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The Cooper Companies, FTI Consulting, CarMax, AutoNation andPenske Automotive

^{Published on 2010-12-22 07:11:46 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: The Cooper Companies(NYSE: [ COO ]) as the Bull of the Day and FTI Consulting(NYSE: [ FCN ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on CarMax Inc.(NYSE: [ KMX ]), AutoNation Inc.(NYSE: [ AN ]) andPenske Automotive Group(NYSE: [ PAG ]).

Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].

Here is a synopsis of all five stocks:

[ Bull of the Day ]:

We maintain our Outperform rating on eye-care and surgical products makerThe Cooper Companies(NYSE: [ COO ]). The company's fourth-quarter and fiscal 2010 revenues and earnings both beat the Zacks Consensus Estimates, boosted by healthy growth across the board.

Cooper proves to be a turnaround story based on rationalization of plants, successful product launches and better execution. Also, the industry outlook has improved with an expectation of lower drop-out rates and a higher proportion of sales of value-added lenses. Within the industry, Cooper remains a leader in toric lenses.

The company has strengthened its balance sheet by reducing debt with improved free cash flows. We currently have a target price of $69 per share.

[ Bear of the Day ]:

FTI Consulting's(NYSE: [ FCN ]) third quarter 2010 earnings were below the Zacks Consensus Estimate. The company's corporate/restructuring segment remains a drag on its growth due to softer trend in restructuring activities and a slowdown in new cases.

The company is also experiencing a tepid pace of recovery in the Merger & Acquisition markets. Overall, the near-term visibility remains unclear, as demand environment for practices remains uncertain given the current market volatility and clients cautious aggregate spending.

Going forward, we remain skeptical about the growth prospects of the company. Hence, we maintain an Underperform rating on the stock.

Latest Posts on the Zacks [ Analyst Blog ]:

CarMax Surpasses Zacks Estimates

CarMax Inc.(NYSE: [ KMX ]) posted a profit of $82.4 million or 36 cents per share in the third quarter of its fiscal 2011, barely surpassing the Zacks Consensus Estimate of 34 cents per share. The profit was higher than $74.6 million or 33 cents per share in the prior-year quarter.

CarMaxa™s results were positively driven by a rebound in customer traffic and sales execution along with a favorable year-over-year comparison. This is also reflected by 16% improvement in comparable store sales for the quarter. Net sales and operating revenues in the quarter went up 23% to $2.12 billion, higher than the Zacks Consensus Estimate of $1.97 billion.

Used vehicle sales escalated 20% to $1.69 billion. This can be attributable to continued rebound in customer traffic and an improvement in sales conversion, reflecting better availability of consumer credit.

However, new vehicle sales rose 24.9% to $47.7 million. Wholesale vehicle sales appreciated 41.1% to $320.1 million, driven by increase in appraisal traffic as well as appraisal buy rate.

Other sales and revenues increased by 16.8% to $62.9 million, driven mainly by increases in extended service plan (ESP) revenues. The 31% increase in ESP revenues reflected both the growth in used unit sales and better penetration of ESP.

Gross profit was $297.9 million in the quarter, up 23% from $242.9 million driven by increases in used and wholesale unit sales as well as an improvement in ESP revenues.

Selling, general and administrative were $219.7 million in the quarter compared with $192.1 million in second quarter of fiscal 2010. The 14% increased was attributable to increases in sales commissions and other variable costs associated with the growth in unit sales and higher advertising expense.

Our Take

We appreciate CarMaxa™s focus on the used-car market, which helps it to outperform the industry. The automotive retailer is among the strongest operators in its peer group, which includesAutoNation Inc.(NYSE: [ AN ]) andPenske Automotive Group(NYSE: [ PAG ]).

In the first quarter of fiscal 2011, CarMax resumed its strategy to open new used-car superstores, driven by improved economic and sales environment in the U.S. Under the strategy, the company plans to open used car superstores at an annual rate of 15%a"20%.The company plans to open five stores in 2012; and five to ten stores in 2013.

These, along with the improved results, have led the company to retain Zacks #2 Rank on its stock, which translated to a short-term (1a"3 months) recommendation of Buy.

Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].

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