For Immediate Release
Chicago, IL – October 30, 2012 – Today, Zacks Equity Research discusses the U.S. Consumer Staples, including Coca-Cola (KO), The Hershey Company (HSY), Wal-Mart Stores, Inc. (WMT) and Molson Coors Brewing Company (TAP).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at
We do not have an Outperform recommendation on any of the consumer staples companies. However, companies like Starbucks, Coca-Cola, Heinz, Hershey, Walmart and Molson Coors are showing impressive growth despite industry headwinds.
Coca-Cola (KO) has beaten estimates and delivered solid growth in all the quarters of 2012. We are encouraged by the company’s global reach, strong brand power, expanding presence outside the U.S. and its solid cash position. Moreover, the company’s acquisition of Coca-Cola Enterprises’ bottling business and its productivity initiatives are expected to result in significant cost savings.
Share buybacks continue to be significant and the company has also increased its dividend rate for 50 consecutive years. The stock carries a Zacks #3 Rank.
The Hershey Company (HSY) raised its 2012 earnings guidance after a solid first-half performance. Earnings in the second quarter increased 17.9% year over year, driven by revenue growth and improved gross margins. Moreover, the company’s strong brand positioning, strategic marketing investments in core brands, disciplined innovation, and consumer capabilities make it attractive.
The company’s pricing and productivity benefits and improved efficiencies from the company’s supply-chain initiatives overshadowed the headwinds from rising input costs. The company pays a regular quarterly dividend that yields 2.7%, which makes this chocolate maker attractive to income seeking investors. Hershey’s has also raised its long-term targets following its continued earnings upside. The company aims to achieve $10 billion in net sales by 2017. The stock carries a Zacks #2 Rank (short-term Buy rating).
Wal-Mart Stores, Inc.’s (WMT) second quarter 2013 earnings were impressive, driven by top-line and positive same store sales. Though currency headwinds and continued economic pressures remained a hurdle, the company upped its full year forecast versus its prior earnings forecast.
We are encouraged by the scale, product and geographic diversity of Walmart. Moreover, Walmart is the sixth-largest Internet retailer. The company is focusing on expanding its presence in the online business, which is already strong in the US, UK, Canada and Brazil. The stock carries a Zacks #2 Rank (short-term Buy rating).
Heinz’s first quarter 2013 results exceeded the prior-year earnings due to a lower-than-expected tax rate, organic sales growth and productivity improvements. Though reported revenues declined due to currency headwinds, organic revenues grew 4.8%. Overall, Heinz’s robust brand portfolio, continued strong growth in emerging markets, strong marketing investments and ongoing cost saving efforts will boost long-term growth. The stock carries a Zacks #3 Rank (short-term Hold rating).
Despite challenging market conditions, global brewer Molson Coors Brewing Company (TAP) posted impressive results in the last three quarters. The company’s acquisition of StarBev is highly encouraging as the addition of StarBev’s flagship brand Staropramen to the company’s portfolio will help it to expand in untapped markets. The stock carries a Zacks #3 Rank (short-term Hold rating).
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