CHICAGO, Aug. 15, 2011 /PRNewswire/ -- 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 blog include: J.C. Penney Company Inc.
(NYSE: JCP), Macy's Inc. (NYSE: M) Kohl's Corporation
(NYSE: KSS) Brinker International Inc. (NYSE: EAT) and
The Wendy's Co. (NYSE: WEN).
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Here are highlights from Friday's Analyst Blog:
J.C. Penney Beats by a
Penny
J.C. Penney Company Inc. (NYSE: JCP) recently delivered
second-quarter 2011 earnings of 7
cents a share that came a penny ahead of the Zacks Consensus
Estimate as well as the prior-year quarter's earnings.
Strong performance of women's apparel and accessories and fine
jewelry boosted the quarterly results, with the Southwest region
contributing the highest revenue.
Behind the Headline
The quarterly sales of $3,906
million fell short of the Zacks Consensus Estimate of
$3,928 million, and inched down 0.8%
from the prior-year quarter. Total sales were adversely affected by
the discontinuation of the publishing of Big Book catalogs.
Internet sales through jcp.com crept up 2.8% to $326 million in the quarter.
Comparable-store sales inched up 1.5% during the quarter
compared with a 0.9% increase in the prior-year period.
J. C. Penney's inclusion of
'Liz Claiborne', 'Arizona', 'St. John's Bay' and 'Modern Bride'
brands to its portfolio helped to drive sales and improve
traffic.
The in-store Sephora departments continue to outperform in
attracting younger and more affluent customers. During the quarter,
J.C. Penney opened 22 Sephora
stores, bringing the total count to 276. The Sephora concept is
expected to be a significant revenue driver.
The company's gross profit fell 3.5% to $1,497 million, whereas gross profit margin
contracted 110 basis points to 38.3%, reflecting higher promotional
spending. Management now expects third-quarter 2011 gross margin to
be marginally down compared with the prior-year period.
Sales and Earnings Forecast
The Plano, Texas-based
retailer, J.C. Penney, provided
guidance for third-quarter 2011 comparable store sales growth in
the range of 2% to 3%, while total sales is expected to increase
250 basis points less than comparable store sales.
Management now expects third-quarter 2011 earnings between
15 cents and 20 cents a share,
including restructuring charges of about 5
cents.
The current Zacks Consensus Estimate for the third quarter is
26 cents a share, above the company's
guidance range. Following, management's outlook, we could witness a
correction in the Zacks Consensus Estimates in the coming days,
with analysts tweaking their estimates in line with the
company.
J.C. Penney's long-term growth
target is to achieve earnings of $5.00 per share in 2014, on the heels of
compelling private and national brands, redefined jcp.com platform,
cost containment initiatives, closure of underperforming units and
restructuring of supply chain.
J.C. Penney, which competes with
Macy's Inc. (NYSE: M) and Kohl's Corporation (NYSE:
KSS), currently operates more than 1,100 department stores in
the United States and Puerto Rico.
Currently, we have a long-term Neutral rating on the stock.
Moreover, J.C. Penney holds a Zacks
#3 Rank, which translates into a short-term Hold
recommendation.
Brinker Beats on Both
Ends
Brinker International Inc. (NYSE: EAT) has recently
reported fourth quarter 2011 adjusted earnings per share of
48 cents, surpassing the Zacks
Consensus Estimate by a penny. Earnings were also above
44 cents reported in the prior-year
quarter.
On a GAAP basis, the owner of Chili's Grill & Bar and
Maggiano's Little Italy has reported fourth quarter earnings of
49 cents per share versus
42 cents posted in the year-ago
quarter.
In fiscal 2011, adjusted and GAAP earnings in the quarter were
1.52 and 1.53, respectively, as against $1.15 and 1.01 in the prior fiscal year.
Total revenue dropped 3.4% year over year to $717.5 million due to a 7.5% decrease in capacity
given an extra operating week in the fourth quarter of fiscal 2010.
However, the quarter's revenue strode past the Zacks Consensus
Estimate of $707 million. In fiscal
2011, total revenue declined 3.4% to $2.8
billion.
However, same-restaurant sales at company-owned restaurants
increased 2.6% on the back of a respective 2.1% 5.7% growth at
Chili's and Maggiano's.
Financial Position
At quarter end, the company had current assets of $221.4 million and shareholder equity of
$438.9 million. During the fourth
quarter, the company repurchased 2.5 million shares for
approximately $62.9 million.
Outlook
Brinker reaffirmed its adjusted earnings guidance range of
$1.80 to $1.95 for fiscal 2012. The
company continues to expect full-year revenues and
comparable-restaurant sales to increase 2–3% year over year.
Capital expenditure is estimated between $155 and $165 million for 2012.
Our Take
Brinker's earnings increased, but revenues declined. However,
Brinker is repositioning its Chili's brand to offset the declining
sales momentum and record more sustainable and stable growth.
Additionally, the company is making efforts to expand its margins
through disciplined cost management. Additionally, the company is
boosting shareholder value through share repurchase activity as
well as dividend payment.
Wendy's currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock. One of the peers of Brinker,
The Wendy's Co. (NYSE: WEN) posted second quarter 2011
adjusted earnings of 5 cents per
share which matched our estimate.
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