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The Zacks Analyst Blog Highlights: Delta Air Lines, United Continental Holdings, Southwest Airlines, JetBlue Airways and Home Depot

Zacks Equity Research

For Immediate Release

Chicago, IL – April 11, 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 Delta Air Lines (DAL), United Continental Holdings (UAL), Southwest Airlines Co. (LUV), JetBlue Airways Corp. (JBLU) and The Home Depot Inc. (HD).

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Here are highlights from Wednesday’s Analyst Blog:

Delta, Virgin Approach DoT for ATI

Delta Air Lines (DAL) and Virgin Atlantic Airways Ltd. submitted an antitrust immunity (ATI) application with the U.S. Department of Transportation (DoT) for their proposed joint venture. The companies are seeking antitrust immunity for their flight routes between North America and the United Kingdom.

In Dec last year, Delta confirmed its plans to acquire a 49% stake in British carrier Virgin Atlantic that is currently with Singapore Airlines. Delta Air Lines will shell out £224 million or $360 million for the purchase and substantially gain more control over New York to London network – one of the hottest air itineraries across the globe.

Interestingly, the air travel network between the U.S. and United Kingdom, including the one between the two foresaid cities, is dominated by a joint venture of AMR Corp.’s American Airlines and British Airways with 60% of the slots at London Heathrow Airport under their control.

With this filing, Delta and Virgin Atlantic target to pose as strong competitors for the American Airlines-British Airways partnership by offering additional frequent quality travel options for trans-Atlantic flyers. The amalgamation of Virgin Atlantic’s hefty slots at the Heathrow airport and Delta’s commanding position over the U.S. airline network are expected to work in favor of passengers with extensive travel plans.

Per the joint venture agreement between Delta and Virgin Atlantic, both carriers will share the expenses and revenues of the flights. The two companies aim to operate 31 total daily flights both ways between the United Kingdom and North America during the peak season, with 23 flights to and from the Heathrow airport. This will hugely benefit customers with expanded and enhanced flight connectivity to key markets, better pricing and suitable booking options.

Both the companies have also applied for antitrust immunity for a five-way coordination between the United Kingdom and North America air network involving Delta, Virgin Atlantic, Air France, KLM, and Alitalia.

Further, with the approval of the antitrust immunity, Delta – the second-biggest U.S. airline by operating revenue following United Continental Holdings (UAL) – intends to commence a new non-stop service from Seattle to London, which is a significant business market. This move will not only strengthen Delta’s foothold on one of the busiest commercial routes but will also broaden the international presence in Seattle.

Delta competes with the likes of Southwest Airlines Co. (LUV) and JetBlue Airways Corp. (JBLU) within the U.S. airline industry and carries a Zacks Rank #3, implying a Hold rating.

Home Depot Attains New 52-Week High

Boosted by the recent rebound in the U.S. housing market, shares of The Home Depot Inc. (HD) hit a new 52-week high of $71.57 yesterday, before closing at $71.20. This Zacks Rank #3 (Hold) home improvement retailer beat its previous 52-week high of $71.45 and has generated a year-to-date return of approximately 12.8%.

Average volume of shares traded over the last 3 months came in at approximately 6,772K. Currently, the stock trades at a forward P/E of 20.3x, flat to its peer group.

Home Depot is a leading player in the highly-fragmented home improvement industry. The company has been revamping itself by concentrating on square footage growth and maximization of productivity from its existing store base.

In addition, the company has implemented significant changes to its store operations to make them simpler and more customer-friendly. We believe these initiatives will induce more traffic to its stores while boosting its top line.

Home depot has always maintained a disciplined capital allocation strategy, focused on making investments to develop its business, while using the excess cash to enhance shareholder returns via paying dividends and share buybacks. Since 1987, the company has increased its dividend from 0.06 cents to 39 cents. Additionally, the company targets to grow return on invested capital to 24% by the close of 2015.

The company also boasts of an impressive record of beating the quarterly earnings expectations and favorable outlook.

With respect to earnings surprise, Home Depot has beaten the Zacks Consensus Estimate 19 times in the last 20 quarters with an average surprise of 12.2%. In the last reported, i.e. for the fourth quarter of fiscal 2012, the company’s earnings beat the Zacks Consensus Estimate by 4.7%.

The company’s adjusted earnings of 67 cents per share jumped approximately 34.0% from the year-ago quarter’s earnings of 50 cents and beat the Zacks Consensus Estimate of 64 cents. The increased bottom line was aided by strong sales growth and improved operating performance.

Buoyed by better-than-expected results, Home Depot projected fiscal 2013 earnings to grow by nearly 12% to $3.37 per share and total sales to increase by 2.0% year over year, with comparable store sales expected to rise nearly 3.0%.

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