CHICAGO, June 3, 2011 /PRNewswire/ -- Zacks Equity
Research highlights: Central Garden & Pet Co. (Nasdaq:
CENT) as the Bull of the Day and Universal
Technical Institute (NYSE: UTI), as the Bear of the Day.
In addition, Zacks Equity Research provides analysis Ford
(NYSE: F), Procter & Gamble (NYSE: PG) and Starbucks
Coffee Company (Nasdaq: SBUX).
(Logo:
http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Full analysis of all these stocks is available at
http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
Central Garden & Pet Co. (Nasdaq: CENT) recently
posted better-than-expected second-quarter 2011 results. The
quarterly earnings of $0.54 per share
beat the Zacks Consensus Estimate of $0.49 and rose 10.2% from the prior-year quarter.
Being the leading producer of garden and pet supplies products in
the U.S. with a diversified portfolio of brands, Central Garden
& Pet has developed a healthy commercial relationship with
giant retailers.
This provides significant upside potential for the company. The
company's effective inventory management is also helping it to
optimize merchandise levels in accordance with sales trends.
The stock is trading at a discount to the peer group, based on
forward earnings estimates. We have a long-term Outperform
recommendation on the stock. Our target price of $11.00, 12.4X 2011 EPS, reflects this view.
Bear of the Day:
Universal Technical
Institute's (NYSE: UTI) average enrollment of the
educational institute rose 8.5% in the first quarter but dropped
690 basis points sequentially. Moreover, the rate of fall in the
new enrollments accelerated to 13% during the quarter, following a
decline of 5% in fourth-quarter 2010.
Management warned that enrollment of new students for fiscal
2011 will be below the prior-year level due to regulations proposed
by the Department of Education, and will consequently result in a
single-digit revenue growth.
We have a long-term Underperform recommendation on the stock.
Our target price of $16.00, 12.5X
2011 EPS, reflects this view.
Latest Posts on the Zacks Analyst Blog:
1Q Productivity Revised Higher
In the first quarter, non-farm business sector labor
productivity increased at a 1.8% annual rate, an upward revision
from the initial estimate of 1.6%. The consensus expectation was
that the number would be unrevised. The gain in productivity was
due to a gain of 3.2% in output (was 3.1%) and a rise of 1.4% in
hours worked (unrevised, seasonally adjusted annual rate).
The increase in productivity growth is welcome, but it still
represents a slowdown. The fourth quarter productivity growth was
2.9%. On a year-over-year basis output increased 3.2%, while hours
rose 1.9%, for an increase in productivity of 1.3%. Clearly,
productivity growth is slowing, but it is doing so from very strong
levels.
Labor productivity, or output per hour, is calculated by
dividing an index of real output by an index of hours worked of all
persons, including employees, proprietors and unpaid family
workers. Over the long term, productivity is probably the
single-most important economic indicator. It is what will govern
per capita income.
In the short term, however, when there is a high level of
unemployment, rising productivity is a mixed blessing. Rising
output is great, but if the same number of people can produce that
higher output, you are not going to make a lot of progress on
bringing down unemployment.
Manufacturing: Durable vs. Non-Durable Goods
The real star in the Manufacturing sector is among the durable
goods makers, such as Ford (NYSE: F). Durable goods
productivity increased 7.5% (revised from 9.8%). At non-durable
goods makers, such as Procter & Gamble (NYSE: PG)
productivity growth was lower, but still very respectable at 2.6%
revised from 4.5%) for the quarter. Durable goods increased output
by 14.0% (revised down from 16.4%) and did so while increasing
hours worked by just 6.1% (unrevised). Non-durable goods production
rose 1.5% (down from 3.3%) while hours fell 1.1% (revised from a
decline of 1.2%).
On the unit cost front, durable goods saw a 4.5% (from 6.7%)
decline for the quarter and a 2.5% (revised from 3.4%)
year-over-year drop. Non-durable goods manufacturing saw a 0.5%
(revised from 2.2%) decline for the quarter, and a 0.3% (revised
from 0.8%) decline year over year.
The rise in non-durable output is not going to provide any help
on the employment front. The next chart shows the year-over-year
changes in overall manufacturing productivity and labor costs over
the last twenty years.
Starbucks All Over China
Starbucks Coffee Company (Nasdaq: SBUX) finally has taken
full control of majority of its stores in mainland China based on a contractual agreement with
its long time joint-venture partner in South China, including Hong Kong and Macau, Maxim's Caterers Ltd.
The agreement allows Starbucks to assume 100 percent equity in
the important China provinces of
Guangdong, Hainan, Sichuan, Shaanxi and Hubei, and the municipality of Chongqing.
Also as part of the agreement, Maxim's has acquired Starbucks
remaining equity stake in the Hong
Kong and Macau markets,
assuming 100 percent equity in them. Maxim's Caterers saw a 10-year
extension in its Hong Kong
operating term until 2037 and gained a 30 percent stake in a joint
venture with Starbucks in Chengdu,
the capital of the Sichuan
Province in southwestern China.
Get the full analysis of all these stocks by going to
http://at.zacks.com/?id=2649.
About the Bull and Bear of the Day
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