Message #13 From:
NewsBot Date: March 8, 2007 05:47:00 AM
ABX News Zacks Industry Rank Analysis Highlights: Barrick Gold, Campbell Soup Company, Fresh Del Monte, Heinz and Newmont Mining
CHICAGO--(BUSINESS WIRE)--Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week’s analysis include Barrick Gold (NYSE: ABX), Campbell Soup Company (NYSE: CPB), Fresh Del Monte (NYSE: FDP), Heinz (NYSE: HNZ) and Newmont Mining (NYSE: NEM). To see the Zacks Industry Rank and the trend in earnings estimates revisions for all 208 industry groups, visit http://at.zacks.com/?id=3154.
Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.
Last week, Fresh Del Monte (NYSE: FDP) reported its first positive earnings surprise in seven quarters. The vegetable and fruit producer’s fourth-quarter loss of four cents per share was 25 cents better than analysts had been expecting. Improved performance in the company’s North American and Asian operations helped to boost gross profits and offset a decrease in revenues.
Fresh Del Monte is in the midst of a turnaround, having closed underperforming operations and cutting unprofitable products last year. Brokerage analysts believe the efforts could pay off this year, as is evident by the material revision in their profit projections. The current consensus estimate of 76 cents per share is 23 cents higher than a month ago.
FDP is a Zacks #1 Rank (“strong buy”) stock classified in Agricultural Operations. It should be noted that Fresh Del Monte was the third food company to deliver a positive earnings surprise in recent weeks. Both Heinz (NYSE: HNZ) and Campbell Soup Company (NYSE: CPB) also topped expectations, as I noted last week.
Historically, when stock prices have dropped, gold was seen as a safe haven. Over the past week, however, gold prices have fallen. Part of the reason is that gold prices had been running up prior to last week’s return of volatility. There may have also been concern that the pullback in the Asian markets impacted demand for the precious metal. Last year’s upward run in gold prices was driven in part by strong economic growth in China and India; the recent drop in the equity markets has cut into personal wealth levels. (Though it is hard to quantify what, if any, actual impact this will have on demand for the precious metal.)
Gold producers haven’t helped sentiment either. Barrick Gold (NYSE: ABX) recently missed expectations by a penny with fourth-quarter earnings of 48 cents per share. Quarterly production improved to 2.28 million ounces contributing to full-year production of 8.64 million ounces. The company warned that production levels could be lower in 2007, however. Barrick Gold’s guidance calls for gold production of 8.1 to 8.4 million ounces. Brokerage analysts were quick to cut their forecasts in response, causing the consensus estimate for 2007 profits to drop by a cumulative 21 cents over the past 30 days to $1.54 per share.
Newmont Mining (NYSE: NEM) also tampered expectations for gold production. The company recently guided for 2007 production of 5.2 to 5.6 million equity ounces, versus 5.9 million equity ounces for 2006. The predicted decline is based on expected lower production levels at the company’s Yanacocha (Peru) and Australia mines. Nine of the 12 covering analysts cut their forecasts as a result, causing the consensus estimate to fall by 45 cents to $1.52 cents per share.
Production costs are a factor for both producers as they are encountering lower-grade ore at some of their mines. ABX and NEM are classified in Mining-Gold, a group that contains 18 Zacks #3 Rank (“hold”) stocks.
The interactive Zacks Industry Rank List allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. See the list at http://at.zacks.com/?id=3208.
(a)The Zacks Rank is assigned to companies with earnings estimates made available by brokerage analysts. The Zacks’ database contains earnings estimates for approximately 4400 companies.
About Zacks Industry Rank and the Zacks Rank
Zacks Industry Rank is calculated by averaging the Zacks Rank for all covered companies within a given industry. The Zacks Rank is assigned to approximately 4400 stocks and ranges from #1 (“Strong Buy”) to #5 (“Strong Sell”). Both the Zacks Industry Rank and the Zacks Rank are quantitative indicators designed to cover periods of 1-3 months.
Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +31.8%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 143.6% annually (+4.8% vs. +11.8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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