For Immediate Release
Chicago, IL – January 07, 2014 – Zacks Equity Research highlights Amazon.com, Inc. ( AMZN- Free Report) as the Bull of the Day and Darden Restaurants, Inc. ( DRI- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Hertz Global Holdings, Inc. ( HTZ- Free Report ), Avis Budget Group, Inc. ( CAR- Free Report) and SouFun Holdings Ltd. ( SFUN- Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Amazon.com, Inc. ( AMZN- Free Report) looks to be putting its 2013 troubles behind it as it has jumped to a Zacks Rank #1 (Strong Buy) from a Zacks Rank #5 (Strong Sell) last year. Earnings growth is expected to pick up steam in 2014.
Amazon is one of the world's largest on line retailers. It also operates a publishing division and creates original media content, offers cloud services and sells Kindle tablets and the Kindle Paperwhite e-reader.
On Dec 26, Amazon announced that a million new customers had signed up for Amazon Prime, the annual membership program that offers unlimited 2-day shipping on millions of items, in the third week of December alone. It is widely believed that all the new Prime members contributed to the surge in last minute package deliveries that caused a back-up at UPS just before Christmas day.
The Prime program now has "tens of millions of members worldwide."
Is Amazon the new Santa? It delivered enough packages through the Prime program to equal one gift for every household in America.
The 2013 holiday season was a record for Amazon with 36.8 million items ordered on Cyber Monday alone.
The company also said it sold "millions" of Kindle e-readers and Kindle Fire tablets, but true to Amazon's history of not providing exact numbers of tablet sales, it didn't say how many "millions."
Bear of the Day:
In the end, Darden Restaurants, Inc. ( DRI- Free Report) couldn't save both Olive Garden and Red Lobster, two of its largest chains. But will a planned sale of Red Lobster boost long term prospects for this Zacks Rank #5 (Strong Sell)?
Darden operates about 2100 restaurants worldwide, including some of the most recognized restaurant brands of Olive Garden, Red Lobster, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House.
On Dec 19, Darden announced a plan to spin-off or sell Red Lobster by mid-2014. Red Lobster operates 705 restaurants in the United States and Canada.
In recent years, Red Lobster has been the brand that has lagged, predominantly due to seafood costs and the market demographic, which trends towards the more upscale diner.
Darden appointed Kim Lopdrup, who had served as Red Lobster's President from 2004 to 2011, as the new CEO of the Red Lobster group.
Darden also said it was suspending any new additions to Olive Garden and limiting the expansion of LongHorn Steakhouse while the Red Lobster spin-off was occurring.
Hertz Rises on Icahn Stock Purchase
t seems that Hertz Global Holdings, Inc.’s ( HTZ- Free Report ) decision last week of adopting a one-year shareholder right plan to prevent itself from a hostile takeover by activist investors was taken at the right time. On Jan 3, CNBC reported that billionaire activist investor, Carl Icahn, has acquired 30–40 million shares or 6%–9% stake in the largest publicly traded U.S. rental-car company. The business TV broadcaster also revealed that the acquired stake is in the form of common shares and derivatives.
Following the news bulletin, the company’s shares soared to a record high of $29.81, which is the highest price since its initial public offering in Nov 2006. However, thereafter the price fell and the stock closed at $28.50, 0.6% lower than the closing price as on Jan 2. Over the one-year span, Hertz shares rose 69.6% primarily driven by its improving prospects, making competition tough for its peer Avis Budget Group, Inc. ( CAR- Free Report) that surged 95.1%.
As per CNBC, Carl Icahn is not the only activist investor interested in the vehicle rental company. Earlier, the television channel had revealed that Dan Loeb’s Third Point LLC and activist investor, Keith Meister's Corvex Capital bought some stake in the company. However, in total, their stake lies below 5%.
As per data compiled by Bloomberg, Wellington Management is the biggest shareholder of Hertz with approximately 9.2% interests in the company as of Sep 30, 2013.
Observing these “unusual and substantial” activities in its shares, we acknowledge Hertz’s decision to adopt the one-year shareholder right plan to restrain from a possible takeover. As per the plan, the company is entitled to issue one preferred share purchase right for each outstanding common share after the close of business on Jan 9, 2014. The rights will be exercisable only when a person or group acquires 10% of the company’s common stock. However, for institutional investors, the exercisable limit is 15%.
The shareholder right plan, also known as poison pill, reduces chances of gaining control over a company by any person or group through accumulation of shares in the open market without appropriately compensating shareholders.
Hertz expects the above plan to facilitate increasing of shareholder value through the execution of strategic initiatives. The company’s long-term strategic initiatives include the integration of Dollar Thrifty, expansion of the off-airport footprint, introduction of new brands catering to consumer needs, rollout of the new rental technology and the company's Lean cost management programs. Apart from this, Hertz is considering a revision in its operating structure and capital allocation to drive long-term growth.
At present, this leading airport car rental brand in the U.S. with presence at 120 major airports in Europe holds a Zacks Rank #5 (Strong Sell). However, some better-ranked stocks in the same industry include SouFun Holdings Ltd. ( SFUN- Free Report), which has a Zacks Rank #1 (Strong Buy).
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