Chicago, IL – December 16, 2013 – Zacks Equity Research highlights Delta Airlines (DAL–Free Report) as the Bull of the Day and Mobile Mini (MINI–Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the The Coca-Cola Company (KO–Free Report), PepsiCo, Inc. (PEP–Free Report) and Dr Pepper Snapple Group Inc. (DPS–Free Report).
Here is a synopsis of all five stocks:
With a strong consumer, rising business confidence and stable oil prices, it should come as no surprise that the airline sector has been performing extremely well this year. In fact, many companies in this segment have more than tripled the market’s return from a YTD look, with gains in excess of 80% not uncommon.
The surge has been pretty widespread too, with both so-called legacy carriers and discount airlines seeing strong performances. One company in the legacy space that has been especially impressive and a great example of this incredible trend is undoubtedly Delta Airlines (DAL–Free Report).
Delta is, following the merger between American and US Airways, the second biggest airline in the world. The firm is probably most famous for its hub at Hartsfield-Jackson airport in Atlanta, though it has a big presence in Detroit, Minneapolis, and New York City as well.
The stock was cleared for takeoff at the start of 2013, and it really hasn’t looked back besides some minor turbulence in April. DAL has actually more than doubled so far this year, putting up a 130% gain YTD, including a 50% move higher in the past six months alone.
This is obviously a huge move, and especially so for a company in a pretty cutthroat industry, but there is plenty of reason to believe that this can continue as we head into 2014 if you look at the company’s profit and growth outlook for the coming year.
Thanks to the strong industry outlook and the pressure that is currently on oil prices, many analysts are looking for DAL to continue to grow earnings in the months ahead. Current estimates peg this quarter’s earnings growth (yoy) at 121%, while current year growth is expected to be in the high double digits, hitting 70% year-over-year.
Thanks to a pretty healthy construction market, many companies involved in this segment have soared so far in 2013. However, with the high probability of the Fed tapering sooner rather than later and sluggish earnings, some companies have been seeing choppier trading as of late, and could be facing significant headwinds in the months ahead.
A perfect example of this trend is Mobile Mini (MINI–Free Report), a company that provides mobile storage solutions in the U.S., Canada, and parts of Western Europe. MINI is up over 70% so far in 2013, but thanks to a recent earnings miss and a poor outlook for this space, it may be best to move on from this name and focus on others in the broader construction world.
At the last earnings report, MINI reported EPS of 28 cents a share, missing the estimate of 32 cents a share. This follows another miss for MINI, as the firm reported earnings of 25 cents a share compared to a 27 cent/share estimate.
Thanks to this miss and some concerns about the construction market with the likely higher rates, analysts have been reevaluating their position on MINI. Not a single estimate has gone higher in the past quarter for the company, pushing the consensus estimate sharply lower.
Additional content:
Coca-Cola to Restructure American Biz
The Coca-Cola Company (KO–Free Report) recently announced organizational and management changes in its Coca-Cola Americas to speed up refranchising to independent bottling partners. Effective from Jan 1, 2014, the North American business of The Coca-Cola Company will be segregated into a traditional company and bottler operating model.
The North American business will comprise two operating units, Coca-Cola North America (:CCNA) and Coca-Cola Refreshments (:CCR). Coca-Cola North America will be led by J.A.M. Douglas who will head North America Brands, Foodservice, Brand Commercial, Retail Sales, Research Development, Venturing and Emerging Brands, Strategy, Franchise Leadership and Transformation and the Canadian franchise operations.
Coca-Cola Refreshments (:CCR), the bottling operations of North America, will be headed by Paul Mulligan. Coca-Cola Refreshments will be considered as a part of Bottling Investments Group (BIG). Mulligan will lead the operations of CCR Canada, Product Supply Chain and Service, Bottler Commercial, Customer Care and Region Sales.
Changing consumer preferences, increasing health consciousness, rising obesity concerns and growing regulatory pressures have tremendously pressurized the carbonated soft drinks (CSD) category in North America. These category headwinds are thus significantly affecting CSD sales of PepsiCo, Inc. (PEP–Free Report), Coca-Cola and another beverage company, Dr Pepper Snapple Group Inc. (DPS–Free Report). The present changes will further boost the growth of the company.
Last year, the company plans to launch a new beverage partnership model, under which it will grant new expanded U.S. territories to five of its bottlers to distribute its beverages. The agreement is expected to improve the efficiency of the operating territories and overall profits in the U.S. by shifting to a more franchise-based model.
The Coca-Cola Company carries a Zacks Rank #3 (Hold).
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