American Express (AXP ): Reiterates 4 STARS (accumulate)

Analyst: Robert McMillan

The company reported fourth quarter earnings per share of 52 cents vs. 22 cents, a penny above Wall Street expectations. Revenues climbed 5% on higher momentum in the charge card business, which we expect to continue powering results on healthy card spending and cost reductions for near term. The financial advisory business was a drag on results, and we expect results to continue to fluctuate amid volatile markets. We are reviewing our estimates. The shares remain attractive at 15 times the Wall Street consensus estimate of $2.25, given the company's solid franchise and long term prospects.

Freddie Mac (FRE ): Downgraded to 3 STARS (hold) from 4 STARS (accumulate)

Analyst: Erik Eisenstein

The company's fourth quarter EPS press release doesn't resolve our concerns about the audit/restatement announced on Jan. 22. Freddie says the audit will take "some time" and "that there may be more volatility" in GAAP EPS in historical periods. Though likely adjustments seem only to affect the timing of earnings and related balance sheet adjustments, the potential restatement does cast some doubt on the reason we had preferred Freddie to Fannie Mae: a more conservative interest rate management. We'll discuss EPS in more detail after Freddie's conference call this afternoon.

Lear (LEA ): Reiterates 5 STARS (buy)

Analyst: Efraim Levy

Lear exceeded forecasts by posting fourth quarter EPS of $1.76 vs. an adjusted $1.49. We have raised our above-consensus 2003 EPS estimate from $5.15 to $5.34, primarily reflecting a gain of 15 cents per share from lower tax rates. Although Lear plans to expense options, and we forecast lower vehicle production in 2003, we expect a more favorable mix shift, higher content per vehicle produced and lower interest expense to help earnings rise. With a valuation in the low end of Lear's peers and its own historical range, we would buy the shares at 7 times our 2003 EPS and free cash flow estimates.

Tyson Foods (TSN ): Reiterates 5 STARS (buy)

Analyst: Joseph Agnese

Tyson posted December quarter EPS of 15 cents before one-time items, vs. 36 cents one year ago, one penny below the Wall Street mean estimate. Results declined as lower market prices caused by an oversupply of all meat proteins and weak international markets outweighed the benefit of a better product mix. We are reducing our fiscal 2003 (ending September) earnings per share estimate to 95 cents from $1.05. However, we see potential EPS upside with the tightening of meat supplies and improved feed costs in the second half of 2003. With longer-term trends intact and the shares trading at 11 times our fiscal 2003 EPS estimate, below the S&P 500 and the company's industry peers, we view Tyson as attractive.

Perkin-Elmer (PKI ): Upgraded to 3 STARS (hold) from 2 STARS (avoid)

Analyst: Stewart Scharf

The company posted Q4 EPS of one cent after charges totalling 17 cents, vs. a year ago loss of 41 cents after charges totalling 75 cents. Revenues rose 1% as growth in consumables, plus imaging and sensor products offset soft instruments sales. Perkin-Elmer's balance sheet refinancings should ease some liquidity concerns, as it reduces debt and generates cash ($50 million in the fourth quarter). The stock is trading at 19 times our 40 cents EPS estimate for 2003, before 31 cents of option expense, a 25% premium to the S&P 500. But with new financing and an S&P Quality Ranking of B+, we see Perkin-Elmer as a market performer.

Sysco Corp. (SYY ): Still 5 STARS (buy)

Analyst: Joseph Agnese

The company reported December quarter EPS of $0.28 vs. $0.24, in line with our estimate. Sales increased 13.6%, reflecting 7.6% real growth and acquisitions. Sysco continues to gain share within customers and from competitors as it expands its customer base. Margins are benefiting from increased sales to independent customers and improved SYSCO Brand product sales. Despite trading at 25 times our fiscal 2003 (June) EPS estimate of $1.18, above peers, with an S&P Quality Ranking of A+ and healthy return on equity, we see the shares of this market leader outperforming in the current uncertain market environment.

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