For Immediate Release
Chicago, IL – November 15, 2011 – Zacks.com announces the list
of stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include Jacobs Engineering Group
Inc. (JEC), Fluor Corporation
(FLR), Foster Wheeler AG ( FWLT), Lowe’s
Companies Inc. (LOW) and The Home Depot
Inc. (HD).
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Here are highlights from Monday’s Analyst
Blog:
Earnings Preview: Jacobs
Engineering
Jacobs Engineering Group Inc. (JEC) will be
reporting its fourth-quarter and fiscal 2011 earnings on Tuesday,
November 15, 2011.
The current Zacks Consensus Estimate for earnings per share
(EPS) is 73 cents, representing an annualized growth of 18.90%.
With respect to earnings surprises over the trailing four
quarters, JEC outperformed the Zacks Consensus Estimate in one
quarter; was in line in another and lagged behind in two other
quarters. Average earnings surprise was a negative 1.75%. The
average earnings surprise implies that the company underperformed
the Zacks Consensus Estimate by the same magnitude over the last
four quarters.
Third Quarter Highlights
On July 25, 2011, Jacobs Engineering Group Inc. reported its
financial results for the third quarter of 2011 with net earnings
per diluted share of $0.71 in the quarter, up from $0.15 reported
in the year-ago quarter. Results were marginally above the Zacks
Consensus Estimate of $0.70.
Total revenue jumped 9.4% year over year to $2,744.2 million,
above the Zacks Consensus Estimate of $2,687.0 million. Revenues
from Technical Professional Services (58.1% of total revenue)
increased to $1,593.5 million from $1,280.1 million in the third
quarter of fiscal 2010 while revenues from Field Services (41.9% of
total revenue) dropped 6.3% to $1,150.7 million.
Agreement of Estimate Revisions
In the last 30 days, none of the analysts providing estimate
increased or decreased the company’s earnings per share (EPS) for
the fourth quarter, as there was no catalyst for such change.
However, for fiscal 2011, one analyst increased the estimate in the
last 30 days while one decreased the same for fiscal 2012.
Magnitude of Estimate Revisions
Estimates over the last 30 days remained intact at 73 cents per
share for the fourth quarter of 2011, representing a year-over-year
growth of 18.90%.
Estimate for fiscal 2011 also remained intact at $2.59 over the
last 30 days while that for fiscal 2012 demonstrated a similar
trend at $3.01. These estimates represented a year-over-year growth
of 4.48% for 2011 and 16.03% for 2012.
Our Take
Jacobs is likely to post impressive results in the fourth
quarter and fiscal 2011 based on improvements in the economic
conditions and end markets as well as the company’s diversification
across geographies and services. We believe that the company’s
contract wins as well as controlled SG&A expenses and backlogs
over time will help to improve financials, going forward.
Jacobs Engineering Group Inc. is one of the world's largest
engineering and construction companies providing services to a
variety of industrial, commercial and government clients across a
global network. The company directly competes with its peers,
Fluor Corporation (FLR) and Foster Wheeler
AG ( FWLT).
We currently maintain a long-term Neutral recommendation on the
stock. Jacobs has a Zacks #3 Rank, which translates into a
short-term Hold rating (1-3 months).
Lowe’s Beats Estimates
Lowe’s Companies Inc. (LOW), the world’s second
largest home improvement retailer, recently posted
better-than-expected third-quarter 2011 results, thereby raising
its fiscal 2011 sales outlook.
Let’s Unveil the Picture
The quarterly earnings of 35 cents a share beat the Zacks
Consensus Estimate by a couple of cents and jumped 12.9% from 31
cents delivered in the prior-year quarter. However, on a reported
basis, including one-time items, the quarterly earnings came in at
18 cents a share, down 37.9% from 29 cents earned in the year-ago
quarter.
Net sales for the quarter crept up 2.3% to $11,852 million from
$11,587 million delivered in the year-ago quarter. Net sales also
comfortably surpassed the Zacks Consensus Estimate of $11,690
million. The company had earlier forecasted sales to increase
approximately 2% during the quarter.
Comparable-store sales during the quarter inched up 0.7%.
Management had earlier predicted comparable-store sales to remain
flat in the quarter.
Lowe’s indicated that gross profit edged down 0.6% to $4,037
million, whereas gross margin contracted 100 basis points to 34.1%
during the quarter.
Stores Update
During the quarter, Lowe’s opened 8 stores. The company expects
to open 25 new stores during fiscal 2011. At the end of the
quarter, the company operated 1,744 stores in the United States,
Canada and Mexico.
Other Financial Aspects
Lowe’s ended the quarter with cash and cash equivalents of $675
million, total long-term debt of $6,615 million, reflecting
debt-to-capitalization ratio of 28.2%, and shareholders’ equity of
$16,809 million. The company generated about $3,892 million in cash
flow from operations during the first-nine months of fiscal
2011.
Strolling Through Guidance
Lowe’s said that it now expects fourth-quarter 2011 earnings in
the range of 20 cents to 23 cents a share. For fiscal 2011,
management expects earnings between $1.57 and $1.60 per share,
excluding charges of 20 cents related to store closings and
discontinued operations.
The current Zacks Consensus Estimates are 23 cents for the
fourth quarter and $1.59 per share for fiscal 2011.
Management now expects sales to increase approximately 8% in the
fourth quarter and between 2% and 3% in fiscal 2011. Earlier,
Lowe’s had forecasted fiscal 2011 sales to increase by
approximately 2%.
Lowe’s, which faces stiff competition from The Home
Depot Inc. (HD), expects comparable-store sales to remain
flat or up 1% in the fourth quarter but to decline by 1% in fiscal
2011.
Let’s Conclude
With the global economic environment still struggling, we
believe that spending on big remodeling projects will likely remain
under pressure until the housing market stabilizes, inventory
levels normalize and consumer-spending rebounds.
Lowe’s recently undertook initiatives such as reformation of its
store and merchandising operations to enliven competence, augment
operational efficiencies and enrich the shopping experience for
customers. All these benefited the company to some or the other
extent.
The company also replaced its old tag line “Let’s Build
Something Together” with a new one “Never Stop Improving”, thereby
reflecting the company’s new brand strategy. We believe that the
new tag line would help the company to build a sense a confidence
among its consumers.
The new tag line mirrors the company’s endeavor of improving and
developing innovative ideas to cater to the constant changing
demands and preferences of consumers. Lowe’s also initiated an
online tool, “MyLowes”, to aid consumers better manage their homes
and other home remodeling projects.
We believe that “Never Stop Improving” campaign and “MyLowes”
may help Lowe’s in gaining a competitive advantage.
Currently, we have a long-term ‘Neutral’ rating on the stock.
Moreover, Lowe’s holds a Zacks #3 Rank that translates into a
short-term ‘Hold’ rating, and correlates with our long-term
view.
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FLUOR CORP-NEW (FLR): Free Stock Analysis Report
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
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