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Zacks Bull and Bear of the Day Highlights: Macy's, CoStar Group, Petrobras, Helmerich & Payne and Calumet Specialty Products Partners

Zacks Equity Research

For Immediate Release

Chicago, IL – March 19, 2013 – Zacks Equity Research highlights Macy's, Inc. (M) as the Bull of the Day and CoStar Group, Inc. (CSGP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Petrobras (PBR), Helmerich & Payne Inc (HP) and Calumet Specialty Products Partners LP (CLMT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Macy's, Inc. (M) delivered the coveted "triple play" with its latest earnings report. On February 26, Macy's reported:

  • A positive earnings surprise
  • A positive sales surprise, and
  • Management provided guidance above the Zacks Consensus Estimate

This prompted analysts to revise their estimates higher for both 2013 and 2014, sending the stock to a Zacks Rank #1 (Strong Buy). Since the Great Recession officially ended in 2009, Macy's has consistently delivered solid same-store sales growth and expanding profit margins, which has led to annual double-digit earnings growth. And analysts expect this trend to continue over the next couple of years.

Despite this, shares trade at just 10.5x 12-month forward earnings, well below the industry median of 14.0x. Tack on a solid 1.9% dividend yield, and this stock looks poised to deliver strong total returns to investors.

Macy's operates about 800 Macy's department stores in 45 states, the District of Columbia , Guam and Puerto Rico . It also owns and operates the Bloomingdale's brand, which has 37 department stores in 11 states.

Bear of the Day:

CoStar Group, Inc. (CSGP) has seen consensus estimates fall meaningfully lower for both 2013 and 2014 following a rare earnings miss on February 27. It is a Zacks Rank #5 (Strong Sell).

Despite the negative earnings momentum, shares still trade at a premium on a forward price to earnings and price to cash flow basis. This doesn't bode well for shares over the next several weeks.

CoStar Group provides information, analytics and marketing services for the commercial real estate market.

CoStar reported fourth quarter results on February 27. Adjusted earnings per share came in at 33 cents, missing the Zacks Consensus Estimate by 2 cents. Revenue rose 51% to $100.1 million, but this was driven in large part by an acquisition.

Following the Q4 earnings miss, analysts revised their estimates meaningfully lower for both 2013 and 2014. This sent the stock to a Zacks Rank #5 (Strong Sell). The 2013 Zacks Consensus Estimate is now $1.71, down from $1.80 thirty days ago. And the 2014 consensus is now $2.28, down from $2.57.

 Latest Posts on the Zacks Analyst Blog:

Petrobras to Boost E&P Spending

Brazil 's state-run integrated energy firm Petroleo Brasileiro S.A., or Petrobras (PBR) has announced a $236.7 billion capital spending plan for the period 2013-2017, which remains almost the same as its investment plan issued last year for 2012-2016.

For exploration and production activities, Petrobras has increased its planned investment by 4% to roughly $147.5 billion, which comprises 62% of the company’s total investment budget.  

In order to support the increased investment for upstream operations, Petrobras has reduced its planned investment for refining operations by 1.1% to around $64.8 billion. Petrobras also intends to lower its expenditure for natural gas and energy projects by 28% to $9.9 billion.

Petrobras expects liquid and gas production in Brazil by 2020 to be roughly 5.2 million barrels of oil equivalent a day, the same as forecast in 2012.

Management has not yet given an outlook for its production outside Brazil , but noted that Petrobras has a plan to assign roughly $3.2 billion to invest abroad over the period of 2013-2017, 90% of which will be allocated for exploration and production activities.

Headquartered in Rio de Janeiro , Petrobras is the largest energy firm in Brazil and one of the largest in Latin America . Petrobras’ activities include the exploration, exploitation and production of oil from reservoir wells, shale and other rocks, and refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.  

Brazil is expected to be among the world’s four largest oil producers this decade due to the country’s huge offshore crude discoveries. Petrobras is thus expected to strengthen its operations from these new discoveries and grow its earnings significantly in the near future.

On the flip side, the Brazilian government, the company’s majority shareholder, has a history of political interference in Petrobras’ affairs. We do not expect this situation to change in the short- to medium-term. This may impact the company’s performance, since interests of the government might not coincide with those of minority shareholders.

Petrobras currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

In the energy sector, Helmerich & Payne Inc (HP) and Calumet Specialty Products Partners LP (CLMT) display better fundamentals and currently carry a Zacks Rank #1 (Strong Buy).   

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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