Zacks Analyst Blog Highlights: Phase Forward, Inc., Pepsi Bottling Group Inc., AT&T Inc., Dillard's Inc. and Einstein Noah Restaurant Group Inc.
2008-12-02 12:04:02 -
Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Phase Forward, Inc. (NASDAQ: PFWD), Pepsi Bottling Group Inc. (NYSE: PBG), AT&T Inc. (NYSE: T), Dillard's Inc. (NYSE: DDS) and Einstein Noah Restaurant Group Inc. (NASDAQ: BAGL).
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Here are highlights from Monday"s Analyst Blog:
Phase Forward Leading the Way
Phase Forward, Inc. (NASDAQ: PFWD) provides the software and services to assist clients in improving the efficiency of their clinical trials. The company offers a suite of applications: InForm, Clintrial and Clintrace.
PFWD earlier reported Q3 revenue of $43.2 million, up 23% from a year ago and up 5.1% quarter over quarter. Gross margin came in at 58.9%, up from 57.9% in the previous quarter. Operating margin came in at 17.2%, up from 15.7% in the prior quarter.
Pepsi Bottling with Plenty of Fizz
Pepsi Bottling Group Inc. (NYSE: PBG) continues to execute well in a difficult soft drink environment. The lackluster CSD [carbonated soft drink] environment in North America is being addressed with a robust pipeline of new products and new initiatives in the refreshment and hydration categories. Management"s execution of business strategies has been superior to that of other major bottlers.
Nevertheless, net revenue per case in the U.S. has been strong, growing in the mid single-digit range due to a positive pricing environment. Significant upside potential in Pepsi Bottling Group"s stock is expected when CSD volumes strengthen.
AT&T Remaining on Hold
AT&T Inc. (NYSE: T) is the largest integrated wireless and wireline telecom company in North America. We positively view the company's acquisition initiatives (including Dobson and Centennial) as opportunity for expanding its subscriber base and coverage zones, especially as the U.S. subscriber population reaches saturation.
We also believe that AT&T's focus on convenience to consumers in the form of bundled services (wireless, Internet, video, voice) protects markets more effectively from new entrant, such as cable operators. Significant cost savings and operational efficiencies continue with the merged entities, which are expected to bolster free cash flow and increase dividends moving forward.
Dillard's Holiday Outlook Neutral
Dillard's Inc. (NYSE: DDS), headquartered in Little Rock, Arkansas is a large departmental store chain, featuring fashion apparel and home furnishings. The company reported net sales of $1.508 billion and a net loss of $0.64 per share in the third quarter, both of which were below our estimates. These results indicate that the company's business trends are getting weaker. We are estimating further declines over the next few years.
While the Dillard"s is making some necessary moves to improve its business (cutting operating costs, closing underperforming stores, and reducing capital expenditures), those efforts won"t bear fruit until the macro conditions begin to stabilize. Unfortunately, conditions are not improving and appear to be worsening in the near term. We maintain our Hold rating.
Einstein Noah Concerns Overdone
Einstein Noah Restaurant Group Inc. (NASDAQ: BAGL), based in Lakewood, Colorado, is suffering the effects of constrained consumer spending, reporting its first quarter of negative comps in four years. We expect comps [comparable store sales] to remain negative and weigh on earnings into the second half of 2009 or longer, depending on the economy.
Longer term, however, we think Einstein Noah is positioned to increase EPS at low-teens CAGR [compound annual growth rate] over the next several years, while boosting ROIC [return on invested capital] from mid-single digits, through 2.5% to 3.5% +comps and 10% unit growth, heavily weighted towards franchises. The company has culled under-performing units from its system roughly 45% of the system and a more profitable unit base remains.
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