The Zacks Analyst Blog Highlights: Dillard's, Best Buy, Fortune Brands Home & Security, Rite Aid and Silgan Holdings

Zacks

For Immediate Release
 
Chicago, IL – October 29, 2013 – 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 the Dillard’s Inc. (DDS-Free Report), Best Buy Co. Inc. (BBY-Free Report), Fortune Brands Home & Security Inc. (FBHS-Free Report), Rite Aid Corp. (RAD-Free Report) and Silgan Holdings Inc. (SLGN-Free Report).
 
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Dillard’s Reiterated at Outperform

On Oct 21, 2013, we reiterated our long-term recommendation on Dillard’s Inc. (DDS-Free Report) at Outperform, based on its strong bottom-line results for the second consecutive quarter.

Why Outperform?

With a positive earnings surprise of 21.5% in the second quarter, the company has surpassed the Zacks Consensus Estimate for the second consecutive quarter as well as thrice in the trailing 4 quarters. The average earnings surprise for the past 4 quarters was approximately 16.0%.

The company’s second-quarter fiscal 2013 earnings benefitted from the successful execution of its long-term growth strategies and the strength of its distinguished and varied assortments.

We expect the company to maintain this trend of posting positive earnings surprises in the years ahead, based on its focus on boosting productivity at existing stores, developing a leading omni-channel platform and enhancing its presence domestically.

Looking at the products offering, we note the company’s strategy of offering more fashion-forward and trendy products has effectively attracted more customers to its stores. This is evident from positive comparable store sales performance in the trailing 11 quarters. Further, improved comparable store sales performance and enhanced e-Commerce capabilities have helped Dillard’s report sales growth over the last several quarters.

Moreover, its wholly owned Captive Insurance Company and REIT facilitate efficient risk management and boost its liquidity position. On the other hand, we appreciate the company’s prudent inventory management that focuses more on conservative purchasing and efforts to better match the timing of receipts with demand, which ultimately result in reduced markdowns.

Other Stocks Worth Considering

Other stocks that are worth considering in the retail industry include Best Buy Co. Inc. (BBY-Free Report), Fortune Brands Home & Security Inc. (FBHS-Free Report) and Rite Aid Corp. (RAD-Free Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

Silgan Downgraded to Zacks Rank #5
 
On Oct 26, 2013, Zacks Investment Research downgraded Silgan Holdings Inc. (SLGN-Free Report) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Silgan witnessed sharp downward price and estimate revisions after reporting disappointing third-quarter 2012 results on Oct 23. The company reported earnings of $1.23 per share in the third-quarter of 2013, which improved 5.1% year over year but were below the company’s guided range of $1.25 to $1.35 per share.

Despite volume growth in metal container business, weather-related headwinds and higher-than-anticipated interest expense affected the earnings. The results also fell short of the Zacks Consensus Estimate of $1.31. The company has delivered negative earnings surprise in the last three quarters.

For 2013, Silgan lowered its expectation for adjusted earnings per share to the band of $2.75 to $2.85 from $3.00 to $3.15. The Zacks Consensus Estimate for 2013 of $2.80 reflects a year-over-year increase of 3.67%.

Even though Silgan will benefit from its successful acquisitions, increasing productivity and cost reduction initiatives, soft demand in Europe, a high debt-to-capitalization ratio and lower volume expectation remain the concerns.

Over the last 7 days, all of the 10 estimates for Silgan were revised downward, pulling down the Zacks Consensus Estimate by 8% to $2.80 per share. For 2014, all of 10 estimates were revised downward over the same timeframe, lowering the Zacks Consensus Estimate by 7% to $3.15 per share.
 
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