CHICAGO, May 27, 2011 /PRNewswire/ -- Zacks Equity
Research highlights: Red Robin Gourmet Burgers (Nasdaq:
RRGB) as the Bull of the Day and Computer Sciences Corp.
(NYSE: CSC), as the Bear of the Day. In addition, Zacks Equity
Research provides analysis on Computer Sciences Corp. (NYSE:
CSC), Accenture (NYSE: ACN) and Hewlett-Packard
Company (NYSE: HPQ).
(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:
Red Robin Gourmet Burgers (Nasdaq: RRGB) reported first
quarter 2011 earnings above the Zacks Consensus Estimate, as it
experienced an upside in revenue and margin. The company's plan to
turn around its business by Project RED, which focuses on revenue
growth, expense control and capital deployment is progressing quite
successfully.
The company is taking host of initiatives to control cost and
target cost savings of $16-18 million
by the end of 2012. The company is also experiencing higher traffic
and same-store sales growth aided by loyalty program, increased bar
focus, pricing action, new menu and social media efforts.
Moreover, focus on franchising, reducing debt and enhancing
shareholder value also augurs well. Therefore, we are upgrading the
stock from Neutral to Outperform.
Bear of the Day:
Computer Sciences Corp. (NYSE: CSC) is one of the leading
players in the information technology (IT) services industry. CSC
reported mediocre fourth quarter 2011 results. We are apprehensive
about the intense competition in the IT and cloud computing space
from both small and big players such as Accenture and
Hewlett-Packard.
Moreover, with government orders expected to dry up to a certain
extent and the NHS realization getting pushed to future quarters,
things look difficult for Computer Sciences. Moreover, demand for
the company's products in Europe
is not encouraging for the upcoming quarters.
We have an Underperform rating on the company. We set a price
target of $40.00, representing a P/E
of 7.8x our 2012 EPS estimate.
Latest Posts on the Zacks Analyst Blog:
CSC Flat, Revenues Decline
Computer Sciences Corporation (NYSE: CSC) reported fourth
quarter 2011 EPS of $1.01, exceeding
the Zacks Consensus Estimate of 96
cents.
Revenue
The company's fourth quarter 2011 revenue of $4.20 billion was flat with the year-ago quarter.
Fiscal 2011 was a tough year as the NHS contract was pushed out
further. Additionally, CSC has had a difficult time with its
Nordics business and delays in federal budgets. Irrespective of
this, CSC recorded positive revenue growth in the Commercial
business both sequentially and year-over-year.
North American Public Sector (NPS) revenue was $1.50 billion, down 4.7% compared to the year-ago
quarter. Managed Services Sector (MSS) revenue was $1.75 billion, up 3.6% from the year-ago quarter.
Business Solutions and Services (BSS) revenue was $981.0 million, down 1.0% compared to the
year-ago quarter.
New Business
The total new business awards for the fourth quarter were
$4.0 billion. North American Public
Sector (NPS) contributed approximately $0.9
billion; Business Solutions & Services (BSS) reported
$1.1 billion and the Managed Services
Sector (MSS) secured $2.0 billion of
new business.
New business awards for the full year of $14.0 billion were comprised of $5.5 billion from NPS, $3.5 billion from BSS, and $5.0 billion from MSS.
Guidance
The company provided its guidance for fiscal year 2012.
Accordingly, Computer Sciences expects new business awards in
excess of $17 billion, revenue of
approximately $16.2 - $17.0 billion,
operating margin of between 8.75% and 9.25% and EPS of
approximately $4.70 - $4.80. Free
cash flow is expected to be equal to or greater than 90% of net
income for the year.
Our Take
CSC reported mediocre fourth quarter 2011 results. We are
apprehensive about the intense competition in the IT and cloud
computing space from both small and big players such as
Accenture (NYSE: ACN) and Hewlett-Packard Company
(NYSE: HPQ). Moreover, with government orders expected to dry up to
a certain extent and the NHS realization getting pushed to future
quarters, things look difficult for Computer Sciences.
Moreover, the demand for the company's products in Europe is not encouraging for the upcoming
quarters.
The company has a Zacks #5 Rank, implying a short-term Strong
Sell rating.
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
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stocks that are likely to outperform (Bull) or underperform (Bear)
the markets over the next 3-6 months.
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