Zacks Bull and Bear of the Day Highlights: Hewlett Packard, Carnival, General Electric, Burger King Worldwide and Yum! Brands
Zacks Equity Research
For Immediate Release
Chicago, IL – April 1, 2013 – Zacks Equity Research highlights Hewlett Packard (HPQ) as the Bull of the Day and Carnival (CCL) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on General Electric Company (GE), Burger King Worldwide, Inc. (BKW) and Yum! Brands, Inc. (YUM).
The post-crash environment has been very tough for makers of computers and peripherals. Competition has been extremely intense, and many consumers have shifted from traditional PCs to tablets and smart phones as their main sources of computing activities.
With this backdrop, many firms have faltered, but a few have managed to persevere despite the immense challenges. One such company that is starting to find its way again in the space is undoubtedly Hewlett Packard (HPQ).
The company is usually regarded as a member of the ‘old guard’ of the PC world, and was best known for its home use products. However, the company has begun to reinvent itself and find new opportunities, namely in the printing and enterprise groups.
These segments, while not quickly growing, have helped to stabilize the company’s floundering personal systems division and give hope for the firm in both the short and long term periods.
Analysts are starting to take note of the trend too, as the vast majority of analysts have recently revised their estimates upward for both the current quarter, current year, and next year periods. The magnitude of the revision has also been pretty good, suggesting that analysts are expecting pretty good things out of the company going forward.
With discretionary spending surging higher, many investors are looking to consumer plays, such as those in the vacation space, for big gains. However, the entire segment isn’t a buy, as there have been some significant problems with a few big names in the space as of late.
For example, for anyone looking to take a cruise, the name Carnival (CCL) probably doesn’t inspire too much confidence. The big cruise ship operator has had big problems lately with a few troubled ships in the Caribbean.
The firm saw a generator issue with one of its ships recently, while there was a similar—and more infamous—problem afflicting another ship in the Caribbean before that. These experiences, while isolated, have definitely damaged the company’s brand name, and they have also called into question the 2013 outlook for CCL going forward.
In fact, analysts have greatly slashed their estimates for the company, not only in this quarter, but in subsequent periods as well. The magnitude of the revisions have been astounding as well, as the consensus for the current quarter was 30 cents two months ago, and it is now just nine cents a share.
This represents a dramatic decline for the cruise ship operator, as literally ever y estimate (in the Zacks Consensus) that has come out in the past two months has been down. One analyst even looks for the company to lose money this quarter, showcasing just how far expectations have fallen for the firm.
GE Capital, Franchise Finance, an operating unit of the General Electric Company (GE), recently offered a credit facility worth $11.3 million to Ghai Management Services, a franchisee of Burger King Worldwide, Inc. (BKW). The transaction is expected to enhance the liquidity of Ghai Management Services and facilitate its working capital requirements to drive further growth.
Based in Fremont, CA, Ghai Management Services owns and operates fast food restaurants. The company presently operates as a Burger King franchisee in 38 locations in Northern California and Southern Oregon. At the same time, it operates as a franchisee for Taco Bell Corp., one of the leading brands of quick service restaurant (:QSR) operator Yum! Brands, Inc. (YUM).
Taco Bell is a premier Mexican-style QSR chain serving over 35 million consumers each week through 5,600 restaurants in the U.S. On the other hand, Burger King operates over 12,000 restaurants worldwide, about 90% of which are owned and operated by independent franchisees. The franchise-centric model is widely promulgated in the restaurant industry as it helps to reduce volatility in earnings and enhances cash flow generation.
Ghai Management Services will utilize the credit facility from GE Capital, Franchise Finance to acquire six Taco Bell restaurants in Northern California. Over the years, GE Capital, Franchise Finance has provided loans for the franchise finance market either through direct sales or portfolio acquisition. With over $10 billion in served assets, it primarily serves mid-market operators in the restaurant and hospitality industries across 18,000 property locations.
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.
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