For Immediate Release
Chicago, IL – December 20, 2012 – Zacks Equity Research highlights Family Dollar Stores (FDO) as the Bull of the Day and Avon Products (AVP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AT&T Inc. (T), Comcast Corporation (CMCSA), NextWave Wireless Inc. (WAVE).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We upgrade our recommendation on Family Dollar Stores (FDO) to Outperform on the back of strategic initiatives undertaken to improve merchandising and store operations that have inspired top- and bottom-line growth. The company's point-of-sale technology, store realignment and merchandise initiatives are driving traffic. These helped the company to post healthy fourth-quarter 2012 results.
The quarterly earnings of $0.75 per share jumped 13.6% from the prior-year quarter, whereas net sales climbed 10.8% with comparable-store sales rising 5.4% driven by healthy performance at Consumables, and Seasonal and Electronics categories. For fiscal 2013, management now expects a growth of 13% to 15% in net sales and 12.6% to 20.9% in earnings per share.
Management's 3-to-5 year growth target includes double-digit growth in the bottom-line and store count expansion at a rate of 5% to 7%. Further, the company remains committed towards better price management, cost containment, effective inventory management and private label offering that should drive sales and margin trends.
Avon Products' (AVP) second-quarter 2012 earnings of $0.20 per share missed the Zacks Consensus Estimate by a penny and plummeted 59% year over year. Moreover, the company s net sales dipped 9% reflecting a fall of 4% in total units, partially offset by benefit from favorable price mix. The disappointing result was primarily due to sluggish performance at each of the company's regions where it operates, along with increased input costs and operating expenses.
We believe the company's initiatives to change the product and price mix, improve representative's earnings and reposition the business in the U.S. market will require significant advertising and promotional expenditures, which may weigh upon its margins. Further, we believe sluggish discretionary spending along with intense competition and exposure to foreign currency may undermine the company's future prospects.
Currently, we maintain a long-term Underperform recommendation on the stock. Our target price of $15.00, 18.1x 2012 EPS, reflects this view.
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AT&T Gets FCC Nod
In order to boost 4G LTE markets in the U.S. as well as to free up the nations under-utilized spectrum, Federal Communications Commission (:FCC) has approved AT&T Inc. (T) – the second-largest wireless carrier in the country to buy Wireless Cellular Service (:WCS) and Advanced Wireless Service (:AWS) spectrum bands from four companies namely, Comcast Corporation (CMCSA), NextWave Wireless Inc. (WAVE), San Diego Gas & Electric Co. and Horizon Wi-Com LLC.
Higher usage of smartphones and tablets coupled with limitation of spectrum are continuously putting huge pressure on AT&T’s network. So, in a bid to improve its spectrum shortage the company planned to acquire T-Mobile USA – the third largest carrier in the country. However, the deal failed to get FCC approval as it might give rise to unhealthy competition across U.S. telecom industry.
While at the same time Verizon Wireless, which is the largest telecom operator of the nation is continuously expanding its 4GLTE markets. At present, Verizon Wireless has more than 470 4G LTE footprints as compared to AT&T’s 125 4G LTE markets.
In order to expand its 4G LTE coverage as well as to catch up with the nation’s largest carrier, AT&T is aggressively buying spectrum of 2.3 GHz band from these companies which holds unused AWS and WCS spectrums. Acquisition of these spectrums will allow AT&T to bring at least 82% of the country’s population under its radar, covering nearly 48 states.
We maintain our long-term Neutral recommendation on AT&TInc. Currently, it has a Zacks#3 Rank, implying a short-term Hold rating on the stock.
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.
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