Alliance Fiber Optic Products, Southern Copper, Yum! Brands, McDonald's and Brinker International as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 23, 2013 – Zacks Equity Research highlights Alliance Fiber Optic Products (AFOP-Free Report) as the Bull of the Day and Southern Copper Corp (SCCO-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Yum! Brands Inc. (YUM-Free Report), McDonald's Inc. (MCD-Free Report) and Brinker International Inc. (EAT-Free Report). Here is a synopsis of all five stocks:
Bull of the Day:
Alliance Fiber Optic Products (AFOP-Free Report) was profiled back on August 2, and the stock is up 45% since then. The ride isn't over for this fiber optic play and it is again the Bull of the Day as a Zacks Rank #2 (Buy).
Back in July I wrote about my "Best Tech Stocks For 2nd Half of 2013" and I discussed the idea of more devices coming soon and how they will create demand for more bandwidth. To satiate the demand for that bandwidth, service providers are increasingly turning to fiber optics.
Over the last few weeks companies that service the fiber optic market have been on fire. Ciena recently beat earnings and guided higher pushing its stock higher by 14% and Finisar reported earnings which they had previously revised guidance for, and then came out with another increase in guidance.
AFOP designs and manufactures components, modules, and subsystems that empower dynamic optical network, and facilitates the migration of fiber optics from the long haul through the last mile. That is all industry jargon for they make a fiber optic connection to your business or home a reality.
The most recent quarter was viewed by Wall Street as a beat of two cents. Zacks has the quarter and the one before it as a meet.
The main idea with a company the size of AFOP is to look at revenue growth. Recently, the company increased its revenue guidance for the next quarter from a range of $19M-$20M to more than $22M. The chart below shows how expectations for revenue have grown throughout this year.
Bear:
Southern Copper Corp (SCCO-Free Report) was profiled back on July 5 as a Bear of the Day as a Zacks Rank #5 (Strong Sell). Since then the company once again missed earnings and is again the Bear of the Day today.
When I take a quick look back at the chart, I see that SCCO is up about 4.75% since it was last profiled as the Bear of the Day. In that same time frame, the market (S&P 500) has been up 6%. So now quite the negative performance you might expect but it has underperformed.
Southern Copper is in the business of mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile.
The last two quarters have not been that good for SCCO. The March 2013 quarter was a miss of three cents of 4.8% below earnings expectations. The follow quarter was another miss of $0.03, but since the estimates were lower the percentage of negative surprise rose to 6.4%.
More importantly, the company has missed on the top line in each of the last three quarters. The most recent quarter reported on 7/22/13 had a top line miss of $112M which translates to a negative sales surprise of 7.4%. Investors do not want to see negative sales growth from companies as it will force management to cut costs deeper and deeper.
Additional content:
Yet Another Dividend Hike at Yum!
Ky.-based restaurateur Yum! Brands Inc. (YUM-Free Report) recently announced its decision to hike its quarterly dividend by 10% to 37 cents from 33.5 cents paid previously. This equates to an annual payout of $1.48 per share. The increased dividend will be paid on Nov 1, 2013 to stockholders of record as of Oct 11. This represents the ninth successive annual increase in dividend by Yum! Brands since the initiation of the program in 2004 and brings the forward annual dividend yield to 2.03% as of Sep 19, 2013.
Yum! Brands, the owner of Pizza Hut, KFC and Taco Bell has a consistent record of paying quarterly dividends, supported by its cash position. The current hike comes exactly after a year of its prior dividend hike (from 28.5 cents to 33.5 cents, which was paid on Nov 2, 2013). Prior to that, Yum! had increased its quarterly dividend by 14% in Sep 2011 and by 19% in Sep 2010.
Yum!’s dividend policy continues to target a payout ratio of 35–40% of its annual net income. Yum! is not the only company in the restaurant sector paying attractive dividends. Fast-food giant McDonald's Inc. (MCD-Free Report) also announced a 5% hike in its dividend to 81 cents, a day before Yum!. Another restaurant company, Brinker International Inc. (EAT-Free Report) raised its quarterly dividend by 20% to 24 cents per share in August end.
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