For Immediate Release
Chicago, IL – February 24, 2012 – Zacks Equity Research
highlights Red Robin Gourmet Burgers ( RRGB) as
the Bull of the Day and Sunoco, Inc. ( SUN) as the
Bear of the Day. In addition, Zacks Equity Research provides
analysis on Alcoa Inc. ( AA), Aluminum
Corporation Of China Limited ( ACH) and BHP
Billiton Ltd. ( BHP).
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 ( RRGB) reported
another solid quarter with fourth-quarter 2011 earnings surpassing
the Zacks Consensus Estimate as it experienced upside in revenue
and margin. The company is progressing quite successfully in
turning around its business by Project RED, which focuses on
revenue growth, expense control and capital deployment.
The pace of the company's ongoing cost saving initiatives is
faster than expected. Moreover, the loyalty program is tremendously
successful. Also, the company is experiencing same-store sales
growth based on its marketing and promotional activities.
In addition, the company's focus on franchising, unit growth,
store remodeling, investments to improve operational efficiency and
enhancing shareholder value also augurs well for its earnings.
Hence, we upgrade the stock from Neutral to Outperform.
Bear of the Day:
A weak business model, geographically undiversified asset base
and operational hindrances compel us to downgrade Sunoco,
Inc. ( SUN) to Underperform from Neutral. Our pessimistic
outlook on the stock is fueled by the company's poorly performing
refining and supply segment, which registered a high loss along
with lower realized prices and throughputs in the fourth quarter of
2011.
Moreover, with the separation of the coke manufacturing
business, Sunoco exhibits a weak business profile and remains
susceptible to competitive risks. As such, we expect Sunoco to
perform below the industry, which gives investors little reason to
hold the stock.
We render a pessimistic outlook on the stock in the coming
quarters, which is the main reason for our downgrade of the rating.
Our $36 price objective reflects a multiple of 6.2X the trailing
twelve-month cash flow.
Latest Posts on the Zacks Analyst Blog:
Alcoa, CPI Sign Deal
Aluminum giant Alcoa Inc. ( AA) and China Power
Investment Corporation (CPI) entered into a deal to form a joint
venture (JV) for producing high-end fabricated aluminum products
for China. The terms of the agreement are yet to be disclosed.
The new company, named Alcoa CPI (China) Aluminum Investment Co.
Ltd., will be based in Shanghai. Alcoa is expected to hold a major
portion of the company’s share.
The agreement for the JV was signed by Alcoa’s Chairman and CEO
and the President of CPI in Beijing. The joint venture was
announced in September 2011 by the companies after they signed a
Letter of Intent.
The joint venture will develop high-end engineered products that
will be used in many industries including automotive, aerospace,
packaging and consumer electronics. Both the companies believe that
this deal will increase their competitiveness and will lead to
profitable growth while facilitating them to serve their customers
better.
In January 2012, Alcoa, the largest U.S. aluminum producer,
reported loss in its fourth-quarter 2011 results. The company
posted a loss from continuing operations of $193 million, or 18
cents per share compared with a profit of $172 million, or 15 cents
per share in the comparable quarter last year.
Excluding restructuring charge of $159 million and other items,
Alcoa's loss came in at 3 cents per share, below the Zacks
Consensus estimate profit of 1 cent. It is the company's first loss
in the last nine quarters.
For full-year 2011, Alcoa reported income from continuing
operations of $614 million, or $0.55 per share, which is more than
double of 2010 results. The disappointing results were driven by
higher costs of energy and transportation.
Though revenues for the quarter rose 6% year over year to $6
billion, business was down in most areas including construction,
industrial products, packaging and commercial transportation.
Besides, sales to automobile manufacturers fell 2%. For 2011,
revenue rose to $25 billion from $21 billion in fiscal year
2010.
For 2012, Alcoa expects global aluminum demand to grow 7% due to
the worldwide deficit in primary aluminum supply. Alcoa’s growth
projection is ahead of the 6.5% rate, which is required to meet its
forecast of doubling the global aluminum demand between 2010 and
2020.
In addition, Alcoa believes that growing demand for aluminum,
combined with market-related production cutbacks, will result in a
global aluminum industry deficit of 600,000 metric tons in 2012
We believe that Alcoa’s cost reduction efforts are, to some
extent, offsetting the negative impact of higher energy and raw
material costs on profitability. The company is divesting
underperforming assets through its restructuring program.
The annual global consumption of aluminum products, both
upstream and downstream, is expected to double by 2020. This
consumption boom will be driven primarily by growth in China,
India, Russia and Brazil, whose demographics are accelerating
development.
Alcoa retains a Zacks #3 Rank, which translates into a
short-term (1 to 3 months) Hold rating and we have recommended the
shares of the company as Neutral for the long-term (more than 6
months). Alcoa faces stiff competition from Aluminum
Corporation Of China Limited ( ACH) and BHP
Billiton Ltd. ( BHP).
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides
analysis from Zacks Equity Research about the latest news and
events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and
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Continuous analyst coverage is provided for a universe of 1,150
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which gives them keen insights to developments that affect company
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ALCOA INC (AA): Free Stock Analysis Report
ALUMINUM CP-ADR (ACH): Free Stock Analysis Report
BHP BILLITN LTD (BHP): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
SUNOCO INC (SUN): Free Stock Analysis Report
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