The Zacks Analyst Blog Highlights: Darden Restaurants, Wendy's, Yum! Brands, Burger King Worldwide and National Grid
For Immediate Release
Chicago, IL – July 16, 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 Darden Restaurants Inc. (DRI-Free Report), Wendy’s Co. (WEN-Free Report), Yum! Brands Inc. (YUM-Free Report), Burger King Worldwide (BKW-Free Report) and National Grid plc (NGG-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday’s Analyst Blog:
Darden a Step Ahead in Latin America
Multi-concept, full-service restaurant operator Darden Restaurants Inc. (DRI-Free Report) recently announced that it has inked area development deals with two renowned Latin American restaurant operators, Grupo Piramide and Dosil S.A. to establish its presence in six Latin American countries − Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica and Peru.
While Grupo Piramide will tap the first five regions and develop Darden's three key brands -- Red Lobster, Olive Garden and LongHorn Steakhouse -- in these countries, Dosil S.A. will concentrate only on Peru. The terms of the deal were not disclosed.
Both these development partners are sought-after multi-brand restaurant operators with a presence in South and Central America and the Caribbean. While Grupo manages the operations of other American brands like Wendy’s Co. (WEN-Free Report), Yum! Brands Inc.’s (YUM-Free Report) KFC and Pizza Hut, Peru’s leading operator Dosil SA has taken charge of restaurant behemoths like Burger King Worldwide (BKW-Free Report) and Brinker International’s Chilli’s. Given their familiarity with local food habits and a strong presence in the same industry, we believe, both the parties remain strategic fits for Darden’s expansion plan.
Darden has been eyeing the Latin American markets for a long time. The latest deal will expand Darden’s presence in 12 markets throughout Latin America. In late February, this Orlando-based restaurateur signed a deal with International Meal Company (:IMC) to enter four Latin American countries − Brazil, Colombia, the Dominican Republic and Panama.
Prior to this, in Jan 2013, Darden expanded its partnership agreement with Restaurant Operators to open its Red Lobster brand of restaurants in Puerto Rico. Notably, last year, this Zacks Rank #3 (Hold) company joined forces with a Mexican casual dining company, CMR, to enter the Mexican market. These above mentioned deals affirm management’s intent to make Latin America one of the prime markets for Darden’s international expansion. Darden sees tremendous growth potential in this market where it finds takers for American dining brands.
Further, the region’s middle-income population is also increasing, which could materially benefit the country’s food and beverage market. The company seeks to capitalize on this opportunity. We believe that the company is trying to expand beyond the U.S. in the midst of cut-throat competition in the rather saturated domestic casual dining market.
National Grid Down to Strong Sell
Zacks Investment Research downgraded National Grid plc (NGG-Free Report) to a Zacks Rank #5 (Strong sell) on Jul 5, 2013.
Why the Downgrade?
Shares of National Grid have dipped roughly 6.3% since the company reported its fiscal year 2013 (ended Mar 31 2013) results on May 16. Adjusted net earnings, in local currency, increased roughly 12% year over year on the back of 4% increase in revenue.
Talking of expenses/income, increase of 3% in operating costs, 4% decline in financial income and 20% increase in tax expense restricted bottom-line growth. To add to this peril, long-term borrowings at the end of 2013 represented a year-over-year increase of 20%. Net cash flow generated from operating activities dipped 11% year over year.
In the last 60 days, the Zacks Consensus Estimate for National Grid has gone down by 6.1% to $4.00 for fiscal year 2014 and declined 10.3% to $4.26 for fiscal year 2015. Also, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of -1.0% and -2.1% for fiscal years 2014 and 2015, respectively.
National Grid is is a well-renowned company engaged in transmission and distribution of electricity and gas to its residential, commercial, and industrial customers. The company currently has a $42.3 billion market capitalization.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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