U.S. Markets closed

Brocade Communications Systems, Regis, Apache, BP and Devon Energy highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – October 18, 2013 – Zacks Equity Research highlights Brocade Communications Systems ( BRCD- Free Report) as the Bull of the Day and Regis Corporation ( RGS- Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Apache Corp. ( APA- Free Report), BP plc ( BP- Free Report) and Devon Energy Corp. ( DVN- Free Report).
Here is a synopsis of all five stocks:

Bull of the Day:

Brocade Communications Systems ( BRCD- Free Report) recently delivered its 7th consecutive positive earnings surprise as it beat on both the top and bottom lines. Although Brocade experienced a decline in revenue year-over-year, profit margins expanded and net income surged as the company focused on efficiency.

Analysts also revised their estimates significantly higher for both 2013 and 2014 after the latest beat, sending the stock to a Zacks Rank #1 (Strong Buy). Although shares of Brocade have soared the last several weeks, the valuation picture still looks very reasonable with the stock trading at 13x forward earnings.

Brocade Communications Systems supplies networking equipment and software for all types of businesses and organizations. It primarily operates in two segments:

  • Storage Area Networking (SAN), which offers Fibre Channel SAN directors, fixed form factor switches and embedded switches, host bus adapters (HBAs) and server virtualization solutions, and
  • Internet Protocol (IP) Networking, which offers modular and stackable solutions, IP routers, Ethernet switches, Ethernet fabrics, converged adapters, as well as application delivery, security and wireless solutions

Brocade reported its fiscal 2013 third quarter results on August 13. Adjusted earnings per share came in at 15 cents, crushing the Zacks Consensus Estimate of 9 cents. It was a 25% increase over the same quarter last year. And this increase came in spite of a decline in revenue.

Bear of the Day:

Regis Corporation ( RGS- Free Report) recently reported its 4th straight earnings miss, driven by a -3.1% decline in same-store service sales and falling profit margins.

Analysts revised their estimates significantly lower for Regis after the latest miss, sending the stock to a Zacks Rank #5 (Strong Sell). Despite the negative earnings momentum, the valuation picture does not look attractive for Regis at this point. Investors should consider avoiding this stock until it can turn things around.

Regis Corporation is focused primarily on hair salons. It owns, franchises or holds ownership interests in approximately 10,000 locations across the globe under the brands Supercuts, Sassoon Salon, Regis Salons, MasterCuts and Cost Cutters, among others.

Regis Corporation reported disappointing results for the fourth quarter of its fiscal 2013 on August 27. Sales fell -5% to $502.3 million, which was below the Zacks Consensus Estimate of $514.0 million. This was driven by a -3.1% decline in same-store service sales as guest count fell -3.7%.

The adjusted cost of service and product as a percentage of revenues increased 180 basis points to 57.7%. This was driven in part by negative leverage of fixed expenses.

Adjusted earnings per share came in at 6 cents, missing the Zacks Consensus Estimate of 10 cents. It was below the 36 cents earned in the same quarter last year.
Additional content:
Apache Reaches 52-Week High
Shares of Apache Corp. ( APA- Free Report) hit a 52-week high of $90.74 on Oct 16. In fact, the Houston, TX-based energy explorer has seen its stock price climb some 26% during the past six months. This price appreciation can be attributed to its large geographically-diversified reserve base, balanced exposure to natural gas and crude oil, impressive growth in its onshore liquids production and portfolio rebalancing initiatives.

Why the Bullishness?

Apache is noted for growing through the acquisition and development of existing reserves. Long-term production growth visibility has significantly improved following the BP plc ( BP- Free Report) asset acquisition, the purchase of a portion of Devon Energy Corp.’s ( DVN- Free Report) Gulf of Mexico assets and the deal to acquire Mariner Energy. These new acreage positions further complement the company’s diversified asset base.

Apache’s international operations also continue to generate attractive returns. In particular, the company has been steadily building its asset base in Australia over the last few years. Apache expects to see meaningful growth in free cash flow in the coming years, stemming from project start-ups in that country.

Management has also not been shy of divesting assets, particularly those that do not fit into the company’s long-term growth plan. Recently, Apache agreed to exit its operations in Kenya, following the sale of certain properties in Canada, and the divestment of 33% of its ‘risky’ Egypt business. In fact, the company has announced some $7 billion worth of asset dispositions year-to-date.

Finally, the oil and gas producer’s cheap valuation and multiyear trends in reserve replacement are other positives in the Apache story.

Zacks Rank & Stock Picks

With Apache shares trading at 52-week high, any upside from here may be limited, as suggested by the company's Zacks Rank #3 (Hold).
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
  Get the full Report on BRCD - FREE
Get the full Report on RGS - FREE
Get the full Report on APA - FREE
Get the full Report on BP - FREE
Get the full Report on DVN - FREE
Follow us on Twitter:  https://twitter.com/zacksresearch
Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Read the analyst report on BRCD

Read the analyst report on RGS

Read the analyst report on APA

Read the analyst report on BP

Read the analyst report on DVN

Zacks Investment Research