Quantcast
Last updated on April 21, 2014 at 5:21 EDT

Zacks Bull and Bear of the Day Highlights: Textron, Humana, Beam, Diageo and Brown-Forman

August 23, 2012

CHICAGO, Aug. 23, 2012 /PRNewswire/ — Zacks Equity Research highlights Textron Inc (NYSE:TXT) as the Bull of the Day and Humana (NYSE:HUM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onBeam Inc. (NYSE:BEAM), Diageo plc (NYSE:DEO) and Brown-Forman Corporation (NYSE:BF.B).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Textron Inc (NYSE:TXT) was upgraded from Neutral to Outperform following a solid earnings report and positive earnings surprise. The beat was due to strong performance by the Bell division of the company and other operational improvements. The company is also lowering its risk profile through liquidation of non-captive finance receivables to focus more on its core manufacturing business.

Textron Inc. is a global multi-industry company that manufactures aircraft, automotive engine components, and industrial tools. It is also a provider of solutions and services for aircraft, fastening systems, and industrial products and components.

Textron reported strong second quarter 2012 earnings of $0.58 per share versus $0.29 per share in the year ago quarter. The quarterly result also comfortably surpassed the Zacks Consensus Estimate of $0.44. Higher numbers for the company were due to strong performance at Bell, continued improvement at Cessna, complemented by good performance in the Industrial business.

We believe TXT can expand its multiple from here and thus upgraded our recommendation from Neutral to Outperform, indicating that the stock will perform better than the market. Our target price is $33.00 or 15.7x 2012 EPS, reflects this view.

Bear of the Day:

Humana (NYSE:HUM) was recently downgraded from Neutral to Underperform. The downgrade comes as the company sharpens its focus on Medicare Advantage plans that increases its revenue dependency on one segment, rising expenditure, overhang of litigation charges and increasing competition in the industry.

Humana is one of the largest health care plan providers in the United States. Humana provides health insurance benefits under Health Maintenance Organization (HMO), Private Fee-For-Service (PFFS), and Preferred Provider Organization (PPO) plans.

Humana reported second quarter 2012 operating earnings per share of $2.34, beating the Zacks Consensus Estimate of $2.23 but falling short of the year-ago earnings of $2.59 per share. Our six month target price of $62.00 equates to an 8.7x multiple of our earnings estimate for 2012.

Latest Posts on the Zacks Analyst Blog:

Beam Plans to Redeem Preferred Stock

Headquartered in Deerfield,Beam Inc. (NYSE:BEAM) recently announced its plan to redeem $2.67 Convertible Preferred Stock of the holders of record as of November 15, 2012, on November 20, 2012. The $2.67 Convertible Preferred Stock was originally issued in 1979 and approximately 97% or more of the holders have converted their Preferred Stock into common stock.

The outstanding convertible preferred stock, as of November 15, 2012, will be redeemed at an aggregate price of $31.02 per share, including $0.52 per share as dividend.

Beam declared that after the redemption of shares, all the rights of the holders of preferred stock will cease to exist and no more dividend payment will accrue on such stock. The holders can only ask for the tender price of the redeemed shares.

Beam noticed that out of 5.5 million shares originally issued, only 145,948 shares are outstanding and it would be logical to eradicate these second-class shares. The company expects that this plan will have no impact on earnings.

Beam further anticipates that the remaining holders of the $2.67 Convertible Preferred Stock will wish to convert their preferred stock into common stock seeing the financial benefits of conversion. As a result, the company announced that the shares can be converted till November 15, 2012 at a conversion ratio of 8.411 shares of Beam common stock for every one share of $2.67 Convertible Preferred Stock.

The holders who convert their stock will receive Beam common stock with a market value of $491.29, assuming the market price at $58.41 per share on the date of conversion. The company will pay cash to compensate for a fractional share.

Beam, the Deerfield, Illinois-based spirits giant, engages in producing and selling branded distilled spirits products worldwide. Globally, the company generated 2011 sales of about $2.8 billion on volume of 34 million 9-liter cases.

Beam, which competes with Diageo plc (NYSE:DEO) and Brown-Forman Corporation (NYSE:BF.B), carries a Zacks #2 Rank, implying a short-term Buy rating on the stock. However, the company retains a long-term ‘Neutral’ recommendation.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks “Profit from the Pros” e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=7158.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment

Research is through our free daily email newsletter; Profit from the Pros. In short, it’s your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com

SOURCE Zacks Investment Research, Inc.


Source: PR Newswire