For Immediate Release
Chicago, IL – March 27, 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 Tyson Foods Inc. (TSN), Sanderson Farms Inc. (SAFM), Supervalu Inc. (SVU), Kroger Company (KR) and Hartford Financial (HIG).
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Here are highlights from Tuesday’s Analyst Blog:
Meat Industry Saved from Shutdown
The meat industry heaved a sigh of relief as according to media reports, the U.S. Congress decided to set aside the furlough of meat inspectors by the United States Department of Agriculture (:USDA).
The government allotted $55 million in order to prevent the proposed furlough as a part of the federal budget cuts. The spending cut and tax increases to cover the deficit by the U.S. government was scheduled to begin in Jan 2013, but was eventually pushed back to March. This was because the differences between President Obama and congressional Republicans had yet to be resolved.
Up to 8,400 inspectors appointed by the USDA were supposed to be furloughed for the equivalent of 15 days to effect the savings required under the automatic cuts. This would result in complete shutdown of meat plants for two weeks as by law, meat processors cannot sell beef, pork, lamb and poultry meat without the USDA inspection seal. According to Agriculture Secretary Tom Vilsack, the impact of the furlough of inspection personnel could have amounted to 15 days of lost production costing over $10 billion.
The proposal was accepted as it did not involve any new spending. The $55 million would instead come from $30 million previously allotted to maintain USDA buildings and $25 million for a new USDA program to upgrade school kitchen equipment.
Meat processing giant Tyson Foods Inc. (TSN) and Sanderson Farms Inc. (SAFM) welcomed the decision. Tyson Foods hailed the bill and commented that the setting aside of the proposed furlough would be beneficial for the meat industry, groceries, restaurants and schools. The prevention of furlough would also provide uninterrupted supply to chains like Supervalu Inc. (SVU) and Kroger Company (KR).
In its fourth quarter fiscal 2013 earnings conference call held in Feb 2013, Tyson said that it expects sales to grow by 3% to 4% in fiscal 2014. Value-added sales are expected to rise in the range of 6% to 8% in 2014. Moreover, international production is expected to grow at an annual rate of 12% to 16%.
The company expressed that its second-quarter loss was attributable to contracting margins in the beef and pork segment. The chicken segment is however improving due to favorable demand shift from red meat.
In April 2013, the company expects to further boost the segment by introducing the NatureRaised Farms brand, including natural chicken reared without use of antibiotics or added hormones. Currently, Tyson Foods carries a Zacks Rank #2 (Buy).
Hartford Financial Hits 52-Week High
On Mar 25, 2013, shares of Hartford Financial (HIG) hit a 52-week high of $26.69. The momentum is driven by the company’s recent capital management plans and earnings beat in the fourth quarter of 2012.
On Feb 4, 2013, Hartford Financial reported fourth-quarter 2012 operating earnings of 54 cents per share, comfortably beating the Zacks Consensus Estimate of 30 cents. The company delivered positive earnings surprise in 2 out of 4 quarters in 2012 with an average beat of 14.4%.
On the same day, Hartford Financial announced a capital management plan aimed at boosting financial flexibility by reducing debt and returning more value to shareholders through share repurchase. The plan comprises debt repayment worth $1 billion along with repurchase of shares worth $500 million by the end of 2013. The company, in an effort to successfully execute its plans, has already announced a cash tender offer to repurchase senior debt worth $800 million.
The capital plan was driven by the surplus capital that Hartford Financial generated from the recent divestitures. The company completed the sale of Woodbury Financial Services in Dec 2012 and its Retirement Plans and Individual Life Insurance businesses in Jan 2013. These three transactions cumulatively enhanced the net statutory capital by $2.2 billion, most of which will be recognized in 2013.
Hartford Financial also terminated its Individual Annuity business in the second quarter of 2012 and sold its new variable annuity business infrastructure in Jan 2013, which is expected to cut down pre-tax expenses by $100 million in 2013.
The valuation of Hartford Financial’s shares is reasonable. The shares are trading at a discount on a price-to-book and forward price-to-earnings basis and return on equity is also lower than the peer group average. Nevertheless, the 1-year return from the stock is 21.5%, much above the S&P 500’sreturn of 11.4%.
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