CHICAGO, Feb. 3, 2011 /PRNewswire/ -- Zacks Equity
Research highlights: Brinker International (NYSE: EAT) as
the Bull of the Day and Tellabs Inc. (Nasdaq: TLAB) as the
Bear of the Day. In addition, Zacks Equity Research provides
analysis on Automatic Data Processing (NYSE: ADP), Time
Warner Inc. (NYSE: TWX) and Mattel Inc. (NYSE: MAT).
(Logo:
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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:
Brinker International (NYSE: EAT) reported second quarter
2011 earnings above the Zacks Consensus Estimate. The upside in
earnings was driven by continued margin expansion at Chili's and
top-line growth at Maggiano's.
The company is repositioning its Chili's brand and is
undertaking several initiatives to offset its declining sales
momentum and record more sustainable and stable growth. Brinker
also reiterated its goal to achieve 400 bps of net operating margin
growth at Chili's and double its EPS by the next five years.
The cash flow position at Brinker is strong. Hence, we are
upgrading the stock from Neutral to Outperform.
Bear of the Day:
We downgrade our recommendation for Tellabs Inc. (Nasdaq:
TLAB) to Underperform, following its poor financial results of the
fourth quarter of 2010, well below the Zacks Consensus Estimates.
The company is facing serious problems with its key customer
AT&T, which accounts for 35% of total revenue in 2010.
We believe Tellabs will continue to lose businesses from
AT&T as depicted by its extremely weak revenue outlook for the
first quarter of 2011. More disastrous is that, Tellabs' highly
reputed high-margin digital cross-connect products are also showing
a downtrend. For that, gross-margin took a huge pressure in the
reported quarter and will remain at that low-level in the
near-term.
Tellabs is finding it increasingly hard to market its core
growth products. Although, the telecom gear manufacturing industry
is growing through a growth phase, Tellabs is facing severe
competitive pressure from large rivals such as Cisco and
Alcatel-Lucent.
Latest Posts on the Zacks Analyst Blog:
ADP Sees Gain of 187,000 Jobs
The Automatic Data Processing (NYSE: ADP) employment
survey was better than expected in January. It shows that private
sector employment rose by 187,000 in January, well above consensus
expectations for a 145,000 increase. Of course, last month, ADP was
way off the mark and reported a gain of 297,000 private sector jobs
and the BLS only reported a gain of 113,000 from the private sector
(and 103,000 total).
The December numbers were revised lower to a gain of 247,000
jobs, but that is still way above the BLS figure (unless the BLS
numbers are revised sharply higher for December when the January
numbers are reported on Friday. I think some upward revision is
likely, but nothing close to that sort of magnitude).
ADP, as the largest payroll processing firm in the country, is
in a very good position to look at the state of the job market.
This is evidence of an economy that is not only growing, but
accelerating very nicely. For most of 2010, the ADP report has
consistently been more pessimistic than the BLS report, although
that was not the case in November or December. If the ADP numbers
were to be confirmed by the BLS, it is the sort of the level we
need to make a dent in the vast army of the unemployed.
Time Warner Beats, Enhances
Return
Time Warner Inc. (NYSE: TWX), the diversified media
conglomerate, posted better-than-expected fourth-quarter 2010
results on the heels of an increase in advertising and subscription
revenues. The company also hiked its quarterly dividend and boosted
its share repurchase program.
The shares of Time Warner rose 2.6% or 84
cents to $33.15 in pre-market
trading.
The quarterly earnings of 67 cents
a share outdid the Zacks Consensus Estimate of 62 cents, and rose 22% from 55 cents earned in the prior-year quarter. On a
reported basis, including one-time items, earnings came in at
68 cents a share, up 28% from
53 cents delivered in the year-ago
quarter.
Buoyed by the strong quarterly performance, Time Warner now
expects fiscal 2011 earnings to increase in the low teens.
Following this, a positive sentiment may be palpable among the
analysts covering the stock, and we could witness a rise in the
Zacks Consensus Estimates in the coming days. The current Zacks
Consensus Estimate for fiscal 2011 is $2.62.
Time Warner's total revenue in the quarter grew 8% to
$7,812 million from the previous
year-quarter, and handily beat the Zacks Consensus Estimate of
$7,477 million. Adjusted operating
income during the quarter logged a growth of 14% to reach
$1,425 million.
Time Warner also raised its quarterly dividend by 11% to
23.5 cents and increased its share
repurchase authorization to $5
billion from the $1 billion
remaining at its disposal as of December 31,
2010. The increased dividend will be paid on March 15, 2011 to shareholders of record as of
February 28, 2011.
Mattel Beats on Strong
Sales
Mattel Inc. (NYSE: MAT) reported fourth quarter 2010
earnings of 89 cents per share, which
surpassed the Zacks Consensus Estimate of 86
cents and was in line with the prior-year quarter earnings.
The better-than-expected results were primarily driven by strong
sales from its core brands such as Barbie and Fisher-Price, partly
offset by declines in Hot Wheels sales as well as cost
escalation.
The company's full-year earnings per share were $1.86, above the Zacks Consensus Estimate of
$1.83 and up 28% from the prior
year.
Quarter Highlights
Worldwide gross sales were $2,327.4
million, ahead of $2,146.2
million recorded in the prior-year period as well as the
Zacks Consensus Estimate of $2,074
million. Including the negative impact of foreign currency
fluctuations, net sales reported were $2,124.6 million, up 9% year over year. U.S.
gross sales improved 11% year over year and international gross
sales increased 6% year over year.
Worldwide gross sales for the Mattel Girls & Boys Brands
business unit were up 9% year over year to $1,265.2 million. Worldwide gross sales for
Barbie spiked 8% over the last year while Hot Wheels was down 4%.
Fisher-Price Brands sales jumped 6% to $775.8 million while the American Girl line grew
8% to $273.2 million.
Gross profit rose 5% from the prior-year quarter to $1,096.0 million and operating income was up 3%
to $428.6 million. The year-over-year
improvement was attributed to higher sales.
However, gross margin dropped 180 basis points year over year to
51.6% and operating margin contracted 110 bps to 20.2%
due to higher advertising expenses (up 50 bps), partially
offset by lower SG&A expenses (down 10 basis points) as a
percentage of sales.
Get the full analysis of all these stocks by going to
http://at.zacks.com/?id=2649.
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