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The Zacks Analyst Blog Highlights: Allstate, Tyson Foods, Chuy's Holdings, Chiptole Mexican Grill and Yum! Brands

Zacks Equity Research

For Immediate Release

Chicago, IL – June 5, 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 Allstate Corp. (ALL), Tyson Foods Inc. (TSN), Chuy’s Holdings Inc. (CHUY), Chiptole Mexican Grill Inc. (CMG) and Yum! Brands Inc. (YUM).

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Here are highlights from Tuesday’s Analyst Blog:

Allstate Dips to Neutral

On Jun 4, 2013, we downgraded our recommendation on Allstate Corp. (ALL) to Neutral from Outperform based on its consistent high-expense trend, which also weakened the first-quarter 2013 results on year-over-year basis.

Why the Downgrade?

Estimates for this property-casualty (P&C) insurer have not experienced much traction since the company reported its first quarter results on May 1. Allstate’s revenue inched up 1.2% year over year, although earnings of $1.35 per share stood lower than $1.42 a share recorded in the year-ago quarter. However, both revenue and earnings topped the Zacks Consensus Estimate by 14.5% and 2.3%, respectively.

While higher operating expenses and catastrophe losses hindered growth, the latter are expected to be high in the second quarter of 2013 as well. For just the month of Apr 2013, catastrophe lossesare projected to be $216 million. These factors also reduce the operating cash flow that declined 8.3% in the first quarter of 2013.

Nevertheless, Allstate’s premiums, underlying combined ratio, book value and ROE witnessed improvement. Moreover, an appreciated investment portfolio boosted liquidity. Allstatedelivered positive earnings surprise in all of the last 4 quarters with an average beat of 7.3%.

Following the first quarter results, the Zacks Consensus Estimate for 2013 climbed only 0.4% to $4.74 per share in the last 30 days, whereas for 2014, it grew 0.6% to $5.13 per share. Meanwhile, the Most Accurate Estimate for Allstate’s 2013 earnings stands at $4.77, resulting in a positive ESP (read: Zacks Earnings ESP: A Better Method) of 0.63%.

Consequently, with the Zacks Consensus Estimates for both 2013 and 2014 showing no clear directional pressure on the stock in the near term, Allstate now has a Zacks Rank #3 (Hold).


Tyson Acquires Circle Foods Assets

The world’s leading meat processor, Tyson Foods Inc. (TSN), is geared to strengthen its foothold in Mexican cuisine by buying assets of California-based Circle Foods LLC from Claridge, from Claridge Inc., a Montreal-based private equity firm.

Private equity firm Claridge has investments and equity stakes in real estate, entertainment industries  and food businesses as Plats Du Chef of Montreal and La Terra Fina of California. The financial terms of the deal finalized on Jun 1have not been disclosed.

Tyson does not plan any operational changes in Circle Foods and intends to keep its management team intact.

The acquisition is of great benefit to Tyson Foods as it is presently putting great focus into expanding its Mexican food offerings. It will add the popular brands to Tyson’s portfolio. Circle Foods owns popular brands like Nuevo Grille and Tortillaland handheld Mexican products, Tortillaland uncooked tortillas and ROTILAND Indian flatbreads. It also produces private brands for several customers.

It also will add a Circle Foods’ state-of-the-art facility plant in San Diego, which is known for its strong food safety management system. The plant hproduces burritos, enchiladas, chimichangas, tacos, quesadillas and tamales, as well as tortillas and Indian flat breads.

Tyson’s focus on Mexican food as is also evident from its strategic acquisition of the Mexican snacks and tortilla producer, Don Julio Foods of Clearfield, Utah in Apr 2013.

Tyson Foods’ focus on Mexican food comes at a time when Mexican food is becoming increasingly popular in the U.S., with more and more Mexican-inspired cuisines being offered by fast-casual and quick-service operators. Companies like Taco Bell, Chuy’s Holdings Inc. (CHUY), Chiptole Mexican Grill Inc. (CMG) and Yum! Brands Inc. (YUM) are popular restaurants offering Mexican delicacies in the U.S.

Tyson’s endeavor to adapt to the changing demand of low-calorie protein foods is encouraging. In Jan 2013, Tyson joined forces with healthy and low-calorie food specialist, Hungry Girl Lisa Lillien, to provide new variants of low-calorie meals for calorie-conscious customers.

It also teamed up with a non-government organization, Alliance for a Healthier Generation, to provide affordable and easily available food products to school children which adhere to federal nutrition standards.

Tyson currently holds a short-term Zacks Rank #3 (Hold).

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