Zacks Bull and Bear of the Day Highlights: Hanesbrands, Central Garden & Pet,
Walgreen, Express Scripts and CVS Caremark
CHICAGO, Dec. 19, 2012
CHICAGO, Dec. 19, 2012 /PRNewswire/ --Zacks Equity Research highlights
Hanesbrands (NYSE:HBI) as the Bull of the Day and Central Garden & Pet
(Nasdaq:CENT) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on Walgreen Co. (NYSE:WAG), Express Scripts (Nasdaq:ESRX)
and CVS Caremark (NYSE:CVS).
Full analysis of all these stocks is available at
Here is a synopsis of all five stocks:
Bull of the Day:
Hanesbrands (NYSE:HBI) posted solid third quarter 2012 results with earnings
of $1.11 per share, which outpaced the prior-year earnings by 31% and the
Zacks Consensus Estimate by 5.7%. The upswing was driven by strong sales
growth in both Innerwear and Outerwear segments.
Overall, we are impressed with the company's strong portfolio of brands and
its continuous innovations. Efficiency in initiatives has led to substantial
cost savings, and the company is also taking efforts to optimize its
inventories, reduce long-term debt and de-leverage its balance sheet.
Despite currency and cotton cost headwinds, Hanesbrands anticipates its
earnings to improve in fiscal 2012 and 2013. Based on our 2012 earnings
estimate of $2.58, the stock is trading at 13.8x, which is a 15.9% discount to
the industry average of 16.4x. Our target price of $43.00 is based on
approximately 16.7x our 2012 earnings estimate.
Bear of the Day:
Central Garden & Pet's (Nasdaq:CENT) dismal fourth-quarter 2012 results
compelled us to adopt a bearish stance on the stock. The company posted a
quarterly loss of $0.21 per share that remained flat with the prior-year
quarter loss but was wider than the Zacks Consensus Estimate of a loss of
$0.20. The company hinted that increased promotional and innovation expenses
and lower revenues from the decor business negatively impacted the results.
Central Garden has missed the Zacks Consensus Estimate by an average of 8.5%
in the trailing four quarters. For fiscal 2013 and 2014, the Zacks Consensus
Estimates dropped by 6 cents and 12 cents to $0.80 and $1.01 per share in the
last 7 days, respectively.
Management now anticipates that sales and earnings for the first quarter of
fiscal 2013 will be lower than the comparable prior-year period due to the
adverse impact of Hurricane Sandy that to a great extent adversely impacted
the Pet segment. Consequently, we downgrade our recommendation to
Latest Posts on the Zacks Analyst Blog:
Earnings Preview: Walgreens
Walgreen Co. (NYSE:WAG) is slated to release its first quarter 2013 earnings
results on Friday, December 21, 2012, before the market opens. The Zacks
Consensus Estimate currently stands at 67 cents per share for the quarter.
This represents year-over-year growth of 6.3%.
With respect to earnings surprises, Walgreens edged past the Zacks Consensus
Estimate in one of the trailing four quarters and reported in-line earnings
result in one of the quarters. The average surprise over the last four
quarters remained negative at 2.53%.
Walgreens has already reported sales for the first quarter of 2013. Total
sales in the first quarter came in at $17.34 billion, down 4.5% year over year
and trailing the Zacks Consensus Estimate of $17.63 billion, missing the
top-line Zacks Consensus Estimate for the third time in a row.
Previous Quarter Synopsis
Walgreens reported a 4.5% year over year decline in adjusted earnings per
share in the fourth quarter of fiscal 2012 to 63 cents. However, it was well
ahead of the Zacks Consensus Estimate of 55 cents.
Total sales decreased 4.9% year over year to $17.1 billion in the fourth
quarter. The decline was primarily attributed to the generic wave in the
pharmaceutical industry. Front-end comparable store sales (those open for more
than a year) dropped 1.3% while prescription sales (63.3% of total revenues)
dipped 8.1% in the quarter.
Agreement of Analysts
Estimate revision trends reflect a bearish sentiment towards the company's
earnings for the first quarter of fiscal 2013. Over the last 30 days, 6 out of
the 14 estimates were revised downwards with no upward revision for the
Walgreens' dismal performance in recent months coupled with concerns regarding
the company's performance in the coming quarters underlines the absence of any
positive movement, depicting a lack of driving events. While the
reconciliation with Express Scripts (Nasdaq:ESRX) is comforting, Walgreens'
ability to win back customers remains a looming concern.
Magnitude of Estimate Revisions
The magnitude of the estimate revisions for Walgreens depicts a slightly
negative bias for the upcoming quarter. The Zacks Consensus Estimate dropped
three cents over the last 30 days and a penny in the last 7 days to 67 cents
for the first quarter.
While fiscal 2012 was a challenging year for Walgreens, we look forward to
fiscal 2013 as near-term headwinds wane. Despite a lukewarm start to fiscal
2013, the company has a broad-based platform to drive growth going forward.
Moreover, the company has left no stone unturned to bolster sales, ranging
from a customer loyalty program to stimulate consumer demand to resorting to
In a small way, the stock inched towards a 52-week high of $37.35 on December
17, 2012. We currently have a long-term 'Neutral' recommendation on the stock
which carries a short-term Zacks #3 Rank (Hold). Its peer CVS Caremark
(NYSE:CVS) carries a Zacks #2 Rank (Buy).
Get the full analysis of all these stocks by going to
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