For Immediate Release
Chicago, IL – August 30, 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 the Autodesk Inc. ( ADSK- Free Report ), McGraw-Hill Financial Inc. (MHFI- Free Report), Exxon Mobil Corp. (XOM- Free Report), Chevron Corp. (CVX- Free Report) and Matador Resources Co. (MTDR- Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Thursday’s Analyst Blog:
Autodesk Downgraded to Strong Sell
On Aug 28, 2013, Zacks Investment Research downgraded Autodesk Inc. (ADSK-Free Report) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
The downgrade primarily reflects declining top-line growth in the second quarter. Although earnings of 35 cents comfortably beat the Zacks Consensus Estimate by 4 cents, revenues of $561.7 million just managed to beat the Zacks Consensus Estimate of $561.0 million.
Revenues declined for the second straight quarter (down 1.2% in the second quarter), primarily due to a downturn in some of the company’s end markets, which negatively impacted the company’s products like AutoCAD and AutoCAD LT in the quarter.
Significantly, revenues declined in Asia Pacific (down 1.0% from the year-ago quarter) and EMEA (down 4.0% year over year), partially offset by the Americas (up 2.0% year over year) in the reported quarter.
The decline in revenue base had a negative impact on margins. Gross margin contracted 160 basis points (bps), while operating margin declined 100 bps from the year-ago quarter.
For the third quarter, Autodesk expects revenues in the range of $540.0 - $555.0 million and earnings of 36 - 40 cents per share. A sluggish demand environment, increasing challenges in emerging markets and shift towards a subscription and rental based model are expected to hurt top-line growth in the near term.
The Zacks Consensus Estimate for the third quarter of 2014 declined 34.1% (14 cents) to 27 cents per share over the last 60 days.
The Zacks Consensus Estimate for 2014 decreased 17.8% (27 cents) to $1.25 per share over the last 60 days. The Zacks Consensus Estimate for 2015 plunged 29.6% (53 cents) to $1.26 per share over the same period.
Crude Above $110 Despite Supply Rise
The U.S. Energy Department's weekly inventory release showed that crude stockpiles logged a surprise increase, as production climbed to its highest level in 24 years. The report further revealed that gasoline and distillate supplies were down from the week-ago levels. Meanwhile, refiners unexpectedly scaled up their utilization rates by 0.2%.
Despite the unsupportive crude data from the U.S. government, the ongoing unrest in Syria that could destabilize the resource-rich Middle East and further tighten the global supply picture, pushed the commodity’s price above $110 a barrel.About the Weekly Petroleum Status Report
The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.
The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.
Analysis of the Data
Crude Oil: The federal government’s EIA report revealed that crude inventories climbed 2.99 million barrels for the week ending Aug 23, 2013, following a decrease of 1.43 million barrels in the previous week.
The analysts surveyed by Platts – the energy information arm of McGraw-Hill Financial Inc. (MHFI- Free Report) – had expected crude stocks to go down some 1 million barrels. A sharp uptick in the level of imports and a spike in domestic production – now at their highest level since 1989 – led to the surprise stockpile build-up with the world's biggest oil consumer.
However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – were down 837,000 barrels from the previous week’s level to 36.59 million barrels. Stocks are currently at their lowest since Mar last year and 29.5% under the all-time high of 51.86 million barrels reached in Jan.
Despite the weekly inventory increase, at 362.05 million barrels, current crude supplies are down slightly (by 0.7%) from the year-ago period, though it is still close to the upper limit of the average for this time of the year. The crude supply cover was up from 22.7 days in the previous week to 22.9 days. In the year-ago period, the supply cover was 23.5 days.
Gasoline: Supplies of gasoline were down for the third time in as many weeks despite a decline in domestic consumption and rising imports. The fall in gasoline inventories could be attributed to lower production.
The 587,000 barrels withdrawal – below analysts’ projections for a 1.5 million-barrels decrease in supply level – took gasoline stockpiles down to 217.81 million barrels. Notwithstanding this drawdown, the existing inventory level of the most widely used petroleum product is 8.3% higher than the year-earlier level and is in the top half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were edged down 316,000 barrels last week, counter to analysts’ expectations for a 1 million barrels rise in inventory level. The decrease in distillate fuel stocks – the first in 4 weeks – could be attributed to strengthening demand, partially offset by higher imports.
At 129.04 million barrels, distillate supplies are 2.3% above the year-ago level but is close to the lower limit of the average range for this time of the year.
Refinery Rates: Refinery utilization edged up 0.2% from the prior week to 91.2%. The analysts were expecting the refinery run rate to decrease 0.5% to 90.5%.
Stocks to Consider
With spot crude price staying strong – at around $110 a barrel – brokerage analysts are likely to upgrade their forecasts on oil-weighted companies and related support plays, leading to positive estimate revisions.
While all crude-focused stocks – including behemoths like Exxon Mobil Corp. (XOM- Free Report) and Chevron Corp. (CVX- Free Report) – stand to benefit from rising commodity prices, companies in the exploration and production (E&P) sector are the best placed, as they will be able to extract more value for their products.
In particular, one can look at Matador Resources Co. (MTDR- Free Report) – a small-cap, undervalued E&P player – as a good buying opportunity. Dallas TX-based Matador Resources, sporting a Zacks Rank #1 (Strong Buy), with current focus on the high-return Eagle Ford shale formation in South Texas, is expected to witness earnings growth of 287% in 2013.
Moreover, a price-to-book (P/B) ratio of just 2.5 suggests that the stock is still undervalued. In fact, shares of Matador Resources have risen from $12.78 to $17.42 since we recommended it on Crude Prices Surge: 3 Stocks to Buy Now on Jul 22.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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 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. Subscribe to this free newsletter today.
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 ADSK - FREE
Get the full Report on XOM - FREE
Get the full Report on MHFI - FREE
Get the full Report on MTDR - FREE
Get the full Report on CVX - 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.
Zacks Investment Research
800-767-3771 ext. 9339
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.
More From Zacks.com