The Zacks Analyst Blog Highlights: Best Buy, Microsoft, Wal-Mart Stores, Amazon.com and Joy Global

 
For Immediate Release

Chicago, IL – August 28, 2013 – 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 Best Buy Co., Inc. (BBY-Free Report), Microsoft Corporation (MSFT-Free Report), Wal-Mart Stores Inc. (WMT-Free Report), Amazon.com Inc. (AMZN-Free Report) and Joy Global Inc. (JOY-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations.
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Here are highlights from Tuesday’s Analyst Blog:

Best Buy Founder to Offload Shares
 
Richard Schulze, the founder and major shareholder of consumer electronics retailer Best Buy Co., Inc. (BBY-Free Report) plans to offload part of his shares as per the company’s regulatory filing with the Securities and Exchange Commission.

According to the filing, the sale will occur in a pre-arranged manner over a six-month period commencing from Oct 1, 2013. Shares will be divested in the open market at the prevalent market prices.

Schulze holds about 20% stake in Best Buy, which is nearly 70 million shares. However, the number of shares to be sold has not been disclosed yet.  

In the past, Schulze had tried to take over Best Buy in a private buyout deal. However, the deal did not materialize. Later, he became the company’s chairman emeritus (an honorary designation) and appointed two people to the board of directors.

So far, Best Buy has amassed a whopping year-to-date return of nearly 207.4%. Moreover, the stock performance has been bolstered by impressive quarterly results. Best Buy posted second-quarter fiscal 2014 earnings per share of 32 cents that surpassed the Zacks Consensus Estimate and rose 23.1% from the prior-year quarter.

At present, Best Buy is executing a turnaround program that includes a price match policy, a multi-channel strategy, a multi-year cost reduction program and the closing of certain big box stores. In the said quarter, Best Buy succeeded in lowering its costs by $65 million, thereby bringing the total reduction to $390 million out of $725 million targeted from the North American business.

Moreover, the company is leaving no stone unturned in wooing consumers and garnering incremental revenues, as is evident from its strategic initiative of opening "Samsung Experience Shops" within its stores. Taking its initiatives forward, Best Buy entered into a partnership with Microsoft Corporation (MSFT
-Free Report) to open “Windows Store” across its 500 outlets in the U.S. and additional 100 outlets in Canada.

Best Buy also completed the divestment of its 50% stake in Best Buy Europe to Carphone Warehouse Group, the joint venture partner in the same. The move will help this consumer electronic retailer to concentrate more on its U.S. operations, which has been facing stiff competition from industry bellwethers such as Wal-Mart Stores Inc. (WMT
-Free Report) and Amazon.com Inc. (AMZN-Free Report).

Currently, Best Buy caries a Zacks Rank #2 (Buy).

 
Will Joy Global (
JOY) Beat Estimates?
 
Joy Global Inc. (JOY-Free Report) will release its fiscal third quarter 2013 financial results before the market bell on Aug 28, 2013. In the prior quarter, this surface and underground mining equipment manufacturer reported a positive earnings surprise of 11.61%. Joy Global currently has a Zacks Rank #4 (Sell). Let’s see how things are shaping up at Joy Global prior to this announcement.

Factors to Consider This Quarter

The fortunes of mining equipment manufacturers are primarily tied to the development and activities of the miners. Miners are presently taking a very cautious step in developing new mines and are selecting projects which can achieve returns without a material improvement in market demand.

The cut in capital expenditure of the miners has resulted in a nearly 35% decline in original equipment bookings. Moreover, prices and margins of the mining equipment suppliers are under pressure as the commodities are in supply surplus.

A major chunk of Joy Global’s revenue comes from its top 10 customers. In the last fiscal year this group contributed nearly 38% of its total revenue. The loss of any of these customers would affect the top line of the company.  

On the positive side, the global demand for coal is expected to move up due to the addition of nearly 90 gigawatts of coal-based power generation plants in 2013. Miners will have to produce more coal to meet the surge in demand once the stockpiles are cleared. This might benefit mining equipment manufacturers like Joy Global.

Earnings Whispers

Our proven model indicates that Joy Global is likely to miss earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here.

Negative Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at -5.80%.
 
Zacks Rank #4 (Sell): Joy Global’s Zacks Rank #4 further increases the possibility of a negative earnings surprise. 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.
 
 
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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