Chicago, IL – June 7, 2013 – Zacks Equity Research highlights Standard Motor Products, Inc. (SMP) as the Bull of the Day and Sotheby (BID) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dell Inc. (DELL), Oracle Corporation (ORCL) and Hewlett-Packard (HPQ).
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:
Standard Motor Products, Inc. (SMP) delivered a big first quarter earnings beat in early May thanks in large part to a significant increase in its gross profit margin. This prompted analysts to revise their estimates significantly higher for both 2013 and 2014, sending the stock to a Zacks Rank #1 (Strong Buy).
Despite strong earnings momentum and solid growth potential, shares of Standard Motor trade at a very reasonable 14x forward earnings.
Standard Motor Products manufactures replacement parts for motor vehicles in the automotive aftermarket industry, with an increasing focus on the original equipment and original equipment service markets. The company is organized into two major operating segments: Engine Management and Temperature Control. It has a market cap of $791 million.
Standard Motor Products delivered better than expected first quarter results on May 3. Earnings per share came in at 42 cents, crushing the Zacks Consensus Estimate of 32 cents. It was a whopping 83% increase over the same quarter last year.
Bear of the Day:
Sotheby's (BID) - Snapshot Report) delivered a big Q1 miss in May that prompted analysts to revise their estimates significantly lower for both 2013 and 2014. It is a Zacks Rank #5 (Strong Sell) stock.
With shares trading at a premium to their historical medians on both a forward P/E and a price/sales basis, investors should consider waiting to bid on this stock until its earnings momentum turns around.
Sotheby's is one of the largest global auctioneers of fine art, decorative art, and jewelry. It operates under three segments: Auction, Finance, and Dealer. Through its predecessors, Sotheby's has been in the auction business since 1744 and is the oldest company listed on the New York Stock Exchange.
First Quarter Results
Sotheby's delivered disappointing first quarter results on May 9. Earnings per share came in at a loss of 33 cents, well below the Zacks Consensus Estimate of -12 cents, and well below a loss of -16 cents in the same quarter last year. The first quarter has historically been slow for Sotheby's due to the seasonal nature of the art auction market.
Latest Posts on the Zacks Analyst Blog:
Oracle Pens Deal with Dell
Dell Inc. (DELL) has entered into a strategic alliance with Oracle Corporation (ORCL). The two are teaming up to introduce a new x86 infrastructure, which will help customers of both companies.
The solution will combine Oracle’s software with Dell’s hardware, which will enable organizations to manage applications faster and also to improve the performance, flexibility and efficiency of the system.
Through this partnership with Oracle, Dell is trying to simplify its IT infrastructure and reduce the integration costs of delivering its hardware and software as a bundle. Offering a combination of Dell and Oracle x86 infrastructure support functions will provide a single point of contact for customers.
Although Dell is making an attempt to work its way up by going into collaborations and securing deals, the company is faced with the same PC market concerns that have struck its peers. Dell’s over-dependence on the segment (still around 70% of revenue) has been a matter of concern for long and is likely one of the reasons it was driven to go private.
Senior management of the company is of the opinion that Dell is facing its biggest challenge in the Consumer and Notebook segments. Revenues from the Consumer Business declined by 20.0% in the first quarter of 2014, which is a substantial fall compared with the other segments.
The company has to adopt innovative strategies, and explore other businesses to reduce its over-dependence on PCs. The collaboration with Oracle is one of the strategies that the company is adopting.
In spite of all the strategies, the headwinds faced by the company make us apprehensive about its future. In the past year, the company has had its share of challenges in the form of tough competition from Hewlett-Packard (HPQ), as well as a restricted spending environment which hurt revenues.
However, we expect new deal wins and privatization to help the company.
Dell Inc. has a Zacks Rank #5 (Strong Sell).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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