The Zacks Analyst Blog Highlights: Plains Exploration & Production, DISH Network, DIRECTV, Netflix and Amazon.com
CHICAGO, Feb. 20, 2013 /PRNewswire via COMTEX/ --
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 Plains Exploration & Production Company (NYSE:PXP), DISH Network Corp. (Nasdaq:DISH), DIRECTV (Nasdaq:DTV), Netflix Inc. (Nasdaq:NFLX) and Amazon.com Inc. (Nasdaq:AMZN)
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Here are highlights from Tuesday's Analyst Blog:
Plains Exploration: Will It Beat
Plains Exploration & Production Company (NYSE:PXP) is set to report its fourth-quarter results on Feb 21, 2013. Last quarter, the company's reported earnings were in line with the Zacks Consensus Estimate. Let's see how things are shaping up prior to this announcement.
Factors to Consider This Quarter
The year 2012 was volatile for the oil industry as the oil companies continued to face challenges from the rising utilization of alternate energy for power generation, higher competition from natural gas producers, production curtailment in the manufacturing sector and compliance with rising government rules, which increased operating costs. Like other oil producers, Plains Exploration & Production is experiencing a similar situation.
Plains Exploration & Production manages its commodity price risk by hedging production. This may, however, prevent the company from realizing maximum prices if the market price rises above the current hedged prices. Derivative contracts also expose it to financial losses, if there is a delay in production or a failure on the part of the counterparty to satisfy its obligations.
However, we are optimistic about the company's strong balance sheet and liquidity position, asset rebalancing strategy, and development of onshore assets in several locations, which may boost margins.
Our proven model does not conclusively show that Plains Exploration & Production is likely to beat earnings this quarter. That is because a stock needs to have both a positive Expected Surprise Prediction or ESP (Read:Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.Negative Zacks ESP:
This is because the Most Accurate estimate stands at 53 cents, while the Zacks Consensus Estimate is pegged at 48 cents. This comes to a difference of -9.43%.
Zacks Rank #3 (Hold): Plains Exploration & Production with Zacks Rank #3 (Hold), enhances the possibility of an earnings surprise. However, the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We also caution against stocks with Zacks Ranks #4 and 5 (Sell rated stocks) going into the earnings announcement, especially when the company is experiencing negative estimate revisions momentum.
DISH to Close More Blockbuster Stores
DISH Network Corp. (Nasdaq:DISH), the second largest satellite TV operator in the U.S. after DIRECTV (Nasdaq:DTV), plans to shut down another 129 Blockbuster stores in the U.K., thereby taking a pretax charge of $46 million on the latter's assets.
Few days back, DISH Network planned to close down 300 of its 830 stores. So, winding up another 129 stores will bring the total number of Blockbuster stores in the country to 401.
The stores, which will be closed in the coming weeks are either underperforming or almost on the verge of their lease terms. Consequently, the move will help DISH Network to improve its operating margin going forward. However, the company did not disclose the store locations that will be shutting down its operations.
Dish Network continues to lose subscribers as they faced stiff competition from online movie distribution companies like Netflix Inc. (Nasdaq:NFLX), Amazon.com Inc. (Nasdaq:AMZN) and Hulu. Therefore, to counter such challenges, the company bought Blockbuster Inc. out of bankruptcy on Apr 26, 2011, for $320 million. The acquisition has not only helped the company to set a new revenue platform but at the same time has also enabled Dish Network to expand its huge collection of movies.
When Dish acquired Blockbuster, the video rental company had about 1700 stores across the US. But ever since its takeover, the company has been facing intense competition from other video streaming companies providing cheaper movie download options and was forced to close down 500 stores last year.
During the last nine months, Blockbuster contributed $817 million revenue, which is just 7.7% of the total revenue generated by DISH Network over the given period. Moreover, revenue contribution from Blockbuster continued to decline over the last three quarters without any improvement.
A continuous loss of subscribers has forced DISH Network to keep its mounting programming costs under control rather than passing it over to its subscribers. So, the best possible option for the company is to trim down unprofitable businesses in order to control cost.
Currently, DISH Network carries a Zacks Rank #3 (Hold).
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