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Earnings Preview for AutoZone – Analyst Blog

Zacks Market Commentaries — Tue, 24 Nov 2009 19:30:31 +0000

AutoZone (AZO) is expected to release its sales and earnings results for the fiscal first quarter before the opening bell on Dec 8. The Memphis, Tennessee-based retailer of automotive replacement parts reported a 3.1% year-over-year fall in its profit to $236.1 million or $4.43 per share for the fourth quarter of its fiscal 2009 ended Aug 29, 2009.

With this, AutoZone has managed to come close to the Zacks Consensus Estimate profit of $4.45 per share. For the first quarter, Zacks Consensus Estimate for the company is $2.68 per share, a decline of 40%, compared to the recorded earnings in the previous quarter.

AutoZone is one of the nation’s leading specialty retailers of automotive replacement parts and accessories, operating in the Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) commercial and other customer markets. As of Aug 29, 2009, the retailer had 4,229 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 188 stores in Mexico.

The company uses its significant cash flow to open new stores every year and maintain a mid-single-digit square footage growth rate. In fiscal 2009, the company opened 140 new stores in the U.S. and 40 in Mexico. AutoZone is also focused on growing same-store sales by expanding private label offerings, which now account for 25% of sales.

AutoZone is the leader in the DIY retail market in the U.S. with a 13% share. The average age of cars on the road is rising, which is raising the demand for auto parts necessitated by greater repair needs. In the DIFM commercial segment, the retailer has a meager 1.3% market share. However, management is of the belief that the company can increase its share in the segment by focusing on improving marketing initiatives to boost sales.

Nevertheless, AutoZone has a high degree of reliance on its private label brands, which could mar its performance in the commercial business. Consequently, the company could face increased costs on account of higher staffing levels at the stores on top of rising occupancy costs. Further, several of AutoZone’s vendors have merged in recent years. This could materially affect the prices at which the company purchases its products.

Thus, we maintain our Neutral recommendation on the stock.
Read the full analyst report on "AZO"
Zacks Investment Research

AutoZone Gets Zacks Downgrade – Analyst Blog

Zacks Market Commentaries — Tue, 06 Oct 2009 20:50:33 +0000

We have downgraded the recommendation on AutoZone (AZO) from Outperform to Neutral. This reflects the company’s heavy reliance on private label brands and threats from its vendor consolidation and appreciation in gas prices, which act contrary to significant growth opportunities that exist in each of its businesses such as retail, commercial and ALLDATA.

AutoZone is one of the nation’s leading specialty retailers of automotive replacement parts and accessories, operating in the Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) commercial and other customer markets. DIY retail sales represented 84% of the company’s revenue in 2008, DIFM commercial sales represented 11% and the remaining 5% generated from other sales.

AutoZone sells the ALLDATA brand automotive diagnostic and repair software, and offers ALLDATA repair subscription, ALLDATA online and on DVD, which offers comprehensive factory-correct repair information to DIY customers.

AutoZone has a high degree of reliance (50%) on its private label brands, which could hinder its commercial business. In recent years, several of the company’s vendors have been merged. This could materially affect the prices at which the company purchases its products. Further, the appreciation in gas prices remains a threat to the company as it has a negative impact on miles driven and deferment of purchases by its customers.

Nevertheless, AutoZone is the leader in the DIY retail market in the U.S. with a 13% share. In the DIFM commercial segment, the company has a 1.3% market share, which the management believes could increase by focusing on improving marketing initiatives.

AutoZone uses its significant cash flow to open new stores every year and maintain a mid-single-digit square footage growth rate. The company is also focused on growing same-store sales by expanding private label offerings, which now account for 25% of sales.
Read the full analyst report on "AZN"
Zacks Investment Research

Company News for September 24, 2009 – Corporate Summary

Zacks Market Commentaries — Thu, 24 Sep 2009 14:30:42 +0000

• Red Hat (NYSE:RHT) reported fiscal second quarter results of 20 cents a share, compared with Zacks estimates of 11 cents a share, on revenues of $183.6 million, versus estimates of $179.0 million

• Deutsche Bank (NYSE:DB) cut AutoZone (NYSE:AZO) price target to $150 from $175 but maintained its “hold" rating on the stock

• Reports say modifications on the Boeing (NYSE:BA) 787 Dreamliner test plane suggest the first flight is possible by late October or early November

• The corporate head of Microsoft's (NASDAQ:MSFT) Game Studios division ruled out plans to acquire video game publisher Electronics Arts (NASDAQ:ERTS)

• Abbott Laboratories (NYSE:ABT) has offered to buy the drug unit of Belgian's conglomerate Solvay SA

• Deutsche Bank (NYSE:DB) raised its price target for HB Fuller (NYSE:FUL) to $23 from $18, while maintaining its "hold" rating

• Goldman Sachs (NYSE:GS) raised its price target on Buffalo Wild Wings (NASDAQ:BWLD) to $46

• Nintendo lowered its Wii price by 20% to $199.99 in the US after meeting increased competition from Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE)

• Palm (NASDAQ:PALM) said an offering of 20 million shares of its common stock was priced at $16.25 apiece, a 5% discount to Tuesday's closing price

• BlackRock (NYSE:BLK) shares rose 1.4% Wednesday on a Deutsche Bank (NYSE:DB) recommendation

• Cisco (NASDAQ:CSCO) shares fell 2.6% on failure to offer current quarter guidance and comments made by CEO Chambers that "it looks like a gradual recovery," but also warning of a risk that the economy could still retreat

Zacks Investment Research

AutoZone Meets Zacks Estimate – Analyst Blog

Zacks Market Commentaries — Wed, 23 Sep 2009 19:13:28 +0000

AutoZone (AZO) reported a 3.1% year-over-year fall in its profit to $236.1 million or $4.43 per share for the fourth quarter of its fiscal year ended August 29, 2009. However, excluding the additional week in last year's fourth quarter results, the profit increased from $227.9 million, or $3.63 per share. The company has also managed to come close to the Zacks Consensus Estimate profit of $4.45 per share.

Gross profit as a percentage of sales remained 50.3%, the same as the year-ago level. While gross margin was positively impacted through continued leverage of distribution costs due to improved efficiencies and lower fuel costs, it was offset by a shift in merchandise sales mix to lower margin products. Operating expenses as a percentage of sales increased to 31.6% from 31.4% last year.

However, excluding the impact from last year's additional week, operating expenses as a percentage of sales were flat compared to last year. Leverage from increased sales was largely offset by continued investments in the enhanced hub stores and an acceleration of its store maintenance program.

Sales for the quarter increased 4.5% to $6.8 billion, while domestic same-store sales were up 4.4%. Operating profit increased 4.6% on an operating margin of 17.3%.

For fiscal 2009, net income increased 2.4% to $657 million, while earnings per share increased 16.8% to $11.73 from $10.04. Excluding last year's extra week, net income increased 5% from $625.8 million and earnings per share increased 19.7% from $9.80. Excluding results from last year's additional week, sales increased 6.6% to $6.82 billion from the prior year and operating profit increased 7.2% to $1.18 billion.

AutoZone's inventory rose 2.7% from the comparable period of last year. However, inventory per store declined 1.4% to $500,000 from $507,000 last year. Net inventory -- merchandise inventories less accounts payable -- decreased on a per-store basis to $20,000 from $25,000 last year. The company believes the continued refinement of its hub and satellite store network heading into the new fiscal year will continue to help mitigate inventory growth while accelerating late model parts coverage.

Share Repurchase Program

AutoZone repurchased 3.8 million shares of its common stock for $587 million during the fourth quarter at an average price of $154 per share. For the fiscal year, the company repurchased 9.3 million shares of its common stock for $1.3 billion at an average price of $140 per share.

Store Openings

During the fourth quarter, AutoZone opened 58 new stores, closed one store, and replaced three stores in the U.S. and opened 20 stores in Mexico. As of August 29, 2009, the company had 4,229 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 188 stores in Mexico.

Financial Position

AutoZone had cash and cash equivalents of $92.7 million as on August 29, 2009. Total debt amounted to $2.73 billion as on that date. The company had a stockholder deficit of $433 million as on the above period. In fiscal 2009, AutoZone had a net cash flow of $673 million before share repurchases and changes in debt.

We continue to recommend the shares of AutoZone as Outperform.
Read the full analyst report on "AZO"
Zacks Investment Research

Company News for September 23, 2009 – Corporate Summary

Zacks Market Commentaries — Wed, 23 Sep 2009 14:04:35 +0000

• General Mills (NYSE:GIS) reported fiscal first quarter earnings of $1.28 a share, ex-items, beating Zacks estimates of earnings of $1.03 a share, as sales rose 0.6% to $3.52 billion, above Zacks estimates of $3.52 billion. The company also raised its 2010 earnings guidance to $4.40 to $4.45 a share from its prior view of $4.20 to $4.25 a share

• AMR (NYSE:AMR) announced a private offering of $450 million senior secured notes due 2012

• AutoZone (NYSE:AZO) reported fiscal fourth quarter earnings of $4.43 a share versus $3.88 a year ago, a shade below Zacks estimates of $4.45 a share. Sales of $2.23 billion were above prior year's $2.21 billion and above Zacks projections of $2.23 billion

• Goldman Sachs (NYSE:GS) lifted its price target on Walgreen (NYSE:WAG) to $36 while maintaining a "neutral" rating. Analysts lowered the fourth quarter earnings estimate 2 cents to 38 cents a share, with fiscal year estimates at $1.92, holding 2010 projections at $2.30

• Goldman Sachs (NYSE:GS) added Jarden (NYSE:JAH) to its Conviction Buy List with a target price of $42, more than 50% above current levels

Zacks Investment Research

Zacks Earnings Preview: AutoZone, Bed, Bath & Beyond, General Mills, KB Home, Lennar, Paychex, CarMax, Research in Motion and Texas Industries – Press Releases

Charles Rotblut — Mon, 21 Sep 2009 12:00:13 +0000

For Immediate Release

Chicago, IL – September 21, 2009 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes AutoZone (AZO), Bed, Bath & Beyond (BBBY), General Mills (GIS), KB Home (KBH), Lennar (LEN), Paychex (PAYX), CarMax (KMX), Research in Motion (RIMM) and Texas Industries (TXI). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Every day, Zacks.com makes 4 stock picks available, free of charge. To see them, go to http://at.zacks.com/?id=5612.

This Week's Events

We will get another look at initial third-quarter results with 11 S&P 500 companies reporting. Included in this group are AutoZone (AZO), Bed, Bath & Beyond (BBBY), General Mills (GIS), KB Home (KBH), Lennar (LEN) and Paychex (PAYX). A total of 33 companies are on the calendar.

The Fed will hold a 2-day meeting starting on Tuesday. No change in rates is expected at either this or the November meeting. Traders will be looking for insight about the pace of recovery and updates on the various bailout programs.

In addition to the Fed meeting, the economic calendar features August Leading Indicators and home sales data.

Monday: August Leading Indicators
Tuesday: Federal Housing Finance Agency (FHFA) House Price Index
Wednesday: FOMC rate decision (about 2:10 pm), weekly crude inventories, weekly mortgage applications
Thursday: August existing home sales, weekly initial jobless claims, weekly natural gas inventories
Friday: August new home sales, August durable good orders, revised August University of Michigan consumer confidence

The Chicago Fed will host an international banking conference in Chicago. Speaking at the event will be White House economics advisor Christina Romer (Thursday) and Fed Reserve Board Governor Kevin Warsh (Friday).

Another big round of treasury auctions is slated. During a 3-day span, starting on Tuesday, the Treasury Department will offer $43 billion in 2-year notes, $40 billion in 5-year notes and $29 billion in 7-year bonds. Recent auctions have been heavily oversubscribed.

Though old adage of "buy Rosh Hashanah, Sell Yom Kippur" has not really worked in investors' favor, the bulls continue to remain in control. Therefore, it seems likely that we will hit Dow 10,000 this week. Investors should be aware, however, that this is a fear and greed market run by fast money.

To our Jewish readers, L'Shana Tova.

Companies That Could Issue Positive Earnings Surprises

As I write this, shares of Bed Bath & Beyond (BBBY) are trading higher in response to raised fiscal second-quarter estimates from one brokerage analyst. The change has yet to be factored into the Zacks Consensus Estimate, which currently stands at 47 cents per share. The most accurate estimate is slightly higher at 48 cents per share. The home goods retailer has topped expectations for 2 consecutive quarters and could be a beneficiary of the rebound in housing. Bed, Bath & Beyond is scheduled to report on Wednesday, Sep 23, after the close of trading.

Though used cars did not qualify for the Cash for Clunkers rebates, optimism about CarMax's (KMX) second-quarter results has been growing. During the past few weeks, 4 brokerage analysts have raised their profit projections. The revisions have pushed the Zacks Consensus Estimate 2 cents higher to 18 cents per share. The most accurate estimate is slightly more bullish at 19 cents per share. KMX beat expectations over the past 2 quarters after previously missing twice. CarMax is scheduled to report on Tuesday, Sep 22, before the start of trading.

Though KB Home (KBH) is projected to have lost 68 cents per share, the actual fiscal third-quarter loss could be less than most analysts forecast. The most accurate estimate is far more bullish, calling for a loss of 61 cents per share, and the homebuilder has topped expectations for 2 consecutive quarters. KB Home is scheduled to report on Friday, Sep 25, before the start of trading.

Research in Motion (RIMM) has topped expectations for 3 consecutive quarters. Ahead of the company's fiscal second-quarter report, 3 analysts have raised their projections. The changes were not significant enough to move the Zacks Consensus Estimate from its current level of $1 per share, though the most accurate estimate is a penny higher, at $1.01 per share. Research in Motion is scheduled to report on Thursday, Sep 24, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

Texas Industries (TXI) has missed expectations during 3 out of the last 4 quarters. Shareholders should brace themselves for another disappointment with 3 of the 8 covering analysts cutting their fiscal first-quarter estimates within the past few weeks. The revisions have caused the Zacks Consensus Estimate to drop 7 cents to a projected loss of 5 cents per share. Texas Industries is scheduled to report on Thursday, Sep 24, before the start of trading.

Charles Rotblut, CFA, is the senior market analyst for Zacks.com.

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Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +26%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 111% annually (-0.8% versus +8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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Zacks Investment Research

Automotive Industry – Zacks Analyst Interviews

Zacks Market Commentaries — Thu, 16 Jul 2009 05:00:00 +0000

Overview - Neutral
OPPORTUNITIES
The industry is very concentrated, with the top 8 global automakers having more than 90% of global revenues, and the top 50 global auto parts companies having 80% of global revenues (the top 4 US tire producers have 75% of the US market).

There is a focus on automation and simplifying product lines to lower costs and benefit from economies of scale. The average car now needs only 15-25 man-hours per vehicle, and this drops 2% annually.

Hybrid/alternative cars represent a source of growth in the future. Market share gains by hybrids/alternatives will be slow, and they are now only 4% of cars on the road. General Motors (GMGMQ) and Chrysler both have filed for (and are currently emerging from) bankruptcy, and will become more competitive in the long run.

WEAKNESSES

Earnings are below expectations and have been for some time. Demand for autos is down 35% due to a weak economy and weakening real estate market.

Demand is also hurt by weakening employment. The recent credit crunch is crippling to auto sales, and this has a trickle-down effect throughout the industry.

Furthermore, there is a slowdown of SUV sales, which are 55% of sales (cars are 45%). Imports have also been more competitive, as they tend to have better gas mileage. Costs for domestic producers is much higher than seen for foreign producers, and this is creating a loss of market share in the US by US producers. Also, the presence of unions has led to costs being much higher than seen in other countries.

Pricing averages (2)% in this sector annually. Incentives are increasing as the industry is trying to increase sales. Overcapacity is about 20% in this sector. Pension deficits are rising due to a weak stock market, lower interest rates and less pension funding.

BUY/SELL RATINGS

AutoZone (AZO)

is a Buy due to improving same-store sales and a resurgence in the used car and auto parts market. TRW Automotive (TRW) is a Buy due to restructuring. Zacks Investment Research

Automotive Industry – Industry Outlook

Zacks Market Commentaries — Thu, 16 Jul 2009 05:00:00 +0000

WEAKNESSES

Earnings are below expectations and have been for some time. Demand for autos is down 35% due to a weak economy and weakening real estate market.

Demand is also hurt by weakening employment. The recent credit crunch is crippling to auto sales, and this has a trickle-down effect throughout the industry.

BUY/SELL RATINGS

AutoZone (AZO)

is a Buy due to improving same-store sales and a resurgence in the used car and auto parts market. TRW Automotive (TRW) is a Buy due to restructuring. Zacks Investment Research

Zacks Analyst Blog Highlights: Baker-Hughes, Weatherford, AutoZone, Wyeth, Inc. and Pfizer – Press Releases

Zacks Market Commentaries — Thu, 25 Jun 2009 12:27:32 +0000

For Immediate Release

Chicago, IL - June 25, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Baker-Hughes (BHI), Weatherford (WFT), AutoZone (AZO), Wyeth, Inc. (WYE) and Pfizer (PFE).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Wednesday's Analyst Blog:

Fed: No Changes

Regarding the economic backdrop, the relative improvement was clearly stated. The Fed painted an accurate picture, describing the ongoing weakness but acknowledging that the rate of deterioration is slowing.

We are gradually moving towards what should become a period of slow growth. As such, investors may want to shift towards companies that could benefit from a rebound. These include Baker-Hughes (BHI) and Weatherford (WFT).

At the same time, I would maintain exposure to companies like AutoZone (AZO) that benefit from the cautious high unemployment environment. This is important, since the recovery will not feel like a recovery to many people.

Pfizer-Wyeth Deal On Schedule

We currently rate shares of Wyeth, Inc. (WYE) a Hold with a $49 price target. Our target assumes Pfizer (PFE) shares trade up near $16.00 (currently $14.85) by the expected close date in the third or fourth quarter. At an exchange ratio of 0.985 and combined with the $33 cash per Wyeth share, this equates to roughly $49 per share.

Revenue in 2008 grew 2% and was up 1% excluding the benefit from foreign exchange. EPS was flat from 2007 on lower interest income and a higher tax rate, partially offset by lower SG&A spend. Revenue in the first quarter 2009 was lower than our forecast. This was largely due to a stronger-than-expected impact from foreign exchange, lower contribution from Alliance revenue (as a result of softer U.S. sales of Enbrel) and weaker-than-expected international sales of Effexor.

Global economic weakness also appears to be taking a toll on sales of a number of Wyeth's pharmaceutical products as well as the consumer business. EPS of $0.95 was ahead of our ($0.89) and the Street ($0.88) estimates and significantly benefited from foreign exchange hedges and a lower-than-expected tax rate during the quarter.

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Fed: No Changes – Analyst Blog

Charles Rotblut — Wed, 24 Jun 2009 20:05:00 +0000

The Fed made no changes to either its interest rate target or debt purchase programs.

No mention was given to potential future rate hikes or a change in the ongoing policy. This was met with some initial criticism, as can be seen by the reversal in stock prices following the announcement.

I think the Fed was correct not to discuss any potential hikes. Mortgage rates have started to rise, and though existing home sales have improved for 2 consecutive months, new home sales have been essentially flat since February. Furthermore, both foreclosures and credit card defaults will likely continue to rise throughout the end of the year.

Regarding the economic backdrop, the relative improvement was clearly stated. The Fed painted an accurate picture, describing the ongoing weakness but acknowledging that the rate of deterioration is slowing.

We are gradually moving towards what should become a period of slow growth. As such, investors may want to shift towards companies that could benefit from a rebound. These include Baker-Hughes (BHI) and Weatherford (WFT).

At the same time, I would maintain exposure to companies like AutoZone (AZO) that benefit from the cautious high unemployment environment. This is important, since the recovery will not feel like a recovery to many people.
Read the full analyst report on "BHI"
Read the full analyst report on "WFT"
Read the full analyst report on "AZO"
Zacks Investment Research

Leading Indicators Slightly Bullish – Analyst Blog

Charles Rotblut — Thu, 18 Jun 2009 18:19:31 +0000

The Conference Board's Leading Indicators Index (LEI) broke above 100 and charted its first 6-month increase since April 2007. But is this a sign for rejoicing? Not quite.

Though scores above 100 are considered to signal expanding conditions, the LEI is just at 100.2. This is indicative more of stabilization than growth. Furthermore, consumer expectations and building permits contributed to the increase, both of which are a bit suspect.

Improvements in both the Conference Board's and the University of Michigan's consumer confidence surveys have been driven by greater optimism over future conditions. These increases were likely aided by the improving stock market. Should the markets stall as friends and neighbors lose jobs, sentiment is likely to falter. Plus, the confidence surveys don't always align with actual spending.

Building permits, as my colleague Dirk van Dijk pointed out earlier this week, are problematic. Inventory is the biggest problem facing the housing industry; as foreclosures continue to rise, more supply will be added. The best way to cut down on inventory levels is to stop producing as much, but judging by housing starts and permits, some homebuilders don't seem to grasp this concept.

Still, the June LEI adds to the growing amount of data pointing towards a slower rate of economic deterioration. We have yet to reach stabilization, but we are moving in that direction, which is a good thing.

Investors therefore need to consider stocks that could benefit from a shift towards an early economic recovery that is marked by high levels of unemployment. Names to consider include AutoZone (AZO), DeVry (DV), International Business Machines (IBM), National Semiconductor (NSM) and Weatherford International (WFT).
Read the full analyst report on "AZO"
Read the full analyst report on "DV"
Read the full analyst report on "IBM"
Read the full analyst report on "NSM"
Read the full analyst report on "WFT"
Zacks Investment Research

Company News for June 18, 2009 – Corporate Summary

Zacks Market Commentaries — Thu, 18 Jun 2009 14:31:11 +0000

* JM Smucker (NYSE:SJM) reported fiscal fourth quarter earnings of $1.02 per share, beating estimates by 39 cents, as revenue rose 81% to $1.1 billion

* Chrysler announced its plans to reopen seven assembly lines

* E*Trade (NASDAQ:ETFC) announced plans to raise $400 million in a common stock offering and exchange $1 billion outstanding debt

* AutoZone (NYSE:AZO) said its board authorized a $500 million share repurchase program

* Wachovia raised its quarterly earnings expectations for Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS), while dropping same for JP Morgan (NYSE:JPM) and Morgan Stanley (NYSE:MS)

* A Lions Gate Entertainment (NYSE:LGF) filing with the SEC revealed investor Carl Icahn raised his holdings in the company

* Watson Pharmaceuticals (NYSE:WPI) agreed to buy privately-held Arrow Group in a $1.75 billion deal

Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Abbott Laboratories, School Specialty, Ford, Toyota and AutoZone. – Press Releases

Zacks Market Commentaries — Mon, 15 Jun 2009 14:12:20 +0000

For Immediate Release

Chicago, IL - June 15, 2009 - Zacks Equity Research highlights Abbott Laboratories (ABT) as the Bull of the Day and School Specialty (SCHS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford (F), Toyota (TM) and AutoZone (AZO).

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:

Abbott Laboratories (ABT) discovers, develops, manufactures and sells a diversified line of healthcare products. We expect almost 10% EPS growth over the next five years driven by strong sales of Humira and the company's rapidly growing vascular business.

Several new drug applications have recently been filed with the FDA, which should accelerate sales in the pharmaceutical business. We believe ABT possesses a low risk profile and will continue to trade at an industry premium.

Accordingly, we reiterate our Buy recommendation with a price target of $65.

Bear of the Day:

School Specialty's (SCHS) fiscal fourth quarter sales came in as expected, but the company's earnings easily beat our estimate thanks to strong cost-cutting efforts. The company did not provide specific guidance for fiscal year 2010, citing delays in the passage of state and school budgets.

SCHS is highly dependent on state and local governments for its revenues, and many of those governments are dealing with falling tax receipts and rising budget deficits. The federal government's stimulus package should help, but there is no guarantee that those funds find their way into education.

As such, School Specialty's revenue could come in below even our pessimistic forecasts. We would continue to avoid SCHS shares because the company's future results will not be due to the execution of its business model -- they will be determined by decisions made by state and local governments. Trying to game spending by state and local governments is not a prudent investment strategy.

Latest Posts on the Zacks Analyst Blog:

Still Leveraging Up

The prospect of very high inflation down the road is real. It is not a current danger given the huge amount of slack in the system. With unemployment at 9.4% and rising, there is simply no way that the wage side of a wage-price spiral can take hold. Thus for the time being, any inflation will simply serve as a method to reduce the real incomes of Americans.

The invisible hand of the market is going to force us to cut back on our consumption one way or the other. This means, among other things, that we will most likely never go back to an annual sales rate of 17 million for car sales. That is not good news over the long term for Ford (F) or even Toyota (TM). It might, however, be good news for AutoZone (AZO) since we will be patching up the old jalopy for much longer.

Dramatically lower consumption over time is not going to be good news for the vast majority of retailers or for the firms in the consumer discretionary sector. I'm not just talking about this year's revenues and earnings, but their revenues and earnings for the next decade (at least). On the corporate side, to reduce total debt companies are going to have to pay far less in dividends and not repurchase stock, and use retained earnings to increase equity relative to debt. State and Local governments will have to both raise taxes and cut services. This is going to seriously slow GDP growth, which will make it all the more difficult to reduce the level of debt relative to GDP.

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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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

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Zacks Investment Research

Still Leveraging Up – Analyst Blog

Dirk Van Dijk — Fri, 12 Jun 2009 17:46:55 +0000

The U.S. as a whole continues to dig itself deeper into debt, even though the composition of that debt is changing. The graph below (data from http://www.federalreserve.gov/releases/z1/current/default.htm) shows the total debt in the U.S. over time broken down by major sectors -- the Y axis is in billions of dollars.

The final bar of the graph is for the end of the first quarter of 2009, while all the others are year-end figures, which is important to keep in mind since the differences between the other bars represents a full year, and the difference between the last two represents only three months.

Total debt in the economy rose by 327.7 billion in the first quarter, but more than all of that ($359.9 billion) was due to increased federal debt (held by the public, excludes Social Security trust fund). The other sectors of the economy had essentially flat growth with relatively minor declines in the household and financial sectors, partially offset by minor increases in S&L debt and non financial corporate debt.

True, this is a slower pace of debt buildup than seen in the recent past. In 2008, total debt rose at an average of $654 billion per quarter, and in 2007 the pace was 1,149 billion a quarter. But the point is that we are still taking on debt, not deleveraging. What we have been doing is replacing private debt for public debt, and to some extent replacing State and Local debt for Federal debt.

There is a historical precedent for this. During the George Washington Administration, Treasury Secretary Alexander Hamilton persuaded Congress to pay off the Revolutionary War debts of not only the Continental Congress but of the States as well -- a move that greatly enriched speculators and formed the basis for the original U.S. banking oligarchy (sound familiar?). Hamilton was right about one thing, though -- the Federal Government is better able to shoulder the burden than are individuals, businesses or municipalities.

However, Federal debt is still a very small portion of overall debt, and there has to be a limit to how much of the total that can be shirted there.

While GDP has grown substantially over the years, it has not come close to matching the pace of debt growth, as seen in the second chart (from http://www.nakedcapitalism.com/2009/06/guest-post-what-de-leveraging.html). Since 1977, debt has grown from 160% of GDP to almost 375% of GDP. With GDP falling in the first quarter, this means that there has been no real slowdown in the growth rate of debt relative to GDP, even though the absolute rate of debt growth has slowed.

I doubt that we can continue to sustain ever-increasing debt relative to GDP. If the current pace continues, it will not be long before total debt is five times GDP, and in only a few decades it would be ten times GDP. I'm not sure what the limit is, but we have to be approaching it.

What does bringing down the total debt burden on the economy mean? Barring a dramatic and sustained acceleration in the rate of GDP growth to Chinese-type levels (not going to happen), it means that households and businesses are going to have to borrow less, save more and pay back the debt...or start defaulting on it. We got a taste of what it is like when households and businesses are not able to borrow last fall, and it is not any fun.

As a nation, we have been living large on the credit card for the last 30 years. Now we have to start paying the bill.

We are going to have to shift the entire economy away from consumption and towards investment in things that will produce future income that can pay off the debts. Either that or the current bankruptcies we are seeing in both the corporate and household sectors (and also foreclosures which can be seen as a partial bankruptcy by a homeowner) will continue to swell, as the problem is solved by default rather than repayment.

Given the number of states and localities that are in deep fiscal trouble (see California), this may extend to huge numbers of Chapter 9 bankruptcies (municipal) as well as Chapter 11 (corporate) and Chapter 13 (personal). This will not be good news for the financial sector -- most notably the banks, but not limited to them. Given its ownership of the printing press, the bankruptcy of the Federal government is not likely until long after the dollar loses its reserve currency status and the Federal government is forced to borrow in currencies other than the dollar.

However, the prospect of very high inflation down the road is real. It is not a current danger given the huge amount of slack in the system. With unemployment at 9.4% and rising, there is simply no way that the wage side of a wage-price spiral can take hold. Thus for the time being, any inflation will simply serve as a method to reduce the real incomes of Americans.

The invisible hand of the market is going to force us to cut back on our consumption one way or the other. This means, among other things, that we will most likely never go back to an annual sales rate of 17 million for car sales. That is not good news over the long term for Ford (F) or even Toyota (TM). It might, however, be good news for AutoZone (AZO) since we will be patching up the old jalopy for much longer.

Dramatically lower consumption over time is not going to be good news for the vast majority of retailers or for the firms in the consumer discretionary sector. I'm not just talking about this year's revenues and earnings, but their revenues and earnings for the next decade (at least). On the corporate side, to reduce total debt companies are going to have to pay far less in dividends and not repurchase stock, and use retained earnings to increase equity relative to debt. State and Local governments will have to both raise taxes and cut services. This is going to seriously slow GDP growth, which will make it all the more difficult to reduce the level of debt relative to GDP.

Maybe I am wrong about the limit of indebtedness as a country being reached. Perhaps the can will be kicked down the road further and total debt will reach 500% or 1000% of GDP. There is nothing particularly magical about 375% of GDP, but as Nixon's chief economist Herbert Stein once pointed out, "if a trend cannot go on forever, it will stop." Well, debt cannot perpetually increase at a greater rate than GDP, so eventually it has to stop. My sense is that it has to happen sooner rather than later.

This mess has been a long time in the making, and will take a very long time to clean up.

Read the full analyst report on "F"
Read the full analyst report on "TM"
Read the full analyst report on "AZO"
Zacks Investment Research

Zacks Industry Outlook Highlights: General Motors, AutoZone and TRW Automotive. – Press Releases

Zacks Market Commentaries — Mon, 08 Jun 2009 14:00:46 +0000

For Immediate Release

Chicago, IL - June 8, 2009 - Zacks.com releases the latest Industry Outlook. Today's interview is with senior analyst Paul Raman, who talks about the Automotive Industry, including General Motors (GMGMQ), AutoZone (AZO) and TRW Automotive (TRW).

A synopsis of today's Industry Outlook is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Earnings are below expectations and have been for some time. Demand for autos is down (35)% due to a weak economy and weakening real estate market. Demand is also hurt by weakening employment. The recent credit crunch is crippling to auto sales, and this has a trickle-down effect throughout the industry.

Furthermore, there is a slowdown of SUV sales, which are 55% of sales (cars are 45%). Imports have also been more competitive, as they tend to have better gas mileage. Costs for domestic producers is much higher than seen for foreign producers, and this is creating a loss of market share in the US by US producers. The presence of unions has led to costs being much higher than seen in other countries.

However, the previous two points will be addressed in part by the bankruptcy filings of General Motors (GMGMQ) and Chrysler. Pricing averages (2)% in this sector annually. Incentives are increasing as the industry is trying to increase sales. Overcapacity is about 20% in this sector. Pension deficits are rising due to a weak stock market, lower interest rates and less pension funding.

AutoZone (AZO) is a Buy due to improving same store sales and a resurgence in the used car and auto parts market. TRW Automotive (TRW) is a Buy due to restructuring.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting: http://at.zacks.com/?id=2679.

About Zacks

The performance of the Zacks Rank portfolios shown above for annual and year-to-date periods are the linked monthly total returns (price changes + dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from Jan 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month.

The portfolios created monthly from 1988 through September 2006 exclude ADRS and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. 2007 returns are for the period of Jan 1 - Jun 30, 2007. These performance numbers have been audited from 1995 through 2003 by Autschuler Melovan, a division of American Express Financial.

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Zacks Investment Research

Automotive Industry – Industry Outlook

Zacks Market Commentaries — Mon, 08 Jun 2009 05:00:00 +0000

There is a focus on automation and simplifying product lines to lower costs and benefit from economies of scale. The average car now needs only 15-25 man-hours per vehicle and this drops 2% annually. Hybrid/alternative cars represent a source of growth in the future. Market share gains by hybrids/alternatives will be slow, and they are now only 4% of cars on the road. GM and Chrysler both have filed for bankruptcy, and will emerge more competitive in the long run.

WEAKNESSES

Furthermore, there is a slowdown of SUV sales, which are 55% of sales (cars are 45%). Imports have also been more competitive, as they tend to have better gas mileage. Costs for domestic producers is much higher than seen for foreign producers, and this is creating a loss of market share in the US by US producers. The presence of unions has led to costs being much higher than seen in other countries.

However, the previous two points will be addressed in part by the bankruptcy filings of General Motors (GM) and Chrysler. Pricing averages (2)% in this sector annually. Incentives are increasing as the industry is trying to increase sales. Overcapacity is about 20% in this sector. Pension deficits are rising due to a weak stock market, lower interest rates and less pension funding.

BUY/SELL RATINGS

AutoZone (AZO)

is a Buy due to improving same store sales and a resurgence in the used car and auto parts market. TRW Automotive (TRW) is a Buy due to restructuring.Zacks Investment Research

Automotive Industry – Zacks Analyst Interviews

Zacks Market Commentaries — Mon, 08 Jun 2009 05:00:00 +0000

WEAKNESSES

Furthermore, there is a slowdown of SUV sales, which are 55% of sales (cars are 45%). Imports have also been more competitive, as they tend to have better gas mileage. Costs for domestic producers is much higher than seen for foreign producers, and this is creating a loss of market share in the US by US producers. The presence of unions has led to costs being much higher than seen in other countries.

BUY/SELL RATINGS

AutoZone (AZO)

is a Buy due to improving same store sales and a resurgence in the used car and auto parts market. TRW Automotive (TRW) is a Buy due to restructuring.Zacks Investment Research

Automotive Industry – Industry Outlook

Zacks Market Commentaries — Fri, 05 Jun 2009 21:42:17 +0000

Overview - Upgraded from Negative to Neutral

OPPORTUNITIES

The industry is very concentrated, with the top 8 global auto companies having more than 90% of global revenues and the top 50 global auto parts companies having 80% of global revenues (the top 4 US tire producers have 75% of the US market).

There is a focus on automation and simplifying product lines to lower costs and benefit from economies of scale. The average car now needs only 15-25 man-hours per vehicle and this drops 2% annually. Hybrid/alternative cars represent a source of growth in the future. Market share gains by hybrids/alternatives will be slow, and they are now only 4% of cars on the road. GM and Chrysler both have filed for bankruptcy, and will emerge more competitive in the long run.

WEAKNESSES

Earnings are below expectations and have been for some time. Demand for autos is down (35)% due to a weak economy and weakening real estate market. Demand is also hurt by weakening employment. The recent credit crunch is crippling to auto sales, and this has a trickle-down effect throughout the industry.

Furthermore, there is a slowdown of SUV sales, which are 55% of sales (cars are 45%). Imports have also been more competitive, as they tend to have better gas mileage. Costs for domestic producers is much higher than seen for foreign producers, and this is creating a loss of market share in the US by US producers. The presence of unions has led to costs being much higher than seen in other countries.

However, the previous two points will be addressed in part by the bankruptcy filings of General Motors (GM) and Chrysler. Pricing averages (2)% in this sector annually. Incentives are increasing as the industry is trying to increase sales. Overcapacity is about 20% in this sector. Pension deficits are rising due to a weak stock market, lower interest rates and less pension funding.

BUY/SELL RATINGS

AutoZone (AZO) is a Buy due to improving same store sales and a resurgence in the used car and auto parts market. TRW Automotive (TRW) is a Buy due to restructuring.

Zacks Investment Research

Company News for May 27, 2009 – Corporate Summary

Zacks Market Commentaries — Wed, 27 May 2009 14:24:37 +0000

* Cree (NASDAQ:CREE) provided upside guidance for its fiscal fourth quarter earnings and revenues. The company said it expects earnings of 15 cents to 17 cents per share, ex-items, versus consensus estimates of 14 cents, as revenues of $143 million to $150 million beat estimates of $139.43 million on stronger LED component bookings for lighting-related applications

* Take-Two (NASDAQ:TTWO) beat estimates with a fiscal second quarter loss of 4 cents a share, ex-items, as revenues declined 57.4% year-over-year to $229.7 million, versus estimates of $218.5 million. The firm issued downside third quarter guidance, but mixed fiscal 2008 guidance, anticipating full-year results of breakeven to a 20 cents a share profit ex-items, versus Street estimates of 12 cents, on revenues of $1.05 billion to $1.15 billion, versus estimates of $1.17 billion

* Barclays (NYSE:BCS) lifted 2010 estimates for Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:BRCM), expecting the two to benefit from increased market shares

* AutoZone (NYSE:AZO) reported a better-than-expected fiscal third quarter earnings of $3.13 a share, beating by 24 cents, as revenues increased 9.3% year-over-year to $1.7 billion

* Staples (NASDAQ:SPLS) released first quarter earnings of 22 cents a share, beating estimates by one cent per share on in-line revenues of $5.8 billion

Zacks Investment Research

Zacks Earnings Preview: Dell, AutoZone, Big Lots, Costco, General Motors, Marvell Technology Group and DSW, Inc. – Press Releases

Charles Rotblut — Mon, 25 May 2009 11:15:00 +0000

For Immediate Release

Chicago, IL - May 25, 2009 - Zacks.com releases the list of companies likely to issue earnings surprises. This week's list includes Dell (DELL), AutoZone (AZO), Big Lots (BIG), Costco (COST), General Motors (GM), Marvell Technology Group (MRVL) and DSW, Inc. (DSW). To see more earnings analysis, visit http://at.zacks.com/?id=3207.

Every day, Zacks.com makes 4 stock picks available, free of charge. To see them, go to http://at.zacks.com/?id=3567.

The Week's Events

Dell (DELL), AutoZone (AZO), Big Lots (BIG) and Costco (COST) are among the most notable names for what will be a light week for earnings. Just 81 companies are confirmed to report, 9 of which are S&P 500 (SPX) members.

Housing data will be among the economic headlines with CaseShiller, existing home sales and new home sales data being released. We will also see the first set of revisions to Q1 GDP.

Tuesday: S&P/CaseShiller housing price index, Conference Board May consumer confidence index
Wednesday: April existing home sales, weekly crude inventories
Thursday: April new home sales, April durable goods orders, weekly initial jobless claims
Friday: Preliminary Q1 GDP, May Chicago PMI, revised May University of Michigan consumer confidence

Dallas Fed President Richard Fisher will discuss the economic outlook on Thursday, May 28 before the Washington Association of Money Managers.

The biggest news of the week should be General Motors (GM). The company has until May 26 to get bondholders to agree to a deal. If an agreement is not reached, it's hard to see how the automaker will meet the White House's June 1 deadline for a restructuring plan.

Bankruptcy seems likely. If a resolution is found (including a neat, prepackaged bankruptcy), the markets could react very positively. A contentious bankruptcy, however, could send stocks lower. The latter scenario seems more likely.

Companies That Could Issue Positive Earnings Surprises

Shares of AutoZone (AZO) following the company's last 2 reports. Can AZO do it again?

Three of the 18 covering analysts have raised their fiscal third-quarter forecasts over the past few weeks, nudging the consensus earnings estimate a penny higher to $2.89 per share. The most accurate estimate is more bullish at $2.94. Keep in mind, however, that AZO has missed once in the past 3 quarters and one analyst recently lowered his projections. So there is some risk. AZO is scheduled to report on Wednesday, May 27, before the start of trading.

Big Lots (BIG) has topped expectations for nearly every quarter over the past 3 years. Ahead of the closeout retailer's first-quarter report, the majority of the covering analysts have raised their forecasts. These revisions pushed the consensus earnings estimate 3 cents higher to 40 cents per share. Big Lots is scheduled to report on Thursday, May 28, before the start of trading.

Marvell Technology Group (MRVL) has delivered 4 consecutive earnings surprises. Revisions by 2 of the 18 covering analysts resulted in the most accurate estimate calling for a 1-cent loss, which is a penny better than the consensus earnings estimate. The possibility for positive guidance also exists, given the commentary provided by other chipmakers. Marvell Technology Group is scheduled to report on Thursday, May 28, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

DSW, Inc. (DSW) disappointed investors twice during the past 4 quarters. Some analysts believe another miss could be forthcoming, as is evidenced by the 1-cent fall in the consensus earnings estimate, to 14 cents per share. The most accurate estimate is even more bearish at 11 cents per share. DSW is scheduled to report on Thursday, May 28, before the start of trading.

Charles Rotblut, CFA is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

Want to turn earnings surprises into quick profits? Learn how by visiting http://at.zacks.com/?id=3206.

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +28%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 82% annually (+2% versus +10%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

About Zacks

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Contact: Charles Rotblut, CFA
Company: Zacks.com
Phone: 312-265-9352
Email: pr@zacks.com
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Zacks Investment Research

A Retail Investing Framework

Daniel Hung — Mon, 13 Apr 2009 04:30:16 +0000

Generally speaking, I see myself as a value investor. Why then, would am I so often looking towards retailers and generally consumer facing businesses for my best investment ideas (see: A Retail Reversal and Irrational Retail Valuations)? After all, many of the best retail stocks are those that rely on growth to provide shareholder return. [...]

New Cars Selling in China – Analyst Blog

Zacks Market Commentaries — Thu, 12 Mar 2009 21:30:07 +0000

New Car Sales Excellent in China; Used Car & Parts Suppliers OK in U.S.

Reports today indicate that Chinese new car sales are up 25% versus last year, to 827,000 cars in the month of February. This is up 12% from January.

Right now, China is the largest new car market in the world. Part of this is due to the car becoming a more affordable necessity there. Part may also be due to a tax cut by the Chinese Government targeted at small, fuel efficient vehicles.

Used car sales continue to hold up in the U.S., as consumers are shying away from new cars. Consumers are fixing up old cars rather than trading in for a new car. The relative performance of stocks that sell used cars and auto parts has been fantastic over the past six months, as can be seen below:

Company	Ticker	Relative Performance
Advanced Auto	AAP	62%
Autozone	AZO	82%
O'Reilly	ORLY	87%
AutoNation	AN	62%
Genuine Parts	GPC	30%
Penske Auto	PAG	3%
Carmax	KMX	36%

Relative performance compared to Dow Jones US Auto/Auto Parts Index

Zacks Investment Research

Stock Investment in a Crisis, Two Early Indicators

Alexander Green — Fri, 06 Mar 2009 12:07:28 +0000

pHave we hit bottom? The U.S. unemployment crisis has changed the purchasing habits for the American consumer. The a href="http://www.investmentu.com/" class="alinks_links"Investment U/a Research Team gives us two stocks that are benefiting from the recession and this new way of life . /p pTheses stocks act as an early warning for what is to come and you don’t need the data from the U.S. Labor Department to give you the figures or warning./p pThis from the Team:/p blockquotepDuring most recessions, the auto sector has traditionally taken it on the chin. This week, we found out some interesting news that gives us some new insight into the changing buying habits of American consumers, and perhaps, new insight on investing./p pstrongAutoZone /strong(NYSE: a href="http://www.google.com/finance?q=NYSE%3AAZO" target="_blank"AZO/a) reported a href="http://money.cnn.com/news/newsfeeds/articles/globenewswire/160614.htm" target="_blank"increased sales and profits/a as customers lined#8230;/p/blockquote

AutoZone and Automatic Data Processing, Non-traditional Indicators

Investment U — Wed, 04 Mar 2009 16:22:20 +0000

AutoZone and ADP, Non-traditional Indicators by Investment U Research Team During most recessions, the auto sector has traditionally taken it on the chin. This week, we found out some interesting news that gives us some new insight into the changing buying habits of American consumers, and perhaps, new insight on investing. AutoZone (NYSE: AZO) reported increased sales and [...]

Retail’s Good Rank – Zacks Industry Rank Analysis

Charles Rotblut — Wed, 04 Mar 2009 05:00:00 +0000

Highlighted stocks include AutoZone (AZO), GameStop Corporation (GME) and Cracker Barrel Old Country Store, Inc. (CBRL).

In the midst of an ongoing recession, Retail-Wholesale is one of the top-ranked sectors. Though this sounds paradoxical, there are 3 reasons that justify this.

The first has to do with timing. Many retailers operate on a February-January calendar year, which means they report earnings later than most companies.

To the extent that analysts revise estimates higher in response to earnings reports, those late reporters receive a better Zacks Rank. The Zacks Rank considers changes made to earnings estimates over both the last 60-90 days and over the last 30 days.

Secondly, as Rob Plaza discussed yesterday, expectations were overly pessimistic, making it easy for some companies within the retail sector to clear the hurdle by a seemingly wide margin.

Finally, there were a few companies in the sector with good earnings reports.

Economy Helping Auto Part Sales

AutoZone (AZO) is a good example. Yesterday, shares of the auto parts retailer soared after the company reported bullish results.

Fiscal second-quarter earnings totaled $2.03, 18 cents above expectations. Net sales reached $1.4 billion, aided by a 6% jump in same-store sales.

The company is benefiting from the decline in car sales. Consumers are keeping their cars longer and, as a result, are spending on maintenance. (Afterall, it's hard to get a job if you can't make it to the interview.)

The stock had soared by more than 50% from its November lows prior to the earnings report, so there was not much room for error. Yet, AZO performed and was rewarded with a new 52-week high yesterday, making it a Zacks Rank top performer.

AutoZone's positive surprised followed good earnings reports from 2 of its competitors, Advance Auto Parts (AAP) and O'Reilly Automotive, Inc. (ORLY). AZO, AAP and ORLY are Zacks #2 Rank ("buy") stocks classified in Retail/Wholesale-Auto Parts.

Video Games Still Selling

Another retailer that has thrived in the face of the recession is GameStop Corporation (GME).

The company recently revised its fourth-quarter guidance to the high-end of the previous range. The world's largest video game reseller expects earnings to have totaled between $1.33 and $1.34 per share. Same-store sale are estimated to have risen by 9.6%.

This year, GME thinks it can achieve comparable same-store sales growth between 4% and 6%, which would be impressive given the maturity of the current gaming console systems.

Though the company did not provide an EPS projection, half of the 16 covering brokerage analysts raised their fiscal 2010 forecasts in response. The consensus earnings estimate now calls for fiscal 2010 profits to total $2.83 per share, which would be an 18% increase over fiscal 2009.

GameStop is scheduled to report in mid-March.

GME is a Zacks #2 Rank stock classified in Retail-Consumer Electronics.

Restaurants Not As Bad As Feared

On the other hand, some companies within the retail sector simply have fared better than analysts feared. This was the case with Cracker Barrel Old Country Store, Inc. (CBRL).

The chain earned 81 cents during its fiscal second-quarter, 6 cents more than brokerage analysts had projected. Though that sounds good, revenues did decline. Same-store restaurant sales were 1.5% lower and same-store retail sales contracted 7%.

CBRL's guidance, however, was good, all things considered. The company reiterated its fiscal 2009 guidance for earnings of $2.65-$3.00 per share.

This was important because analysts had been lowering their full-year projections prior to the release of earnings. During the past few weeks, analysts have reversed course, and the consensus earnings estimate has risen by 12 cents to $2.68 per share.

Brokerage analysts have also recently raised their full-year profit forecasts on Papa John's International, Inc. (PZZA) and Texas Roadhouse, Inc. (TXRH).

CBRL is Zacks #1 Rank ("strong buy") stock, whereas PZZA and TXRH are Zacks #2 Rank stocks. All 3 are classified in Retail-Restaurants.

The Zacks Rank is a quantitative short-term indicator designed to determine a stock's relative performance over a period of 1 to 3 months.

Zacks Premium and Zacks Elite subscribers can view the Zacks Industry Rank List at http://www.zacks.com/zrank/zrank_inds.php. This interactive list allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. Shown below is the Zacks Sector Rank List, which shows the trend in estimate revisions on a broader scale.

Sector Rank as of Mar 3
Sector	This Week's Zacks Rank	Last Week's Zacks Rank	FY09 Revisions Ratio	FY09 Estimates Revised Up	FY09 Estimates Revised Down
Medical	2.60	2.61	0.81	593	730
Retail-Wholesale	2.88	2.94	0.50	296	595
Computer and Technology	2.88	2.89	0.34	513	1498
Aerospace	2.98	2.98	0.30	30	101
Consumer Discretionary	2.98	3.00	0.27	158	587
Utilities	2.99	2.97	0.29	90	314
Business Services	3.01	3.04	0.32	77	243
Consumer Staples	3.01	3.00	0.32	121	380
Construction	3.16	3.04	0.28	58	210
Oils-Energy	3.18	3.21	0.26	283	1070
Transportation	3.21	3.20	0.15	47	311
Industrial Products	3.26	3.27	0.17	66	389
Auto-Tires-Trucks	3.26	3.24	0.12	16	137
Finance	3.28	3.28	0.17	282	1618
Basic Materials	3.28	3.27	0.32	114	360
Conglomerates	3.30	3.18	0.16	8	50

Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

Zacks Investment Research

AZO Beats in Q4 and Rises 8% – Zacks Tale of the Tape

James Giaquinto — Tue, 03 Mar 2009 18:44:44 +0000

Drivers may not be buying new cars during this recession, but they are spending money to fix up their old ones - which gave AutoZone (AZO) a strong fiscal second-quarter performance.

Shares of the company are up approximately 8% today.

The leading auto parts retailer topped expectations with earnings per share of $2.03 for the quarter. Analysts were expecting $1.85. In the year-ago quarter, AZO reported $1.67.

Net sales of $1.4 billion advanced 8.1% from last year, while domestic same-store sales moved higher 6%.

The company's report comes on the same day that Ford (F) announced a 48% drop in February sales, which further underscores AZO's enviable niche in an otherwise poor environment for auto concerns.

During the quarter, AZO opened 20 new stores in the U.S. while closing only 1. It also opened 8 stores in Mexico. The company now has more than 4,100 stores.

The company is "very optimistic" about the rest of the fiscal year thanks to its "resilient" business model.

In addition to being one of the better-performing S&P 500 companies today, AZO also made the Zacks #1 Rank Top Performers List for Tuesday. (The Zacks Rank is a quantitative, short-term indicator.)

On a longer-term basis, though, AZO currently has a Zacks Equity Research recommendation of "Hold".

Earnings estimates for this fiscal year, ending August 2009, have trended higher over the past 3 months, with 5 analysts raising their expectations in the past 30 days. Furthermore, analysts currently expect profit for next fiscal year to be higher than this fiscal year.

"AZO" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Looking For A Bear Market Rally Today

Daniel Shepard — Tue, 03 Mar 2009 05:28:31 +0000

Tuesday March 3, 2009 Navivest Yesterday, the Dow Jones Industrial Average lost 299.64, to close at 6,763.29, an 11 year low. This came on the back of three straight down days, so now the running total is four straight down days on the Dow. At some point, that has to give. We understand the economy is in shambles, [...]

Earnings results and economic reports – Week 50.

Vlada Kynsky — Mon, 08 Dec 2008 17:21:00 +0000

strongMonday:br //strongEconomic NAbr /Earnings H amp; R Block (HRB), Nat Semi (NSM), Pep Boys (PBY)br /br /strongTuesday:/strongbr /Economic Pending Home Sales (-2.3%)br /Earnings Analogic (ALOG), AutoZone (AZO), Kroger (KR), Toro (TTC), ADC Telecom (ADCT), Cooper (COO), Oxford (OXM), Pall (PLL), SAIC (SAI)br /br /strongWednesday:/strongbr /Economic Weekly Crude, Treasury Budget (-$193B)br /Earnings Korn/Ferry (KFY), CKE Restaurants (CKR), Greif (GEF), NCI Bldg (NCS)br /br /strongThursday:br //strongEconomic Weekly Claims, Import / Export, Trade Balance (-$54B)br /Earnings Ciena (CIEN), Costco (COST), Luluemon (LULU), Esterline (ESL), Martek (MATK), Teekay (TK)br /br /strongFriday:/strongbr /Economic PPI amp; Core (-1.8%, 0.2%), Retail Sales (-1.4%, -1.7%), Biz’ Invs (-0.1%), Michigan (58) Earnings NAdiv class="blogger-post-footer"http://stockweb.blogspot.com/atom.xml/div pa href="http://feedads.googleadservices.com/~a/SQk3ONGLysXPUUj8p5cpWPND6oI/a"img src="http://feedads.googleadservices.com/~a/SQk3ONGLysXPUUj8p5cpWPND6oI/i" border="0" ismap="true"/img/a/pdiv class="feedflare" a href="http://feedproxy.google.com/~f/Stockweb?a=IveUgyz9"img src="http://feedproxy.google.com/~f/Stockweb?d=41" border="0"/img/a /div

Auto Zone (NYSE:AZO): Downgraded to Underperform, $110 tgt at FBR

Notable Calls — Wed, 05 Nov 2008 14:05:00 +0000

Friedman Billings Ramsey is out with a major downgrade on Auto Zone (NYSE:AZO) taking their rating to Underperform from Mkt Perform while lowering tgt to $110.

At a minimum, the firm does not think that AZO's stock price will be able to keep up with its peers, nor with the overall equity market. As with other retailers, sales have likely slowed for the sector since the end of AutoZone's fiscal year (August, 2008). When AZO had last reported, comp store sales were +0.6% and had been helped for that period by the tax stimulus. At Gabelli's after-market automotive conference yesterday in Las Vegas, the firm found most companies generally cautious about current sales trends. Therefore, they estimate that AZO's same-store sales are currently tracking at -2% for 1Q09E.

Separately, they are concerned that competitive pressures will accelerate for AZO, with AZO currently operating at hardline retail sector-high operating margins (EBIT) of 17.1% (LTM), which are up from 14.5% in 2002. Competitor O'Reilly Automotive (ORLY) vows to step up its investment in both inventory and price within its newly acquired CSK stores. This investment is also slated to take place in key markets for AZO (namely, the West Coast).

FBR has revised down their AZO earnings estimates;

Notablecalls: Talking to a especially well connected senior NCN member who thinks this one will kill the stock. He thinks a $10 haircut (towards $110-$112 level) may be in the cards here. - FYI

Maverick Capital Management 13F | Lee Ainslie Hedge Fund Holdings Analysis

Richard C. Wilson — Mon, 22 Sep 2008 12:41:00 +0000

Maverick Capital

Maverick Capital Management Holdings Analysis

This post is being written as part of HedgeFundBlogger.com's Investment Securities Tool which analyzes the holdings of hedge fund managers.

Lee Ainslie started Maverick Capital back in 1993 with $38 million. Nowadays, the fund is worth $10 billion. Ainslie, like many of the other fund managers I've profiled, has a background rooted in learning from legendary great Julian Robertson at Tiger Management. So, due to the fact that these proteges learned from the best and have had great success running their own hedge funds, I continually try to find a reason not to follow these funds. And, needless to say I'm never successful. Some contacts over at Maverick have explained that their hedge fund strategy is straight up stock picking, both long and short. They made it clear though, that they do not employ pairs trades. Although, some of their long/short setups might be in the same sector. They try to hedge their positions like a true hedge fund by picking out the shining stars in certain sectors, as well as identifying the pieces of garbage. Now, of course, this presents us with a problem in that the 13F filings only show long positions (unless they're holding puts on a name, we can see those). So, a good amount of Maverick's portfolio (the entire short side) is unbeknownst to us, because they have reported zero put positions. But, let's look on the bright side in that we can see all their long positions. Maverick uses a value approach (obviously learned from Julian) and one of their most popular metrics is finding companies and comparing their enterprise value to sustainable free cash flow.

So, now that we've got a little background on Maverick, let's see what they were up to. The following are Maverick Capital's current holdings as of June 30th 2008, as released in their most recent 13F filing with the SEC. The positions in this most recent 13F were compared to last quarter's 13F and here are the changes made to their portfolio:

New Positions:
First Solar (FSLR): 1,202,118 shares. This position is 2.93% of Maverick's portfolio.
Lorillard (LO): 3,820,856 shares. This position is 2.36% of Maverick's portfolio.
CVS Caremark (CVS): 5,912,073 shares. This position is 2.09% of Maverick's portfolio.
Netapp (NTAP): 9,331,862 shares. This position is 1.81% of Maverick's portfolio.
ITT Educational Services (ESI): 2,422,090 shares. This position is 1.79% of Maverick's portfolio.
Macy's (M): 9,008,174 shares. This position is 1.56% of Maverick's portfolio.
Hansen Natural (HANS): 5,712,952 shares. This position is 1.47% of Maverick's portfolio.
Polo Ralph Lauren (RL): 2,431,244 shares. This position is 1.36% of Maverick's portfolio.
Dicks Sporting Goods (DKS): 7,589,473 shares. This position is 1.20% of Maverick's portfolio.
Cigna Corp (CI): 2,931,045 shares. This position is 0.93% of Maverick's portfolio.
Digital River Inc (DRIV): 1,974,144 shares. This position is 0.68% of Maverick's portfolio.
Viacom Inc (VIA): 2,442,500 shares. This position is 0.67% of Maverick's portfolio.
Forest Labs (FRX): 1,789,900 shares. This position is 0.56% of Maverick's portfolio.
Lamar Advertising (LAMR): 1,542,918 shares. This position is 0.50% of Maverick's portfolio.
Visa (V): 565,005 shares. This position is 0.41% of Maverick's portfolio.
South Financial Group (TSFG): 50,000 shares. This position is 0.38% of Maverick's portfolio.
Athena Health (ATHN): 1,245,819 shares. This position is 0.34% of Maverick's portfolio.
National City Corp (NCC): 6,625,176 shares. This position is 0.28% of Maverick's portfolio.
Sohu.com Inc (SOHU): 170,485 shares. This position is 0.11% of Maverick's portfolio.
MSCI Inc (MXB): 287,186 shares. This position is 0.09% of Maverick's portfolio.
Universal American (UAM): 1,004,391 shares. This position is 0.09% of Maverick's portfolio.
Comscore (SCOR): 436,640 shares. This position is 0.09% of Maverick's portfolio.
Citizens Republic Bancorp (CRBC): 937,500 shares. This position is 0.02% of Maverick's portfolio.

Added to:
Berkshire Hathaway (BRK.B): Increased position by 1412%. Position is now 0.45% of their portfolio.
Gmarket (GMKT): Increased position by 317%. Position is now 0.19% of their portfolio.
Infinera (INFN): Increased position by 171%. Position is now 0.54% of their portfolio.
American Capital (ACAS): Increased position by 141%. Position is now 0.30% of their portfolio.
Nordstrom (JWN): Increased position by 136.61%. Position is now 2.79% of their portfolio.
America Movil (AMX): Increased position by 129.88%. Position is now 3.91% of their portfolio.
Lexmark (LXK): Increased position by 109.39%. Position is now 1.42% of their portfolio.
Citrix (CTXS): Increased position by 109.36%. Position is now 2.20% of their portfolio.
Bank of New York Mellon (BK): Increased position by 55.42%. Position is now 3.15% of their portfolio.
Baxter Intl (BAX): Increased position by 51.69%. Position is now 2.90% of their portfolio.
Advanced Micro Devices (AMD): Increased position by 45.89%. Position is now 2.87% of their portfolio.
Raytheon (RTN): Increased position by 41.72%. Position is now 2.58% of their portfolio.
Fidelity National Info (FIS): Increased position by 40.56%. Position is now 2.05% of their portfolio.
Covidien (COV): Increased position by 32.99%. Position is now 2.32% of their portfolio.
Liberty Media Corp (LMDIA): Increased position by 28.09%. Position is now 1.59% of their portfolio.
Resmed (RMD): Increased position by 26.46%. Position is now 0.74% of their portfolio.
Burlington Northern (BNI): Increased position by 22.73%. Position is now 1.83% of their portfolio.
Google (GOOG): Increased position by 22.27%. Position is now 1.72% of their portfolio.
Genentech (DNA): Increased position by 21.38%. Position is now 1.40% of their portfolio.
Zimmer Holdings (ZMH): Increased position by 20.28%. Position is now 1.73% of their portfolio.
Cypress Bioscience (CYPB): Increased position by 19.98%. Position is now 0.20% of their portfolio.
Apple (AAPL): Increased position by 19.45%. Position is now 4.09% of their portfolio.
Research in Motion (RIMM): Increased position by 15.41%. Position is now 4.08% of their portfolio.
MetroPCS Comm (PCS): Increased position by 13.6%. Position is now 0.77% of their portfolio.
Home Inns & Hotels (HMIN): Increased position by 7.72%. Position is now 0.54% of their portfolio.
Gilead Sciences (GILD): Increased position by 6.66%. Position is now 2.37% of their portfolio.
Marvell Technology (MRVL): Increased position by 5.24%. Position is now 3.08% of their portfolio.
Newstar Financial (NEWS): Increased position by 5.21%. Position is now 0.14% of their portfolio.
Cardinal Health (CAH): Increased position by 3.33%. Position is now 1.56% of their portfolio.
Amylin Pharma (AMLN): Increased position by 2.84%. Position is now 0.58% of their portfolio.
Discovery Holding (DISCA): Increased position by 1.74%. Position is now 1.21% of their portfolio.
Palm (PALM): Increased position by 1.40%. Position is now 0.51% of their portfolio.
Lumber Liquidators (LL): Increased position by 1.14%. Position is now 0.26% of their portfolio.
China Nepstar (NPD): Increased position by 0.75%. Position is now 0.18% of their portfolio.
First Advantage (FADV): Increased position by 0.65%. Position is now 0.15% of their portfolio.
Under Armour (UA): Increased position by 0.17%. Position is now 0.83% of their portfolio.
Mylan Inc (MYL): Increased position by 0.06%. Position is now 1.09% of their portfolio.
Monsanto (MON): Increased position by 0.04%. Position is now 1.68% of their portfolio.
Potash (POT): Increased position by 0.03%. Position is now 2% of their portfolio.

Reduced positions:
Thermo Fisher (TMO): Reduced their position by 4.91%. Position is now 1.68% of their portfolio.
Western Union (WU): Reduced their position by 10.2%. Position is now 2.08% of their portfolio.
Marsh & Mclennan (MMC): Reduced their position by 12%. Position is now 1.55% of their portfolio.
Textron Inc (TXT): Reduced their position by 18.93%. Position is now 1.44% of their portfolio.
Wyeth (WYE): Reduced their position by 20.6%. Position is now 1.46% of their portfolio.
Leap Wireless (LEAP): Reduced their position by 23.40%. Position is now 0.39% of their portfolio.
Trubion Pharma (TRBN): Reduced their position by 24.38%. Position is now 0.04% of their portfolio.
Dish Network (DISH): Reduced their position by 27.75%. Position is now 1.13% of their portfolio.
Avon Products (AVP): Reduced their position by 33.23%. Position is now 1.36% of their portfolio.
JP Morgan Chase (JPM): Reduced their position by 38.68%. Position is now 0.89% of their portfolio.
Cognizant (CTSH): Reduced their position by 42.97%. Position is now 0.85% of their portfolio.
DirecTV (DTV): Reduced their position by 49.69%. Position is now 0.83% of their portfolio.
Suntrust Banks (STI): Reduced their position by 50%. Position is now 0.16% of their portfolio.
Gamestop (GME): Reduced their position by 51.64%. Position is now 0.81% of their portfolio.
Corcept (CORT): Reduced their position by 57.49%. Position is now 0.01% of their portfolio.
Bluefly (BFLY): Reduced their position by 90%. Position is now 0.11% of their portfolio.
Berkshire Hathaway (BRK.A): Reduced their position by 95%. Position is now 0.66% of their portfolio.

Removed Positions (Positions Maverick sold out of completely):
Hanesbrands (HBI)
Autozone (AZO)
Bankrate (RATE)
CNET (CNET)
Crocs (CROX)
Cumulus Media (CMLS)
Harmonic (HLIT)
Loews (L)
Move Inc (MOVE)
Nucor (NUE)
OfficeMax (OMX)
Qualcomm (QCOM)
Salesforce (CRM)
Sandisk (SNDK)
Sears (SHLD)
Starbucks (SBUX)
UnitedHealth (UNH)

Positions with no change:
VMWare (VMW). Position is 0.59% of their portfolio.
BPW Acquisition (BPW). Position is 0.18% of their portfolio.
FIrst Marblehead (FMD). Position is 0.05% of their portfolio.
Ultra Clean Holdings (UCTT). Position is 0.01% of their portfolio.
Vivus (VVUS). Position is 0.01% of their portfolio.

Top 20 holdings by % of portfolio:
1. Apple (AAPL): 4.09% of the portfolio
2. Research in Motion (RIMM): 4.08% of the portfolio
3. America Movil (AMX): 3.91% of the portfolio
4. Bank of New York Mellon (BK): 3.15% of the portfolio
5. Marvell Tech (MRVL): 3.08% of the portfolio
6. First Solar (FSLR): 2.93% of the portfolio
7. Baxter Intl (BAX): 2.90% of the portfolio
8. Advanced Micro (AMD): 2.87% of the portfolio
9. Nordstrom (JWN): 2.79% of the portfolio
10. Raytheon (RTN): 2.58% of the portfolio
11. Gilead (GILD): 2.37% of the portfolio
12. Lorillard (LO): 2.36% of the portfolio
13. Covidien (COV): 2.32% of the portfolio
14. Citrix (CTXS): 2.20% of the portfolio
15. CVS Caremark (CVS): 2.09% of the portfolio
16. Western Union (WU): 2.08% of the portfolio
17. Fidelity National Info (FIS): 2.05% of the portfolio
18. Potash (POT): 2.00% of the portfolio
19. Burlington Northern (BNI): 1.83% of the portfolio
20. Netapp (NTAP): 1.81% of the portfolio

----------------------------------------------------

Breakdown: Maverick changed up their portfolio a decent amount over the past quarter. Most notable are their changes within their top 10 holdings. Hedge fund favorite Qualcomm (QCOM) was Maverick's 3rd largest holding last filing. This filing, they no longer even hold a position. Additionally, they were selling off chunks of other top 10 holdings from last quarter. They sold off 33% of their position in Avon Products (AVP), which was their 4th largest holding just one quarter ago. They also sold over 51% of their Gamestop (GME) position, which last quarter was their 7th largest holding. With those positions vacating their place in the top 10 holdings of Maverick's portfolio, new holdings obviously took their place. America Movil (AMX), another hedge fund favorite, was Maverick's 9th largest holding last time. This time, they increased their position by 129% and it is now their 3rd largest holding. They obviously used the weakness in this name to add to their position, just like fellow 'Tiger Cub' fund Lone Pine Capital. Maverick also added heavily to Nordstrom (JWN), increasing their position by 136% and making it now their 9th largest holding.

Maverick was out adding to tech across the board. Apple (AAPL) and Research in Motion (RIMM) are their top 2 largest holdings respectively, as they boosted their positions in both by over 14% each. Additionally, they added to their Marvell (MRVL) position, bringing it up to the fund's 5th largest position now. Maverick also continues to build a position in Advanced Micro Devices (AMD), as it now is their 8th largest holding.

Among their new positions this quarter are First Solar (FSLR), Lorillard (LO), and CVS Caremark (CVS). I highlight these three in particular because Maverick started large, new positions in all three names. First Solar (FSLR) was brought up all the way to the fund's 6th largest holding after not even owning shares last quarter. They started a new position in CVS Caremark (CVS) and brought it up to the fund's 15th largest holding. Also, they added heavily to Lorillard (LO) as well, making this new position their 12th largest holding. This position is interesting because we also saw Lone Pine Capital (ran by Stephen Mandel Jr.) start a new position in this exact same name. And, actually, this is not the only position that both Maverick and Lone Pine both started together. In this 13F filing, we see that Maverick started a position in Hansen Natural (HANS). And, Lone Pine recently disclosed that they have a 7.8% stake in HANS. It's definitely common to see many similar positions within the portfolios of various 'Tiger Cub' managers who now run their own funds because they all undoubtedly keep in touch and come from the same school of thought.

One last thing I would like to point out is Maverick selling completely out of various consumer related names. They sold completely out of their positions in Autozone (AZO), Hanesbrands (HBI), Sears (SHLD), Starbucks (SBUX), Crocs (CROX), and OfficeMax (OMX).

You can view their most recent 13F as filed with the SEC here.

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Business Week. VIX close to October 07 lows.

Vlada Kynsky — Mon, 19 May 2008 15:50:00 +0000

Monday
Economic: Leading Inds (0.0%)
Earnings: Campbell’s (CPB), Excel Maritime (EXM), Lowe’s (LOW), Perfect World (PWRD), DryShips (DRYS)

Tuesday
Economic: PPI & Core (0.0%, 0.2%)
Earnings: AutoZone (AZO), China Energy (CSUN), Home Depot (HD), Target (TGT), Analog Devices (ADI), Hewlett (HPQ), Intuit (INTU)

Wednesday
Economic: Weekly Crude, FOMC Minutes
Earnings: BJ’s (BJ), Ross (ROST), Solarfun (SOLF), Tsakos (TNP), Bristow (BRS), Gymboree (GYMB), Netease (NTES), Network Apps (NTAP), PETsMART (PETM), Salesforce (CRM)

Thursday
Economic: Weekly Claims (370K)
Earnings: AnnTaylor (ANN), Barnes & Noble (BKS), Children’s Place (PLCE), Dick’s (DKS), Gamestop (GME), Patterson (PDCO), Toro (TTC), Trina Solar (TSL), Aeropostale (ARO), Gap (GPS), Verigy (VRGY), Zumiez (ZUMZ)

Friday
Economic: Existing Home Sales (4.85M)
Earnings: NA