Company Description

Crane Co. manufactures highly engineered industrial products. Founded in 1855, the company provides products and solutions to customers in the aerospace, electronics, hydrocarbon processing, petrochemical, chemical, power generation, automated merchandising, transportation and other markets. Crane's five business segments are: Aerospace & Electronics, Engineered Materials, Merchandising Systems, Fluid Handling and Controls. Crane has approximately 11,000 employees in North America, South America, Europe, Asia and Australia.

Solid Income

The company recently declared a quarterly dividend of 20 cents per share, noting that it is payable on December 10 to shareholders of record as of the close of business on November 30.

Crane's dividend yield of 2.7% tops the industry average of 1.6%

A Strong Quarter

The company also posted solid results for the third quarter, raising the lower end of its earnings outlook.

Third-quarter earnings per share of 60 cents surpassed the Zacks Consensus Estimate by 25% and matched the year-prior earnings. Sales of $551 million slipped 14% year-over-year.

Management noted that despite a 14% decline in sales from the third quarter of 2008, operating profit and earnings per share were flat compared to 2008, primarily reflecting the company's success in re-aligning its cost base, adding that operating margin improved by 160 basis points, to 10.1%, compared to 8.5% a year ago.

The company said its $305 million in cash, $300 million revolving bank credit agreement and no near-term debt maturities provide it with a solid financial foundation to continue to manage through the current environment, positioning Crane for growth as end markets recover.

Bullish Estimates and a Surging Share Price

The company upped the lower end of its full-year earnings guidance to a range of $1.90 - $2.05 from $1.75 - $2.05.

Analysts boosted the 2009 Zacks Consensus Estimate to $2.05 per share from last month's $1.90. For the following year, analysts polled by Zacks are projecting earnings of $2.21 per share, versus the previous month's $2.08.

Shares of Crane soared past the market by more than 100% over the past year. Zacks Investment Research

Company Description

Crane, which was founded in 1855, is a diversified manufacturer with 5 business segments and employees in 25 countries.

The segments include: Aerospace & Electronics which designs aircraft components including landing systems and electronics for military, medical and commercial applications including on Mars Rovers and fighter jets; Engineered Materials such as composites; Merchandising Systems like vending machines; Fluid Control Systems; and Controls.

Crane Surprised by 25% in the Third Quarter

On Oct 26, Crane reported third quarter results which easily beat the Zacks Consensus Estimate by 12 cents per share. Earnings per share were 60 cents compared to the Zacks Consensus of 48 cents. EPS was also 60 cents in the year ago period.

Sales, however, did decline by 14% to $551 million from $459 million in the third quarter of 2008. That included an organic business decline of about 15% and unfavorable foreign currency translation of 3%. These negatives were partially offset by increased sales in acquired businesses by about 4% in the quarter.

The company was generally pleased with the overall quarterly results.

"While sales in Engineered Materials, Merchandising Systems, Fluid Handling and Controls were lower than the prior year quarter, they improved slightly from the second quarter this year," said Crane Co. president and chief executive officer, Eric C. Fast.

"Total Aerospace & Electronics segment sales have been declining for the past year primarily because of weaker demand in our long-cycle Aerospace business," he added.

2009 Outlook

Given recent cost cutting that showed far greater monetary benefits than the company originally anticipated, Crane increased the lower end of its 2009 EPS guidance to $1.90 - $2.05 from $1.75 - $2.05.

It reaffirmed its sales guidance of $2.2 billion.

Zacks Consensus Estimates Spike Higher

Given the big beat and the narrowing of full year guidance, it's not a surprise that analysts are raising estimates.

The fourth quarter Zacks Consensus Estimate has risen 4 cents to 52 cents in the last week as all 4 covering analysts raised in that time.

Full year 2009 Zacks Consensus Estimates also jumped by about 9% to $2.07 from $1.90 in the last week as, once again, all 4 covering analysts raised. This is higher than the company's current EPS guidance.

Value Fundamentals

Crane is a Zacks #1 Rank (strong buy) stock. It is trading with a price-to-book of 2.03. The company also has a stellar 5-year average return on equity (ROE) of 19.50%. As an added bonus, shareholders get rewarded with a dividend currently yielding 2.60%.

Zacks Investment Research

Company Description

Pall designs solutions in filtration, separation and purification for customers across a wide range of industries including biopharmaceutical, hospital and transfusion medicine, energy and alternative energy, electronics, municipal and industrial water, aerospace, and transportation.

The company's Total Fluid Management solutions enable customers to minimize emissions and waste.

Pall Saw Economic Conditions Improving

On Sep 14, the company reported fiscal fourth quarter 2009 earnings and full-year 2009 earnings. Revenues in the fourth quarter were still off 2008 levels but some segments saw improvement.

Life Sciences' sales rose 5.2%, Medical sales grew 1.6%, and Biopharmaceuticals climbed 7.8%. But the Industrial Segment struggled, declining 8.8% year over year which reflects the state of the manufacturing sector.

On the positive side, it was the first quarter in a year that the Microelectronics sector showed sales growth quarter over quarter, even as sales were still down by 31.7% compared to the fourth quarter of 2008.

Fiscal 2010 Outlook

The company forecasts global economic activity to remain weak for the last two quarters of 2009 before a slow recovery in the first half of 2010. Pall will continue to reduce its costs.

Growth

Analysts see brighter days ahead for the company. The fiscal first quarter Zacks Consensus Estimate rose 3 cents to 42 cents in the last 30 days as 2 out of 7 covering analysts raised during that time.

For fiscal 2010, estimates jumped 7 cents to $1.94 with 7 out of 8 analysts raising in the last month.

5-year earnings growth is expected to be 14.67%. Analysts forecast year over year earnings growth in fiscal 2010 of 8.92%.

Income

Paying dividends is nearly unheard of in this industry so Pall easily outpaces its peers in the income category. It is currently paying a dividend with a yield of 1.78%.

Fundamentals

Pall Corporation is a Zacks #2 Rank (buy) stock. It is trading with a forward P/E of 16.84. The company has a strong return on equity of 20.12%, well above the industry average of 2.88%.

Zacks Investment Research

The fund normally invests in financial instruments with economic characteristics that should perform opposite to those of its underlying index. It is non-diversified.

Unit holders have to make a minimum initial investment of $2,500 to enter this Zacks#1 Rank (“Strong Buy") fund. It has outstripped the total returns of its benchmark index in the last 1-, 3- and 5-year periods.

Rydex Transportation Inv (RYPIX) seeks capital appreciation by investing in companies engaged in providing transportation services or those engaged in design, manufacture, distribution, or sale of transportation equipment.

The fund invests in securities that are traded in the United States, as well as in futures and options contracts. It has an expense ratio of 1.38%.

The fund’s key holdings include United Parcel Service Inc. (UPS - Analyst Report), Union Pacific Corp. (UNP - Analyst Report) and Burlington Northern Santa Fe Corp. (BNI - Analyst Report).

Rydex Electronics Inv (RYSIX) seeks capital appreciation. It primarily invests in equity securities that are traded in the United States, as well as in futures and options contracts.

The fund focuses on electronics companies, including semiconductor manufacturers and distributions, and makers and vendors of other electronic components and devices. It distributes dividends and capital gains, if any, annually.

Michael P. Byrum has been lead manager at the fund since its inception in April 1998. Before joining Rydex Investments, Byrum worked for Money Management Associates, the investment adviser for Rushmore Funds Inc.

Air Products, which supplies oxygen and other gases to industrial and medical sectors, is also building two new air separation units for Shadeed Iron & Steel's production plant in the Sohar Industrial Port of Oman with Saudi firm Abdullah Hashim Group.

Eyes Emerging Market

India is an emerging photovoltaic (PV) market with strong support from the government. Earlier this month, Air Product’s joint venture in India, INOX Air Products Ltd., signed two new contracts with leading manufacturers for the company's SunSource Solutions gases and materials to support the growing Indian PV market.

INOX Air Products has signed a long-term gas supply deal to provide bulk and specialty gases to HHV Solar Technologies Pvt. Ltd and Jupiter Solar Power Ltd. Last year, it won more than 20 new contracts in Asia from both crystalline and thin-film PV markets. The company has also signed gas supply contracts with leading PV manufacturers including Best Solar and CHINT Solar in China, Green Energy Technology in Taiwan and Gadir Solar in Spain.

Separately, Air Products said that its consolidated sales in the current quarter-to-date fell 26% from the same period last year. The company blamed declining demand in most end markets, unfavorable currency and price weakness for the drop in July and August sales. Sales in the Tonnage Gases segment were down 43%, driven by pricing pressure while sales in the electronics and performance materials segment was down 28% due to lower industry utilization and capital spending. Merchant gases sales slipped 17% on weak volumes and unfavorable currency impact.

The company is scheduled to release its fourth quarter results before the market opens on Oct. 21. We maintain our Neutral recommendation on the stock.

Big Lots is a closeout retailer which sells a broad range of products including seasonal items, furniture, housewares, toys, electronics, home decor and tools. It has been benefiting from customers seeking value in their purchases during the recession.

On Aug 25, the company reported that earnings per share were 35 cents which surprised on the Zacks Consensus Estimate by 12.90%, or 4 cents. It also surpassed the 32 cents reported in the second quarter of 2008.

Sales fell by 1.7% to $1.086 million from $1.105 million in the year ago quarter. Comparable store sales were also lower, decreasing 2.4% for the quarter.

Fiscal 2009 Guidance Raised

Given that the company continues to surprise on estimates, it also continues to raise its fiscal 2009 guidance range. Big Lots now expects earnings per share in the range of $1.92 to $2.02, up from its prior forecast of $1.85 to $1.95.

The company also expects third quarter earnings per share between 14 cents and 19 cents.

Zacks Consensus Estimates rose to be inline with the company's guidance range. Third quarter Zacks Consensus Estimates climbed 1 penny to 17 cents in the last month.

The full-year Zacks Consensus Estimates gained 6 cents to $1.99 with 10 out of 12 analysts raising in the last 30 days.

Value Fundamentals

Big Lots is slightly more expensive than when I last reviewed it in June. It now trades with a forward P/E of 13.06 but was trading at 12.3 in June.

Big Lots is now a Zacks #2 Rank (buy) stock. It has a stellar 1-year return on equity (ROE) of 20.28% which beats the industry average of 15.56%.

Read the June 12 article.

Update to Previous Value Zacks Rank Buy Stocks

JoS. A. Bank Clothiers, Inc. (JOSB) has been defying the retail doom and gloom as sales climbed 9.8% year over year in the fiscal second quarter. Analysts expect 5-year sales growth of 16.8%. JOSB has a PEG ratio of just 0.90. Read the full article.

Plains Exploration & Production Company (PXP) is seeing production volumes pick up in the Haynesville Shale even as crude and natural gas prices remain far below 2008 prices. The company trades with a forward P/E of 9.02. Read the full article.

America's Car-Mart Inc. (CRMT) saw revenues leap 10.7% in the first quarter as same store sales also jumped 8.4%. The company has surprised on estimates the last 4 quarters by an average of 17.82%. CRMT has attractive value characteristics, with a forward P/E of 12.27. Read the full article.

Zacks Investment Research

The company’s Mil Mi-8 is the aerospace industry’s most-produced helicopter, with nearly 12,000 units manufactured since 1968 and over 2500 currently in service. More than 1000 of the heavier transport Mi-17 version, introduced in 1974, are currently in-service and the helicopter is still in production.

Pall’s Centrisep air cleaners protect helicopter engines from airborne contamination by utilizing centrifugal force to continuously remove particles, such as sand, dust and salt spray, before they can enter the engine air intake. The engine air particle separator technology extends the life of a helicopter engine guarding against erosion, while enhancing engine safety, reliability, availability and performance.

Over 40,000 helicopters are currently in service worldwide, excluding piston-powered, single-engine craft. Industry forecasts over $14 billion revenue in additional helicopter production in 2010.

Pall Aerospace provides fluid filtration and separation solutions for a broad range of military and commercial aircraft. Its filter products are used on all major rotorcraft brands worldwide. Centrisep air cleaners have been protecting helicopter engines since the 1960s. Over fifty different designs have been certified and operate worldwide.

Pall Corp. is a filtration, separation and purification leader providing Total Fluid Management solutions to meet critical needs of customers in biopharmaceutical, hospital and transfusion medicine, energy and alternative energy, electronics, municipal and industrial water, aerospace, transportation and broad industrial markets. We currently have a Neutral recommendation on Pall.

According to industry sources, the chips will be used in a wide range of electronics such as game consoles, digital cameras, flat panel TVs and other electronic gadgets starting in April 2010. To meet demand by that period, Toshiba will have to ramp up production. Its customers include IT giants like Apple (AAPL), which has already purchased $500 million worth flash memory chips from Toshiba.

Toshiba currently manufactures chips at its plant in Oita, southern Japan and plans to outsource to expand its production if capacity is insufficient.

According to sources, Toshiba is holding discussion with Singapore’s Chartered Semiconductor Manufacturing Ltd. (CHRT) and Advanced Micro Devices (AMD) to spin off Globalfoundries Inc. and proceed with its outsourcing plan. This will help the company to reduce costs and fulfill customer supply orders.

Last year, Toshiba formed a joint venture with Sony (SNE) and SCEI (Toshiba owned 60% while Sony and SCEI owned 20% each) for the production of high-performance semiconductors, which include the Cell/B.E. processor, the RSX graphics engine and SoCs (System-on-Chip) for applications in digital consumer products. Moreover, to ramp up chip production, it bought Sony’s SoC line for about 90 billion yen ($968 million).

Toshiba competes with International Business Machines (IBM), which has technology alliances with Chartered Semiconductor, Globalfoundries, Infineon Technologies, Samsung Electronics, NEC Electronics and STMicroelectronics (STM) for developing 28 nm chips. In addition, NVIDIA (NVDA) plans to boost its 40nm technology, that is likely to improve margins and help the company take market share from Toshiba.

Toshiba is looking to bid for French nuclear group Areva's power transmission and distribution unit. This new line will help the company enter into a new line of power business for stable revenue and growth that will facilitate cost reduction at its loss-making chip division that has been under pressure due to economic recession.

Shares of Toshiba were up 3.2% to 481 yen outperforming a 1% rise in the benchmark Nikkei average.

Intelligent power grids, or smart grids, are based on the conventional power grids which transport electricity from large power plants to individual households. However, digital technology allows individual households or businesses to manage their electricity more efficiently, allowing them to receive, or deliver back to the grid, electricity from other sources like wind or solar power facilities, or even from batteries in electric cars.

According to studies, more than a billion tons of carbon dioxide (CO2) emissions could be abated with intelligent power networks by 2020. Smart Grids are essential for integrating renewable power sources into power networks and for ensuring stable power supplies from solar and wind energy.

Overall, the Smart Grid market has three primary components: Smart Metering (intelligent billing), Grid Intelligence (the grid infrastructure and its controls) and Utility IT (intelligent data management). Siemens is active in all three areas and is already the global market leader for grid intelligence.

Smart Grids have enormous growth potential worldwide. They are, for example, a prerequisite for reaching the EU’s 20-20-20 climate goals aimed at reducing CO2 emissions by 20% and increasing the share of renewable energies in the European grid by 20% by 2020. In addition, Smart Grids are included in many of the economic stimulus programs throughout the world.

The US government plans to invest around 3 billion Euros here in the coming years. Siemens expects to receive orders worth around 15 billion Euros from these programs by 2012. Out of these, 40% or roughly 6 billion Euros is likely to be for green technologies from the Siemens Environmental Portfolio.

A slew of companies across the globe are pushing to secure their share in this projected growth market, ranging from blue chips like Siemens, General Electric Co. (GE) and Cisco Systems Inc. (CSCO) to various start-ups offering related components and services.

Energy-efficient and flexible power grids are a key cornerstone for the launch of electric cars on a broader scale, as they can be designed to meet specific needs for the supply, demand and storage of electricity.

Volkswagen AG, Europe’s largest automaker by sales, said in July that it would launch an electric version of its upcoming New Small Family car in 2013. Other auto makers, including Nissan Motor Co. Ltd and General Motors Co., are also pressing ahead with developing fully electric cars for the mass market. 

Energy-efficient, resource-conserving Smart Grids are part of the Siemens Environmental Portfolio, which generated a quarter of its total sales in fiscal 2008.

Siemens is a German industrial conglomerate with interests in information services, automation and controls, medical equipment, power generation, transportation systems, automotive electronics, lighting and many other areas. With a focus on electronics and electrical engineering, the company is a major multinational with over 430,000 employees in more than 190 countries.

We currently have a Neutral recommendation on Siemens.

Siemens has a leading position in China, the world’s largest market for power transmission equipment. The company has involvement as a provider of innovative energy technologies in numerous major infrastructure projects, including projects in the field of high-voltage direct current transmission.

Siemens is a German industrial conglomerate with interests in information services, automation and controls, medical equipment, power generation, transportation systems, automotive electronics, lighting, and many other areas. With a focus on electronics and electrical engineering, the company is a major multinational with over 430,000 employees in more than 190 countries.  Its major competitors are ABB Ltd. (ABB) and General Electric Co. (GE).

We currently have a Neutral recommendation on Siemens.

Due to a delay in completing due-diligence on the companies' assets, including the manufacturing and sales sites worldwide, the companies had decided to postpone the contract to the end of July. Again in July, the companies decided to postpone the agreement to integrate business operations at NEC Electronics and Renesas until the end of August.

In April 2009, both NEC Electronics and Renesas had been negotiating to integrate business operations. The consolidation took place to weather the difficult economic conditions, weak demand and pricing pressure that weighed heavily on chipmakers. This merger would make the combined company Japan's largest chip maker with more than 30% market share, and the third-largest chip maker worldwide.

The delay can be attributed to lack of funds as The Nikkei reported that Hitachi, Mitsubishi Electric and NEC Corporation (parent companies) were planning to provide financial assistance of about ¥200 billion ($2.1 billion) to Renesas and NEC Electronics for the successful completion of the merger. This financial aid will help speed up the integration process. The injection of funds will also help to reduce Renesas debt and lower restructuring costs.

The merger, once complete, will give tough competition to large chip manufacturers such as Freescale Semiconductor Inc. (FSL), Intel Corp. (INTC) and Samsung Electronics Co.

NEC electronics is the supplier of chips to Japan's number one electric car maker, Toyota Motor (TM) and the number one online gaming company Nintendo, maker of the Wii console.

The contract had originally been awarded to Northrop by the Army's Intelligence and Security Command, Fort Belvoir in 1997. Through this follow-on contract, valid for five years, Northrop will coordinate multiple battlefield functions such as electronic warfare, military deception, psychological warfare, operations security and computer-network operations to disrupt enemy decision-making while protecting information necessary for the US troops.

The deal will boost Northrop’s dwindling backlog subsequent to termination of the $5.1 billion Kinetic Energy Interceptor program by the US Government. The company’s total backlog fell to $70.4 billion after the second quarter from $76.9 billion year over year.

Based in Los Angeles, California, Northrop Grumman provides products, services, and solutions in information and services, aerospace, electronics and shipbuilding to the military, government and commercial customers in the United States and beyond. The company is the largest IT service provider to the federal government. In addition, it is the only nuclear-powered aircraft shipbuilder in the United States. We maintain our Neutral recommendation on the stock.

Chicago, IL – August 14, 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: Ford (F), Toyota (TM), Best Buy (BBY), Bed Bath & Beyond (BBBY) and Walgreen (WAG).

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Here are highlights from Thursday’s Analyst Blog:

Retail Sales Turning Tail

The government auto sales numbers (up 2.4% from June, following a 1.9% increase the previous month) were well below what was indicated by the unit sales numbers coming from auto companies like Ford (F), General Motors and Toyota (TM). However, the "Cash for Clunkers" surge was right at the end of the month, and some of those sales may show up in the August numbers.

The ex-auto sales are the most disappointing, and show that consumers are still keeping their wallets shut pretty tight. The auto sales part is clearly going to be distorted by the Cash for Clunkers program, both in the July data and the August data. The rest of retail sales have no such distortions.

On a year-over-year basis, total sales were down 8.3% vs. being down 8.9% year over year in June. This is all due to a huge swing in autos, which were down 7.3% in July from a year ago versus being down 14.3% year over year in June. Excluding autos, the year-over-year decline actually accelerated to -8.5% from -7.8%.

As might be expected, the more discretionary the store type, the worse sales are doing. This is particularly noticeable on a year-over-year basis. The one exception to that is gas stations, which is pretty much of a non-discretionary store type, where sales were down 2.1% on the month and off 32.5% year over year.

Keep in mind, though, that the retail sales numbers are nominal -- not adjusted for price changes -- and so the decline there has much more to do with prices than it does with volume.

Electronics and appliance store sales were down 1.4% on the month and off 14.6% year over year. The year-over-year numbers reflect Circuit City no longer being in the picture, but the month to month figures are not affected by it. This is probably not a good sign for Best Buy (BBY).

Home furnishing stores (including furniture) were down 0.9% for the month and off 12.9% year over year. Similar to the situation with electronics, the removal of Linens & Things probably affected the year-over-year numbers but not the monthly figures, so it is not a good sign for Bed Bath & Beyond (BBBY). Of course, Best Buy and Bed Bath probably benefited greatly by the removal of major competitors, and these numbers only reflect what is going on at the top line. Firms have been quite successful at cutting costs to offset weak revenues of late.

By comparison, the stores that focus on staples have not seen large declines. Grocery store sales were down by 0.3% for the month but just off 1.1% on a year-over-year basis, and drug store sales were actually up 0.7% for the month and 4.1% year over year. This most likely means that revenues will hold up well at firms like Walgreen (WAG).

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The first is the expansion of its sales force in Southeast Asia. Internet usage in the region has been growing rapidly over the last few years, driving increasing interest in online advertising. Online advertising industries in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are expected to grow around 60% between 2008 and 2010.

The newly appointed direct sales team will join forces with the existing Singapore-based team to develop localized marketing campaigns in Malaysia, the Philippines and Vietnam. The idea is to sell online advertising in form of display, search or through a mobile platform. We think this is a pertinent move and it is time Yahoo started cementing relationships in the region.

The second initiative is designed to attract U.S. customers who have been hit hard by the recession. It is a new website called Yahoo Deals (http://deals.yahoo.com) that provides a host of information about bargain agreements. It also offers coupons for groceries, local stores and online printable form for a large number of products, such as clothing, beauty, baby, computers, video games, flowers, gifts, automotive products, electronics and gardening.

A separate tab called Weekly Ads directs users to special offers by big local brands. The website also enumerates special offers for Visa card holders at local restaurants, retailers and service providers. Customers who wish to purchase coupons and take a print out later can save the coupons to their own account. Yahoo recently conducted a survey that proved the growing demand for coupons and limited availability. We believe this website is likely to attract many customers in the current market environment.

New CEO Carol Bartz seems to know what she wants. Despite weak results for some time now, Yahoo had been clinging on to all business lines. Bartz was quick to generate cash from the search business and is now giving the company the much-needed direction. We think the above measures will strengthen Yahoo’s revenue opportunities and provide the company with tools to generate cash in a weak environment.

The flow-back feature of the water-treatment application is unique in that it leverages years of offshore produced water experience to meet onshore produced water objectives. The Veirsep system (a horizontal flotation system that incorporates several unique technologies to separate oil, grease and suspended solids from the flow-back stream) has been used in offshore applications to reduce oil and grease levels to meet discharge quality requirements.

The system is the most recent addition to Siemens’ modular Produced Water Services. These services are designed based on the water supply and specific needs of the customer and supported through Siemens’ application engineering and treatment expertise.

The process is eco-friendly and conserves fresh water for municipal and agricultural use. This innovative process also reduces emissions through reduced truck traffic. System capacity is 6,000 bpd and recovers over 90% of fluids for reuse. The Siemens process avoids adding an additional 17,000 pounds of carbon di-oxide into the air each day, equivalent to over 3,000 tons per year.

The Siemens Industry Sector (Erlangen, Germany) is the world's leading supplier of production, transportation, building and lighting technologies. With integrated automation technologies as well as comprehensive industry-specific solutions, Siemens increases the productivity, efficiency and flexibility of its customers in the fields of industry and infrastructure.

Siemens AG is a global leader in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. Its major competitors are ABB Ltd. (ABB) and Areva. We continue with our Hold rating on Siemens.

Company Description

Nordson Corporation manufactures dispensing equipment that applies adhesives, sealants and coatings to industrial products during manufacturing operations. It also provides equipment used in the testing and inspection of electronic components as well as technology-based systems used for curing and surface treatment processes.

The company's customers include manufacturers of appliances, automotive, construction, electronics, food and beverage, packaging and life sciences. It has sales support offices in 30 countries.

Nordson Surprised by 62.9% in the Fiscal Second Quarter

On May 21, Nordson reported fiscal second quarter 2009 results which easily surprised on analysts' estimates by 17 cents. Adjusted earnings per share were 44 cents compared to analysts' estimates of just 27 cents.

While this was well under the 97 cents in the year ago period, it better than the first quarter results of 39 cents.

The global recession continued to play havoc with the company's revenue as it fell to $189 million from $294 million in 2008. Nordson has instituted cost cutting as a response to the difficult conditions. It expects to save $80 million in 2009 from those initiatives.

Backlog

The backlog at the end of the second quarter fell 29% to $80 million compared to $113 million at the end of second quarter 2008 due to the poor economic environment. However, the company saw a 4% increase in the backlog quarter over quarter.

Order rates, which have dropped year over year, also showed an increase in recent months, rising 9% in the last two and one-half months compared to the first two months of the calendar year.

Estimates Jumped

Covering analysts are bullish on the company, which has surprised on estimates 3 out of the last 4 quarters by an average of 26.78%.

Third quarter consensus estimates spiked 13 cents to 49 cents in the last 60 days.

Fiscal 2009 consensus estimates rose 26.3% to $1.92 from $1.52 also in the last 60 days.

Growth

Analysts still expect 5-year average earnings growth of 12.5% which is higher than the expected industry average of 11.10%.

Income

Nordson pays a dividend with a current yield of 1.90%. Its dividend payout is much higher than the industry average, which is zero.

Fundamentals

Nordson is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 19.92. It has a solid 1-year return on equity (ROE) of 16.13%.

Zacks Investment Research

Company Description

Aaron's operates more than 1,575 stores in 48 states and Canada that offer affordable rental payment plans on a variety of merchandise, including home appliances, office furniture and electronics, to moderate-income customers.

The company also operates under the MacTavish Furniture brand which manufactures furniture and bedding at 12 facilities in 5 states.

Aaron's Posts Record Revenue

On Apr 27, the company reported record first quarter results that saw revenue jump 15% to $474 million from $412.7 million a year ago. Same store sales were humming, gaining 12.3% year over year.

The number of customers at its stores and its franchisees stores soared by 20% over the year ago period as consumers had difficulty obtaining traditional credit and sought out Aaron's rent-to-own alternatives.

Earnings per share climbed 55% to 65 cents from 42 cents in the first quarter of 2008, easily surprising on analysts' estimates of 51 cents.

2009 Guidance Rises

The company is bullish about 2009 given the record first quarter results. Second quarter earnings are expected to be in the range of 45 to 50 cents.

For the full-year, guidance was raised to the range of $1.90 to $2.05 from $1.72 to $1.87 per share. The company expects new store growth between 5% to 9% over the store base at the end of 2008.

Earnings Estimates Jump

Given the optimistic guidance, covering analysts moved to raise estimates in the last 60 days. Second quarter consensus is at 48 cents which is right in the middle of the forecast range.

Full-year estimates rose 18 cents to $2.00 per share.

The company is expected to report second-quarter earnings on July 21.

Value Fundamentals

Aaron's is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 14.6. Its price-to-book is 1.95. The company has a solid 5-year return on equity (ROE) of 13.65%.

Additionally, Aaron's pays a small dividend with a yield of 0.20%.

Zacks Investment Research

Conn's, Inc. (CONN), the Texas consumer electronics and home products retailer, saw revenue jump 5.8% in the fiscal first quarter of 2010 ending Apr 30.

Total net sales rose 2.6% to $200.1 million on the back of strong sales of consumer electronics, furniture and mattresses. Lawn and garden was weak in the quarter.

Same store sales actually declined 4.6% as consumers shopped for electronics at Circuit City's liquidation sale and due to shortages of certain television sets.

The credit portfolio saw improvement as the annualized net charge-off rate fell to 3% from 3.2% in the year ago period. It was also down from the 3.4% rate in the previous quarter.

Adjusted earnings per share met analysts' estimates at 47 cents in the quarter.

Guidance Reaffirmed

The company reaffirmed its fiscal 2010 guidance, which ends Jan 31, 2010, of earnings per share in the range of $1.75 to $1.85.

With the guidance remaining intact, covering analysts moved to raise estimates to be inline with the forecast. 2010 consensus estimates rose 23 cents to $1.82 per share in the last 30 days.

Value Fundamentals

Conn's Inc. is now a Zacks #2 Rank (buy) stock but was a Zacks #1 Rank (strong buy) stock when we last reviewed it in April. It is still cheap, trading at just 7x forward earnings. It has a PEG ratio of 0.55.

Read the Apr 16 analysis.

Update to Previous Value Zacks Rank Buy Stocks

Dress Barn, Inc. (DBRN) is finding profits in its value priced women's fashion as same store sales rose in the fiscal third quarter. The company recently raised 2009 guidance. Read the full article.

Bob Evans Farms, Inc. (BOBE) is seeing strength at its value priced Bob Evans restaurant chain and its pork products as consumers look to cut dining costs. The company has surprised 3 out of the last 4 quarters by an average of 17.68%. Read the full article.

Corrections Corporation of America (CXW), one of the largest operators of prisons in the United States, has surprised on estimates 3 out of the last 4 quarters by an average of 4.61%. Revenue grew 6.5% in the first quarter. Read the full article.

Black Box Corporation (BBOX), the communications infrastructure provider, has surprised on estimates 3 out of the last 4 quarters by an average of 9.03%. Analysts expect 5-year earnings growth of 10%. Read the full article.

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Company Description

Big Lots is a closeout retailer which sells a broad range of products including seasonal items, furniture, housewares, toys, electronics, home decor and tools.

The company has 1345 Big Lots stores in 47 states and also sells merchandise through its web site. It also has wholesale operations through Big Lots Wholesale, Consolidated International and Wisconsin Toy.

Big Lots Surprised by 10% in the First Quarter

On May 28, Big Lots reported fiscal first quarter 2009 earnings per share of 44 cents compared to 42 cents in the first quarter of fiscal 2008. Analysts expected 40 cents per share.

Sales fell 0.9% to $1.142 billion compared to $1.152 billion for the year ago quarter. Sales also decreased by 0.5% at stores open for at least 2 years.

Operating profit, however, rose to $60.3 million, or 5.3% of sales, compared to $58.2 million, or 5.1% of sales, in the year ago period. The increase in operating profit resulted from improvement in the gross margin rate and a flat operating expense rate as a percentage of sales.

2009 Guidance Raised

The company is still expecting the second quarter to be challenging, with a decrease in sales in the range of 1% to 3%. Earnings per share are expected to be in the range of 26 to 32 cents.

But given the strong first quarter, Big Lots raised its fiscal 2009 guidance to a range of $1.85 to $1.95 from a previous forecast of $1.89. Comparable store sales are expected in a range of flat to a decline of 1% with a profit rate between 5.4% and 5.6%.

Consensus Estimates Rise

Given the company's guidance forecast, covering analysts moved to raise second quarter and full year estimates.

Second quarter consensus is now expected to be 31 cents per share, up 1 cent, in the last 30 days. Full-year 2009 consensus has jumped to $1.94 from $1.88 with 6 out of 10 analysts raising in the last 30 days.

Value Fundamentals

Big Lots is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 2.41. The company has a solid 5-year return on equity (ROE) of 11.24%.

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Company Description

Rent-A-Center owns and operates stores offering rent-to-own goods. Merchandise includes appliances, furniture, electronics, and accessories. Customers enter into a rental agreement that carries an option to maintain ownership at the end of the period.

Solid Quarter

On Apr 27 Rent-A-Center reported first quarter results that included net income of $45.4 million, up $9 million from last year. Earnings per share were $0.65, up from $0.54. The announcement beat Wall Street expectations by 10 cents and was the second consecutive surprise.

Estimates Continue to Rise

Following the announcement analysts have continued to revise estimates upward. The consensus estimate for 2009 is now $2.24, up from $2.13 over the past 3 months. Estimates for 2010 are averaging $2.44, up from $2.33.

Current forecasts would produce year-over-year growth of 9% for this year and in 2010. Shares are exchanging hands at less than 10 times earnings and carry a PEG ratio of 1.3.

The Chart

Shares of RCII are very susceptible to missing earnings guidance, as you can see by the chart below. However, the stock typically recovers though a series of better-than-expected quarters.

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Shares are up more than 17.5% today.

Conn's still expects earnings between $1.75 and $1.85 per share for the current fiscal year, which excludes fair value adjustments.

The average forecast for the year ending January 2010 moved higher by 11.3% over the past week to $1.77 per share.

For the fiscal first quarter, CONN earned 47 cents per share, eliminating one-time items, which was in line with the raised consensus.

Revenue jumped 5.8% to $231.3 million, helped by an increase in sales in its electronics, furniture and mattresses business. However, same-store sales declined 4.6%.

So far, nearly 670,000 shares of this Zacks #3 Rank ("Hold") company have changed hands, compared with the daily average volume of 251,289.

Company Description

Cubic Corporation is the parent company of two major business segments: defense and transportation. The Cubic Defense group is a world leader in realistic combat training systems, mission support services and defense electronics. Cubic Transportation Systems is a leader in the design and manufacture of automated fare collection systems and services for public transit authorities worldwide.

Strong Results

The company saw fiscal second-quarter earnings of 53 cents per share, topping the year-prior 36 cents and exceeding analysts' estimates of 43 cents.

Second-quarter sales of $242.8 million came in above last year's $210.3 million. Sales from the defense segment increased 26% year-over-year to $173.7 million.

Shares of saw a nice spike after delivering the strong quarter and have been trading well ahead of the market over the past year.

Bullish Forecasts

Analysts are upbeat on earnings. Estimates for the year ending September 2009 are at $2.02 per share, up from last month's $1.91. For the following year, earnings projections of $2.17 were increased from the previous month's $2.06.

Favorable Industry Comparisons

Cubic offers a return on equity (ROE) 12%, topping the industry average of 9%. The company's net profit margin of 5% is also ahead of the industry average of 1%. The company rewards shareholders with an industry-leading dividend yield of 0.5%. Zacks Investment Research

The manufacturer of industrial products attributed the decline to a 23% fall in base revenues coupled with an 8% decrease on account of currency translation.

Illinois Tool's 3 weakest segments were industrial packaging, power systems and electronics and construction products, as each of them slipped more than 35%.

The company meanwhile affirmed second-quarter EPS of 25 cents to 37 cents per share, excluding items, compared to average forecast of 30 cents.

Over the past month, 11 out of 16 covering analysts have reduced full-year expectations, sending the consensus down 21 cents to $1.27 per share.

ITW, a Zacks #5 Rank ("Strong Sell") stock, is down about 1.3% on volume of approximately 1.8 million, compared to average daily volume of about 4.1 million.

Perhaps the performance, which included year-over-year advances in EPS and sales, will provide a spark for the company's earnings estimates, which haven't moved much in recent weeks. Nevertheless, expectations for the fiscal year ending September 2009 remain above the 3-month ago level by 3.8%.

Next fiscal year's estimate is up 7.7% in that time to $2.11, which means analysts currently expect an improvement of practically 10% for the fiscal year ending September 2010.

On Thursday, CUB announced that fiscal second quarter earnings reached 53 cents per share, which was a dime better than expectations, marking a surprise of more than 23%. In the year-ago quarter, earnings per share were 36 cents.

Sales moved higher to $242.8 million, compared to $210.3 million last year. The company's defense segment saw sales advance 26% to $173.7 million, but sales at the transportation systems segment decreased to $68.6 million from $72.1 million.

CUB is the only company from the Elec Prods - Misc industry to appear on today's Zacks #1 Rank List, which includes 228 stocks.

CUB is the parent company of 2 major business segments: defense and transportation. The Cubic Defense group is a world leader in realistic combat training systems, mission support services and defense electronics. Cubic Transportation Systems is a leader in the design and manufacture of automated fare collection systems and services for public transit authorities worldwide.

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Company Description

Rent-A-Center owns and operates stores offering rent-to-own goods. Merchandise includes appliances, furniture, electronics, and accessories. Customers enter into a rental agreement that carries an option to maintain ownership at the end of the period.

Solid Quarter

On Apr 27 Rent-A-Center reported first quarter results that included net income of $45.4 million, up $9 million from last year. Earnings per share were $0.65, up from $0.54. The announcement beat Wall Street expectations by 10 cents and was the second consecutive surprise.

Estimates Continue to Rise

Following the announcement analysts have continued to revise estimates upward. The consensus estimate for 2009 is now $2.23, up from $2.13 over the past 3 months. Estimates for 2010 are averaging $2.45, up from $2.33.

Current forecasts would produce year-over-year growth of 8% for this year and 10% in 2010. Shares are exchanging hands at less than 10 times earnings and carry a PEG ratio of 1.3.

The Chart

Shares of RCII fell sharply following the earnings release, but investors seem to appreciate the value and the stock has been climbing since. Take a look at the chart below.

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