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The Zacks Analyst Blog Highlights: Iconix Brand Group, Nike, Francescas Holdings, Hanesbrands and Clorox

Zacks Equity Research

For Immediate Release

Chicago, IL – April 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 Iconix Brand Group, Inc (ICON ), Nike, Inc. (NKE), Francescas Holdings (FRAN), Hanesbrands Inc (HBI) and The Clorox Co. (CLX).

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Here are highlights from Monday’s Analyst Blog:

Iconix Upgraded to Strong Buy

Zacks Investment Research upgraded Iconix Brand Group, Inc (ICON ) to a Zacks Rank #1 (Strong Buy) on Apr 23 driven by a spate of accretive acquisitions made in the recent past. The company reported first quarter 2013 results on Apr 24 and raised its view for 2013, thus supporting the upgrade.

Why the Upgrade?

Iconix successfully completed three acquisitions in the past five months. In late-Feb 2013, Iconix acquired the renowned lifestyle brand Lee Cooper, which includes multiple lifestyle categories including men’s and women’s casual wear, footwear and accessories. In early-Feb 2013, Iconix formed a joint venture with Buffalo International ULC to acquire a 51% interest in the latter’s Buffalo David Bitton brand in order to expand its retail footprint in the U.S. and Canada. In early-Dec 2012, Iconix acquired the renowned football brand Umbro from Nike, Inc. (NKE) in order to further strengthen its portfolio with an iconic brand that focuses on the fashion, athletics, electronics, entertainment and home industries.

The successful completion of acquisitions helped the company deliver another solid performance in the first quarter of 2013. Iconix’s revenues in the quarter surged 19% year over year and surpassed the Zacks Consensus Estimate by 4%. First quarter earnings of 54 cents per share also beat last year’s result by 26% and the Zacks Consensus Estimate by 5.9%. In fact, Iconix has topped earnings estimates in nine out of the last twelve quarters.

Following the solid first quarter 2013 earnings, Iconix raised its 2013 adjusted earnings guidance to $2.10–$2.20 per share from the previously announced range of $2.05–$2.15 per share. The company had earlier raised its earnings guidance in fourth quarter 2012 to account for the effect of the acquisition of Lee Cooper.

Estimates have mostly increased after the strong first quarter results and bright outlook for the year. The Zacks Consensus Estimate increased 0.5% to $2.14 per share for 2013, while it grew 5.4% to $2.35 per share for 2014 over the past 7 days.

We remain impressed with Iconix’s strategic acquisitions and consistent expansion of licensing agreements. Iconix expects to explore additional opportunities and enhance its portfolio with more iconic brands. Iconix expects to deliver over 20% revenue and EPS growth for 2013.

Other Stocks to Consider

Other stocks that are worth considering are Francescas Holdings (FRAN) and Hanesbrands Inc (HBI), both of them carrying a Zacks Rank #2 (Buy).

Earnings Preview: Clorox


The Clorox Co. (CLX) is set to report its third-quarter fiscal 2013 results on May 1. The company’s earnings for the last reported quarter jumped 13.9% from the year-ago quarter’s earnings to 90 cents and beat the Zacks Consensus Estimate of 81 cents. Let’s see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

The company’s earnings per share in second-quarter fiscal 2013 benefited from improvements in revenues as well as gross margins, offset by higher selling and administration expenses as it continues to invest in information technology (IT) systems. We believe Clorox's diversified portfolio of brands, positions it well to generate above-average industry growth amid a challenging environment. The company’s rigorous research & development process, marketing strategies, financial control, and operating leverage further strengthen its brands and facilitate it to generate long-term profitability, which is well evident from its record of beating the quarterly earnings expectations.

Earnings Whispers?

Our proven model does not conclusively shows that Ross Stores is likely to beat the earnings this quarter. A stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 to surpass the earnings estimates. However, this is not the case here, owing to the following factors:

Zacks ESP: ESP for Clorox is 0.00% since the Most Accurate Estimate stands at $1.06, which is in line with the Zacks Consensus Estimate.

Zacks #3 Rank (Hold): Clorox’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.


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Read the analyst report on ICON

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