The Zacks Analyst Blog Highlights: RadioShack, Best Buy, Ford Motor, General
Electric and Toyota Motor
CHICAGO, Nov. 26, 2012
CHICAGO, Nov. 26, 2012 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include RadioShack Corporation
(NYSE:RSH), Best Buy Co. (NYSE:BBY), Ford Motor Co. (NYSE:F), General Electric
Company (NYSE:GE) and Toyota Motor Corporation (NYSE:TM).
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from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Friday's Analyst Blog:
S&P Lowers RadioShack Rating
Rating agency Standard and Poor's (S&P) downgraded the credit rating of the
struggling U.S. consumer electronics and service retailer RadioShack
Corporation (NYSE:RSH) to CCC+ from B- along with a negative outlook. S&P
expects RadioShack to continue with its poor financial performances as the
company remains surrounded with fierce competition from its rival Best Buy Co.
(NYSE:BBY) and stores operated by other wireless carriers.
RadioShack's rating was downgraded on the back of the company's vulnerability
to non-payment of its dues and its dependence on favorable business and
economic condition to meet its financial obligations. Meanwhile, the negative
rating outlook conferred to RadioShack indicates that in case of any poor
financial performance by the company, there remain chances of further
reduction in outlook.
The primary cause of concern for the creditors of RadioShack is that the
recovery rating on the company's senior unsecured debt is "4", which indicates
that in case of a payment default, there is only a 30-50% chance of recovering
According to S&P, the rationale behind the rating downgrade is that they
expect the company's earnings to remain under pressure in 2012 and 2013,
mainly attributable to the competitive nature of the consumer electronics
business and the high concentration of low margin mobility business, which
constitute more than 50% of RadioShack's revenue.
However, the only upside for the company is its liquidity position as it has
adequate cash to meet its need over the next 12 months. RadioShack has
achieved its target of securing $175 million worth of new financing at a
blended interest rate of approximately 9%, which will be used to refinance
half of its convertible bonds worth $375 billion, due in August 2013. However,
the company's cash position could slide if it fails to stabilize its falling
The sluggish economic growth in the U.S. is hardly helping RadioShack's
prospects in any way. Weak consumer spending on the back of limited disposable
income along with a very competitive industry dynamics remains the major road
block for the company. Accordingly, we do not foresee any meaningful changes
in the company's operating performances and thus remain skeptical about the
growth of the company.
We currently maintain a long-term Underperform recommendation on RadioShack.
However, it holds a Zacks #3 Rank, implying a short-term Hold rating.
Ford Joins with General Electric
Ford Motor Co. (NYSE:F) has announced the collaboration with General Electric
Company (NYSE:GE) wherein the latter will purchase Ford's 2,000 C-MAX Energi
plug-in hybrids in order to convert half of its global fleet with alternative
fuel vehicles. Under the deal, Ford will jointly offer General Electric's
alternative fuel infrastructure technology, including WattStation charging
stations and CNG natural gas fueling station to customers.
The purchase of C-MAX Energi by General Electric is a part of its commitment
for ecomagination. Through this strategy, the company provides innovative
solutions that maximize resources utilization, drive economic performance and
support the world in smooth functioning.
General Electric focuses on providing its customers more economical and
eco-friendly vehicles, thereby adding value to the customers. After the
purchase, General Electric will have a fleet of 5000 vehicles with alternative
fuel. The company has set a target of having 25,000 vehicles with alternative
The partnership will mutually benefit both the companies. Both General
Electric and Ford are focusing on promoting energy saving and advanced
technology for the vehicles. Ford will be launching six new electrified
vehicles to meet the rising demand for fuel efficient vehicles.
Both the companies will be working with the researchers from Georgia Institute
of Technology to study employee driving and charging habits. This move will
improve the efficiency of the electric vehicles and charging performance. Ford
also plans to share the research results with the other companies interested
in having electric vehicles in their fleet.
Michigan-based Ford is one of the largest automobile producers globally. The
company is divided into two segments: Automotive and Financial services.
Although the U.S. is Ford's primary selling ground, Europe, South America, and
the Asia-Pacific constitute its other major markets.
We appreciate the company's expansion plan in both the mature and emerging
markets, continuous focus on hybrid vehicles and plans for launching 6 new
Lincoln models in the next 3 years. However, we are concerned about its
sluggish European and South American operations together with disappointing
results from its Financial Services.
Ford, which competes with Toyota Motor Corporation (NYSE:TM), maintains a
Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.
We have a long-term (more than 6 months) Neutral recommendation on its shares.
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