24/7 Wall St. » SWY

24/7 Wall St. Closing Bell — May 21, 2012 ( AVP, PBR, SWY, BA, BBY, CPB, HAST, KKD, LOW, TECD, TUDO, AZO, GES, RL, WSM, TTWO, FB, CBE, ETN, WPRT)

Paul Ausick — Mon, 21 May 2012 20:04:35 +0000

The three major US stock indexes opened higher this morning as what seems to be a declaration of love for Greece at the G8 summit meeting pushed down fears that the Greeks would leave the euro and throw all of the monetary union into chaos (our coverage here). There is also some reason to believe that China will take its foot off the brake and step on the accelerator to get its economy on a growth path again. The US dollar index fell today, now down -0.19% at 81.138. The GSCI commodity index is down fractionally at 629.50, with commodities mostly mixed today. WTI crude oil closed up -1.2% at $92.57/barrel, and Brent crude trades up 1.58% at $108.83/barrel. Natural gas fell sharply today, down -4.4% today at $2.62/thousand cubic feet. Gold settled down -0.2% today, at $1,588.70/ounce.

The unofficial closing bells put the DJIA up more than 134 points to 12,503.87 (1.09%), the NASDAQ rose nearly 68 points (2.46%) to 2,847.21, and the S&P 500 rose 1.60% or nearly 21 points to 1,316.00.

There were several analyst upgrades and downgrades today, including Avon Products Inc. (NYSE: AVP) cut to ‘sell’ at UBS; Petrobras (NYSE: PBR) raised to ‘buy’ at SocGen; Safeway Inc. (NYSE: SWY) raised to ‘buy’ at Citigroup; Boeing Co. (NYSE: BA) raised to ‘buy’ at Argus; and Best Buy Co. Inc. (NYSE: BBY) cut to ‘hold’ at BB&T.

Earnings reports since markets closed on Friday have led to some price changes as of the last half hour of trading today: Campbell Soup Co. (NYSE: CPB) is down -2.1% at $32.71; Hastings Entertainment Inc. (NASDAQ: HAST) is up 15.2% at $2.05; Krispy Kreme Doughnuts Inc. (NYSE: KKD) is up 12.3% at $6.75; Lowe’s Companies Inc. (NYSE: LOW) is down -10.1% at $25.60 (more coverage here); Tech Data Corp. (NASDAQ: TECD) is up 0.7% at $47.78; and Tudou Holdings Ltd. (NASDAQ: TUDO) is up 11.3% at $33.37.

Tomorrow we are scheduled to get earnings reports from Autozone Inc. (NYSE: AZO), Best Buy, Guess? Inc. (NYSE: GES), Ralph Lauren Corp. (NYSE: RL), Williams Sonoma Inc. (NYSE: WSM), and Take-Two Interactive Software Inc. (NASDAQ: TTWO).

Other standouts from today include the following stocks:

Facebook Inc. (NASDAQ: FB) is down -11% at $34.03. Following Friday’s massively-hyped IPO and the CEO’s weekend wedding, a falling share price was probably inevitable. More coverage here.

Cooper Industries plc (NYSE: CBE) is up 25.2% at $69.96 after posting a new 52-week high this morning of $70.97. The company is being acquired by Eaton Corp. (NYSE: ETN) for $11.8 billion. More coverage here.

Westport Innovations Inc. (NASDAQ: WPRT) is up 12% at $26.57. The natural gas engine maker has a deal with Volvo for a new truck engine.

Stay tuned for Tuesday. Atlanta Fed President Dennis Lockhart is giving a speech. We have also noted the following events on the schedule (all times Eastern):

10:00 a.m. – Existing home sales
10:00 a.m. – Richmond Fed manufacturing index
11:30 a.m. – 4-week bill auction
1:00 p.m. – 2-year note auction

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AVP, AZO, BA, BBY, CBE, CPB, ETN, FB, GES, HAST, KKD, LOW, PBR, RL, SWY, TECD, TTWO, TUDO, WPRT, WSM

Top Analyst Upgrades & Downgrades (AVP, BAC, BBY, BA, DCI, FB, GS, HLF, KIRK, MS, MYGN, NUAN, PBR, RHI, ROST, SWY, SPLK, TJX, ZBRA)

Administrator — Mon, 21 May 2012 12:35:55 +0000

These are some of the top analyst upgrades, downgrades and initiations seen in Wall Street research calls this Monday.

Avon Products Inc. (NYSE: AVP) Cut to Sell at UBS.

Bank of America Corporation (NYSE: BAC) Cut to Market Underperform at JMP Securities.

Best Buy Co. (NYSE: BBY) Cut to Hold at BB&T.

Boeing Co. (NYSE: BA) Raised to Buy at Argus.

Donaldson Company. Inc. (NYSE: DCI) Reiterated Outperform and raised estimates at Credit Suisse.

Facebook, Inc. (NASDAQ: FB) Started as Positive at Susquehanna.

Goldman Sachs Group Inc. (NYSE: GS) Cut to Market Underperform at JMP Securities.

Herbalife Ltd. (NYSE: HLF) Reiterated Buy at Argus.

Kirkland’s, Inc. (NASDAQ: KIRK) named Bear of the Day at Zacks.

Morgan Stanley (NYSE: MS) Cut to Market Underperform at JMP Securities.

Myriad Genetics (NASDAQ: MYGN) Raised to Outperform at Leerink Swann.

Nuance Communications (NASDAQ: NUAN) Started as Neutral with $25 target at Goldman Sachs.

Petrobras (NYSE: PBR) Raised to Buy at Societe Generale.

Robert Half International (NYSE: RHI) named as Bull of the Day at Zacks.

Ross Stores, Inc. (NASDAQ: ROST) Cut to Hold at Canaccord Genuity.

Safeway (NYSE: SWY) Raised to Buy at Citigroup.

Splunk, Inc. (NASDAQ: SPLK) Started as Overweight at Barclays.

TJX Companies (NYSE: TJX) Cut to Hold at Canaccord Genuity.

Zebra Technologies (NASDAQ: ZBRA) Cut to Neutral at JPMorgan.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox. We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

JON C. OGG

Filed under: Analyst Calls Tagged: AVP, BA, BAC, BBY, DCI, FB, GS, HLF, KIRK, MS, MYGN, NUAN, PBR, RHI, ROST, SPLK, SWY, TJX, ZBRA

Sears, Overstock, And Gilt Hammered In New E-Commerce Study

247wallst — Wed, 09 May 2012 15:12:08 +0000

Sears (NASDAQ: SHLD), Overstock (NASDAQ: OSTK), and Abercrombie & Fitch (NYSE: ANF) are not particularly well-regarded as brands or particularly well-liked by Wall St. Perhaps coincidentally, each shows up near the bottom of the e-retailer satisfaction list published by research firm Foresee. All are in the bottom 15% of the 100 companies rated.

The FORESEE E-RETAIL SATISFACTION INDEX (SPRING TOP 100 EDITION 2012) is the result of approximately 21,000 responses from visitors to the top 100 retail sites. The data posts year-over-year comparisons of both industry average satisfaction and satisfaction with individual retailers.

The bottom ten sites in the survey, based on a total best score of 100 were:

Nutrisystem.com (NASDAQ: NTRI) 74

PCConnection.com 74

PCMall.com 754

Safeway.com (NYSE: SWY) 74

Abercrombie.com 73

Build.com 73

Gilt.com 71

Peapod.com 70

Ancestry.com (NASDAQ: ACOM) 69

efollett.com 69

The presence of Gilt at the bottom is somewhat of a surprise given that it caters to high end customers.

At the top of the list, are several companies which would be expected. The first among them is the world’s largest e-commerce company–Amazon (NASDAQ: AMZN). Fortunately for Barnes & Noble (NYSE: BKS) which is in a battle with Amazon in the e-reader business, its site scored well. The company recently took an investment from Microsoft (NASDAQ: MSFT) to expand its Nook e-reader division. Apple (NASDAQ: AAPL), which is generally well-regarded for customer service across its online and bricks and mortar retail operations, also did well. The one surprise on the list is Avon (NYSE: AVP), which has struggled with its image.

Amazon.com 89

QVC.com 85

Store.Apple.com 85

Keurig.com 84

Avon.com 83

LLBean.com 83

1800Contacts.com 82

BN.com 82

Newegg.com 82

Douglas A. McIntyre

Filed under: Research, Retail Tagged: AAPL, ACOM, AMZN, ANF, AVP, BKS, featured, MSFT, NTRI, OSTK, SHLD, SWY

24/7 Wall St. Closing Bell (GD, ABB, HOG, COP, S, ALU, MO, PEP, TLAB, XOM, AET, BMY, BG, JBLU, LIZ, MJN, REGN, SWY, SWC, TASR, UPS, YNDX, NRGY, SPH, LEAP, AKAM)

Paul Ausick — Thu, 26 Apr 2012 20:06:31 +0000

Markets opened a few ticks lower this morning after a poor report on new claims for unemployment benefits in the US (our coverage here). The report that pending home sales jumped 4.1% lit a fire under investors and pushed equities higher (our coverage here). The EIA report on natural gas supplies held gas prices higher although they’ve dropped back by late afternoon (our coverage here). Yields on 7-year US Treasury notes were at a record low following Fed Chairman Ben Bernanke’s clarification of what “exceptionally low” interest rates mean (our coverage here). The US dollar index fell today, now down -0.17% at 78.932. The GSCI commodity index is up 0.04% at 677.57, with commodities mixed on the slightly weaker dollar. WTI crude oil closed up 0.4% at $104.55/barrel, and Brent crude trades up 0.65% at $119.89/barrel. Gold settled up 1.1% today, at $1,660.50/ounce.

The unofficial closing bells put the DJIA up nearly 114 points to 13,204.70 (0.87%), the NASDAQ rose nearly 21 points (0.69%) to 3,050.61, and the S&P 500 rose 0.67% or more than 9 points to 1,399.99.

There were several analyst upgrades and downgrades today, including General Dynamics Corp. (NYSE: GD) cut to ‘equal-weight’ at Morgan Stanley; ABB Ltd. (NYSE: ABB) cut to ‘neutral’ at JPMorgan; Harley-Davidson Inc. (NYSE: HOG) raised to ‘overweight’ at Barclays; ConocoPhillips (NYSE: COP) raised to ‘neutral’ at Macquarie; and Sprint Nextel Corp. (NYSE: S) maintained as ‘hold’ at Argus.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Alcatel-Lucent S.A. (NYSE: ALU) is down -16.9% at $19.71 (our coverage here); Altria Group Inc. (NYSE: MO) is up 0.9% at $31.96 (our story here); Pepsico (NYSE: PEP) is down -0.3% at $66.44 (our story here); Tellabs Inc. (NASDAQ: TLAB) is down -5.1% at $3.83 (our coverage here); Exxon Mobil Corp. (NYSE: XOM) is down -0.8% at $86.13 (our coverage here); Aetna Inc. (NYSE: AET) is down -8.4% at $45.22; Bristol-Myers Squibb Co. (NYSE: BMY) is down -1.7% at $33.72; Bunge Ltd. (NYSE: BG) is down -2.6% at $65.69; JetBlue Airways Corp. (NASDAQ: JBLU) is down -0.1% at $4.64; Liz Claiborne Inc. (NYSE: LIZ) is up 9.4% at $13.87; Mead Johnson Nutrition Co. (NYSE: MJN) is up XX% at $XX; Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is up 4% at $86.38 after posting a new 52-week high of $87.26n earlier today; Safeway Inc. (NYSE: SWY) is down -2.8% at $21.00; Stillwater Mining Co. (NYSE: SWC) is down -4.6% at $10.69; TASER International Inc. (NASDAQ: TASR) is up 5.7% at $4.39; United Parcel Service Inc. (NYSE: UPS) is down -1.8% at $78.25; and Yandex N.V. (NASDAQ: YNDX) is down -5% at $23.31.

Other standouts from today include the following stocks:

Inergy L.P. (NYSE: NRGY) is up 17% at $19.71. The company is being acquired by Suburban Propane Partners LP (NYSE: SPH). More coverage here.

Leap Wireless International Inc. (NASDAQ: LEAP) is down -20.2% at $6.16. The wireless carrier fell sharply on disappointing quarterly results. More coverage here.

Akamai Technologies Inc. (NASDAQ: AKAM) is down -14.8% at $33.03. The technology provider beat estimates but issued weak guidance.

Stay tuned for Friday. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – GDP report
8:30 a.m. – Employment cost index
9:55 a.m. – Reuters/University of Michigan consumer sentiment index

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: ABB, AET, AKAM, ALU, BG, BMY, COP, GD, HOG, JBLU, LEAP, LIZ, MJN, MO, NRGY, PEP, REGN, S, SPH, SWC, SWY, TASR, TLAB, UPS, XOM, YNDX

24/7 Wall St. Closing Bell (BHI, MU, SWY, TSLA, MTG, CALM, SARA, APOL, GOL, WAG, LEN, VRNM, SLB, AONE, AUDC, ARNA)

Paul Ausick — Mon, 26 Mar 2012 20:06:48 +0000

Markets opened about higher this morning following a flat close in Asia and a bit of enthusiasm in Europe following a manufacturing survey from Germany (our coverage here). Then Fed Chairman Ben Bernanke hinted that more stimulus might be on its way to help boost employment(our coverage here). By the last hour of trading the indexes were at or near their highest level of the day. The US dollar index fell today, now down -0.46% at 78.978. Commodities were generally higher on the dollar weakness, with the notable exception of corn. WTI crude oil closed up 0.2% at $107.03/barrel, and Brent crude trades up 0.44% at $125.68/barrel. Gold settled up 1.6% today, at $1,689.00/ounce.

The unofficial closing bells put the DJIA up more than 161 points to 13,241.93(1.23%), the NASDAQ rose nearly 55 points (1.78%) to 3,122.57, and the S&P 500 rose 1.39% or more than 19 points to 1,416.50.

There were several analyst upgrades and downgrades today, including Baker Hughes Inc. (NYSE: BHI) cut to ‘market perform’ at Wells Fargo; Micron Technology Inc. (NASDAQ: MU) cut to ‘perform’ at Oppenheimer; Safeway Inc. (NYSE: SWY) cut to ‘neutral’ at Credit Suisse; Tesla Motors Inc. (NASDAQ: TSLA) raised to ‘buy’ at Wunderlich; and Magic Investment Corp. (NYSE: MTG) started as ‘market perform’ at Keefe Bruyette Woods.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Cal-Maine Foods Inc. (NASDAQ: CALM) is down -5.7% at $39.58; and Saratoga Resources Inc. (AMEX: SARA) is up 6.9% at $7.43. After markets close today Apollo Group Inc. (NASDAQ: APOL) and Gol Linhas Aereas Inteligentes SA (NYSE: GOL) report earnings. Before the markets open in the morning, we’ll get earnings from Walgreen Co. (NYSE: WAG) and homebuilder Lennar Corp. (NYSE: LEN).

Other standouts from today include the following stocks:

Verenium Corp. (NASDAQ: VRNM) is up nearly 20% at $3.69 after posting a new 52-week high of $4.15 earlier today. The enzyme maker is selling some assets. More coverage here.

Schulumberger Ltd. (NYSE: SLB) is down -1.1% at $72.36. The oil field services giant warned on earnings. More coverage here.

A123 Systems Inc. (NASDAQ: AONE) is down about -13.4% at $1.47 after posting a new 52-week low of $1.45 earlier. The company will recall certain batteries for replacement. More coverage here.

AudioCodes Ltd. (NASDAQ: AUDC) is down -16.2% at $2.95. The network gear maker lowered its outlook. More coverage here.

Arena Pharmaceuticals Inc. (NASDAQ: ARNA) is up more than 24% at $2.99 after posting a new 52-week high of $3.19. The drug-maker has begun the process of getting a new drug to market in Europe. More coverage here.

Stay tuned for Tuesday. Federal Reserve Chairman Ben Bernanke and Boston Fed President Eric Rosengren are giving speeches. We have also noted the following events on the schedule (all times Eastern):

9:00 a.m. – S&P Case-Shiller housing price index
10:00 a.m. – Conference Board consumer confidence index
10:00 a.m. – Richmond Fed manufacturing index
11:30 a.m. – 4-week Treasury bill auction
2:00 p.m. – 2-year note auction

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AONE, APOL, ARNA, AUDC, BHI, CALM, GOL, LEN, MTG, MU, SARA, SLB, SWY, TSLA, VRNM, WAG

Top Analyst Upgrades & Downgrades (BHI, ICE, LXK, MTG, MU, RDN, GOLD, SWY, TSLA, XL)

Administrator — Mon, 26 Mar 2012 12:03:00 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Monday.

Baker Hughes Inc. (NYSE: BHI) Cut to Market Perform at Wells Fargo

IntercontinentalExchange, Inc. (NYSE: ICE) named as Bull of the Day at Zacks.

Lexmark International Inc. (NYSE: LXK) Cut to Market Perform at Bernstein.

MGIC Investment Corp. (NYSE: MTG) Started as Market Perform at Keefe Bruyette Woods.

Micron Technology Inc. (NASDAQ: MU) Cut to Perform at Oppenheimer.

Radian Group Inc. (NYSE: RDN) Started as Market Perform at Keefe Bruyette Woods.

Randgold Resources Limited (NASDAQ: GOLD) Cut estimates at Goldman Sachs.

Safeway Inc. (NYSE: SWY) Cut to Neutral at Credit Suisse.

Tesla Motors, Inc. (NASDAQ: TSLA) Raised to Buy at Wunderlich.

XL Group, Plc (NYSE: XL) named as Bear of the Day at Zacks.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: BHI, gold, ICE, LXK, MTG, MU, RDN, SWY, TSLA, XL

24/7 Wall St. Closing Bell (DELL, KMB, SWY, RAX, BAC, ANF, CMCSA, XEC, DE, DVN, INCY, NOR, TEVA, ZNGA, BPAX, CSKI, IPSU, ALNY, CYBI)

Paul Ausick — Wed, 15 Feb 2012 21:07:27 +0000

The three major US stock indexes opened slightly higher this morning, but the DJIA almost immediately turned south and remained in negative territory all session. The Nasdaq composite and S&P 500 turned south in the early afternoon. China’s central bank said that it would continue to buy European sovereign debt and do its part to help the Eurozone recover. But nothing much has happened on the continent today to build up hopes for avoiding a Greek default. The afternoon release of the FOMC minutes cooled markets even more as the minutes showed little enthusiasm for another round of quantitative easing. Crude oil is higher today following Iran’s announcement that it was cutting off supplies to six European countries (see our coverage here). WTI is up 1.05% at $101.80/barrel and Brent is up 1.34% at $118.92. Gold rose 0.6% to settle at $1,728.10/ounce.

The unofficial closing bells put the DJIA down more than 97 points to 12,780.95 (-0.76%), the NASDAQ fell 16 points (-0.55%) to 2,915.83, and the S&P 500 fell -0.54% or more than 7 points to 1,343.23.

There were several analyst upgrades and downgrades today, including Dell Inc. (NASDAQ: DELL) cut to ‘underperform’ at Sterne Agee; Kimberley-Clark Corp. (NYSE: KMB) cut to ‘neutral’ at Janney; Safeway Inc. (NYSE: SWY) raised to ‘outperform’ at Credit Suisse; Rackspace Hosting Inc. (NYSE: RAX) cut to ‘market perform’ at Raymond James; and Bank of America Corp. (NYSE: BAC) cut to ‘market perform’ at Bernstein.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Abercrombie & Fitch Co. (NYSE: ANF) is up 8.2% at $48.25; Comcast Corp. (NASDAQ: CMCSA) is up 4.5% at $28.48 after posting a new 52-week high of $29.05 earlier today; Cimarex Energy Co. (NYSE: XEC) is up nearly 19% at $81.66; Deere & Co. (NYSE: DE) is down -5.4% at $84.21; Devon Energy Corp. (NYSE: DVN) is up about 7% at $71.64 (more coverage here); Incyte Corp. (NASDAQ: INCY) is down -5.9% at $17.19; Noranda Aluminum Holding Corp. (NYSE: NOR) is down -2% at $10.63; Teva Pharmaceuticals Inc. (NASDAQ: TEVA) is up 3.4% at $45.01; and Zynga Inc. (NASDAQ: ZNGA) is down nearly -15% at $12.21.

Other standouts from today include the following stocks:

Guggenheim Solar ETF (NYSE: TAN) completed a 1:10 reverse split this morning. We have more coverage here.

BioSante Pharmaceuticals Inc. (NASDAQ: BPAX) is up more than 30% at $0.99. The company’s testosterone replacement drug for men has been approved by the FDA and will be co-marketed with Teva.

China Sky One Medical Inc. (NASDAQ: CSKI) China Sky One is down more than -28% at $1.10. Volume is nearly 10x the daily average of about 285,000 shares traded. The nutritional supplement company’s shares were stopped following an announcement of the resignations of 26 managers and the reported illness of the CEO.

Imperial Sugar Co. (NASDAQ: IPSU) is down nearly -14% at $5.75. Investors are likely taking profits today, following a week-long run-up in the share price.

Alnylam Pharmaceuticals Inc. (NASDAQ: ALNY) is up nearly 15% at $12.59. The biopharmaceutical company priced a secondary share offering at $10.75. More coverage here.

Cybex International Inc. (NASDAQ: CYBI) is up more than 19% at $1.81 after posting a new 52-week high of $2.01 earlier this morning. The sporting goods maker posted better-than-expected earnings this morning.

Stay tuned for Thursday. Federal Reserve chairman Ben Bernanke is giving a speech. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – Housing starts
8:30 a.m. – New claims for unemployment benefits
8:30 a.m. – Producer price index
10:00 a.m. – Philadelphia Fed survey
10:30 a.m. – EIA weekly natural gas storage report
1:00 p.m. – 30-year TIPS auction
4:30 p.m. – Fed balance sheet and money supply

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: ALNY, ANF, BAC, BPAX, CMCSA, CSKI, CYBI, DE, DELL, DVN, INCY, IPSU, KMB, NOR, RAX, SWY, TEVA, XEC, ZNGA

Top Analyst Upgrades & Downgrades (ANDE, BAC, DELL, GEVO, GT, KMB, OIS, OCR, PWAV, RAX, RCL, SWY, TRMB, ZNGA)

Administrator — Wed, 15 Feb 2012 13:20:07 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Wednesday morning.

The Andersons, Inc. (NASDAQ: ANDE) named as Value stock of the day at Zacks.
Bank of America Corporation (NYSE: BAC) Cut to Market Perform at Bernstein.
Dell Inc. (NASDAQ: DELL) Cut to UNderperform at Stern Agee.
Gevo, Inc. (NASDAQ: GEVO) Started as Buy with $16 target at Canaccord Genuity.
Goodyear Tire & Rubber Company (NYSE: GT) Cut to Hold at S&P Capital IQ.
Kimberly-Clark Corporation (NYSE: KMB) Cut to Neutral at Janney.
Oil States International (NYSE: OIS) Started as Buy with $103 target at Canaccord Genuity.
OmniCare Inc. (NYSE: OCR) Raised to Outperform at Credit Suisse.
Powerwave Technologies, Inc. (NASDAQ: PWAV) Cut to Underweight at JPMorgan; Target cut to $1.00 at Canaccord Genuity.
Rackspace Hosting, Inc. (NYSE: RAX) Cut to Market Perform at Raymond James.
Royal Caribbean Cruises Ltd. (NYSE: RCL) named Bear of the Day at Zacks.
Safeway Inc. (NYSE: SWY) Raised to Outperform at Credit Suisse.
Trimble Navigation (NASDAQ: TRMB) named Bull of the Day at Zacks.
Zynga Inc. (NASDAQ: ZNGA) Cut to Neutral at Baird; Cut to Equal-weight at Barclays.

If you enjoyed the top analyst upgrades and downgrades, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: ANDE, BAC, DELL, GEVO, GT, KMB, OCR, OIS, PWAV, RAX, RCL, SWY, TRMB, ZNGA

Valuation Reality Check In Whole Foods (WFM, KR, SWY)

Administrator — Wed, 08 Feb 2012 22:56:41 +0000

Whole Foods Market Inc. (NASDAQ: WFM) may have posted a 33% gain to earnings and it may still have a lot of growth ahead of it. The reality is that the company is running into a valuation issue. Even if it gets traded like a luxury goods seller rather than a grocery store chain, the valuation argument has to start coming closer to home here.

The company beat earnings by $0.05 at $0.65 per share and revenues rose almost 13% to $3.39 billion versus Thomson Reuters estimates of $3.38 billion. Whole Foods even raised guidance for its Fiscal year of 2012 to a range of $2.28 to $2.32 earnings per share from a prior target of $2.21 to $2.26 and against a consensus target from Thomson Reuters of $2.27 EPS. It also raised revenue guidance for 2012 to a range of 13.5% to 15% and that looks mostly in-line with the expected figure of $11.6 billion expected.

Whole Foods is a great growth story, it is an incredibly well run organization, and it deserves a premium over traditional grocery stores which run on razor-thin margins. Whole Foods has far higher margins and its expansion of its own 365 private-label brand is likely going to help it capture even higher margins even though the products are generally priced lower than other organic and natural brand-label foods.

So, everything is positive… except for our headline. The guidance is not exactly far higher than what was already expected. At the mid-point of its new earnings range, Whole Foods stock trades at a massive 33.9-times the fiscal September 2012 consensus estimate and it trades at 1.2-times expected revenues.

Compare Whole Foods forward 2012 valuations of 33.9-times earnings and 1.2-times sales to The Kroger Company (NYSE: KR) and Safeway Inc. (NYSE: SWY). Kroger trades at only 10.6-times earnings and only about 0.14-times sales; Safeway trades at 12-times expected earnings and only 0.17-times total sales.

The good news for the bulls is that Whole Foods has always been a premium stock. It is even easy to argue that Whole Foods will always trade at a premium to grocery chains. It has the whole lifestyle trade attached to it. Whole Foods is far more of a fun experience compared to most grocery stores, at least until the bill comes. Whole Foods is arguable the biggest luxury brand that there is.

The bad news is simple. Valuations at some point just have to give. At $77.93 and after the stock hit a new high of $78.31, how can it rise? The consensus target from analysts is $79.29 and even if that gets raised it can only rise so much. With a $13.99 billion market cap, it is worth roughly two-thirds of the combined values of Safeway and Whole Foods while it is expected to generate only about 8% of the combined sales of the two food giants.

A great company, at a price that just feels too high to justify on any traditional financial metrics. The stock can run up on news. It just looks too hot now under rational evaluations.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Earnings, Economy, Food, Luxury, Retail, Value Investing Tagged: KR, SWY, WFM

Expected Price Gains for Grocery Store Stocks (SWY, KR, WINN, WFM, SVU, TFM, RDK, WMK, WMT)

Paul Ausick — Wed, 02 Nov 2011 18:05:57 +0000

Grocery stores and supermarkets get whipsawed by rising prices on food commodities, rising prices from food processing companies, and rising fuel prices on one hand and higher unemployment and stagnant wages on the other. If people didn’t need to eat, they probably wouldn’t.

About the only weapons the grocers have is selectively lowering prices and pushing their privately-labeled goods, which have a higher profit margin for the stores than the nationally-advertised brands. Stores have been unable, yet, to come up with a significant boost to their revenues and profits available from technology developments. The costs of implementing high-tech grocery shopping more than offsets any possible gains. It’s another problem grocers will have to find an answer to, along with rising costs, if they are going to grow.

We’ve looked today at a number of grocery store and supermarket stocks to try to determine where some hidden value may lie. The stores we’ve reviewed are Safeway Inc. (NYSE: SWY), The Kroger Co. (NYSE: KR), Winn-Dixie Stores Inc. (NASDAQ: WINN), Whole Foods Market, Inc. (NASDAQ: WFM), Supervalu Inc. (NYSE: SVU), The Fresh Market, Inc. (NASDAQ: TFM), Ruddick Corp. (NYSE: RDK), Weis Markets, Inc. (NYSE: WMK), and Wal-Mart Stores Inc. (NYSE: WMT). We’ve included Walmart because it gets more than half its $100+ billion in revenues from grocery sales, making it the largest grocery seller among this group.

All data from Yahoo! Finance, and current prices were gathered at about noon today.

Safeway Inc. (NYSE: SWY) has a median target price of $19.00 from 13 brokers. Shares are trading today at $19.28, about 1.5% above the target price. Safeway’s forward P/E is 10.37 and the company pays a dividend yield of 2.9%. The stock’s 52-week trading range is $15.93-$25.43, and at today’s price that’s about 21% above its 52-week low, posted earlier this morning, and 24% below the 52-week high. Safeway saw its average food basket price rise by 2.3% year-over-year in September, the same rate as Kroger and Supervalu. Sales of private label foods and gasoline gave the company a boost in the third quarter, but gross margins fell — never a good sign for a grocery. Look for a hike to the target price soon, now that Safeway has managed to bust through $19.

The Kroger Co. (NYSE: KR) has a median target price of $26.00 from 15 brokers. Shares are trading today at $22.83, for an implied gain of $3.17, or 14%. Kroger’s forward P/E is 10.57 and the company pays a dividend yield of 2%. The stock’s 52-week trading range is $20.53-$25.85, and at today’s price that’s about 11% above its 52-week low, posted earlier this morning, and 12% below the 52-week high. Kroger is Walmart’s leading competitor in grocery sales, with about $82 billion in 2010. The company has made a conscious effort to keep prices low, and that has affected margins negatively. If the company can figure a way to get those margins up, the stock price has room to grow.

Winn-Dixie Stores Inc. (NASDAQ: WINN) has a median target price of $10.50 from 5 brokers. Shares are trading today at $6.57, for an implied gain of $3.93, or 60%. Winn-Dixie’s forward P/E is negative and the company does not pay a dividend. The stock’s 52-week trading range is $5.10-$10.08, and at today’s price that’s about 29% above its 52-week low, posted earlier this morning, and 35% below the 52-week high. Winn-Dixie didn’t quite meet its expected EPS loss estimate of -$0.42 when it reported earnings yesterday, but its same-store sales rose 3.3% and its revenues grew 3.1%. The company has a lot of headroom before it hits its price target or its 52-week high, and its big plus is a debt-free balance sheet.

Whole Foods Market, Inc. (NASDAQ: WFM) has a median target price of $75.00 from 15 brokers. Shares are trading today at $70.64, for an implied gain of $4.36, or 6%. Whole Foods’ forward P/E is 31.04 and the company pays a dividend yield of 0.6%. The stock’s 52-week trading range is $39.95-$74.45, and at today’s price that’s about 77% above its 52-week low, posted earlier this morning, and 5% below the 52-week high. The company is expected to report EPS of $0.41 on revenues of $2.36 billion after markets close today. Full-year EPS for the year ended in September is expected to be $1.93. Whole Foods has performed very well in a tight environment this year, and the company’s stock price reflects that. Expectations, as indicated by the high forward earnings multiple, might be somewhat optimistic but there’s still a 6% gain available when the company hits its target price.

Supervalu Inc. (NYSE: SVU) has a median target price of $8.38 from 10 brokers. Shares are trading today at $7.77, for an implied gain of $0.61, or 8%. Supervalu’s forward P/E is 6.03 and the company pays a dividend yield of 4.2%. The stock’s 52-week trading range is $6.26-$11.77, and at today’s price that’s about 24% above its 52-week low, posted earlier this morning, and 34% below the 52-week high. Like Safeway and Kroger, the average food basket price rose 2.3% at Supervalu in September. The company reported EPS of $0.28 two weeks ago, beating estimates. At the same time, the company lowered its full-year estimates on both earnings and revenues.

The Fresh Market, Inc. (NASDAQ: TFM) has a median target price of $43.50 from 8 brokers. Shares are trading today at $40.27, for an implied gain of $3.23, or 8%. Fresh Market’s forward P/E is 30.48 and the company does not pay a dividend. The stock’s 52-week trading range is $30.86-$46.85, and at today’s price that’s about 30% above its 52-week low, posted earlier this morning, and 14% below the 52-week high. Fresh Market shares started the month of September with a bang, but unfortunately the company only succeeded in generating short interest near 20% of outstanding shares. Stock price increases have stalled, and remain about where they were two months ago.

Ruddick Corp. (NYSE: RDK) has a median target price of $49.00 from 3 brokers. Shares are trading today at $43.75, for an implied gain of $5.25, or 12%. Ruddick’s forward P/E is 15.46 and the company pays a dividend yield of 1.2%. The stock’s 52-week trading range is $33.44-$46.00, and at today’s price that’s about 31% above its 52-week low, posted earlier this morning, and 5% below the 52-week high. Ruddick sold its thread-making and textile business to a private equity buyer last week for $180 million, leaving it with just its grocery operations. Shares got a short-lived boost on the sale, but shares continue to drift away from the 52-week high and the target price.

Weis Markets, Inc. (NYSE: WMK) has a median target price of $31.00 from just one broker. Shares are trading today at $39.45, about 21% above the target price. Weis’s forward P/E is unreported and the company pays a dividend yield of 3%. The stock’s 52-week trading range is $36.52-$42.20, and at today’s price that’s about 8% above its 52-week low, posted earlier this morning, and 7% below the 52-week high. Just looking at Weis’s hi/low it is pretty clear that the company needed to do something to try to break its share price out of that tight range. Last week it boosted its annual dividend from $1.16 to $1.20, and declared a special dividend of $1/share. The bounce to the share price lasted just one day.

Wal-Mart Stores Inc. (NYSE: WMT) has a median target price of $60.00 from 19 brokers. Shares are trading today at $57.06, for an implied gain of $2.94, or 5%. Walmart’s forward P/E is 11.62 and the company pays a dividend yield of 2.6%. The stock’s 52-week trading range is $48.31-$57.96, and at today’s price that’s about 18% above its 52-week low, posted earlier this morning, and 2% below the 52-week high. Walmart stock is trading near enough to its 52-week high that another good quarterly report could push the shares through that barrier. Walmart’s average food basket price rose 0.9% year-over-year in September, less than half as much than prices at Safeway, Kroger, and Supervalu stores.

Paul Ausick

Filed under: Analyst Calls, Food, General Tagged: KR, RDK, SVU, SWY, TFM, WFM, WINN, WMK, WMT