Science & Technology
Science and Technology
Science and Technology
Wed, October 27, 2010
Tue, October 26, 2010
Google, Monsanto, PPG Industries, Sherwin Williams and RadioShack
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: Google (Nasdaq: [ GOOG ]) as the Bull of the Day and Monsanto Company (NYSE: [ MON ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PPG Industries (NYSE: [ PPG ]), Sherwin Williams (NYSE: [ SHW ]), and RadioShack Corp. (RSH).
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 ]:
Google's (Nasdaq: [ GOOG ]) third quarter earnings beat the Zacks Consensus Estimate, signaling a much stronger second half of 2010 than anticipated. Additionally, Google provided color on its display, mobile and video business for the first time this quarter, which resulted in nearly all analysts raising estimates for the year.
While the growing competition is always something to look out for, we cannot ignore Google's market position, solid cash flow, focus on innovation, technology and infrastructure, strategic acquisitions and proactive approach to mobile. Consequently, we are upgrading the shares to Outperform.
GOOG shares are currently trading at a discount to its closest competitor, Yahoo! Inc. We believe the company's solid position in the core search market and other growth initiatives justify a premium to the peer group.
[ Bear of the Day ]:
We have downgraded our recommendation on Monsanto Company (NYSE: [ MON ]) from Neutral to Underperform based on weak earnings results. The company posted for fiscal 2010 an EPS of $2.41, almost half the $4.41 from fiscal 2009.
The increase in cost and expense was an icing on the cake. We believe this will continue for a substantial period of time based on the slower market recovery.
Further, an intensely competitive environment and Monsanto's huge dependence on a few large customers can lead to risk. Monsanto also faces foreign currency risk since a significant portion of its income comes from outside the U.S.
Latest Posts on the Zacks [ Analyst Blog ]:
Used Home Sales Rise, Prices Fall
Existing home sales rose 10.0% in September to an annual rate of 4.53 million from a slightly downwardly revised rate of 4.12 million in August. Relative to a year ago, sales are down 19.1%.
Existing home sales have been significantly distorted by the tax credit timing. A year ago, sales were starting to ramp up due to a tax credit that was supposed to end in November but was extended through April, with closing through the end of June. Since existing home sales are recorded at closing, many sales that would have normally occurred in July and August were pushed into June.
However, the absolute level of existing home sales is not really that important. The reason for this is that they are already existing assets. As they change hands, relatively little economic activity is triggered. Oh, people do tend to redecorate a anew for thema house. That can help out paint companies like PPG Industries (NYSE: [ PPG ]) and Sherwin Williams (NYSE: [ SHW ]), and the level of sales obviously affects the incomes of realtors. But relative to the amount of economic activity generated by a new home sale, existing home sales are just not that important.
The Direction of Housing Value
What is important is the value of existing houses, and the direction the value is going. For the vast majority of people, their house is their single most-important asset, and is, or at least was, their most important store of wealth. While the total value of stock market wealth may be greater than that of housing wealth, stock market wealth is far more concentrated (very few people have eight figures worth of housing equity, while 8 and even 9 figure stock portfolios are relatively common).
Housing is also a far more leveraged asset, where one is being conservative if one puts 20% down, while putting 50% down on a stack market purchase is being very aggressive. While the median price is not the best measure, it does have the advantage of being relatively timely.
RadioShack Beats, Stock Tanks
RadioShack Corp. (RSH) has declared third quarter 2010 financial results mostly in line with the Zacks Consensus Estimates. Comparable store sales for the company-operated stores and kiosks (stores and kiosks opened at least a year) grew 6.2% year-over-year. This is a key retail performance indicator, measuring growth from existing sales locations.
GAAP net income in the third quarter 2010 was $46 million or 37 cents per share, compared to a net income of $37.4 million or 30 cents per share in the year-ago quarter. Quarterly EPS of 37 cents beats the Zacks Consensus Estimate of 35 cents. The companya™s strategy to put emphasis on innovative mobile and technology products helps RadioShack improving its bottom line.
Quarterly net revenue was $1,051.8 million, up 6.2% year-over-year and also above the Zacks Consensus Estimate of $1,038 million. The year-over-year increase in revenue was primarily due to continued growth in the postpaid wireless segment together with the improvement in non-wireless segments of Accessories and Power.
Quarterly gross profit was $477 million, compared to $471.1 million in the prior-year quarter. Gross margin was 45.4% in the reported quarter compared to 47.6% in the same quarter of the previous year. This was mainly due to adverse sales-mix towards low-margin products.
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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