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The Zacks Analyst Blog Highlights: Kohl's, hhgregg, Ross Stores, Delhaize Group and Hologic

Zacks Equity Research

For Immediate Release

Chicago, IL – August 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 Kohl’s Corporation (KSS-Free Report), hhgregg Inc (HGG-Free Report), Ross Stores Inc (ROST-Free Report), Delhaize Group (DEG-Free Report) and Hologic Inc. (HOLX-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:

Kohl's Beats Q2 Earnings Estimates, Broadens View

Retailer Kohl’s Corporation (KSS-Free Report) posted second quarter fiscal 2013 earnings of $1.04 per share, beating the Zacks Consensus Estimate by a penny. Earnings were within management’s expectation of $1.00 - $1.08 per share and climbed 4.0% from the prior-year quarter earnings of $1.00 per share. The upswing in earnings was due to top-line growth, gross margin improvement and tight expense control.

Sales and Margins

Net sales increased 2.0% from the year-ago level to $4.289 billion, on the back of improved comparable sales. Sales however missed the Zacks Consensus Estimate of $4.295 billion. Kohl’s comparable store sales were 0.9% in the reported quarter compared to a decline of 2.7% in the year-ago period. The company was able to manage its inventory and also contributed in e-commerce growth during the quarter.

Gross margin improved 10 basis points to 39.1%. Operating margin declined 40 basis points to 10.5% from the year-ago quarter due to higher operating expenses. Both selling, general and administrative expenses and depreciation expenses were higher in the quarter.

Store Update

The company did not open any store in the quarter. Last quarter, it had opened nine stores, ending the quarter with 1,155 stores in 49 states. Kohl’s has plans to open three new stores and remodel 30 more in the fall.

Other Financial Details

As of Aug 3, 2013, Kohl's cash and cash equivalents were $592 million compared with $518 million in the previous quarter. Long-term debt remained at $2.492 billion during the period compared with $2.492 billion.

During the quarter, the board of Kohl's declared a quarterly cash dividend of 35 cents per share, which will be paid on Sep 25, 2013 to shareholders of record as of Sep 11, 2013.

Guidance

Kohl’s has issued guidance for the third quarter of fiscal 2013. The company expects earnings in the range of 83 cents to 92 cents per share, sales to increase in the range of 1%–3% and comparable store sales to increase in the range of 0%–2% in the quarter.

For fiscal 2013, Kohl’s has broadened its earnings guidance from $4.15 - $4.45 per share to $4.15 - $4.35 per share.

Kohl’s now has a Zacks Rank #3 (Hold). Other retail and wholesale stocks that warrant a look include hhgregg Inc (HGG-Free Report), Ross Stores Inc (ROST-Free Report) and Delhaize Group (DEG-Free Report). While hhgregg holds a Zacks Rank #1 (Strong Buy), Ross Stores and Delhaize carry a Zacks Rank #2 (Buy).

Hologic Grows Skeletal Health Range

In line with its strategy of portfolio expansion, Hologic Inc. (HOLX-Free Report) launched its redesigned DXA (dual energy X-ray absorptiometry) imaging system – Horizon. This novel system will be used for the determination of the triad of critical health problems – obesity, cardiovascular disease and osteoporosis.  The Horizon platform is simultaneously being commercialized in the domestic market and other countries.


The Horizon platform is embedded with Hologic’s proprietary technologies. It is expected to improve workflow efficacy on the back of superior design components and expanded technical capabilities.

Hologic spearheaded into the DXA market with the launch of the foremost QDR bone densitometer. Following this, management asserts that it maintained its authoritative stance in the DXA market on the heels of persistent investment in research and development. According to the company, the commercialization of the Horizon platform further strengthens its foothold in the market.

Market Potential

Considering the exponential rise in incidence of cardiovascular disease, osteoporosis and obesity-related problems across the globe, there is a vast market opportunity for Hologic’s Horizon platform.  According to estimates from Handout on Health: Osteoporosis, one in two females over the age of 50 are prone to osteoporosis-related fracture during their lifetime. The same applies to one in four men over 50 years of age.

As per findings from World Health Organization (:WHO), roughly 17 million deaths worldwide are caused by cardiovascular disease annually. Moreover, WHO estimates that approximately 2.8 million individuals annually die of obesity-related complications.  

Besides, according to medical journal The Lancet, there has been 82% rise in the incidence of obesity over the last 20 years. Thus, these problems present an attractive opportunity for Hologic to garner incremental revenues.

Our Take

The market launch of the Horizon platform is an upside for the company as it will expand Hologic’s Skeletal Health business. In the last quarter, higher sales of densitometry systems led growth for the franchise. We believe that commercialization of lucrative products will boost segment revenues.

On the tepid side, Hologic is still plagued by looming challenges such as lower sale of legacy products, economic uncertainties in Europe, slower sales cycles and increasing pricing pressure. The company’s downward revision of guidance for the ongoing fiscal reflects that any near-term improvement in the situation is unlikely.

The estimate revision trend for the ongoing and next fiscal year also underlines bearish sentiments towards Hologic. Currently, the stock carries a Zacks Rank #5 (Strong Sell).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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