For Immediate Release
Chicago, IL – May 24, 2010 – Zacks Equity Research highlights Cummins, Inc. (CMI) as the Bull of the Day and Nokia Corp. (NOK) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dell Inc. (DELL), Hewlett-Packard (HPQ) and Gap Inc. (GPS).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
Cummins, Inc. (CMI) is set to benefit from fuel economy improvements, new emission standards and increased prices. Liquidity is also improving. However, a slump in key markets, including the U.S., and a soft heavy-duty truck market that forms over 50% of the company’s business raise concerns.
Nevertheless, the company reported strong results in the most recent quarter, driven by continued strength in China, India and Brazil. It also surpassed the Zacks Consensus Estimate by $0.40 during the quarter.
Our long-term Outperform recommendation on the stock indicates that it will perform better than the broader market. Our $82 target price, 21.8X 2010 EPS, reflects this view.
Nokia Corp. (NOK) is facing serious problems in the high-end feature-rich smartphone segment. Smartphones are expected to become the next-generation choice, taking over the market share from basic mobile handsets.
As of now, unfortunately, Nokia has failed to introduce any smartphone to compete with BlackBerry, iPhone or any Android-based handsets. Nokia’s inability in the high-margin lucrative smartphone market will put more pressure on its earnings going forward. Feature-rich software and services are the main characteristics of any smartphone, which Nokia seriously lacks.
There is no near-term visibility about the launch of the upgraded Symbian. Additionally, the company’s network infrastructure solutions wing is still facing economic headwinds. We downgrade our recommendation to Underperform due to the absence of any catalyst.
Latest Posts on the Zacks Analyst Blog:
Dell Exceeds Expectations
Dell Inc. (DELL) reported first quarter 2011 EPS of 30 cents, exceeding the Zacks Consensus Estimate of 26 cents.
Dell did not provide any guidance for the second quarter, but is cautiously optimistic about improvement in corporate IT demand. This apart, the company continues to witness increase in Commercial demand in the first quarter and is optimistic about the trend continuing throughout the year.
On the other hand, due to seasonal effect the second and the first part of the third quarter generally witness slower demand from larger commercial customers in the U.S. and Europe. Therefore, the company expects low seasonal demand pickup in the second quarter.
To summarize, Dell reported strong first quarter numbers, with the EPS exceeding the Zacks consensus estimate and revenue moving up compared to the year-ago quarter. The EPS was also better than the year-ago quarter. New products, a stronger services business, opportunities in the Electronic Medical Record sector, the smart phone initiative and a revival in IT spending are positive factors. Additionally, the acquisition of Perot Systems also expanded the customer base and opened up cross-selling opportunities.
However, the high level of debt and increasing competition from the likes of Hewlett-Packard (HPQ) and Acer are of concern.
Gap Beats, Lifts Outlook
Gap Inc. (GPS) reported fiscal 2010 first-quarter earnings of 45 cents per share after the closing bell on Thursday. The result topped both the Zacks Consensus Estimate of 43 cents and the year-ago earnings of 31 cents per share. The strong performance was primarily driven higher sales led by its low-price Old Navy segment and improved margins.
Bolstered by the strong quarterly performance, The Gap also lifted its earnings guidance for fiscal 2010 to a range of $1.77 to $1.82 per share from its earlier guidance of $1.70 to $1.75. The revised guidance remains in line with the Zacks Consensus Estimate of $1.80 per share, which dipped by 3 cents in just the past week.
Meanwhile, during the quarter, net sales grew 6% to $3.3 billion from $3.1 billion in the prior-year period. Comparable store sales expanded 4% in the quarter, led by a 7% growth in Old Navy. The Old Navy chain has continued to benefit from the increasing preference among U.S. shoppers for lower-price stores due to the challenging macroeconomic environment.
In the reported quarter, The Gap opened 9 stores and closed 19 locations, and ended the quarter with a total of 3,085 stores.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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