CHICAGO, March 18, 2014 /PRNewswire/ --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 the Adobe Systems Inc. (Nasdaq:ADBE-Free Report), Emerge Energy Services LP (NYSE:EMES-Free Report), Ring Energy, Inc. (AMEX:REI-Free Report), Chesapeake Granite Wash Trust (NYSE:CHKR-Free Report) and Kroger Company (NYSE:KR-Free Report).
Today, Zacks is promoting its 'Buy' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday's Analyst Blog:
Is Adobe (ADBE) Expected to Disappoint?
Adobe Systems Inc. (Nasdaq:ADBE-Free Report) is set to report first-quarter 2014 results on Mar 18. Last quarter, it posted 5.3% negative surprise. Let's see how things are shaping up for this announcement.
Growth Factors This Past Quarter
Adobe's fourth-quarter earnings of 18 cents exceeded the Zacks Consensus Estimate by a penny due to solid cost management and higher revenues. Revenues were up sequentially and at the higher end of management's guidance range due to the accelerated adoption of creative cloud subscription pricing model.
Margin expansion was limited due to the change in sales mix, which favored lower-margin products.
For the second quarter, management expects revenues in the range of $950 million to $1.0 billion, down 6.7% sequentially at the mid-point. Adobe expects non-GAAP earnings per share in the range of 22-28 cents, well above the Zacks Consensus Estimate of 12 cents.
Earnings Whispers?
Our proven model does not conclusively show that Adobe will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 12 cents. Hence, the difference is 0.00%.
Zacks Rank: Adobe's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
You could consider other stocks with a positive earnings ESP and a Zacks Rank #1, 2 or 3 such as:
Emerge Energy Services LP (NYSE:EMES-Free Report), with Earnings ESP of +8.96% and a Zacks Rank #1.
Ring Energy, Inc. (AMEX:REI-Free Report), with Earnings ESP of +50.00% and a Zacks Rank #2 (Buy).
ChesapeakeGranite Wash Trust (NYSE:CHKR-Free Report), with Earnings ESP of +6.45% and a Zacks Rank #2.
Kroger Enhances Shareholder Value
The Kroger Company (NYSE:KR-Free Report), one of the largest grocery retailers, recently announced a new share buyback program, along with declaring its quarterly dividend.
Under the new share repurchase program, which replaced the existing authorization, Kroger's board approved buyback worth $1 billion. The earlier program has nearly $2 million worth of shares remaining to be repurchased.
Along with this, Kroger announced a quarterly dividend of 16.5 cents per share, payable on Jun 1, 2014 to shareholders of record on May 15, 2014.
Kroger is an asset for yield-seeking investors. The company is actively managing its capital, returning much of its free cash to shareholders via share buybacks and dividends, apart from deploying cash flows in opening stores and entry into new markets. The company has paid $928 million to shareholders through share repurchases and dividends in the last four quarters. Since Jan 2000, the company has returned about $10 billion to stakeholders via share buyback program.
Recently, Kroger posted fourth-quarter fiscal 2013 earnings of 78 cents a share that surpassed the Zacks Consensus Estimate of 73 cents, aided by its Customer 1st strategy. However, quarterly earnings fell 11% from 88 cents earned in the prior-year quarter. Additionally, total sales (including fuel center sales) decreased 4% year-over-year to $23,222 million and also fell short of the Zacks Consensus Estimate of $23,280 million.
Going forward, we believe that a predominant position among the nation's largest grocery retailers enables Kroger to sustain growth, expand store base and increase market share. It also remains well positioned to deliver higher earnings, primarily through strong super market sales growth.
Currently, Kroger's shares have a Zacks Rank #2 (Buy).
Today, Zacks is promoting its 'Buy' stock recommendations. Get #1Stock of the Day pick for free.
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