CHICAGO, May 12, 2011 /PRNewswire/ -- Zacks Equity
Research highlights: Polycom Inc. (Nasdaq: PLCM) as the Bull
of the Day and Tower Group Inc. (Nasdaq: TWGP), as the Bear
of the Day. In addition, Zacks Equity Research provides analysis on
Cisco Systems (Nasdaq: CSCO), Macy's Inc. (NYSE: M)
and Buffalo Wild Wings Inc. (Nasdaq: BWLD).
(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:
Polycom Inc. (Nasdaq: PLCM) declared record-high
first-quarter 2011 financial results, surpassing the Zacks
Consensus Estimates. Despite facing competitive pressure from
Cisco, which acquired Tandberg TV, Polycom's high-margin Network
Infrastructure Systems businesses grew 25% year over year in the
previous quarter.
Strong momentum in the Network Infrastructure division is a
significant positive for Polycom since this division drives overall
margins of the company. We believe long-term fundamentals of the
videoconferencing industry are compelling. Moreover, the global
economy has just started to recover. Business enterprises are
restricting their respective travel budgets as a cost control
measure.
This makes Polycom's HD telepresence solutions a cost-induced
alternative in an increasingly interactive world. Polycom has solid
liquidity to deal with its future ventures. We upgrade our
recommendation on Polycom to Outperform.
Bear of the Day:
Weaker investment yield continues to be a concern for Tower
Group Inc. (Nasdaq: TWGP). In response to this environment,
management had implemented a strategy to purchase dividend paying
common stocks during the fourth quarter to enhance investment
income.
The company is also evaluating alternative investment classes to
further enhance the investment income. Though management is trying
ways to offset pressure from low interest rate, we are not sure as
to whether the company will be successful with this strategy.
Our six-month target price of $22.00 equates to about 8.4x our earnings
estimate for 2011. We view the $0.50
per share annual dividend as secure, implying a total negative
return of about 7.4% over that period, which is consistent with our
Underperform recommendation on the shares.
Latest Posts on the Zacks Analyst Blog:
Cisco Posts Modest Earnings Beat
Cisco Systems (Nasdaq: CSCO), the world's largest
computer network equipment maker, reported a modest positive
earnings surprise when it posted fiscal 3rd quarter earnings
results after the bell today. The Dow component brought in
42 cents per share on revenues of
$10.87 billion for the quarter.
Shares are trading up 4% in after-hours following the earnings
report, following a penny drop on a down day for regular trading
today. Many concerns investors have about Cisco's direction are
perhaps baked into the current share price; even with the bump
after-hours, CSCO is trading around its lowest price since early
2009.
Much ink has been spilled on Cisco's problems of late, including
shrinking gross margins which have led to the company taking steps
to sell off consumer products such as its Flip video business,
which was discontinued in the quarter. Also, competition in the
switches market have driven down Cisco's premiums. This has
resulted in gross margin compression, which fell again in the
quarter to 61% (it was 64% in the year-ago quarter).
There was one less week in the 3Q of fiscal 2011 than in the
year-ago quarter, which adds another positive glint to the earnings
report. And while its products segment was down (as expected, with
the Flip product getting the axe), services were up in the quarter.
That said, net income is down $400
million year over year -- was this all from an extra week in
the quarter a year ago?
Minor positive earnings surprises are nothing new for Cisco.
Over the previous 4 quarters, the average earnings beat was 5.86%.
Analysts had been bringing down estimates slightly over the past
month, but with a 35% sequential gain in EPS for fiscal 3Q, perhaps
some upward revisions will be in the offing.
What Cisco plans to do regarding new products and its recent
re-focus on its bread and butter of routing, switching and services
will go a long way in determining Cisco's future. But it may be
awhile until it is clear how successful the company's new strategy
becomes.
Macy's Beats, Boosts – Up Big
Macy's Inc. (NYSE: M), one of the leading department
store retailers in the United
States, recently posted first-quarter 2011 results that beat
Zacks' expectations on the heels of healthy sales, improved
operating margin and effective cost management, thereby sending
shares up $2.32 or 8.8% to
$28.65 in pre-market trading.
Consequently, the company doubled its dividend pay-out and raised
its full year outlook.
The quarterly earnings of 30 cents
a share outperformed the Zacks Consensus Estimate of 18 cents, and jumped 6 times from 5 cents earned in the prior-year quarter. The
Zacks Consensus Estimate rose by 3
cents prior to the earnings release, with 7 out of 14
analysts covering the stock raising their estimates in the last 30
days.
Macy's now expects fiscal 2011 earnings in the range of
$2.40 to $2.45 per share, up from
$2.25 to $2.30 forecast earlier,
which lies ahead of the current Zacks Consensus Estimate of
$2.32. Following an improved outlook,
a positive sentiment may be palpable among the analysts, and we
could witness a rise in the Zacks Consensus Estimates in the coming
days.
The company has been taking prudent steps to increase sales,
profitability and cash flows, which 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.
Buffalo Wild Wings Upped to Outperform
We are upgrading our rating on Buffalo Wild Wings Inc.
(Nasdaq: BWLD) to Outperform from Neutral.
The rating upgrade is based on solid first quarter 2011 results,
which outpaced the Zacks Consensus Estimate, primarily driven by
double-digit growth in the top line and lower traditional wing
prices. The company is also on track to achieve 13% unit and 18%
net earnings growth in fiscal 2011, based on improved comparable
store sales and favorable wing costs.
During the first quarter, cost of traditional wings declined 36%
year over year to $1.22 per pound.
For the first two months of second quarter 2011, the company
expects traditional wings cost to be $1.02 per pound, lower than any quarterly price
since 2003. Buffalo Wild Wings has also contracted for the price of
boneless wings, a higher margin product, till March 2012 at a cost similar to fiscal 2010.
Buffalo Wild Wings is witnessing an improvement in comps with
company-operated and franchised restaurants growing 3.9% and 1.6%,
respectively, during the quarter. Additionally, the comps are
expected to be up 5.3% at company-owned restaurants and 1.6% at
franchise locations for the first four week of the second quarter
of 2011.
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
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