Zacks Bull and Bear of the Day Highlights: American Eagle Outfitters, Avon Products, Kinder Morgan, Goldman Sachs and Barclays
CHICAGO, June 8, 2012 /PRNewswire/ -- Zacks Equity Research highlights American Eagle Outfitters (NYSE: AEO) as the Bull of the Day and Avon Products Inc. (NYSE: AVP) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onKinder Morgan Inc. (NYSE: KMI), The Goldman Sachs Group Inc. (NYSE: GS) and Barclays Plc (NYSE: BCS).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We are upgrading our long-term recommendation on American Eagle Outfitters (NYSE: AEO) to Outperform as the company's first quarter 2012 earnings of $0.22 per share beat the Zacks Consensus Estimate of $0.20 and climbed 37.5% from the prior-year period. The robust quarterly performance was primarily driven by an 18% increase in the top line, along with improved operating margin.
The company now expects earnings to be between $1.16 and $1.22 per share in fiscal 2012, reflecting year-over-year growth of 19% - 26%. We remain impressed with the company's continued momentum in denim along with improved merchandise assortments in the women's business segment, which will likely augment its top line performance as well as enhance gross margin.
Moreover, we believe the company's cost-saving initiatives and long-term growth strategy will not only provide financial flexibility, but will also help to drive value proposition. Shares of AEO were upgraded to a Zacks #1 Rank on May 30, 2012.
Avon Products Inc.'s (NYSE: AVP) first-quarter 2012 earnings of $0.10 per share missed the Zacks Consensus Estimate of $0.28 and dipped nearly 73% from the prior-year quarter. Moreover, the company's net sales inched down 2%, reflecting a fall of 1% in total units, partially offset by benefit from favorable price mix.
The disappointing results were primarily due to sluggish performances in every category, coupled with increased input costs and operating expenses. The North American market remains sluggish, with sales falling 4% in the quarter. Moreover, the company's initiatives to change product mix and reposition the business in the U.S. market will require significant advertising and promotional expenditures, which may dent its margins.
Further, we believe Avon has missed the opportunity of reviving itself citing Coty's withdrawal of its takeover bid. Currently, we are maintaining a long-term Underperform recommendation on the stock and a Zacks #5 Rank.
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Goldman Vends Partial Stake in KMI
On Wednesday, Houston-based Kinder Morgan Inc. (NYSE: KMI), a natural gas pipeline operator, announced the selling of stakes by three of its investors. These investors include The Goldman Sachs Group Inc.'s (NYSE: GS) investment funds, The Carlyle Group and Riverstone Holdings LLC.
Kinder Morgan priced the secondary offering of 63 million of its common stock at an average price of $31.88. The stock offering comprised of shares sold by these investors.
Goldman will be selling 36.7 million shares out of the total holding of 134.8 million shares for about $1.2 billion. Both Carlyle Group and Riverstone Holdings hold 51.2 million shares each in Kinder Morgan. Out of this, Carlyle will sell 12.7 million shares and Riverstone would part away 13.6 million shares.
However, Kinder Morgan and its management are not selling any shares, and therefore will not be receiving any proceeds.
The common stock offering is expected to be completed by earlier next week. Barclays Plc (NYSE: BCS) is acting as the underwriter for the offering.
Goldman's stake sell followed the controversial acquisition of El Paso Corporation by Kinder Morgan in May 2012. Goldman's involvement in the deal was the main reason behind this contention.
Goldman, holding 19.1% stake in Kinder Morgan and having two board members in the company, acted as an advisor to El Paso for the deal. Therefore, shareholders of EI Paso sued the company to stop this merger doubting Goldman as an advisor, but the case was settled soon and shareholders' approval was received.
Goldman currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Further, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.
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
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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