CHICAGO, Nov. 29, 2013 /PRNewswire/ -- Zacks Equity Research highlights ATK (NYSE:ATK-Free Report) as the Bull of the Day and EnPro Industries (NYSE:NPO-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onthe Men's Wearhouse Inc. (NYSE:MW-Free Report), Jos. A. Bank Clothiers Inc. (Nasdaq:JOSB-Free Report) and Hanesbrands Inc. (NYSE:HBI-Free Report).
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Here is a synopsis of all five stocks:
ATK (NYSE:ATK-Free Report) recently delivered its 11th straight positive earnings surprise on solid revenue growth and expanding profit margins. Management also raised its full year sales and earnings guidance after the latest beat, prompting analysts to revise their estimates significantly higher for both 2014 and 2015.
It is a Zacks Rank #1 (Strong Buy) stock.
While shares of ATK have been soaring this year, the valuation picture still looks very reasonable with shares trading in-line with their historical median on a forward P/E basis.
Alliant Techsystems, or ATK, manufactures and sells a number of products to the aerospace and defense, and civilian markets including solid rocket propulsion, military and civilian ammunition, commercial firearms, composites, space structures, and precision weapons. In 2013, approximately 2/3rds of its sales came from the U.S. Government.
ATK reported better-than-expected results for the second quarter of its fiscal year 2014 on November 7. Adjusted earnings per share came in at $2.82, well above the Zacks Consensus Estimate of $2.42. It was a stellar 50% increase over the same quarter last year.
Revenue rose 7% to $1.14 billion, ahead of the consensus of $1.12 billion. The increase was largely driven by acquisitions, but organic revenues were up 1%. The 'Sporting Group' segment saw top-line growth of 48%, including 28% organically, as the demand for ammunition remained strong. The was partially offset by a sales decline in the 'Defense Group,' however.
EnPro Industries (NYSE:NPO-Free Report) recently delivered disappointing third quarter results as sales and profit margins declined meaningfully.
Analysts revised their estimates significantly lower for both 2013 and 2014, sending the stock to a Zacks Rank #5 (Strong Sell).
With shares trading well above their historical median on both a price/earnings and price/book basis, investors should consider avoiding this stock until its earnings momentum improves.
EnPro Industries provides engineered industrial products for the processing and general manufacturing industries worldwide. It operates in three segments:
- Sealing Products (54% of sales)
- Engineered Products (31%), and
- Engine Products & Services (15%)
EnPro Industries reported disappointing third quarter results on November 1. Adjusted earnings per share came in at 53 cents, well below the Zacks Consensus Estimate of 78 cents. It was a 35% decline from the same quarter last year.
Sales fell 5% to $276.0 million, missing the consensus of $293.0 million. The decline was driven in large part by weakness in the 'Engine Products & Services' segment, which saw sales plunge 34%. This was primarily due to lower demand for parts and service from U.S. government markets. Sales were down 3% in the 'Engineered Products' segment but rose 4% in the 'Sealing Products' segment.
Additional content:
Mens Wearhouse Turns Table on JOSB
The tug of war between men's specialty retailer, The Men's Wearhouse Inc. (NYSE:MW-Free Report), and rival men's clothier, Jos. A. Bank Clothiers Inc. (Nasdaq:JOSB-Free Report), has started again, but with a twist. This time, Jos. A. Bank is at the receiving end, as Men's Wearhouse has initiated a takeover bid to acquire all shares of the former.
Men's Wearhouse has communicated an all cash transaction, wherein it will acquire the shares of Jos. A. Bank for $55 per share or a total of $1.2 billion. The company decided to buy its suitor after meticulous evaluation by its board on various options that would offer value to its shareholders.
Men's Wearhouse believes that the bid offers ample premium as well as instant liquidity to Jos. A. Bank shareholders. The bid represents a 32% premium over Jos. A. Bank's closing price on the day prior to the announcement of Jos. A. Bank's proposal to buy Men's Wearhouse (Oct 8, 2013). Moreover, it implies a 45% premium to the target's enterprise value and a 9.1x enterprise value to the trailing 12-month adjusted EBITDA multiple.
In all, Men's Wearhouse's acquisition bid reveals a significant premium to Jos. A. Bank's proposal to purchase the former.
Jos. A. Bank had proposed to buy Men's Wearhouse in an all-cash transaction, valued at $48 per share or a total of $2.3 billion. The bid offered a 42% premium to the latter's closing share price at the time of the proposal as well as a premium to the highest traded price of Men's Wearhouse in the last five years.
Men's Wearhouse expects the merger to be largely accretive to its earnings within a year of closing the transaction, while the combined company will gain from having a sturdy balance sheet and operational flexibility to achieve its strategic goals. The combination is expected to create a behemoth in men's wear retailing, providing a superior scale of operation and enhanced product offerings along with improved shareholder value.
Confirming Men's Wearhouse's proposal, Jos. A. Bank stated that its board is reviewing the bid and will respond in due course.
Jos. A. Bank is a much smaller company, while Men's Wearhouse is a market leader in the men's clothing business. Men's Wearhouse reported annual sales of about $2.48 billion in the recently concluded fiscal year, more than double of Jos. A. Bank's annual sales of $1.05 billion.
Men's Wearhouse believes it is in the best position to acquire Jos. A. Bank, given its larger scale, long history of efficient capital management and a track record of successful acquisition and integration. It has successfully integrated 600 stores and over 7,000 employees from its earlier acquisitions of Joseph Abboud, After Hours and Moores.
Men's Wearhouse expects effortless integration as Jos. A. Bank stores will operate under its name, absent any major rebranding or remodeling. Management of the new company will consist of the most competent members from both companies, while adopting the best practices of both the groups to attain operational and financial synergies.
Both Men's Wearhouse and Jos. A. Bank currently carry a Zacks Rank #3 (Hold). Better-ranked stocks among the retailers include Hanesbrands Inc. (NYSE:HBI-Free Report).
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