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: Burger King (NYSE: BKC), McDonald's (NYSE: MCD), Oi Particpacoes ADR (NYSE: TNE), Brasil Telecom (NYSE: BRP) and Banco Bilbao Vizcaya Argentaria, S.A., or BBVA (NYSE: BBV).
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Here are highlights from Monday’s Analyst Blog:
Burger King Turnaround On Track
Burger King (NYSE: BKC) reported fiscal 2Q09 (ended December 31, 2008) financial results Friday that indicated its turnaround story is still on track, despite the deepening global recession. Although the company's fiscal 2Q09 EPS declined 8.3% year over year to $0.33 -- missing our estimate by $0.05 -- the shortfall was caused by foreign currency translation, and not a reflection of deteriorating core fundamentals. Excluding the $0.05 drag from currency translation, EPS grew 5.6%.
Burger King has opportunities to grow earnings over the next several years by accelerating unit growth, expanding margins closer to those of McDonald's (NYSE: MCD), the category leader, and improving average unit volumes through new product innovations and restaurant remodels.
Brazil's TNE: Surprise Dividend
Last Friday, Oi Particpacoes ADR (NYSE: TNE) was up almost 10% in a remarkable rally. The reason for such a great performance was the announcement of extraordinary dividends of BRL1.2 billion (US$533 million) or US$1.40 per ADR. This amount represents 10.5% of the value of the stock for the closing of last Friday.
The dividend was not expected, and the surprise of the market helps to explain the aggressiveness of the movement. Nevertheless, we have been discussing for quite some time the very low valuation of this ADR and the attractiveness of this stock as both a growth and value play.
Unfortunately, we do not believe that dividends of comparable amounts are to be expected for the short-term anymore. The company is expected to start a new investment program in the very short-term in order to integrate Brasil Telecom (NYSE: BRP) in its network after the recent merger.
Spain's Recession to Hit BBV
We are continuing our Sell rating on Banco Bilbao Vizcaya Argentaria, S.A., or BBVA (NYSE: BBV), and cutting our target price to $9. Our Sell recommendation largely reflects the grim economic outlook in Spain.
The recent collapse in housing and construction, which propelled economic growth for the last decade, is expected to stall for the next few years. Moreover, the IMF recently forecast that Spain will enter a recession in 2009 (its first since 1993) and believes that Spain will be harder hit than other European countries.
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