Spirit Airlines, RadioShack, Big Lots, Dollar General and Ross Stores highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 5, 2013 – Zacks Equity Research highlights Spirit Airlines, Inc. (SAVE-Free Report) as the Bull of the Day and RadioShack (RSH-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Big Lots Inc. (BIG-Free Report), Dollar General Corporation (DG-Free Report) and Ross Stores Inc. (ROST-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
The airlines are flying high and so are their stocks. Spirit Airlines, Inc. (SAVE-Free Report) recently posted record third quarter results as revenue jumped double digits over a year ago. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in both 2013 and 2014.
Spirit Airlines operates a low-cost airlines based on ultra-low base fares which allows customers to buy the extras they value. The company has a $9 Fare Club program that costs $59.95 per year but gives customers access to special low fares and deals on baggage fees.
Spirit operates about 250 flights to 50 destinations in the U.S., Caribbean and Latin America. It is one of the few airlines offering service from the United States to the expanding markets of Panama and Colombia.
On Oct 30, Spirit reported its third quarter results and blew by the Zacks Consensus by $0.10. Earnings were $0.79 compared to the Zacks Consensus of $0.69. It was the fourth earnings beat in a row.
Revenue jumped 33.4% to $456.6 million. Total revenue per available seat mile ("RASM") was 12.55 cents, up 8.9% compared to the year ago quarter. The gain was due to higher load factors and higher average passenger yields.
Adjusted pre-tax margin rose to 20.3%, the highest quarterly adjusted pre-tax margin in the company's history.
Spirit is expected to have strong double digit earnings growth of 57% in 2013 and another 20.2% in 2014.
Bear of the Day:
Is it too late to turn around RadioShack (RSH-Free Report)? This Zacks Rank #5 (Strong Sell) recently posted a worse-than-expected quarterly loss but it has a new CEO and is testing new concept stores.
RadioShack operates 4300 stores in the United States and 270 stores in Mexico. It also has about 1,000 dealer and other outlets worldwide.
On July 1, RadioShack opened up the first of its new concept store on Manhattan's Upper West Side which aimed to highlight popular tech devices from Apple, Samsung and the others. These stores have more hands on testing capabilities.
Since the summer, it has opened up numerous new concept stores.
The company is undergoing changes at the hands of new CEO Joseph Magnacca, who came to RadioShack in February 2013 from Walgreens. He instituted a 100 day plan to turn it around.
In the company's third quarter report, RadioShack listed out the five pillars of the company's turnaround:
reposition the brand;
2. revamp the product assortment;
3. reinvigorate the store experience;
4. operational efficiency; and
5. financial flexibility.
By the end of the year, RadioShack expects to have over 100 concept and brand statement stores in operation. It also intends to re-merchandise inventory in its existing 4,300 stores which it hopes will show improvement in the fourth quarter.
RadioShack is up against the clock.
Additional content:
Big Lots to Shut Wholesale Biz
Big Lots Inc. (BIG-Free Report) announced the decision to shutter its wholesale operations, including Big Lots Wholesale, Consolidated International and Wisconsin Toy wholesale by fiscal 2013 end. During the shutdown, inventories are expected to liquidate and associates will be absorbed by the retail segment in the next 90 days.
Following the announcement, pre-tax charges for the third quarter are estimated to range between $5 and $8 million. Also, post the wind down, the wholesale business financials will be treated as discontinued operations for fiscal 2013.
With the rising competition, sales and growth margins of the wholesale segment have fallen below expectations, leading the company to shift its attention to retailing and seeking other avenues to improve customer relations and generate higher returns for its shareholders.
Although the wind down will be detrimental for many associates involved with the wholesale segment, Big Lots is striving to build and implement new long-range strategies to reach out to its customers. Taking into account its current financial status and future business opportunities, it has already undertaken initiatives. These include enhancing cooler and freezer program, commencing furniture financing and foray into the digital world.
This leading North American closeout merchandise and toy retailer is expected to announce its third-quarter fiscal 2013 results on Dec 2, 2013. Our proven model does not conclusively show that Big Lots is likely to beat the Zacks Consensus Estimate this quarter. This is because the company carries a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. For a stock to outperform, it needs both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3.
Other stocks in the retail discount industry that warrant a look include Dollar General Corporation (DG-Free Report) and Ross Stores Inc. (ROST-Free Report), which hold a Zacks Rank #2 (Buy).
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