Dollar Tree Stores (DLTR ): Upgrades to 4 STARS (accumulate) from 3 STARS (hold)
Analyst: Karen Sack
Dollar Tree posted a strong first half with earnings per share up almost 38%. Lower shrinkage and fewer markdowns helped to boost operating income by 47%. S&P is raising the 2002 earnings per share estimate by $0.10 to $1.40, up 28% from 2001, and is projecting a 21% increase in 2003. Dollar Tree is boosting square footage by about 25% annually. With only modest gains in same-store sales of 1%-2%, S&P sees a continued rise in operating income. Dollar Tree is conservatively financed, with $159 million in cash and modest long-term debt. S&P's six-month target price is $35.
Unilever N.V. (UN ): Upgrades to 4 STARS (accumulate) from 3 STARS (hold)
Analyst: Richard Joy
Unilever reported second quarter earnings per share before special items of $0.97 vs. $0.72, $0.08 better than expected. Sales declined 0.4% as brand divestitures offset solid 3.3% organic growth. Strong operating profit gains for North America (+19%), Africa/Middle East (+41%), Asia/Pacific (+17%) and Latin America (+61%) outweighed a 3% decline in European profits. S&P is raising its 2002 earnings per share estimate $0.18 to $3.65, and sees $3.95 for 2003. Unilever is attractive given improving trends for core brands, margin expansion, rising earnings visibility and free cash flow growth.
Nvidia (NVDA ): Downgrades to 1 STAR (sell) from 3 STARS (hold)
Analyst: Thomas Smith
The maker of graphic processing units warned that July-quarter revenues will run as low as $410-430 million, versus the consensus $568 million, and the company sees earnings per share at breakeven or better -- well below the Street's $0.40 estimate. Weak unit sales of PCs plus and more low-end PCs in the mix snuffed out growth in core desktop markets. A big write-off of inventory is expected. S&P is lowering the fiscal 2003 earnings per share estimate to $0.90 from $1.78, and cutting fiscsal 2004's to $1.30 from $2.00. This miss was a whopper. Stock options expense was estimated under SFAS 123 at $0.74 for fiscal 2002, compromising what remains of earnings.