CHICAGO, Feb. 25, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: Target Corporation (NYSE: TGT),
Priceline.com Inc (Nasdaq: PCLN), Expedia
Inc (Nasdaq: EXPE), Kohl's Corp. (NYSE: KSS)
and Transocean Inc. (NYSE: RIG).
(Logo:
http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the
free Profit from the Pros newsletter:
http://at.zacks.com/?id=4579
Here are highlights from Thursday's Analyst Blog:
Target's Earnings Soar
Target Corporation (NYSE: TGT), the operator of
general merchandise and food discount stores in the United States, recently posted
fourth-quarter 2010 results. The quarterly earnings of $1.45 per share beat the Zacks Consensus Estimate
of $1.40, and rose 17% from
$1.24 earned in the prior-year
quarter.
The Zacks Consensus Estimate for the quarter was stable prior to
the earnings release, despite 3 out of 26 analysts covering the
stock lowering their projections in the last 30 days.
The increase in quarterly earnings was driven by effective cost
management and improved profitability at retail and credit card
segments that overshadowed lower-than-expected sales. Moreover,
lower-than-expected effective tax rate boosted the quarterly
earnings by 7 cents a share.
Behind the Headline
Total revenue for the quarter climbed 2.4% to $20,661 million from the prior-year quarter but
fell short of the Zacks Consensus Estimate of $20,839 million. Retail sales grew 2.8% to
$20,277 million as shoppers are
gradually opening up their wallets.
Minneapolis, Minnesota-based
company, Target, said that comparable-store sales for the quarter
grew 2.4%, reflecting a sharp rise over an increase of 0.6%
registered in the prior-year quarter. The number of transactions
rose to 1.6%, whereas the average transaction amount climbed
marginally by 0.8% in the quarter.
Despite a 3.4% increase in cost of sales, gross profit at the
Retail segment climbed 1.4% to $5,819
million, aided by sales growth witnessed across the segment;
however, gross margin contracted slightly by 40 basis points to
28.7%. Segment operating income jumped 3.1% to $1,608 million, whereas operating margin remained
flat at 7.9%.
The company said that revenue from the Credit Card segment
tumbled 17% to $384 million. However,
Target was quick to indicate that segment profit rose to
$151 million in the quarter under
review from $39 million delivered in
the prior-year quarter helped by a decline in bad debt
expenses.
Target's Strategic Initiatives
Management indicated that Target's store remodel program, 5%
REDcard Rewards program and the new Target.com platform will help
sustain sales momentum, continue to drive traffic and enhanced
customer shopping experience in fiscal 2011.
Earlier, Target had hinted about its plans to remodel nearly 380
stores in fiscal 2011, which include an expanded grocery offering,
improved store layout and enhancement of in-store shopping
experience across departments, such as beauty, home, electronics
and video games.
Moreover, by the end of 2011, Target plans to introduce P-fresh
in-store food and grocery sections in approximately 850 discount
stores. The company expects P-fresh to boost 2011 comparable-store
sales by 1% to 2%.
Another opportunity, which Target is eyeing, is the opening of
stores in international markets, such as Canada and Latin
America. The company plans to open 100 to 150 stores in
Canada by 2013 and 2014. We
believe the opening of stores outside the
United States will definitely boost the company's top and
bottom lines and improve its cash flow generation capability.
Other Financial Details
During the quarter, Target repurchased about 7.6 million shares
at a price of $54.60 per share,
aggregating $414 million. In fiscal
2010, the company bought back 47.8 million shares at a price of
$52.44 per share, aggregating
$2.5 billion.
The company ended the quarter with cash and cash equivalents of
$1,712 million, total unsecured debt
and other borrowings of $11,653
million and shareholders' equity of $15,487 million.
Target currently, operates 1,750 stores in 49 states, of which
1,037 are general merchandise stores, 462 are expanded grocery
assortment and 251 are SuperTarget stores.
Our View
Target's efficient marketing, multi-channel strategy, product
innovation, compelling pricing strategy and new merchandise
assortments, should help drive comparable-store sales and operating
margins in the long term. We expect the company to gain market
share, and believe that more focus on consumable items should boost
sales and earnings in a sluggish consumer environment.
Target now tends to focus more on store renovations and
enhancing store sales productivity, introducing smaller format
stores, and eyeing opportunities to open stores in the
international markets.
PriceLine Up on Report, Guidance
Priceline.com Inc (Nasdaq: PCLN) reported strong
numbers in the seasonally down fourth quarter. The company's
earnings including stock based compensation and excluding other
items beat the Zacks Consensus by 16
cents, or 5.7%.
Shares dropped 1.8% during the day since expectations were low
given the fact that competitor Expedia
Inc (Nasdaq: EXPE) missed expectations. However, after
Priceline's positive surprise and solid guidance, shares jumped
4.67% in after-hours trading.
Revenue
Priceline reported revenue of $731.3
million in the quarter, representing a sequential decline of
27.0% and a year-over-year increase of 35.0%. This was in-line with
the Zacks Consensus estimate, although at the high end of
management's expectations of a 31-36% increase from last year.
On a sequential basis, Priceline saw double-digit seasonal
volume declines across all product lines. Specifically, hotel room
nights dropped 20.0%, rental car days growing 23.5% and airline
tickets 13.3%.
The year-over-year revenue increase was attributable to both
hotel room nights and rental car days, which were up 50.8% and
64.6%, respectively. Priceline's average daily rates (ADRs)
compared favorably with the year-ago quarter, increasing around 3%
for the international business and over 5% for the domestic
business. Airline tickets (down 2.8%) was the only product line
that disappointed.
Guidance
For the first quarter, Priceline expects total gross bookings to
grow 45-50% year over year, with international growing 64-69% (up
66-71% on local currency basis) and domestic growing 7-12%. This is
expected to yield a year-over-year revenue increase of 29-34%
($768.5 million at the mid-point),
much better than our expectations of $746
million. Priceline also expects a gross profit dollar
increase of 47-52%.
Total advertising spend is expected to be $185-190 million, of which roughly $12 million will be spent on offline advertising.
Sales and marketing expense is expected to be $32-36 million, personnel expenses (excluding
stock based compensation) of $65-69
million, general and administrative expenses $23-26 million, information technology expenses
$7 million and depreciation and
amortization charges $5 million. The
pro forma EBITDA is expected to be $147-157
million.
Priceline expects the pro forma EPS to come in at $2.34-$2.44, with the GAAP EPS at $1.66 to $1.76. Analysts were expecting pro forma
earnings of $2.03, well below the
guided range.
Conclusion
Analysts have been lowering estimates over the past 7 days,
which has had a negative impact on the Zacks rank (currently #4,
signifying a short-term Sell recommendation). However, we think
that estimates will go up in the next few days. We would caution
investors about rising costs however, which are likely to lower
margins in 2011.
Kohl's Reports Strong Q4
Kohl's Corp. (NYSE: KSS) registered fourth-quarter
2010 earnings of $1.66 per share,
which was in line with the Zacks Consensus Estimate. However,
earnings were up 18.6% year-over-year from $1.40.
For the full year, earnings came in at $3.65 a share which was up 13% compared to
$3.23 in fiscal 2009. However, annual
earnings were below the Zacks Consensus Estimate of $3.73.
The year-over-year profits were primarily driven by improved
merchandise margins, strong inventory management and successful
brand strategies.
Driven by strong profits in fiscal 2010, the company provided
guidance for earnings for the first quarter and full fiscal 2011.
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 rage of
$4.05 to $4.25 a share.
Transocean Lags, Down Annually
Global offshore drilling contractor Transocean
Inc. (NYSE: RIG) reported weak fourth
quarter and full-year 2010 results, affected by reduced utilization
rates and lower average daily revenue along with higher operating
costs.
Earnings per share, excluding one-time expenses, came in at
76 cents, below the Zacks Consensus
Estimate of 87 cents. In the year-ago
period, the company had earned $2.21
(on an adjusted basis).
Full-year 2010 earnings, excluding one-time costs, were
$6.00 per share, down 52.7% year over
year and 9.5% below our projection.
Total quarterly revenue came in at $2,160
million, down 21.0% from the year-ago level of $2,733 million and lagging the Zacks Consensus
Estimate of $2,299 million. The
quarter performance was bruised by lower utilization resulting from
idle rigs, legal charges and reduced revenue.
Transocean generated total revenue of $9,576 million in 2010 as compared with
$11,556 million in 2009. The
full-year revenue also failed to meet our expectation of
$9,704 million.
During the quarter, Transocean's high-spec floaters accounted
for the lion's share of total revenue with approximately 57.1%,
while mid-water floaters and jackup rigs contributed about 22.1%
and 14.6%, respectively. The remaining revenue came from other rig
activities and integrated services.
Want more from Zacks Equity Research? Subscribe to the free
Profit from the Pros newsletter: http://at.zacks.com/?id=5514.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and
qualitative analysis to help investors know what stocks to buy and
which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly
traded stocks. Our analysts are organized by industry which gives
them keen insights to developments that affect company profits and
stock performance. Recommendations and target prices are six-month
time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides
highlights of the latest analysis from Zacks Equity Research.
Subscribe to this free newsletter today:
http://at.zacks.com/?id=5516
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc.,
which was formed in 1978 by Leonard
Zacks. As a PhD in mathematics Len knew he could find
patterns in stock market data that would lead to superior
investment results. Amongst his many accomplishments was the
formation of his proprietary stock picking system; the Zacks Rank,
which continues to outperform the market by nearly a 3 to 1 margin.
The best way to unlock the profitable stock recommendations and
market insights of Zacks Investment Research is through our free
daily email newsletter; Profit from the Pros. In short, it's your
steady flow of Profitable ideas GUARANTEED to be worth your time!
Register for your free subscription to Profit from the Pros at
http://at.zacks.com/?id=4580.
Visit http://www.zacks.com/performance for information about the
performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook:
http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results.
Investors should always research companies and securities before
making any investments. Nothing herein should be construed as an
offer or solicitation to buy or sell any security.
Contact:
|
|
Mark Vickery
|
|
Web Content Editor
|
|
312-265-9380
|
|
Visit: www.zacks.com
|
|
|
SOURCE Zacks Investment Research, Inc.