For Immediate Release
Chicago, IL – February 17, 2010 – 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: Kraft Foods Inc. (KFT), Waste Management, Inc. (WM), Abercrombie & Fitch Co. (ANF), CME Group Inc. (CME) and Barclays PLC (BCS).
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Here are highlights from Tuesday’s Analyst Blog:
Kraft Grows but Misses Estimate
Kraft Foods Inc. (KFT) reported fourth quarter results with earnings of 48 cents per share, below the Zacks Consensus Estimate of 50 cents. However, quarterly earnings were up 17.1% year-over-year.
Net revenues for the quarter increased 3.2% year-over-year to $11.0 billion, primarily due to the favorable 3.2% impact of foreign currency, partially offset by negative 0.4% impact from divestitures. However, organic revenues increased 0.4%, driven by 1.6% benefit from volume and mix, partially offset by 1.2% due to lower price levels.
By Segment
In the North American segment (KNAC), sales declined 1.5% year-over-year as gains in U.S. Convenient Meals (3.9%), U.S. Grocery (0.1%) and Canada & North American Foodservice (8.2%) were fully offset by declines in U.S. Beverages (1.9%), U.S. Cheese (13.7%) and U.S. Snacks (3.3%).
In the International segment, net revenues in the European Union increased 8.0% while the top-line in the developing markets expanded 11.2%.
Gross margins for the quarter expanded 590 basis points (bps) to 37.5% versus 31.6% in the comparable prior-year quarter. The operating margin also increased a robust 876 bps to 11.9% versus 3.1% year-over-year. The improvement was attributable to lower costs following the completion of the restructuring program, and favorable product mix.
For fiscal 2009, free cash flow increased to approximately $3.8 billion, reflecting a 35% increase compared to the prior-year quarter. The increase was primarily attributable to efficient working capital management, partially offset by incremental pension contributions.
Waste Management’s Q4 Beats
Waste Management, Inc. (WM) reported fourth-quarter earnings of 52 cents per share, above the Zacks Consensus Estimate of 48 cents and prior-year earnings of 49 cents per share. The year-over-year growth was primarily driven by the company’s cost cutting efforts.
Net sales decreased 3.3% to $3.01 billion from $3.11 billion in the prior-year quarter. Lower Volumes had a negative impact of 6.4% on the company’s internal revenue growth in the quarter, while yield on collection and disposal business contributed 2.7% to the internal growth. Excluding revenue from our fuel surcharge, commercial revenue and residential revenue increased 1.0% and 1.5%, respectively, compared to the fourth quarter of 2008.
For the full year 2009, Waste Management reported earnings of $2.00 per share on revenues of $11.79 billion compared to earnings of $2.22 per share on revenues of $13.39 billion in 2009. The company exceeded its targeted savings of $120 million on an annualized basis from its restructuring program announced in February 2009. However, this could not fully offset the impact of lower revenues on earnings.
Abercrombie Earnings Plummet
Abercrombie & Fitch Co. (ANF), a leading international specialty retailer, reported relatively weak fourth quarter 2009 results with net income of $47.5 million or 53 cents per share, compared to a net income of $68.4 million or 78 cents per share in the year-earlier quarter.
The year-over-year decline in results was primarily due to the prolonged economic downturn that resulted in reduced consumer discretionary income and cuts in non-essential spending. The quarterly results also included loss from discontinued operations and non-cash impairment charges.
Excluding one-time items, net income for the quarter was 91 cents per share compared to $1.06 in the year-earlier quarter. For fiscal 2009, Abercrombie reported break-even earnings versus $3.05 per share in fiscal 2008. Excluding non-recurring items, earnings for fiscal 2009 were $1.12 per share compared to $3.51 in the year-ago period.
Overall net sales of the company during the quarter decreased 5% to $936.0 million from $980.8 million in the year-ago quarter. Total company direct-to-consumer net merchandise sales remained flat year-over-year at $93.1 million, while overall comparable-store sales decreased 13%.
CME Getting 90% of Dow Jones Recently, CME Group Inc. (CME) has announced that a definitive agreement has been reached to attain 90% of the stake in the Dow Jones & Company. This new joint venture will own the Dow Jones Indexes, which includes The Dow Jones Industrial Average (DJI) and approximately 130,000 index properties. The deal is expected to be sealed by the first quarter of 2010, post the regulatory approvals and other customary formalities.
According to the terms of the agreement, Dow Jones will retain the 10% stake and a key role in the management of the DJI, contributing about $675 million. The CME Group will buy the remaining 90% stake for some of its market data services that are valued at $607.5 million. Further, the joint venture will raise approximately $613 million by issuing third-party debt which will be utilized by CME Group to pay its $607.5 million share to Dow Jones.
Other terms of the deal include the allowance of new joint venture to license the Dow Jones name for the financial-index business. However, the ownership of the Dow Jones brand, including trademarked names, will still remain with Dow Jones. CME Group has appointed Barclays Capital, a division of Barclays PLC (BCS), as its financial advisor and Kirkland & Ellis LLP as the legal advisor.
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