeover of Germany-based titanium and aluminum structural castings supplier - Tital - reinforces Alcoa's position to leverage strong growth in the commercial aerospace sector and capture rising demand for advanced jet engine components made of titanium.
Alcoa has also agreed to buy titanium and specialty metal products supplier - RTI International Metals, Inc. ( RTI - Free Report ) - in a stock-for-stock deal worth $1.5 billion. The buyout is expected to broaden Alcoa's titanium offerings and add advanced technologies and materials to its portfolio.
Alcoa is also ramping up production to address healthy automotive demand. Strong auto demand for sheet products is expected to favorably impact the company's global rolled products business in the March quarter.
Moreover, Alcoa remains on track to move down the cost curve and is actively repositioning its portfolio, including closure of high-cost smelters. The company, in March, said that it will review 500,000 metric tons of smelting capacity over the next 12 months for probable curtailment or sale, which would impact 14% of its global smelting capacity.
However, softness across building and construction and commercial transportation markets is expected to persist in Europe in the first quarter. The packaging market in North America is also expected to remain weak.
While improved pricing aided Alcoa's results in the fourth quarter, it is still faced with a volatile aluminum pricing environment given the oversupply of the metal in the market. The company is also expected to witness currency headwinds and pricing pressure in the packaging and European industrial markets. Its primary metals business is also expected to be impacted, in the first quarter, by reduced production due to the sale of Mt. Holly smelter, lower energy sales in Brazil and higher costs.
Our proven model shows that Alcoa has the right combination of two key ingredients to beat earnings.
Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction) for Alcoa is +8.00% - the difference between the Most Accurate estimate of 27 cents and the Zacks Consensus Estimate of 25 cents. This indicates a likely positive earnings surprise.
Zacks Rank #3 (Hold): Alcoa's Zacks Rank #3 increases the predictive power of its ESP.
Note that stocks with Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Stocks That Warrant a Look
Here are some other mining companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
About the Bull and Bear of the Day
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