For Immediate Release
Chicago, IL – May 1, 2013 – Zacks Equity Research highlights Lumber Liquidators (LL) as the Bull of the Day and Select Comfort (SCSS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sprint Nextel Corp. (S), Clearwire Corporation (CLWR) and Dish Network Corp. (DISH).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Lumber Liquidators (LL) has seen some excellent growth and just posted a solid quarter. The company is poised to open several new stores and it is a Zacks Rank #1 (Strong Buy), it is the Bull of the Day.
When I look at a stock, I want to see growing earnings and growing revenues. When I see growing revenues I want to see quality growth and I will see that in an increasing number of stores opening. Of those new stores, I want to see higher productivity than the existing stores as management applies lessons learned. This will also serve to expand margins.
These things don't always happen, but they are happening for Lumber Liquidators. Store growth has been consistent, albeit slowing from a 20%+ pace in 2011 to a roughly 10% annual rate in 2012. More importantly there has been the idea of increased productivity from the new stores. Sales per square foot productivity based on a calculation of the difference between sales growth and comps divided by growth in square footage shows significant and steady increases in productivity.
Gross margins have grown in each quarter over the last seven quarters. That growth in margins has also led to the EBITDA line which has seen steady expansion as well. What that will lead to is significantly higher earnings per share.
Select Comfort (SCSS) is giving investors nightmares as it dreams up two negative earnings surprises. The stock is a Zacks Rank #5 (Strong Sell) and is the Bear of the Day.
The two most recent earnings report saw the company post negative earnings surprises. The December 2012 quarters saw a big $0.10 miss which translates into a 31% negative earnings surprise. The next quarter saw a miss of $0.02 or 4.55%.
Following the earnings releases, the stock felt like someone wet the bed. A 14.8% decline followed the December 2012 report that occurred on 1/24. The stock was off less than a full percent following the March 2013 report, so just an uncomfortable night’s sleep and not quite the night terror the stock saw last quarter.
Select Comfort makes and sells adjustable-firmness mattresses and other sleep-related products in the United States and Canada. The company offers its products under the Sleep Number brand name. As of December 29, 2012, it operated 410 stores. The company was founded in 1987 and is headquartered in Minneapolis, Minnesota.
Only two other stocks have been a Zacks Rank #5 (Strong Sell) for a longer period of time. Since January 29, the stock has seen a deterioration of earnings estimates.
Estimates for 2013 were calling for $1.89 in December 2012, but slipped to $1.73 in January 2013. They fell again in March to $1.58 and are currently at $1.36.
Latest Posts on the Zacks Analyst Blog:
Sprint to Finance Clearwire Again
Sprint Nextel Corp. (S) is reportedly financing Clearwire Corporation (CLWR) under its buyout deal. Sprint will provide another $80 million to Cleawire in May, leaving lesser scope for Dish Network Corp.’s (DISH) takeover plan to be fulfilled despite its being a lucrative offer.
In Dec 2012, Sprint inked an agreement to acquire the remaining 50% stake in Clearwire Corporation for $2.97 per share, amounting to a total of approximately $2.2 billion. In addition, the company also offered Clearwire a financing arrangement of $800 million that can be drawn in installments.
In January and February, Clearwire declined to receive any sum under the financing arrangement as the company was planning to consider Dish Network Corp.’s (DISH) buyout proposal of $2.28 billion. However, Clearwire moved ahead with Sprint’s deal and sort financing in March and April. After the company drew funds from Sprint in April, news surfaced that Dish is planning a possible withdrawal of its acquisition proposal if Clearwire takes additional funding from Sprint, as this would give Sprint the opportunity to increase its holding with every financing installment. However, nothing has been apparently confirmed by Dish regarding its withdrawal of the proposal.
Going forward, in the middle of this month, Dish came up with another plan of buying Sprint. Dish’s offer of $25.5 billion to acquire Sprint has apparently outbid Softbank offer to acquire 70% of Sprint’s stake for a total consideration of $20.1 billion. Going by recent reports, Sprint is currently reviewing Dish’s offer and has received an approval to seek more details on it from Softbank.
The buyout has created interest, with speculations mounting on which company will finally be able to cut the deal. While Sprint has increased its chances by financing Cleawire, Dish’s counter offer to buyout Sprint for $7 per share (inclusive of $4.76 in cash and 0.05953 shares in Dish for each Sprint share) is a challenge for Softbank.
However, Softbank seems fully geared for this challenge. The company has already hedged the falling yen against the U.S. dollar SoftBank hedged its Japanese currency at $1 = 82.2 yen. Moreover, Japanese banks are ready to lend at the lowest possible rate, thereby helping SoftBank to raise more debt for buying out Sprint Nextel.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: https://twitter.com/zacksresearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
More From Zacks.com