|By PR Newswire||
|August 18, 2014 09:30 AM EDT||
CHICAGO, Aug. 18, 2014 /PRNewswire/ -- 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 the Costco Wholesale Corporation (Nasdaq:COST-Free Report), Target Corporation (NYSE:TGT-Free Report), Wal-Mart Stores Inc. (NYSE:WMT-Free Report), Burlington Stores, Inc. (NYSE:BURL-Free Report) and McGraw Hill Financial, Inc. (NYSE:MHFI-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday's Analyst Blog:
Costco Dominates Warehouse Retail on Decent Comps
Costco Wholesale Corporation (Nasdaq:COST-Free Report) appears unfazed by the soft recovery in the U.S. economy. The company has managed to keep an upbeat note and sustain its sales momentum amid heightened competition to grab a bigger share of the market.
Costco continues to be a dominant retail wholesaler, based on the breadth and quality of the merchandise it offers. The company's strategy to sell products at heavily discounted prices has helped it to remain on a growth track, as cash-strapped customers continue to see it as a viable option for low-cost necessities.
Riding on Positive Comps
Costco is well positioned in the warehouse club industry, having delivered positive comparable-store sales consistently so far in 2014.
Costco, which faces stiff competition from Target Corporation (NYSE:TGT-Free Report) and Sam's Club, a division of Wal-Mart Stores Inc. (NYSE:WMT-Free Report), has consistently registered comparable-store sales growth from January to July. Within this period, comps growth touched a low of 2% and hit a high of 6%, thereby recording an average growth of approximately 4.7%. In the first seven months of 2014, comps increased 4% in January, 2% in February, 5% in March and April, 6% in May and June each, and 5% in July.
Given the current macroeconomic environment, monthly sales data for Costco is also encouraging, reflecting consistent growth. The company, within the span of January to July, registered sales growth in the range of 4%–10%, reflecting average growth of approximately 7.4%. The company registered sales growth of 6% in January, 4% in February, 8% in March, 7% in April, 8% in May, 10% in June and 9% in July.
A differentiated product range enables Costco to provide an upscale shopping experience to its members, resulting in market share gains and higher sales per square foot. Moreover, the company continues to maintain a healthy membership renewal rate. Costco also remains committed to open new clubs in domestic and international markets. The company's diversification strategy is a natural hedge against risks that might crop up in specific markets.
Costco currently carries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the retail sector is Burlington Stores, Inc. (NYSE:BURL-Free Report), which holds a Zacks Rank #1 (Strong Buy).
Will DoJ Verdict Stomp McGraw-Hill's Upbeat Earnings?
The company's adjusted earnings of $1.06 per share from continuing operations grew 15% as well as beat the Zacks Consensus Estimate of 98 cents. Total revenue increased 8% to $1,346 million and surpassed the Zacks Consensus Estimate of $1,292 million owing to strong performance at the company's segments.
After the impressive results, management upgraded the full-year 2014 earnings guidance. McGraw Hill Financial now expects adjusted earnings in the range of $3.80–$3.90 per share, up from $3.75–$3.85 per share projected earlier.
In spite of an earnings beat, estimates for McGraw Hill Financial have not shown any upward revision remaining constant at $3.87 and $4.40 per share for 2014 and 2015 respectively. Analysts remain concerned about the impending verdict on the Department of Justice's (DoJ) $5 billion civil fraud case against S&P Ratings. Moreover, anticipated weakness in structured finance and difficult debt issuance environment adds to the woes.
S&P Ratings Services is accused of deliberately providing high ratings to the U.S. collateralized debt obligations (CDOs) and residential mortgage backed securities (RMBS) in 2007 that underperformed and fueled the collapse of the housing market. The U.S. Government stated that S&P did not properly highlight the credit risks related to the mortgage securities issued by the investment banks.
Though the company received a favorable court ruling on the case on Apr 15, 2014 that should help in defense, the final outcome of the case still remains uncertain. The company has submitted several documents under the Wells Notice in Jul 2014. Though management declined to make any further statements on the matter, it expects legal expenses in the upcoming quarters to shoot up.
Currently, McGraw Financial carries a Zacks Rank #2 (Buy).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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