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The Zacks Analyst Blog Highlights: Lowe's, Home Depot, Fastenal, Lumber Liquidators Holdings and Entergy

Zacks Equity Research

For Immediate Release

Chicago, IL – January 25, 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 Lowe’s Companies Inc. (LOW), The Home Depot Inc. (HD), Fastenal Company (FAST), Lumber Liquidators Holdings, Inc. (LL) and Entergy Corporation (ETR).

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Here are highlights from Thursday’s Analyst Blog:

Will the Housing Recovery Spur Job Growth?

The labor market is not doing well and the unemployment rate is hovering around 7.8%. In such a scenario, the recovery in the housing market could, to some extent, calm the jittery economy by improving job prospects, primarily in the construction industry.

When the housing market crashed it left many jobless, but now with new construction activities and home prices showing signs of improvement, optimism prevails.

The housing market is gradually making its way out of its dormant state, thus raising hopes for a better job market. According to the data released by the U.S. Bureau of Labor Statistics, the construction industry created 30,000 jobs in Dec 2012, including 13,000 related to construction of buildings, and 12,000 for residential specialty trade contractors.

The slump in the housing market did not spare home-improvement retailers, such as Lowe’s Companies Inc. (LOW) and The Home Depot Inc. (HD), which faced the brunt as homeowners refrained from spending on big remodeling projects. However, a rebound in the housing market would play a key role to instill confidence in these stocks. Other stocks to benefit include Fastenal Company (FAST), provider of industrial and construction supplies, and Lumber Liquidators Holdings, Inc. (LL), a retailer of hardwood flooring.

The sign of confidence is clearly reflected in the current hiring plans of Lowe’s. The company plans to employ 45,000 seasonal workforce and 9,000 permanent part-time staff in the wake of the resurging housing market that could trigger demand for remodeling works. The metric, ‘Leading Indicator of Remodeling Activity’ released by Joint Center for Housing Studies of Harvard University, indicates that the spending on home improvement activities could surge in 2013.

The data suggests that spending on home improvement-related projects will witness an increase of 10.6% in the first quarter of 2013, resulting in an annualized value of $127 billion, 16.8% in the second quarter, reaching an annualized value of $134.4 billion and 19.7% in the third quarter to reach $145.5 billion. Consequently, we can expect increased hiring from home-improvement retailers to better meet the rising demand.

The elevation in home prices and the lowest mortgage rates is triggering construction activities. If the resurrection in the construction industry sustains, it will usher in good news for many job seekers.

Entergy Provides Outlook

Integrated energy company, Entergy Corporation (ETR) provided fourth-quarter 2012 preliminary operational earnings expectation of approximately $1.71 per share and as-reported earnings expectation of approximately $1.65 per share. Results for fourth-quarter 2011 were as-reported earnings of 87 cents per share and operational earnings of 94 cents per share.

The increase in fourth-quarter 2012 earnings reflects upside in the Utility and Parent & Other segments. This would be partially offset by lower earnings at Entergy Wholesale Commodities.

Segment Details

The quarter-over-quarter increase in Utility fourth quarter 2012 operational earnings reflected lower income tax expense. Higher net revenue also contributed to the Utility earnings improvement, driven by volume and price. Both comparable periods had roughly similar negative weather effects. On a weather-adjusted basis, retail sales were higher, driven by growth in the residential and commercial segments. Partially offsetting these items was an increase in depreciation expense.

Entergy Wholesale Commodities (EWC)

The quarter-over-quarter decrease in earnings at Entergy Wholesale Commodities was due to lower net revenue and increases in income tax and decommissioning expenses. EWC net revenue declined due to lower pricing for the nuclear fleet. Higher decommissioning expense was incurred this quarter versus the prior year due to the benefit from an adjustment to the decommissioning liability recorded in the fourth quarter of 2011.

Parent & Other

At Parent & Other, operational results improved during the quarter due to a decrease in income tax expense on Parent & Other activities. This was partially offset by higher interest expense.

Earnings Guidance

Entergy affirmed its 2013 operational earnings guidance in the range of $4.60 to $5.40 per share. Entergy noted it currently expects earnings to be on the lower half of the operational guidance range due to updated pension and post-retirement cost estimates, which include an approximate 75 basis point decrease in the discount rate assumption.

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