Zacks Bull and Bear of the Day Highlights: First Interstate BancSystem, Monro Muffler Brake, Boeing, Lockheed Martin and Rockwell Collins
Zacks Equity Research
For Immediate Release
Chicago, IL – February 15, 2013 – Zacks Equity Research highlights First Interstate BancSystem, Inc. (FIBK) as the Bull of the Day and Monro Muffler Brake, Inc. (MNRO) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Boeing Co. (BA), Lockheed Martin Corporation (LMT) and Rockwell Collins Inc. (COL).
Investors looking for strong total return potential should take a look at First Interstate BancSystem, Inc. (FIBK). The company is growing earnings at a healthy clip thanks to strong non-interest income and improving credit quality.
It recently delivered a positive earnings surprise for the fourth quarter, sending earnings estimates meaningfully higher for both 2013 and 2014. It is a Zacks Rank #1 (Strong Buy) stock.
Shares look attractive at just 1.0x book value, especially when you factor in a juicy 3.0% dividend yield.
First Interstate BancSystem is a bank holding company headquartered in Billings, Montana. The company operates 72 banking offices in 42 communities in Montana, Wyoming and western South Dakota. It was incorporated in 1971 and has a market cap of $747 million.
First Interstate delivered better-than-expected Q4 results on January 28. Earnings per share came in at 37 cents, beating the Zacks Consensus Estimate by 2 cents. It was a 28% increase over the same quarter last year.
Monro Muffler Brake, Inc. (MNRO) is suffering from negative same-store sales and declining profit margins, which has caused analysts to lower their estimates for both 2013 and 2014. It is a Zacks Rank #5 (Strong Sell) stock.
Monro Muffler operates 939 automotive repair and tire service stores in the U.S. It operates under the Monro Muffler Brake and Service, Mr. Tire, Tread Quarters Discount Tires, Autotire, Tire Warehouse, Tire Barn and Towery's Tire and Auto Care brands. On January 29, the company reported third quarter 2013 earnings per share of 35 cents, a penny shy of the Zacks Consensus Estimate. It marked the company's 4th straight earnings miss. Total sales increased 8%, but same-store sales fell a painful 5.9%. Meanwhile, gross profit declined as a percentage of sales from 38.4% to 36.6% while operating income fell 17% year-over-year.
Following the Q3 earnings release, analysts revised their estimates lower for both 2013 and 2014, sending the stock to a Zacks Rank #5 (Strong Sell). The Zacks Industry Rank isn't very bullish either. The 'Consumer Services - Miscellaneous' industry ranks in the bottom 11% of all the industries that we rank.
Aerospace and defense operator The Boeing Co. (BA) received an order to supply 16’ 737 MAX airplanes to IcelandAir. The initial order for 12 aircrafts was received in Dec 2012, which has been increased to 16 now. The agreement also includes purchase rights for another eight 737 MAXs.
The total value of the 16 airplanes will be $1.6 billion at list prices. We expect IcelandAir to get a discount on list prices as Boeing has historically offered discounts on bulk orders.
The bulging 737 MAX order book, which presently stands at 1,180 airplanes, will definitely offer a breather for this airplane manufacturer given the continued uncertainty over its Dreamliner 787 model. To cope with piling order, Boeing decided to increase its production rate of 737 MAX from the current 38 airplanes a month to 42 airplanes a month in 2014.
Boeing 737 MAX is a premier aircraft from Boeing’s stable and sees brisk demand in the single-aisle market for its fuel efficiency and low carbon dioxide emissions. Powered by the Commercial Fan Motor (“CFM”) International LEAP-1B engines, the Advanced Technology winglet of this airplane also enhances performance.
Additionally, the pivoting overhead stowage bins add to the spaciousness of the cabin. The bins give passengers more room to keep a carry-on roll-aboard near their own seat besides providing extra leg space. This aircraft is 13% more fuel efficient than its closest peer in the single-aisle aircraft market.
Despite a strong showing from 737 MAX, Boeing’s commercial aircraft division continues to face problems with its 787 Dreamliner. To begin with there were delays with the first 787 aircraft delivery. On Jan 16 this year all 787 Dreamliners were grounded worldwide after battery-related incidents. A parked 787 at the Logan International Airport in Boston caught fire while there was an in-flight incident on another 787 in Japan forcing an emergency landing. Boeing is investigating the cause of battery malfunction.
Boeing is yet to resolve its Dreamliner 787 battery problem though it continues to manufacture the model. However, supply of the same to its customers has been halted. We believe unless the company succeeds to solve the battery issue margins would come under pressure and eventually the company might find it difficult to meet its 2013 delivery target of 60’ 787 airplanes.
Boeing completed 2012 with a strong backlog of 4,400 airplanes valued at $319 billion. 737 MAX and the jinxed 787 model will play a pivotal role for the company in achieving its 2013 commercial revenue target which is in the range of $51 billion to $53 billion.
Boeing currently retains a Zacks Rank #3 (Hold). We presently prefer other operators in the aerospace and defense sector, like Lockheed Martin Corporation (LMT) and Rockwell Collins Inc. (COL), which carry a Zacks Rank #2 (Buy).
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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