CHICAGO, Nov. 12, 2013 /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 Costco Wholesale Corporation (Nasdaq:COST-Free Report), Stein Mart Inc. (Nasdaq:SMRT-Free Report), The Gap, Inc. (NYSE:GPS-Free Report), L Brands, Inc. (NYSE:LTD-Free Report) and Xylem Inc. (NYSE:XYL-Free Report).
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Here are highlights from Monday's Analyst Blog:
Costco Posts Healthy Sales
Despite a challenging environment, Costco Wholesale Corporation's (Nasdaq:COST-Free Report) comparable-store sales results for October betters analysts' expectations. The company delivered comparable-store sales (comps) growth of 3%, portraying an increase of 4% at the U.S. and 3% at international locations.
Excluding the effect of gasoline prices and foreign currency fluctuations, Costco's comparable-store sales for October rose 6%, reflecting comparable sales growth of 5% at its U.S. locations and 7% at international outlets.
On the whole, retailers came up with better sales results for the month of October, amid an environment that grappled with a 16-day government shutdown, an uncertain economic recovery and soft job opportunities. Retailers spent more on promotions and came up with lucrative discounts to drive traffic. However, heavy discounts raise concerns about margins.
Apparel retailer, Stein Mart Inc. (Nasdaq:SMRT-Free Report) impressed analysts by posting a 5.4% rise in comps, while The Gap, Inc. (NYSE:GPS-Free Report), witnessed a 4% increase in comps. L Brands, Inc. (NYSE:LTD-Free Report), the specialty retailer of women's intimate and other apparel, beauty and personal care products, reported comps growth of 8% for the month of October.
Coming to Costco, comparable-store sales for the 9-week period increased 3%, buoyed by 4% growth at the U.S. and 1% increase at international locations. Excluding the effect of gasoline prices and foreign currency fluctuations, Costco's comparable-store sales for the period jumped 6%. Comps increased 5% at the U.S. and 6% at international locations.
Total net sales for October rose 6% to $8.15 billion from $7.66 billion in the year-ago period. Costco's net sales for the 9-week period increased 6% to $18.01 billion from $17.00 billion in the year-ago period.
Costco currently operates 642 warehouses, comprising 457 in the United States and Puerto Rico, 86 in Canada, 34 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, 9 in Korea and 3 in Australia. The company plans to open 7 more new warehouses before this calendar year ends.
Currently, Costco carries a Zacks Rank #3 (Hold).
Xylem Upgraded to Outperform
upgraded our recommendation on Xylem Inc. (NYSE:XYL-Free Report) to Outperform from Neutral, anticipating the company's better performance in the broader market going forward.
Why the Upgrade?
Being well positioned in the water solutions industry, Xylem presents strong growth opportunities. The company has also been leveraging on its solid potential for international expansion.
Xylem has been growing inorganically, with acquisitions contributing roughly 2% to the sales in the third quarter of 2013. Management sees further scope for inorganic growth in future, with expected expenditure for acquisitions in 2013 pegged at $200 million.
Strategic contract wins have helped increase the company's market share in the past quarters. In 2013, Xylem won important contracts in Singapore, China, Colombia, United Arab Emirates, Sweden and Beijing. With such diversified and high-value contracts in the pipeline, Xylem is likely to improve its market share and generate higher revenues in the quarters ahead.
Additionally, Xylem's efforts to increase shareholders' wealth have been commendable. In the first nine months of 2013, the company has returned $107.0 million to shareholders via dividends and share repurchases, roughly doubled from $58.0 million a year ago. This August, Xylem was authorized a share buyback program worth $250 million.
Xylem's third quarter 2013 results depict the strength of the company. Earnings per share in the quarter increased 11% year over year to 49 cents. Revenues rose 5% year over year to $965 million on the back of healthy contract wins and acquisitions.
Year-to-date, the company has generated returns of 25.7%. In the last 30 days, the Zacks Consensus Estimate for Xylem has gone up by 14.0% to $1.63 for 2013 and climbed 8.9% to $1.84 for 2014.
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