For Immediate Release
Chicago, IL – December 16, 2011 – Zacks Equity Research
highlights Macy, Inc. (M) as the Bull of the Day
and Meritor, Inc. (MTOR) as the Bear of the Day.
In addition, Zacks Equity Research provides analysis on
FedEx Corporation (FDX), The Boeing
Company (BA) and United Parcel Service
Inc. (UPS).
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:
Macy, Inc.'s (M) has been taking prudent steps
to increase sales, profitability and cash flows. These 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. These help the company to
deliver better-than-expected third-quarter 2011 results.
The quarterly earnings of $0.32 per share beat the Zacks
Consensus Estimate of $0.16, and portrayed a fourfold increase from
$0.08 earned in the prior-year quarter. Following this management
raised its outlook. Macy's now expects fiscal 2011 earnings between
$2.70 and $2.75 per share.
The company hinted that it is also seeking to expand both the
Macy's and Bloomingdale's brands. Macy's, which saw 4.8% growth in
November comparable-store sales, expects comps increase between
4.8% and 5% for fiscal 2011.
Bear of the Day:
Meritor, Inc. (MTOR) is a globally recognized
automotive parts supplier. However, the company has high customer
concentration, which implies limited scope for margin expansion.
Further, the recent turmoil in the global economy is expected to
continue to mar its results.
We are also disappointed about Meritor's deteriorating cash
flow. Although the company's fiscal fourth quarter profit was ahead
of the Zacks Consensus Estimate by $0.19 per share, we remain
concerned about its long-term outlook.
Our long-term Underperform recommendation on the stock indicates
that it will perform lower than the broader market. Our $5.50
target price, 3.8X our 2012 EPS estimate, reflects this view.
Latest Posts on the Zacks Analyst Blog:
FedEx Beats EPS, Keeps Guidance
Before the opening bell, FedEx Corporation
(FDX), the world's second-largest package delivery company,
reported second quarter fiscal 2012 adjusted earnings of $1.57 per
share. The quarter’s earnings outpaced the Zacks Consensus Estimate
of $1.52 and were 35% above $1.16 earned in the year-ago
quarter.
Total revenue climbed 10% year over year to $10.59 billion and
missed the Zacks Consensus Estimate of $10.605 billion. The
year-over-year improvement was attributable to continued
improvement in FedEx Ground, healthy performance by FedEx Freight
and strong yield initiatives.
Operating income shot up 66% year over year to $780 million in
the reported quarter. Operating margin also showed an increase of
250 basis points (bps) to 7.4%from 4.9% in the year-ago
quarter.
Operating expenses rose 7% year over year to $9.8 billion mainly
due to a 28% rise in the fuel cost from the year-ago quarter.
Segment Results
FedEx Express revenue was $6.58 billion in the
reported quarter, up 10% year over year. Operating income climbed
30% year over year to $342 million, resulting in an 80 bps
expansion in operating margin to 5.2%.
The FedEx International Priority (IP) average daily package
volume fell 3% year over year due to weak Asian demand while
revenue per package (yield) grew 11% on higher fuel surcharge. U.S.
domestic revenue per package rose 12% year over year despite a 4%
decline in the U.S. domestic average daily package
volume.
FedEx Express is rightsizing its aircraft fleet. The company
intends to replace the old MD10 aircraft with the new 767-300F from
The Boeing Company (BA) between 2014 and 2018.
Additionally, FedEx is also delaying the delivery of 11 Boeing 777F
aircraft to balance the demand for air network capacity.
FedEx Ground revenue rose 13% year over year to
$2.34 billion attributable to package volume growth at FedEx Ground
as well as FedEx SmartPost. Operating income grew 34% year over
year to $398 million, resulting in operating margin of 17% compared
with 14.3% in the year-ago quarter. FedEx Ground average daily
package volume increased 4% and revenue per package grew 8%. FedEx
SmartPost average daily volume expanded 17% and revenue per package
rose 4%.
FedEx Freight revenue increased 9% year over
year to $1.33 billion, reflecting 8% higher LTL
(less-than-truckload) yield, partially offset by lower average
daily LTL shipments (down 3%). FedEx Freight recorded an operating
income of $40 million compared with an operating loss of $91
million in the year-ago quarter.
Operating margin was 3% versus (7.5%) in the year-ago quarter.
The strong performance was driven by operational efficiency from
the combination of FedEx Freight and FedEx National LTL completed
early this year.
Guidance
FedEx has projected earnings in the range of $1.25 to $1.45 per
share for the third quarter of 2012. The mid-point ($1.35) is
higher than the current Zacks Consensus Estimate of $1.33.
Based on rising fuel prices and moderate economic growth, FedEx
reaffirmed its fiscal 2012 earnings projection of $6.25–$6.75 per
share. The mid-point ($6.60) is above the current Zacks Consensus
Estimate of $6.30.
FedEx continues to expect capital spending of $4.2 billion for
fiscal 2012.
Our Analysis
Despite economic volatility, we believe all three segments of
FedEx will continue to perform well. The company expects continued
top-line growth in Ground and Freight based on strong yields,
ongoing efficiency plans, volume expansion and cost management.
At FedEx Express, the company is realigning its network capacity
to match weak international volumes due to the drop in Asian
demand. Further, FedEx has taken several initiatives like reducing
flights and frequencies as well as redeploying equipment in other
networks to lower costs.
Nevertheless, huge investments in aircraft and vehicles,
competitive threats from United Parcel Service
Inc. (UPS), a unionized workforce and steeper fuel prices
may limit the upside potential of the stock.
We are currently maintaining our long-term Neutral rating on
FedEx. The stock retains the Zacks #3 Rank (Hold) for the short
term (1-3 months).
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
stocks that are likely to outperform (Bull) or underperform (Bear)
the markets over the next 3-6 months.
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BOEING CO (BA): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
MERITOR INC (MTOR): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis Report
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