The Zacks Analyst Blog Highlights:Costco Wholesale, Pacific Sunwear of
California, Lululemon Athletica, Foot Locker and News Corp.
CHICAGO, May 29, 2013
CHICAGO, May 29, 2013 /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 Costco Wholesale Corporation
(Nasdaq:COST), Pacific Sunwear of California Inc. (Nasdaq:PSUN), Lululemon
Athletica Inc. (Nasdaq:LULU), Foot Locker, Inc. (NYSE:FL) and News Corporation
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Here are highlights from Tuesday's Analyst Blog:
Will Costco Earnings Beat Estimate?
Costco Wholesale Corporation (Nasdaq:COST) is slated to report its
third-quarter fiscal 2013 results before the market opens on May 30, 2013. In
the last quarter, it posted a positive surprise of 4.8%. Let's see how things
are shaping up for this announcement.
Factors This Past Quarter
The better-than-expected results were buoyed by growth in the top line due to
rise in membership fees and improved sales of discretionary items, as
consumers seeking discounts started flocking to warehouse clubs. The company's
strategy to sell products at heavily discounted prices has helped it to remain
on the growth trajectory amid beleaguered economic conditions as cash-strapped
customers continue to reckon Costco as a viable option for low-cost
necessities. Having continued to deliver consistent comparable-store sales
growth, Costco is well positioned in the warehouse club industry.
Our proven model does not conclusively show that Costco is likely to beat
earnings this quarter. This is because a stock needs to have both a positive
Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1,
#2 or #3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: ESP for Costco is 0.00%. This is because the Most Accurate Estimate
remains in line with the Zacks Consensus Estimate of $1.02.
Zacks Rank #3 (Hold): Costco's Zacks Rank #3 (Hold) lowers the predictive
power of ESP because the Zacks Rank #3 when combined with 0.00% ESP makes
surprise prediction difficult. We caution against stocks with a Zacks Ranks #4
and #5 (Sell rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions momentum.
Stocks That Warrant a Look
Here are some other companies you may want to consider as our model shows they
have the right combination of elements to post an earnings beat:
Pacific Sunwear of California Inc. (Nasdaq:PSUN), Earnings ESP of +50.00% and
a Zacks Rank #2 (Buy).
Lululemon Athletica Inc. (Nasdaq:LULU), Earnings ESP of +3.33% and a Zacks
Rank #2 (Buy).
Foot Locker, Inc. (NYSE:FL), Earnings ESP of +1.14% and a Zacks Rank #2 (Buy).
News Corp. Board Clears Business Split
News Corporation (Nasdaq:NWSA) recently announced that its board of directors
has consented to the company's earlier decision of splitting its operations
into 2 separate publicly traded publishing and entertainment entities.
The diversification is expected to culminate on Jun 28, 2013. Alongside, the
company announced the board members for the separated entities.
Post split, the Entertainment company (to be named 21^st Century Fox) will
encompass cable and television assets, filmed entertainment, and direct
satellite broadcasting businesses including Fox broadcasting, cable network,
Fox News Channel, the 20th Century Fox movie studio, BSkyB, Sky Italia, Sky
Deutschland, and pay-TV operations in Europe and India.
Additionally, the Publishing company (to be known as News Corporation) will
comprise publishing businesses, education unit and the integrated marketing
services business, with brands like The Wall Street Journal, HarperCollins and
With regards to the separation, the company announced that the shareholders of
the company will receive one share in the new publishing company for every
four shares they hold in the existing one. Moreover, to prevent unfavorable
takeovers, News Corporation adopted a poison pill provision, which will be
applicable for one year post split.
The split is expected to augur well for News Corporation, which has been in
troubled waters since the revelation of the phone hacking scandal. In
addition, it will definitely help the company improve its financials.
It is, however, apparent that the entertainment company with better prospects
will have a greater chance of luring investors than the publishing entity,
which is grappling with declining revenues.
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