Citgroup’s Timothy Thein and Andrew Jaskowiak went looking for reasons to get excited about Neutral-rated Caterpillar (CAT) but found them wanting:
We met with members ofCaterpillar senior management, including Brad Halverson (CFO), Mike Dewalt from Finance Services and Amy Campbell from IR. In addition, we recently checked-in with several of our North AmericanCaterpillar dealer, and Solar, contacts. As usual, there were some modest incremental pluses and minuses, but nothing in aggregate that leads us to change our view on the stock, or current estimates. With global growth projected to remain in the ~2.5% range (at current F/X rates) through 2017, and overall commodity profits under pressure, it is difficult to identify catalysts to drive EPS out of the $3.50-$4/share range. With the stock within ~5% of our $75 price target (or ~20x our 2016 EPS est), we maintain our Neutral rating…
Top 5 Services Stocks For 2016: International Game Technology(IGT)
International Game Technology PLC operates and provides a range of services and technology products across lotteries, machine gaming, sports betting, and interactive gaming markets in North America, Asia, and Europe. It provides online lottery transaction processing systems; a suite of lottery-enabled point-of-sale terminals; supplies instant ticket games; and provides printing services, instant ticket marketing plans, graphic design, programming, production, packaging, and shipping and delivery services. The company also provides video lottery terminals (VLT), VLT central systems, and VLT games to government customers; video and traditional mechanical reel slot machines and casino systems to casino operators; and amusement with prize machines and games to licensed operators, as well as designs, develops, manufactures, and provides cabinets, games, systems, and software. In addition, it is involved in the provision of sports b etting platform that offers betting on sporting events, motor sports, and non-sporting events, such as entertainment, music, culture, and current affairs; transaction processing of commercial transactions, such as prepaid cellular telephone recharges, prepaid mobile data, prepaid electricity and other utility bill payments, credit card transactions, social security contributions and payments, and prepaid cards; and collection, processing, and network services on behalf of third parties, as well as in the issuing of electronic money through immediate conversion of funds. Further, the company provides interactive games, such as poker, casino games, bingo, iLottery, sports betting, horseracing, and skill-based games. The company was formerly known as GTECH S.p.A. and changed its name to International Game Technology PLC in April 2015. The company was incorporated in 2014 and is headquartered in London, the United Kingdom.
- [By Michael Flannelly]
Analysts at Sterne Agee noted on Monday that International Game Technology’s (IGT) fiscal 2014 growth is stronger than it appears. As such, the analysts raised the price target on the casino gaming equipment manufacturer.
The analysts maintain a “Buy” rating on IGT and now see shares reaching $25, up from the previous target of $23. This new price target suggests a 23% upside to the stock’s Friday closing price of $20.32.
“Excluding FY13 Canadian VLT sales, which do not recur in FY14, consensus FY14 EPS growth is ~14% versus ‘in-print’ consensus EPS growth of ~4%,” Sterne Agee analyst David Bain said. “We believe IGT’s peer-low stock valuation is partly driven by a misinterpretation of forward growth using ‘in-print’ FY14 EPS projections.”
Futhermore, the firm raised IGT’s fourth quarter EPS estimates from 33 cents to 34 cents.
IGT shares were inactive during pre-market trading on Monday. The stock is up 43.4% year-to-date.
Top 5 Services Stocks For 2016: New York & Company Inc.(NWY)
New York & Company, Inc., together with its subsidiaries, operates as a specialty retailer of women’s fashion apparel and accessories in the United States. The company offers a range of wear-to-work, and casual apparel and accessories, including pants, jackets, knit tops, blouses, sweaters, denim, T-shirts, activewear, handbags, and jewelry. It sells its products under the New York & Company, Lerner, Lerner New York, New York Style, City Stretch, City Style, and NY&C brand names. The company sells its branded merchandise through its network of retail stores and E-commerce store at nyandcompany.com. As of March 15, 2012, it operated 532 stores in 43 states. The company, formerly known as NY & Co. Group, Inc., was founded in 1918 and is headquartered in New York, New York.
- [By Lisa Levin]
Shares of New York & Company, Inc. (NYSE: NWY) got a boost, shooting up 13 percent to $2.31 as the company posted upbeat quarterly results.
The GEO Group Inc (NYSE: GEO) shares were also up, gaining 19 percent to $23.27. Following Thursday’s Department of Justice news regarding privately-managed prisons, GEO Group dropped on Thursday, but rebounded Friday after issuing a response to the DoJ.
- [By Monica Gerson]
New York & Company, Inc. (NYSE: NWY) shares dropped 42 percent to $1.72 after the company reported downbeat Q1 results and issued a weak Q2 forecast.
Top 5 Consumer Service Companies To Watch In Right Now: Francesca's Holdings Corporation(FRAN)
Francesca’s Holdings Corporation, through its subsidiaries, operates a chain of retail boutiques. It offers fashion apparel, jewelry, accessories, and gifts primarily for women between the ages of 18 and 35. The companys apparel products comprise dresses, fashion tops, sweaters, cardigans and wraps, bottoms, outerwear and jackets, tees and tanks, and intimates; and jewelry includes necklaces, earrings, bracelets, and rings. Its accessories consist of handbags, clutches, wallets, shoes, belts, hats, scarves, sunglasses, watches, and hair accessories; and gifts include fragrances, candles, bath and body, home accessories, books, wall art, nail polish, and miscellaneous items. As of March 23, 2016, the company operated 626 boutiques in 48 states and the District of Columbia. The company also sells its products through its Website at francescas.com. Francesca’s Holdings Corporation was founded in 1999 and is headquartered in Hou ston, Texas.
- [By Ben Levisohn]
Francesca’s Holdings (FRAN) has jumped 5.4% to $11.00 after beating earnings forecasts.
Restoration Hardware (RH) has tumbled 20% to $28.92 after slashing its full-year guidance. Restoration Hardware was also cut to Market Perform from Outperform at Telsey Advisory Group.
Top 5 Services Stocks For 2016: Starz(STRZA)
Starz, through its subsidiaries, operates as a media and entertainment company. It operates through Starz Networks, Starz Distribution, and Starz Animation segments. The Starz Networks segment provides premium subscription video programming to U.S. multichannel video programming distributors (MVPDs), including cable operators, satellite television providers, and telecommunications companies. Its networks include Starz and Encore, which air film content, as well as original series and specials without advertisements; and MoviePlex that offers various art house, independent films, and classic movie library content. This segment also provides online access to the content that air on their linear networks through STARZ PLAY, ENCORE PLAY, and MOVIEPLEX PLAY. The Starz Distribution segment sells or rents DVDs under the ANCHOR BAY brand; and acquires and licenses various titles from third parties and also develops and produces certai n of its content. This segment also distributes content on pay-per-view, video-on-demand, subscription video-on-demand, electronic sell-through, and other digital formats to MVPDs, online/mobile distributors, game developers/publishers, and consumer electronics companies; and distributes movies, television series, documentaries, childrens programming, and other video content. The Starz Animation segment develops and produces two-dimensional animated content for various third party entertainment companies. Starz was incorporated in 2007 and is headquartered in Englewood, Colorado.
- [By Ben Levisohn]
Starz (STRZA) has jumped 14% to$32.16 after agreeing to be purchased by Lions Gate Entertainment (LGF) in a deal that values Starz at about $4.4 billion. Lions Gate has climbed 9.4% to $22.90.
Top 5 Services Stocks For 2016: Kohl’s Corporation(KSS)
Kohl?s Corporation operates department stores in the United States. The company?s stores offer private and exclusive, as well as national branded apparel, footwear, and accessories for women, men, and children; soft home products, such as sheets and pillows; and housewares primarily to middle-income customers. As of January 29, 2011, it operated 1,089 stores in 49 states. The company also offers on-line shopping on its Web site at Kohls.com. Kohl?s Corporation was founded in 1962 and is headquartered in Menomonee Falls, Wisconsin.
- [By Ben Levisohn]
Credit Suisse analysts Michael Exstein and Anjani Vedula call Kohl’s (KSS) the “canary in the coal mine” for mall retailers. They explain why:
Rarely does a sector see a secular shift as dramatic as the one now occurring in retail in general and the mall anchors specifically. After last year’s poor operating and stock performance, many retail investors are now expecting a significant cyclical recovery in margins. However, we do not think this is a realistic expectation because mall anchors’ expense structures have fundamentally changed for two reasons: 1) sales mix has shifted towards the lower margin e-commerce channel; 2) brick & mortar operating margins are increasingly pressured (on both an absolute dollar basis as well as % of sales basis), leading to lower operating margins in aggregate.
Using Kohl’s 10-K disclosure to illustrate this shift. We illustrate this secular shift in mall anchors’ expense structures by modelling the breakout in operating income for Kohl’s brick & mortar business (B&M) versus their e-commerce business. Kohl’s gives more details on the shift in SG&A than its peers, making it easier to illustrate the pressures the industry is under. In fact, in spite of the pressures, Kohl’s has maintained relatively constant sales as well as gross margins, no small feat considering they are absorbing shipping & handling charges associated with e-commerce. In effect, we are using Kohl’s as the “canary in the coal mine”, as a preview of a larger secular issue facing the mall anchor sector…
While all retailers with an e-commerce business are exposed to these secular changes to some degree, those with a higher e-commerce penetration are more exposed, sooner. On the brick & mortar operations side, those retailers with the lowest wage rates are likely to be most impact by the essentially industry-wide wage increases brought on b