Shares of the company are a shade under 11% thus far on Thursday.
EL effectively managed its business through diverse economic challenges, especially in the U.S., by building on the strength of its brand portfolio, according to the company.
For the fiscal year, net sales were up 12% while net earnings per common share advanced 11%.
The beauty and skin care products company is a Zacks #3 Rank. Earnings estimates for this fiscal year, ending in June 2009, have been rather steady for several months, but these solid performances could convince some of the 13 covering analysts to lift expectations.
PALM Wavers Under Competition
Palm, Inc.?s (PALM) much anticipated launch of its next generation Treo, the 800w, gives it a more competitive offering at the high-end of the smartphone market.
The Centro also continues to gain traction, surpassing two million units in July. However, we believe the lack of a competitive offering has hurt Palm?s position and it will be very difficult for it to regain lost ground in the business market and the iPhone will pose problems for the Centro in the consumer market.
Risks from competitive releases continue to grow, highlighted by Apple?s (AAPL) decision to offer a $199 iPhone and numerous product releases by Research In Motion (RIMM), such as the Pearl, Curve, and Bold. Although Palm is having success with its Centro, the low price has taken a bite out of revenue and margins.
We, therefore, maintain our Sell rating on PALM shares with a six-month price target of $4.00. Although the stock could get a pop from new product offerings, we don?t expect sustained improvement in results. Over the long-term, we expect Palm to struggle as it competes against much larger competitors that are able to innovate faster and launch more attractive products.
GameStop Buy Rec Reiterated
We think that GameStop Corp. (GME) has numerous competitive advantages that will enable the video game retailer to deliver strong growth for the next several years. Most investors underestimate the company?s used video game business, which produces strong sales with higher profit margins than new video game sales.
Unlike most other areas of retail, video game sales remain strong. According the NPD Group, total US video game sales were $1.69 billion, up 53 percent from June 2007. For the first six months of 2008, total video game sales were up 36 percent year-over-year and up 46 percent in the May/June period.
As a result, we expect another strong quarter from GameStop, and we are increasing our estimates. We are taking our 2008 EPS estimate from $2.40 to $2.42 and our 2009 EPS estimate from $2.98 to $3.01. We expect robust video game sales throughout 2009, and GameStop will continue to benefit from these strong industry trends.
GME shares are trading at 18.7x our 2008 EPS and 15.0x 2009 EPS estimate. We think GameStop?s industry-leading footprint, expertise in the used video game market, and the strength of the current video game cycle make GME shares a solid long-term holding. We also think the company?s robust growth justifies its premium multiple. We reiterate our Buy rating and our six-month target price of $60, which is 20x our 2009 EPS estimate.
Kinross Gold Sees Big Overheads
In 2008 second quarter, Kinross Gold Corp.?s (KGC) net earnings of $0.09 per diluted share remained flat compared to $0.08 per diluted share in the same period last year. Revenue was up 3% year over year to $298.7 million. Gold production was 406,032 equivalent ounces versus 439,783 ounces last year. The year-over-year decrease in production was primarily due to the asset swap transaction with Goldcorp, as well as the impact of lower grades mined at Fort Knox, Round Mountain, and La Coipa.
Higher gold prices bode well for Kinross? topline growth. KGC has received approval for a huge investment in the Paracatu mine expansion, which is expected to start production in September. The various exploration and expansion activities undertaken will enhance production levels. The Bema acquisition will result in various synergies. Steady improvements in the leaching process and rising mill throughput are driving results at the Round Mountain facility. At the Maricunga mine, we believe enhanced capacity will boost production volume.
The company?s production is expected to go up to 1.8-1.9 million ounces of gold in 2008 and to 2.4-2.5 million gold equivalent ounces in 2009 driven by increased production from its two new projects Kupol and Buckhorn, apart from Paracatu.
However, declining production levels at some of the existing operations and higher mining, energy, and administrative overhead costs are likely to constrain margin expansion. Consequently, we reiterate our Hold recommendation on shares of KGC, with a six-month target price of $14.50.
Denbury Value Gets Attractive
Denbury Resources, Inc. (DNR) reported better-than-expected second-quarter 2008 recurring earnings of $0.57 per diluted share (our estimate was $0.43 per diluted share), compared to $0.22 per share in the prior-year period.
