Francesca's Holdings, Mentor Graphics, Nokia, Microsoft and Google highlighted as Zacks Bull and Bear of the Day

Zacks

For Immediate Release

Chicago, IL – September 18, 2013 – Zacks Equity Research highlights Mentor Graphics (MENT-Free Report) as the Bull of the Day and Francesca’s Holdings (FRAN-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Nokia Corporation (NOK-Free Report), Microsoft Corp. (MSFT-Free Report) and Google Inc.’s (GOOG-Free Report). Here is a synopsis of all five stocks:

Bull of the Day:

Looking for a company with exposure to the semiconductor, auto, and aerospace industries?  Then Mentor Graphics (MENT-Free Report), Zacks Rank #1 (Strong Buy) should be on your buy list.  Mentor Graphics designs, manufactures, markets, and supports electronic design automation software.  The software helps companies design circuit boards and integrated circuits.

In its July quarter, Mentor posted record revenue, bookings, and operating income.  In fact, bookings were up over 70% year over year and should be supportive to future sales growth.  The favorable outlook is highlighted by a strong upward revision to FY 2015 (January) earnings per share estimates. The Zacks Consensus Earnings Estimate for FY 2015 is up 9.7% over the last thirty days to $1.46 per share.  There was also a solid $0.03/share bump to FY 2014 EPS to $1.27.

Sales growth is expected to be healthy in the coming year.  The Zacks Sales Consensus for FY 2015 sees sales rising 6.0% to $1.228 bln. The most recent analyst move was above consensus at $1.235 bln.
 
Bear:
 
Francesca’s Holdings (FRAN-Free Report), Zacks Rank #5 (Strong Sell), is a women’s apparel retailer which recently reported disappointing profits.  The company posted earnings per share of $0.33 in the quarter ending July against a Zacks Consensus Estimate of $0.35. 
 
The company also provided weak guidance for FY Q3 (October) and the Zacks Consensus estimate for Q3 tumbled $0.10 to $.20 in the wake of the report.  Estimates have also declined for FY 2014 and FY 2015 by $0.18 and $0.25 to $1.12 and $1.33 respectively over the past thirty days. The stock gapped sharply lower after its September 4th earnings release.
 
Francesca’s reported below plan sales and gross margin pressure.  Weak traffic and poor sales in the gift category weighed on results.   Same store sales have contracted three straight quarters and operating margins have declined compared to a year ago four straight quarters. 
 
The CEO indicated that there were improved traffic trends in late August, but no clear direction had emerged.  The statements provide caution on the outlook.  The dim view has compressed the forward price to earnings ratio from over 30.0 to 15.5.  Women’s apparel is a competitive space and being reflected in the multiple.
 
Additional content:
 
Nokia’s New Offering: $29
 
In order to expand its feature phone market, Finnish handset manufacturer, Nokia Corporation (NOK-Free Report) has launched low-cost camera phone, Nokia 108. It is priced at $29 and is available in both single and dualSIM modes with a VGA camera. The new handset is expected to be shipped from the last quarter of 2013.

The ultra-light Nokia 108 comes with an MP3 player, FM radio, flashlight, alarm, 31-day battery backup, Bluetooth and the popular snake game. The handset will initially be available in black, white and red and later the colors yellow and cyan will also be introduced.

Nokia 108 has been introduced to target low-end customers who have never used camera phones. Moreover, the availability of a microSD card allows up to 32GB of storage facility.

The feature phone business is doing quite well in emerging nations like India, with the Asha series being a huge hit. In the recently concluded second quarter of fiscal 2013, Nokia sold 53.7 million feature phones (including 4.3 million Asha full-touch phones). A few days back, the company also launched a high-end feature phone, Nokia 515 at $150.

Recently, Microsoft Corp. (MSFT-Free Report) has decided to acquire Nokia Corp’s handset business for $7.2 billion (5.44 billion euros). The deal is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders and regulators.

Earlier, Nokia teamed up with Microsoft to offer Windows-based Lumia handsets. However, stiff competition from Google Inc.’s (GOOG-Free Report) Android-based smartphones has resulted in continuous deterioration of its handset business.

Nokia currently carries a Zacks Rank #3 (Hold).
 
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