For Immediate Release
Chicago, IL – March 9, 2012 – Zacks Equity Research highlights Cabela's, Inc. (CAB) as the Bull of the Day and KB Home (KBH) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Williams-Sonoma (WSM), Navistar (NAV) and Stein Mart ( SMRT).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Cabela's, Inc. (CAB) fourth-quarter 2011 earnings of $1.06 per share beat the Zacks Consensus Estimate of $0.99, and surged 23.3% from the prior-year quarter. The quarter witnessed healthy revenue growth and profitability at its retail segment, improved performance at Cabela's CLUB Visa program, increased merchandise gross margin and boost in market share.
Merchandise gross margin expanded 40 basis points to 36.4% during the quarter. Management reiterated its long-term goal of increasing the margin by 200-300 basis points. Driven by improving trends, the company now expects earnings to increase at a double-digit rate in fiscal 2012.
The company is looking to enhance its retail square footage growth and focusing on next-generation store and new Outpost store formats. Moreover, the company remains committed on alleviating bad debt risk in its credit card business. The gradual improvement in the economy has lowered delinquencies and charge-offs.
KB Home (KBH) faces a fragile housing market. Increased availability of housing alternatives may keep the company's earnings under pressure. Furthermore, the company's housing market is highly concentrated, which poses threats to its earnings performance.
The company did post a profit of $0.18 per share during the fourth quarter of fiscal 2011, which was much higher than the Zacks Consensus Estimate of $0.03. Nevertheless, the negative factors have led us to downgrade the recommendation on shares of KB Home from Neutral to Underperform with a target price of $10.00.
Our long-term Underperform recommendation on the stock indicates that it will perform lower than the overall market. Our $10 target price, 25.0X our 2013 EPS estimate, reflects this view.
Latest Posts on the Zacks Analyst Blog:
Optimism on Greek Bonds, U.S. Jobs
Greece’s private sector bond swap, whose uncertain fate had gripped the markets in recent days, appears to be attracting enough participation to make the deal binding on all bondholders.
The details of the swap will come out Friday morning, but growing optimism about the deal is helping bring down the yields on Italian and Spanish government bonds, which had started creeping back up in recent days.
Friday morning not only clears up the air on the Greek situation, but will also likely confirm the recent improving trend in the U.S. labor market though the February non-farm payroll report. This morning’s modestly weaker-than-expected Initial Jobless Claims report nevertheless confirms the improving jobs picture, helping build expectations of a strong labor reading tomorrow. The expectation is that a favorable labor market read on Friday will serve as the key catalyst to push stocks above resistance levels.
Initial Jobless Claims came in a tad weaker than expected last week – up 8K to 362K vs. expectations of a lower rise. The prior week’s tally was modestly revised upwards to 354K from the originally reported 353K. The four-week average, which smoothes out the week-to-week fluctuation, moved up by a mere 250 to 355K.
This week’s modest ‘miss’ notwithstanding, the overall trend in the labor market has consistently been in favorable direction lately. It will be interesting to see if Friday’s jobs report will further confirm this trend.
On the earnings front, Williams-Sonoma (WSM), the home furnishings retailer, beat earnings and revenue expectations and guided higher. Results at truck maker Navistar (NAV) and retailer Stein Mart ( SMRT) came short of expectations.
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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