CHICAGO, May 17, 2011 /PRNewswire/ -- Zacks Equity
Research highlights: Priceline.com (Nasdaq: PCLN) as the
Bull of the Day and Washington Federal (Nasdaq: WFSL), as
the Bear of the Day. In addition, Zacks Equity Research provides
analysis on Wal-Mart Mart Stores Inc. (NYSE: WMT), Target
Corp. (NYSE: TGT) and Costco Wholesale Corporation
(Nasdaq: COST).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
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:
Priceline.com (Nasdaq: PCLN) is one of the leading online
travel companies in the world. Priceline's first quarter earnings
missed the Zacks Consensus but management expects strong
double-digit bookings growth in the next quarter, with
international growing much faster than domestic.
The secular growth trend in the online travel space, Priceline's
own business momentum, international growth opportunities, good
execution, prudent marketing strategy and strong financial position
are likely to drive upside to the shares. While occupancy
tax-related litigation remains an overhang, it is likely to have
the same impact on all peer companies.
With demand strengthening considerably following the recession,
we remain optimistic. We therefore have an Outperform rating on
PCLN shares.
Bear of the Day:
We are downgrading our recommendation on Washington
Federal (Nasdaq: WFSL) to Underperform from Neutral, based on
the pressure on net interest margin (NIM) and its lag with respect
to deposit re-pricing. The company's fiscal second-quarter 2011
earnings marginally missed the Zacks Consensus Estimate.
Increased interest income, lower expenses and a substantial drop
in provision for loan losses were among the positives during the
quarter. However, weak loan demand and lower profitability metrics
were the downside. We remain concerned about the company's
considerable exposure to real estate markets where values remain
soft.
Our six-month target price of $14.00 per share equates to about 14.4x our
earnings estimate for fiscal 2011. Combined with the $0.24 per share annual dividend, this price
target implies an expected negative total return of 8.2% over that
period.
Latest Posts on the Zacks Analyst Blog:
Earnings Preview: Wal-Mart
Wal-Mart Mart Stores Inc. (NYSE: WMT) is scheduled to
announce its first quarter 2012 results on May 17, 2011, and we see limited revisions in
analyst estimates at this point. Currently, the Zacks Consensus
Estimate is 96 cents per share and
sales estimate is around $103.12
billion.
Fourth Quarter Overview
Wal-Mart's fourth quarter earnings increased 11.9% from the
year-ago period. However, (excluding the benefit of one-time items)
earnings were $1.34 a share, which
was ahead of the Zacks Consensus Estimate of $1.31, by 2.3%.
For full year 2011, reported earnings came in at $4.18 per share, while adjusted earnings were
$4.07. Both reported and adjusted
earnings were ahead of the Zacks Consensus Estimate of $4.04.
Net sales for the quarter recorded a growth of 2.5% to
$115.6 billion from $112.8 billion in the year-ago quarter. The
expansion was primarily driven by a robust 8.9% expansion in the
International segment, which benefited from favourable currency
translations, coupled with a 4.4% growth in the Sam's Club segment.
Revenues were in line with the Zacks Consensus Estimate.
Annual revenues spurred 3.4% to $419
billion. Net sales included a currency exchange rate benefit
of $4.5 billion. Income from
continuing operations attributable to Walmart were $15.4 billion, a 6.3% increase from $14.4 billion last year.
However, sales at Wal-Mart's U.S. segment were down
year-over-year, declining marginally by 0.5%.
Wal-Mart, widely regarded as a bellwether for the U.S. economy,
stated that U.S. same-store sales decreased 1.1% year-over-year,
while that for Sam's Club grew by 2.7%.
Meanwhile, quarterly operating income grew by 7.3%
year-over-year to $8.0 billion, while
the operating margin increased by 31 basis points to 6.9%. The
growth was primarily seen due to favorable foreign currency
translations.
Wal-Mart ended the year with 985 million square feet of retail
space. In fiscal 2012, the company expects organic square footage
to increase between 3% and 4%.
Management Guidance
Driven by strong profits in fiscal 2011, the company provided
first quarter and full fiscal 2012 earnings guidance. For the first
quarter, the company expects earnings to be in the range of
68 cents to 73 cents, whereas for the
full year earnings are projected in the range of $4.05 to $4.25 a share.
First-Quarter 2012 Zacks Consensus
Analysts covered by Zacks expect Walmart to post first-quarter
2012 earnings of 96 cents a share.
The current Zacks Consensus inched up 9.1% from the year-ago period
and ranges within 90 cents and
$1.00.
Agreement of Analysts
Out of the twenty three analysts providing estimates for the
first quarter 2012, none of the analysts have changed their
estimates in the last 7 days.
The limited number of changes to estimates indicate the absence
of any major catalyst during the quarter that could drive results.
Consequently, most of the analysts are sticking to the estimates
they had projected post fourth quarter earnings.
Magnitude of Estimate Revisions
There was no change in the Zacks Consensus Estimates for the
first quarter and fiscal 2011 over the past 30 days. However, the
fiscal 2011 estimates moved down by 1 penny in the past ninety
days.
Recommendation
We remain encouraged by the company's significant presence in
the international market. The international segment of the company
consists of retail operations in 14 countries and Puerto Rico. Moreover, the company earns the
trust of its customers by providing a broad assortment of quality
merchandise and services at 'every day low prices' (EDLP).
Currently, Walmart which faces stiff competition from Target
Corp. (NYSE: TGT) and Costco Wholesale Corporation
(Nasdaq: COST) has a Zacks #2 Rank, implying a short-term Buy
recommendation.
Get the full analysis of all these stocks by going to
http://at.zacks.com/?id=2649.
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