Zacks Bull and Bear of the Day Highlights: Dillard's, Helmerich & Payne, Target, Wal-Mart and Costco
CHICAGO, July 25, 2012 /PRNewswire/ -- Zacks Equity Research highlights Dillard's, Inc. (NYSE: DDS) as the Bull of the Day and Helmerich & Payne, Inc. (NYSE: HP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onTarget Corporation (NYSE: TGT), Wal-Mart Stores Inc. (NYSE: WMT) and Costco Wholesale Corporation (Nasdaq: COST).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Dillard's, Inc. (NYSE: DDS) first-quarter 2012 earnings of $1.88 per share beat the Zacks Consensus Estimate of $1.67 and surged over 48% from the prior-year quarter. The robust performance was backed by strong comparable-store sales growth and improved margins. Management is also undertaking restructuring initiatives and inventory reduction efforts to reduce costs while boosting its profitability.
Dillard's wholly-owned REIT and Captive Insurance Company will facilitate it in managing risks more efficiently while enhancing its liquidity position. Further, Dillard's healthy balance sheet and adequate cash flows allow it to make shareholder friendly moves, such as acquisitions, dividends and share repurchases.
In addition, the recently modified credit line agreement is expected to further enhance its financial flexibility by allowing the company to borrow more funds at the same level of inventory pledged. Currently, we maintain a long-term Outperform recommendation on the stock.
We are downgrading our recommendation on Helmerich & Payne, Inc. (NYSE: HP) to Underperform from Neutral, as we expect the oil and gas wells contract driller to deliver dull performance in the coming months, owing to the volatile macro environment, deteriorating natural gas scenario and inflationary industry conditions.
We also expect to see a drop in earnings, under the effects of soft dayrates and operators unwillingness to sign on newbuild contracts. Operational disruptions such as inclement weather, blowouts and well fires could adversely affect Helmerich & Payne's drilling operations and emerge as a dampener for the company's growth.
We thus see considerable downside for Helmerich & Payne shares during the next few quarters. Our $41 price objective reflects a 2012 P/E multiple of 8.6x.
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Target Continues Remodeling Stores
Target Corporation (NYSE: TGT), an operator of general merchandise and food discount stores in the United States, recently announced its plan of further remodeling 30 general merchandise locations by October this year. The current program is in line with the last of three cycles of remodels this year covering an area from Cincinnati, Ohio to Jacksonville, Fla. and Nashville, Tenn.
The remodeled stores are expected to offer an expanded food layout along with greater assortment of dry dairy and frozen items, improved store layout and enhanced in-store shopping experience across departments, such as apparel, home, beauty, shoes and baby. Currently, about 1,100 stores with a dedicated floor space of approximately 10,000 square feet are offering expanded grocery items.
After the completion of this remodeling program, Target customers will enjoy a wide range of national food brands, along with Target owned brands like Archer Farms premium foods, Market Pantry value staples and meal options and Sutton & Dodge premium quality USDA Choice beef.
Target's efficient marketing, multi-channel strategy, product innovation, compelling pricing strategy, and new merchandise assortments are expected to drive comparable-store sales and operating margins in the long term. We expect the company to gain market share, and believe that more focus on consumable items should boost sales and earnings in the coming quarters.
However, a greater concentration of the company's revenue generating capabilities in limited regions of the United States poses a competitive threat to Target, compared with Wal-Mart Stores Inc. (NYSE: WMT) and Costco Wholesale Corporation (Nasdaq: COST), which are geographically diverse and more resourceful.
Consequently, Target is focusing more on store renovations and improving store sales productivity. Further, with the ever-changing consumer preferences, the company feels the need to adapt to the demands of time and consider consumer-oriented strategies.
Currently, Target carries a Zacks #3 Rank implying short-term Hold rating for the next 1-3 months and this correlates with our long-term Neutral recommendation.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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