CHICAGO - (Business Wire) Zacks Equity Research highlights
Peabody Energy (NYSE: BTU) as the Bull of the Day and
Telmex ADR (NYSE: TMX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on
Concur Technologies (Nasdaq: CNQR),
Becton Dickinson (NYSE: BDX) and
Cumulus Media (Nasdaq:
CMLS).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: Peabody Energy (NYSE: BTU)
Favorable supply and demand fundamentals coupled with Peabody’s exposure to seaborne markets should give the company margins and earnings growth above its peers. Its significant unpriced (open position) in ‘09/’10 will further accelerate revenues, cash flows and earnings as Peabody locks in volumes at prices significantly higher than Q2’08 realizations in the PRB and Illinois Basin, as coal from these areas show continued strength through 2010. We are raising our ‘08 and ‘09 estimates from $2.67 to $3.15 per share and from $4.60 to $6.13 per share, respectively.
Bear of the Day: Telmex ADR (NYSE: TMX)
Second quarter 2008 results were disappointing. Net profit was down 13% as revenue fell amid stiffer competition. Moreover, Mexican domestic growth has also stalled. Expansion in other Latin American regions, particularly Brazil, is expected to continue in the near term. Meanwhile, the company still needs to increase the profit margins of its acquired units, which are currently well below that of its Mexican business.
Its valuation seems excessive if compared to other Latin American operators. High inflation and interest rates throughout the world is a matter of huge concern.
Latest Posts on the Zacks Analyst Blog:
Concur Technologies (Nasdaq: CNQR)
Concur Technologies reported results for its second quarter of 2008 that exceeded our revenue and earnings estimates. While Concur has a slightly weaker balance sheet but strong near-term fundamentals, we are concerned about the company's long-term prospects as eventually it will begin to bump heads with the major industry players as it continues to grow at a significant pace.
The company reiterated its commitment to accelerate the pace of re-investments that are intended to sustain the level of revenue growth and innovation in the coming quarters. It rolled out Concur Pay almost six months ahead of schedule, and this has led us to raise our 2008 revenue estimates. We expect revenues and GAAP net income in 2008 to increase by 63.5% and 64.7%, respectively, on a year-over-year basis.
Becton Dickinson (NYSE: BDX)
Becton Dickinson third-quarter results beat our estimates on solid revenue growth and expense management. Declines in selling, general and administrative expense added 170 basis points (bps) to its operating margin, offset by a higher cost of good sold gross margin (60 bps).
For 2008, the management now expects gross margin of 51.2 percent, about 60 bps below the 2007 level. We are increasing our 2008 revenue estimates on the management’s updated outlook, and our EPS estimates also increase on greater revenue but with lower operating margin improvement.
Absent acquired growth and FX [foreign currency exchange] benefit, organic revenue growth remains in the 7.0-8.0% area. Acquisitions and other uses of cash, including stock buybacks, will be needed to drive sustainable low double-digit or low teens EPS growth. Nonetheless, the company’s diversified and consistent performance is deserving of a premium, in our opinion.
Cumulus Media (Nasdaq: CMLS)
Tightening credit markets and an accelerating industry-wide decline in radio revenue derailed Cumulus Media’s buyout deal. Nevertheless, we think the company will again seek to go private when the economy and credit markets improve.
The company is currently trading at 9.0x depressed 2008 EBITDA, well below the former buyout multiple of 14x. Although, we don't expect to see to those previous lofty radio buyout multiples again in light of the industry's secular decline, some multiple expansion would be logical when the economy improves.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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