The Zacks Analyst Blog Highlights: Kirkland's, McGraw-Hill Financial, Carrizo Oil & Gas, Exxon Mobil and Southwestern Energy

The Zacks Analyst Blog Highlights: Kirkland's, McGraw-Hill Financial, Carrizo
                Oil & Gas, Exxon Mobil and Southwestern Energy

PR Newswire

CHICAGO, Aug. 27, 2013

CHICAGO, Aug. 27, 2013 /PRNewswire/ 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  the Kirkland's Inc.
(Nasdaq:KIRK-Free Report), McGraw-Hill Financial Inc. (NYSE:MHFI-Free Report),
Carrizo Oil & Gas Inc. (Nasdaq:CRZO-Free Report), Exxon Mobil Corp.
(NYSE:XOM-Free Report) and Southwestern Energy Co. (NYSE:SWN-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of
the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Kirkland's Upgraded to Strong Buy

On Aug 24, 2013, Zacks Investment Research upped Kirkland's Inc.
(Nasdaq:KIRK-Free Report) to Zacks Rank #1 (Strong Buy) following solid
second-quarter results announced last week.

Why the Upgrade?

Kirkland's posted a solid second quarter fiscal 2013 results backed by strong
comps and margin expansion.

Kirkland's' impressive second-quarter 2013 results followed by a enhanced
guidance for fiscal 2013 primarily drove the rating upgrade.

On Aug 23, 2013, Kirkland's reported a loss of 3 cents, narrower than the
year-ago loss of 11 cents as well as the Zacks Consensus Estimate of a loss of
10 cents per share. The second-quarter 2013 results were better than
management's expected net loss range of 8 cents to 11 cents on the back of
sales gain and margin expansion.

Net sales climbed 6.7% year over year driven by strength in the e-commerce
business which grew 27% in the quarter. Kirkland's' comps declined a mere 0.2%
compared to a decline of 3.6% in the prior year, thanks to the strong sales

Kirkland's' total transactions decreased 6% but the average ticket price was
up 5%. Further, the company stated that though store traffic was down 7%,
conversion rates were up 1%. Thus, it can be inferred that although KIRK lost
some price-sensitive customers, the ones who visited the shops spent more on
every visit. Kirkland's is focusing on a more stable, high-priced, high-margin
customer base.

On a year-over-year basis, gross profit climbed 18.8% to $35.6 million, while
gross margin inflated 374 basis points (bps) to 36.7% of sales from 33% in the
prior year due to the improvement in merchandise margin.

Moreover, management has increased its fiscal 2013 earnings guidance range and
now expects earnings per share between 80 cents and 90 cents instead of the
previous guidance range of 75 cents–85 cents. Kirkland's expects fiscal 2013
total sales to increase approximately 3% to 4% year over year, instead of the
previous expectation of 3% to 5%. The guidance reflects the improved sales and
marketing efforts taken up by the company.

Natural Gas Demand Picks Up

The U.S. Energy Department's weekly inventory release showed a
smaller-than-expected rise in natural gas supplies due to the commodity's
brisk use for power generation in the face of warmer weather. However, on a
bearish note, the storage build was bigger than the benchmark 5-year average
gain for the week. 

About the Weekly Natural Gas Storage Report

The Weekly Natural Gas Storage Report – brought out by the Energy Information
Administration (EIA) every Thursday since 2002 – includes updates on natural
gas market prices, the latest storage level estimates, recent weather data and
other market activities or events.

The report provides an overview of the level of reserves and their movements,
thereby helping investors understand the demand/supply dynamics of natural
gas. It is an indicator of current gas prices and volatility that affect
businesses of natural gas-weighted companies and related support plays.

Analysis of the Data

Stockpiles held in underground storage in the lower 48 states rose by 57
billion cubic feet (Bcf) for the week ended Aug 16, 2013, below the guided
range (of 67–71 Bcf gain) as per the analysts surveyed by Platts, the energy
information arm of McGraw-Hill Financial Inc. (NYSE:MHFI-Free Report).
However, the increase – the nineteenth injection of 2013 – exceeded both last
year's build of 47 Bcf and the 5-year (2008–2012) average addition of 56 Bcf
for the reported week.

Following past week's build, the current storage level – at 3.063 trillion
cubic feet (Tcf) – is now 44 Bcf (1.5%) above the 5-year average. However,
supplies are still down 238 Bcf (7.2%) from the last year's level.

Natural gas stocks hit an all-time high of 3.929 Tcf in 2012, as production
from dense rock formations (shale) – through novel techniques of horizontal
drilling and hydraulic fracturing – remained robust. In fact, the oversupply
of natural gas pushed down prices to a 10-year low of $1.82 per million Btu
(MMBtu) during late Apr 2012 (referring to spot prices at the Henry Hub, the
benchmark supply point in Louisiana).

However, things started to look up in 2013. This year, cold winter weather
across most parts of the country boosted natural gas demand for space heating
by residential/commercial consumers. This, coupled with flat production
volumes, meant that the inventory overhang was gone, thereby driving commodity
prices to around $4.40 per MMBtu in Apr – the highest in 21 months.


During the last few weeks, though, natural gas demand has gone through a
relatively lean period, as mild weather – from July through mid-August –
prevailed over the country, leading to tepid electricity draws to run air
conditioners. This has led to a slide in the commodity's price. In fact,
healthy injections over last few weeks, plus strong production have meant that
supplies have overturned the deficit over the five-year average for the first
time since late March.

But with hotter-than-normal weather expected during the next few weeks,
leading to strong electricity draws to run air conditioners, natural gas price
may experience another upward curve.

This, in turn, is expected to buoy natural gas producers, particularly small
ones like Carrizo Oil & Gas Inc. (Nasdaq:CRZO-Free Report). While big players
like Exxon Mobil Corp. (NYSE:XOM-Free Report) and Southwestern Energy Co.
(NYSE:SWN-Free Report) – both Zacks Rank #3 (Hold) stocks – would also
benefit from the improved fundamentals, they are large-cap, low-beta entities
with slow price action. 

As such, we advise investors to accumulate Carrizo shares, which sports a
Zacks Rank #1 (Strong Buy). With the financial incentive to produce the
commodity and the subsequent improvement in the company's ability to generate
positive earnings surprises, it has the potential to rise significantly from
current levels.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of
the Day pick for free.

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