Zacks Bull and Bear of the Day Highlights: Pinnacle West Capital, AmBev,
Volkswagen, General Motors and Ford Motor
CHICAGO, Oct. 16, 2012
CHICAGO, Oct. 16, 2012 /PRNewswire/ --Zacks Equity Research highlights
Pinnacle West Capital Corporation (NYSE:PNW) as the Bull of the Day and
AmBev's (NYSE:ABV) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on Volkswagen AG (OTC:VLKAY), General Motors Company
(NYSE:GM) and Ford Motor Co. (NYSE:F).
Full analysis of all these stocks is available at
Here is a synopsis of all five stocks:
Bull of the Day:
We have upgraded our recommendation on Pinnacle West Capital Corporation
(NYSE:PNW) to Outperform from Neutral owing to the company's strong financial
position, improvement in credit rating along with steady inorganic growth
strategy. We remain confident about Arizona's fundamentals, which are allowing
Pinnacle West to achieve higher levels as the economic environment improves.
The company expects annual customer growth of approximately 2% for 2012
through 2015 will benefit its results. In addition, favorable renewable energy
prospects and the recent rate case approval will ensure increased returns.
Over the last five years, the company's shares have traded in the P/E multiple
range of 11.4x to 17.9x on trailing 12-month earnings. Our target price of
$63.00 is based on the P/E multiple of 18.4 on 2012 EPS.
Bear of the Day:
Anticipating negative impact on AmBev's (NYSE:ABV) future financial
performance due to Brazilian government's decision to raise taxes on beer, we
are maintaining our long-term Underperform recommendation on AmBev. To shield
against the higher taxes, AmBev might inflate its prices in an effort to
somewhat offset the negative impact, which may result in lower volumes.
Consequently, the net income may be pulled down. Moreover, the company
reported a lower-than-expected second-quarter 2012 earnings of $0.29 per
share, missing the Zacks Consensus Estimate of $0.35. Intense competition from
global and regional players, coupled with seasonal nature of business, may
undermine the company's future operating performance as well.
Our long-term Underperform recommendation on the stock indicates that it would
perform below the broader market. Our target price of $36.00, 21.6x 2012
EPADR, reflects this view.
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Volkswagen Cuts Production Goal
In the wake of the economic uncertainties in Europe, Volkswagen AG (OTC:VLKAY)
recently announced that it will halt the production of Passat cars for a week
in Germany, according to Reuters. The move is a part of the company's
initiative to reduce its group output by 300,000 vehicles this year.
According to sources, the company has reduced the global production target for
the group to 9.4 million vehicles from the previous estimate of 9.7 million.
However, the target is well above the previous year's output of 8.5 million
vehicles. In addition, owing to the declining orders from the customers, the
company also plans to close its production facility in Emden in northwestern
Germany for a couple of days.
One of the company's major competitors, General Motors Company (NYSE:GM), also
remains challenged by the ongoing financial crisis in the euro zone. Its
European operation Opel expects to incur an operating loss of €1 billion ($1.3
billion) in 2012 due to fewer-than-anticipated car sales.
Ford Motor Co.
), which also competes with Volkswagen, expects to lose between $500 million
and $600 million in 2012 in the 19 European markets covered by the automaker,
owing to the ongoing debt crisis in the region. Ford recorded a loss of $27
million in 2011.
Volkswagen, in the second quarter of 2012, registered a 20% increase in
earnings per share to €12.05 ($15.2) from €10.04 per share in the
corresponding quarter of 2011. Total revenues went up 19% year over year to
€48.1 billion ($60.4 billion).
Headquartered in Wolfsburg, Germany, Volkswagen is the manufacturer and
distributor of automobiles globally. The company operates in Europe, North
America, South America, and the Asia-Pacific.
Currently, Volkswagen retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
Get the full analysis of all these stocks by going to
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
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