The reported loss may be attributable to the provision of $360.7 million due to the Chapter 11 bankruptcy of Embraer’s key client American Airlines (“AMR”), which washed out the effect of revenue growth and an improved mix of deliveries.

For fiscal 2011, earnings per ADS were 62 cents per share, down from $1.83 per share earned a year ago.

Revenue

Net revenue in the quarter was $2,025.1 million, up from $1,970.2 million in the year-ago quarter, driven by delivery of 32 commercial and 50 executive aircrafts, with a total delivery of 105 commercial and 99 executive aircrafts (83 light jets and 16 large jets) by the year end. Reported revenue beat the Zacks Consensus Estimate of $1,977 million.

Commercial Aviation revenue accounted for 53.2% of total revenue, Defense and Security Business contributed around 14.5%, Executive Aviation 29.8%, and Others 2.5%.

Embraer's firm order backlog at the end of 2011 totaled $15.4 billion, primarily driven by delivery of commercial and executive aircrafts, slightly down from $16 billion in the sequentially prior quarter.

For fiscal 2011, net revenue at $5,803.0 million rose from $5,364.1 million recorded in the prior year.

Margins

EBIT margin in the quarter was a negative 0.3% compared with gains of 6.7% in the year-ago quarter and 9.1% in the previous quarter. EBITDA in the quarter was recorded at $59.2 million, down from $197.2 million in the year-ago comparable quarter, while EBITDA margin stood at 2.9%, drastically down from 10.0% in the year-ago quarter.

In the fiscal year, gross margin grew to 22.5% from 19.1% a year ago, based on the company’s efforts to improve productivity and efficiency.

Balance Sheet

Despite significant cash generation during the final quarter of the year, the company's net cash position was $445.7 million at the end of 2011, down from $691.8 million, a year ago. Cash and cash equivalents were $1,350.2 million at the end of 2011 compared with $1,393.1 million at 2010 end.

At the end of 2011, the company's total debt decreased to $1,658.1 million from $1,810.6 million in the previous quarter.

Cash Flow

Exiting the fourth quarter, Embraer’s net cash generated from operating activities was $178.7 million, up from $161.1 million in the previous quarter.

Capital spending increased to $76.8 million in the quarter from $65.8 million in the year-ago quarter and $72.8 million in the previous quarter. Free cash flow was recorded at $276.6 million in the reported quarter versus $193.2 million in the year-ago quarter and ($11.9) million in the preceding quarter.

Brazil-based Embraer S.A. designs, manufactures and sells aircraft and aviation-related structural parts to the world’s commercial aviation, executive aviation and defense markets. The company’s product portfolio supporting strong customer orders and a diversified global footprint offer tough competition to peers of the likes of Boeing Co. (BA), Lockheed Martin Corporation (LMT), and Northrop Grumman Corporation (NOC).

We currently maintain a long-term Neutral recommendation on the stock. Embraer has a Zacks # 3 Rank, which translates into a short-term Hold rating (1-3 months).

 
BOEING CO (BA): Free Stock Analysis Report
 
EMBRAER AIR-ADR (ERJ): Free Stock Analysis Report
 
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
 
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

The Dow Jones Industrial Average (DJI) lost 0.5% to settle at 13,170.19. The Standard & Poor 500 (S&P 500) declined 0.3% to finish yesterday’s trading session at 1,405.52. The tech-laden Nasdaq Composite Index edged down 0.1% to close slightly lower at 3,074.15. The fear-gauge CBOE Volatility Index (VIX) gained 3.6% to touch 15.58. Consolidated volumes on the New York Stock Exchange, the Nasdaq and Amex were roughly 6.2 billion shares, lower than this year’s daily average of 6.9 billion shares. For more than two stocks that advanced on the NYSE, only one stock could manage to trade higher.

The benchmarks have only recently recorded multi-year highs. The S&P 500 was the latest achiever, reaching its best closing levels since May 2008 on Monday. Moreover, the S&P 500’s closing level of 1,405.52 on Monday was also its new 52-week high. However, the S&P 500 ultimately snapped its three-day winning streak. Among the 10 industry groups of the S&P 500, the energy and industrial sectors suffered the worst declines.

As for the energy sector, the Energy SPDR Select Sector Fund (XLE) was down 1.5% and stocks including Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Marathon Oil Corporation (NYSE:MRO) and Valero Energy Corporation (NYSE:VLO) dropped 1.5%, 0.5%, 0.6%, 1.9% and 1.8%, respectively. Separately, industrials also received a battering and the Industrial SPDR Select Sector Fund (XLI) was down 1.2%. Industrial stocks including Honeywell International Inc. (NYSE:HON), E.I. du Pont de Nemours (NYSE:DD), Dow Chemical (NYSE:DOW) and 3M Company (NYSE:MMM) were down 1.6%, 1.0%, 0.4% and 0.4%, respectively.

The downfall of the energy and industrial sectors was due to developments in China. For the second time in just over five weeks, China raised its fuel prices. Meanwhile, Saudi Arabia’s promise of fulfilling any shortage in global supply of fuel dragged crude prices lower in New York.

•    Shares of Lions Gate Entertainment (NYSE:LGF) soared 7.2% to $15.30, an all-time high, before the release of its movie, The Hunger Games

•    Shares of Bank of America Corporation (NYSE:BAC) gained 2.9% after it announced that it will not be issuing any further equity in a second offering

•    Tiffany & Company (NYSE:TIF) posted fourth-quarter 2011 earnings of $1.39 per share, missing the Zacks Consensus Estimate of $1.41
 

 
BANK OF AMER CP (BAC): Free Stock Analysis Report
 
EMC CORP -MASS (EMC): Free Stock Analysis Report
 
LIONS GATE ETMT (LGF): Free Stock Analysis Report
 
TIFFANY & CO (TIF): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Operational Update

Total revenues in the reported quarter increased 7.9% year over year to $1.012 billion, beating the Zacks Consensus Estimate of $1.008 billion. Organic growth in the quarter was 5.9%.

Cost of rental uniforms and ancillary products increased 7.8% year over year to $409.9 million and cost of services rose 6.4% to $176.2 million during the quarter. Selling, general and administrative expenses increased 1.9% on a year-over-year basis to $288.4 million.

Operating income for the third quarter also improved 26.3% to $137.5 million. Consequently, operating margin expanded 200 basis points (bps) year over year to 13.6%.

Segment Update

Rental uniforms and ancillary product revenues of $721 million for the quarter increased 8.4% from $665 million in the year-ago quarter. Gross profit increased to $311.1 million in the quarter from $284.8 million in the prior-year quarter. Gross margin increased 30 bps year over year to 43.1%.

Uniform Direct Sales revenues grossed $109.1 million, increasing 6.4% from $102.6 million in the year-ago quarter. Gross profit for the segment was $33.2 million, up from $30.2 in the year ago quarter. Gross margin increased 100 bps year over year to 30.5%.

First Aid, Safety and Fire Protection revenues were $101.4 million, up 11.2% from the year-earlier quarter. Gross profit increased to $43.8 million from the year ago quarter of $37.9 million. Gross margin improved 170 bps year over year to 43.2% in the quarter.

Document Management revenues of $80.6 million for the quarter increased 2% from $79.1 million in the year-ago quarter. Gross profit, however, declined to $37.9 million from the prior-year quarter of $39.1 million. The segment’s gross margin decreased 240 bps year over year to 47%.

Financial Position

Cash and cash equivalents were $217.9 million as of February 29, 2012, decreasing from $438.1 million as of May 31, 2011. Long-term debt was $1.06 billion as of February 29, 2012 compared to $1.28 billion as of May 31, 2011. As of February 29, 2012, the debt-to-capitalization ratio decreased to 36.9% from 37.9% as of November 30, 2011. Cash flow from operations was $307.7 million during the first nine months of fiscal 2012, up from $207.9 million in the year-ago comparable period.

Looking Ahead

Cintas, in fiscal 2012, expects to generate revenues in the band of $4.9 billion to $4.12 billion, up from the previous expectation of $4.075 billion to $4.125 billion. Earnings are now expected in the range of $2.24 to $2.27 versus the prior range of $2.16 to $2.20 per share.

The company expects capital expenditure to be between $160 million and $170 million in fiscal 2012.

Our Take

Cintas performed well in the third quarter of fiscal 2012. The company experienced robust organic growth and improved margin expansion in almost all the segments except Document Management. Lower prices of recycled paper negatively affected the Document Management segment.

Cincinnati, Ohio-based Cintas Corporation designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products, and first aid and safety products for approximately 900,000 businesses. Cintas competes with G&K Services Inc. (GKSR) and privately held Alsco Inc. and ARAMARK Corporation.

Currently, we have an Outperform recommendation on Cintas, which is backed by a short-term Zacks #2 Rank (Buy).

 
CINTAS CORP (CTAS): Free Stock Analysis Report
 
G&K SVCS A (GKSR): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

On the docket for release a little later today is the February Existing Home Sales report, which is expected to show a modest improvement from the previous month’s level. But the housing report is unlikely to prove a major market mover.

The broader context for the market’s recent gains is the steadily improving outlook for the U.S. economy and a less worrisome European picture. China’s growth outlook remains an unknown, but the question has long been debated in the market, and lacks in "surprise" factor. And this broader theme about the U.S. and global economic backdrop remains intact.

In corporate news, Oracle (ORCL) reported better-than-expected results after the close on Tuesday. General Mills (GIS) came modestly short of EPS expectations this morning, as high input costs weighed on margins, offsetting the better-than-expected revenue top-line numbers.

 
GENL MILLS (GIS): Free Stock Analysis Report
 
ORACLE CORP (ORCL): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Today’s trading action will likely lack in conviction, though the downward bias may not be as pronounced as was the case on Tuesday. China related worries were cited as the reason for the modest Tuesday pullback. But the reality is that stocks do pause after making steady gains, as has been the case lately.

On the docket for release a little later today is the February Existing Home sales report, which is expected to show a modest improvement from the previous month’s level. But the housing report is unlikely to prove a major market mover. The broader context for the market’s recent gains is the steadily improving outlook for the U.S. economy and a less worrisome European picture. China’s growth outlook remains an unknown, but the question has long been debated in the market and lacks in surprise factor. And this broader theme about the U.S. and global economic backdrop remains intact.

In corporate news, Oracle (ORCL) reported better than expected results after the close on Tuesday. General Mills (GIS) came modestly short of EPS expectations this morning, as high input costs weighed on margins, offsetting the better than expected revenue top-line numbers.

Sheraz Mian
Director of Research

 
GENL MILLS (GIS): Free Stock Analysis Report
 
ORACLE CORP (ORCL): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Total revenue climbed 11.2% year over year to $102.0 million in the quarter. Within segments, company store revenues grew 11.0% year over year to $68.6 million, Domestic franchise revenue grew 9.3% to $2.4 million and International franchise revenue escalated 22.2% to $6.3 million, driven by higher royalty revenues.

Total KK Supply Chain revenues increased 13.4% to $52.0 million buoyed by a selling price hike in major product categories. KK Supply Chain raised selling prices to counter higher input costs, mainly agricultural commodity.  

Same-store sales at company stores rose 8.3%, reflecting the thirteenth consecutive quarter of comps growth. Domestic franchise same-store sales grew 7.9%, but International franchise same-store sales fell 8.8%. Operating income in the quarter increased to $5.3 million from $0.9 million.

In full-fiscal 2012, adjusted earnings per share were 31 cents as against 11 cents recorded in the prior-year quarter. Total revenue went up 11.4% to $403.2 million.  

Store Update

During the quarter, Krispy Kreme opened 26 franchise stores and 3 company-owned stores and closed 13 franchised stores. At the end of the quarter, the company had 92 company stores and 602 franchise stores.

Financial Position

Krispy Kreme ended fourth quarter 2012 with cash and cash equivalents of $44.3 million and shareholders’ equity of $249.3 million. Long-term debt less current maturities was $25.4 million versus $32.9 million as of January 30, 2011.

Outlook

For 2013, operating income has been guided to a range of $29 million to $33 million inclusive of impairment and lease termination costs.  Earnings are estimated to remain between 21 cents and 24 cents.  On an adjusted basis, management expects 35-41 cents in earnings per share, which includes only income tax. The big difference in both guidance resulted from an increase in the estimated tax rate to 45% from management's earlier estimate of 6-7%. The higher tax rate arises out of the reversal of valuation allowances on deferred tax assets in the fourth quarter of fiscal 2012.

In 2013, the company anticipates opening 5 to 10 company stores, 10 to 15 domestic franchise stores and more than 75 international franchise stores.

Our Take

We heard a clear optimistic tone from Krispy Kreme earnings release regarding its expansion plan, menu planning and an enthusiasm to brew up its beverage line.

Chicago, IL – March 21, 2012 – Zacks.com releases details on a group of stocks that are currently members of the exclusive Zacks #5 Rank List – Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell): Flowers Foods, Inc. ( FLO) and J&J Snack Foods Corp. ( JJSF). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: True Religion Apparel, Inc. (TRLG) and Warnaco Group Inc ( WRC).

To see the full Zacks #5 Rank List – Stocks to Sell Now visit: http://at.zacks.com/?id=92

Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Rank List of Stocks to Sell Now by 80% annually (+2% vs. +10%). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, Zacks told investors which stocks to sell or avoid.    

Here is a synopsis of why FLO and JJSF have a Zacks Rank of #5 (Strong Sell) and should most likely be sold or avoided for the next one to three months. Note that a #5 Strong Sell rating is applied to 5% of all the stocks in the Zacks Rank universe:

Flowers Foods, Inc. ( FLO) announced fourth-quarter profit of 17 cents per share on February 9 that missed analysts’ expectations by 19.05%. The Zacks Consensus Estimate for the current year slid to $1.04 per share from $1.10 per share in the last 60 days as next year’s estimate dipped 4 cents per share to $1.17 per share in that time span.

J&J Snack Foods Corp. ( JJSF) posted a first-quarter profit of 29 cents per share on January 23, which came in 11 cents wider than the average forecast. The Zacks Consensus Estimate for the full year fell to $2.69 per share from $2.85 per share over the past two months. For 2013, analysts expect a profit of $2.85 per share, compared to last two month’s projection for a profit of $3.03 per share.  

Here is a synopsis of why TRLG and WRC have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next one to three months.

Chicago, IL – March 21, 2012 – Four free stock picks are being made available today on Zacks.com. The industry’s leading independent research firm highlights one Zacks #1 Rank Strong Buy or a Zacks #2 Rank Buy stock for each of the four main styles of investing: Aggressive Growth, Growth & Income, Momentum, and Value.

The four highlighted picks are: Procera Networks ( PKT), T. Rowe Price Group, Inc. ( TROW), Pharmerica ( PMC) and Jarden Corporation ( JAH).

Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks are offered free. http://at.zacks.com/?id=88

From 1988 through the present – a period that included serious corrections and recessions – the Zacks #1 Rank Stocks have nearly tripled the market with a fully documented average gain of +28% per year.

Here is a summary of today's selected stocks that are now highly rated by Zacks:          

Aggressive Growth – Procera Networks ( PKT)
Procera Networks is a Zacks #1 Rank (Strong Buy) after making a sustained move into profitability. Strong EPS beats and higher estimates make this stock attractive to aggressive growth investors.

Zacks Guide to Aggressive Growth Investing (free!) – http://at.zacks.com/?id=4309

Growth & Income – T. Rowe Price Group, Inc. ( TROW)
One company that benefits directly from the rising stock market is asset manager T. Rowe Price Group, Inc.

 Zacks Guide to Growth & Income Investing (free!) – http://at.zacks.com/?id=4310

Momentum – Pharmerica ( PMC)
Pharmerica is a Zacks #1 Rank (Strong Buy) after posting six consecutive positive earnings surprises and recent accelerating earnings momentum.

Zacks Guide to Momentum Investing (free!):  http://at.zacks.com/?id=4311

Value – Jarden Corporation ( JAH)
Jarden Corporation reported record fourth quarter sales and earnings but the good times aren't over yet. This Zacks #1 Rank (Strong Buy) is expected to grow earnings by the double digits again in 2012. It also has the distinction of being a value stock, with a forward P/E of just 9.7.

Zacks Guide to Value Investing (free!) –  http://at.zacks.com/?id=4312

How to Regularly Access Top Zacks Rank Picks for Free – http://at.zacks.com/?id=7154

Underlying the four free stock picks is a simple truth that first appeared in a Financial Analysts Journal article published in 1979. Leonard Zacks, a Ph.D. from M.I.T. found that "earnings estimate revisions are the most powerful force impacting stock prices."  Zacks #1 Rank is awarded to a stock when analysts sharply upgrade their estimates of what the company will earn.

Chicago, IL – March 21, 2012 – 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 Citigroup Inc. ( C), HDFC Bank Limited ( HDB), China Unicom ( CHU), Research In Motion Limited (RIMM) and Apple Inc. (AAPL).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

Citi Offloads Shanghai Bank Stake

Citigroup Inc. ( C) has offloaded its 2.71% equity stake in Shanghai Pudong Development Bank (“SPDB”) for an after-tax gain of around $349 million. The stake sale was made though block trade to institutional investors.

The two companies have, however, made strategic arrangement to cooperate with each other. Both the companies are discussing a number of mutual initiatives, including Citi’s global network and credit lines utilization to aid SPDB in expanding internationally in future.

This sale follows Citi’s recent offloading of its entire 9.85% stake in Housing Development Finance Corporation Ltd. (HDFC) in India for an after-tax gain of approximately $722 million. Notably, HDFC is a premier housing finance company of India and the promoter of HDFC Bank Limited ( HDB), one of the largest banks in India.

We think the stake sale is part of Citi’s ongoing capital planning efforts. Banks need to boost up their capital levels to encounter any financial crisis and satisfy global banking rules.

Moreover, Citi has recently won approval for launching its own card business in the country. Citi's Chinese subsidiary Citibank (China) Co. Ltd. received approval from the China Banking Regulatory Commission to launch its own credit card business in that country. The company will launch both retail and commercial cards before the end of this year. This marks a landmark for Citi, the first U.S.-based bank to introduce its own credit card in China.

Furthermore, Citi’s securities joint venture (JV) in China with Shanghai-based Orient Securities Co. received a regulatory nod in January this year. The JV named Citi Orient Securities Co. will carry on investment banking activities including securities underwriting and sponsoring.

Our Take

The beefing up of capital levels is an impressive effort on the part of Citi.

Chicago, IL – March 21, 2012 – 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 Eni SpA (E), Statoil ASA (STO), Hewlett-Packard Company (HPQ), EMC Corp. (EMC) and Amazon.com Inc. (AMZN).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

Eni SpA to Sell Assets, Boost Output

Eni SpA (E) remains busy in its asset divestiture program, mainly to support its upstream development activities. The company, in its 2012–2015 Strategic Plan, revealed that it aims to deliver production growth of more than 3% annually over the next four years through the asset sale program.

The divestiture program includes sale of its stakes in Portugal's Galp Energia and Italian gas transport group Snam. Galp Energia has a market value of €10.6 billion and Eni owns 33.34% in Galp, worth around €3.5 billion. The company expects to complete the deals before 2014 and strengthen its balance sheet in order to concentrate on big potential projects. The group also plans to offload other non-core assets including those in the North Sea.

We believe that Eni’s outlook for the upcoming period is favorable given its 2012–2015 strategic plans to enhance production and implement steps to control costs and recover profitability. Eni has also boosted its long-term outlook plan to 3% per annum from the previous 2% until 2021 and plans to add 700,000 barrels a day from the new project start-ups within the plan period.

Eni expects its production over the plan period to be aided by significant organic contributions from regions like Russia (Yamal), the Barents Sea, Kazakhstan, Venezuela and the sub-Saharan region. It intends to spend a sum total of €59.6 billion (US$78 billion) until 2015, which is 12% higher than the previous plan. Of the total budget, more than 75% is apportioned for upstream activities.

As for the company’s production, total liquids and gas output for the fourth quarter of 2011 dropped more than 14% year over year.

Chicago, IL – March 21, 2012 – Today, Zacks Equity Research discusses the Autos Industry, including General Motors Company ( GM), Ford Motor Co. ( F), Toyota Motors Corp. ( TM), Honda Motor Co. ( HMC) and Nissan Motor Co. ( NSANY).

A synopsis of today’s Industry Outlook is presented below. The full article can be read at  http://www.zacks.com/stock/news/71650/Auto+Industry+Stock+Outlook+%26amp%3B+Review+%96+March+2012

The auto industry is highly concentrated. The top-10 global automakers account for roughly 80% of the worldwide production and nearly 90% of total vehicles sold in the U.S.

In January-February 2012, General Motors Company ( GM) led with a 18.3% market share in the U.S., followed by Ford Motor Co. ( F) with a 15.3% market share, Toyota Motors Corp. ( TM) with a 13.8% market share, Chrysler-Fiat with a 11.4% market share, and Honda Motor Co. ( HMC) and Nissan Motor Co. ( NSANY) at the last spots with 9.4% and 9.0% market shares, respectively.

Due to a massive structural change after the global economic meltdown in 2008, the global auto industry is expected to be ruled by automakers and suppliers based in the six major auto markets: China, India, Japan, Korea, Western Europe and the U.S.

OPPORTUNITIES

To remain competitive, the automakers will need to design vehicles that will cater to consumers in both mature and emerging markets while manufacturing them at low-cost using the most advanced technology.

The recent trend shows that automakers are concentrating on offering more optional features (which will save money on gas) even on the small and less gas-guzzler vehicles in order to attract buyers. The sale of optional features is helping them offset lower profit margins for small cars relative to large trucks.

The automakers continue to shift their production facilities from high-cost regions such as North America and Europe to lower-cost regions such as China, India and South America. According to a study by CSM Worldwide, China and South America together are projected to represent more than 50% of growth in global light vehicle production in the auto industry from 2008 to 2015.

The role of governments is highly significant.

Chicago, IL – March 21, 2012 – Today, Zacks Investment Ideas feature highlights Features: PowerShares Cleantech ETF ( PZD). First Trust NASDAQ Clean Edge Smart Grid Infrastructure Fund ( GRID) and Global X Lithium ETF ( LIT).

3 ETFs for the ‘Energy Efficiency’ Boom

With a modestly improving economic environment, it appears as though businesses are slowly starting to hire while consumers are once again opening up their pocketbooks. While this trend has led to some optimism across the economy, one downside to this increased demand from a variety of sectors looks to be in the commodity world.

A number of products have seen rising prices so far this year with some of the biggest gains coming in the energy world. Oil prices are now firmly above $100/bbl. while coal, heating oil, and RBOB have all seen price increases in the first part of the year as well.

If these positive economic trends continue, high prices in this segment could be in the beginning of a bull market, if not at the very least poised to stay at elevated levels for the time being (see Inside The Forgotten Energy ETFs).

This development could boost demand for those engaged in the exploration and production of new fossil fuel areas as higher prices make fields that were once off limits profitable again. Another end result of this trend could be renewed interest in alternative fuels such as wind and solar power.

These energy forms tend to be much more competitive with their ‘traditional’ cousins when prices are high in the hydrocarbon world, spurring some to make the switch to clean energy. Yet, while exploration for new deposits and the broad clean energy sector look to be winners, investors could also see huge gains in stocks that promote energy efficiency as well.

Companies in this segment could be key components in a time of high energy prices, helping to stretch supplies in all forms of energy.

Chicago, IL – March 21, 2012 – Zacks Equity Research highlights U.S. Bancorp ( USB) as the Bull of the Day and Loews Corporation ( L) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Motorola Solutions Inc. ( MSI), Exelon Corporation ( EXC) and Verizon Wireless ( VZ).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

We are upgrading our recommendation on U.S. Bancorp ( USB) to Outperform from Neutral based on its solid fundamentals in the midst of a challenging economic environment. The company's fourth-quarter 2011 earnings surpassed the Zacks Consensus Estimate due to growth in revenue and reduced credit costs.

Top-line expansion was supported by increases in both net interest income and fee-based revenue. Its diverse revenue stream, improving credit quality and solid capital levels are impressive.

Though a low interest rate environment and regulatory issues remain our concerns, we believe that the company's loan growth will be encouraging and it will raise dividend and buyback shares following the stress test results.

Bear of the Day:

We have downgraded Loews Corporation ( L) to Underperform from Neutral on the back of weak fourth quarter results. Operating earnings in the fourth quarter lagged the Zacks Consensus Estimate owing to lower investment income from limited partnership, increase in insurance reserves for its payout annuity business, lower earnings at Diamond Offshore and weak performance of equity investments.

Results at HighMount remained soft due to lower sales volume stemming from lower drilling activity and lower natural gas prices. CNA has substantial exposure to catastrophe losses. Losses in the fourth quarter totaled $208 million, a substantial deterioration from $113 million a year ago.

Our six-month target price of $35.00 per share equates to about 12.1x our 2012 earnings estimate. This price target along with the annual dividend of $0.25 per share implies an expected negative total return of 9.6% over that period.

Latest Posts on the Zacks Analyst Blog:

Motorola Solutions Wins Contract

Motorola Solutions Inc. ( MSI), one of the leaders in the lucrative U.

Revenue

In the third quarter of 2012, consolidated sales were $534.2 million, up from $458.0 million in the third quarter of 2011. Sales were primarily driven by strong results within the Aviation Supply Chain segment, which benefited from earlier investments and robust demand from airline customers. Moreover, the newly-acquired businesses like Telair International GmbH (Telair) and Nordisk Aviation Products, AS (Nordisk), generated strong sales revenue during the third quarter in the Structures and Systems segment. The acquisitions were completed on December 2, 2011.

Revenue from the Aviation Supply Chain business was $134.2 million, up 11.8% year over year and accounted for about 25.1% of total revenue. Government and Defense Services revenue of approximately $133.7 million comprised 25.0% of total revenue and decreased slightly from $147.3 million in the year-ago quarter.

Maintenance, Repair and Overhaul (MRO) segment, which accounted for roughly 21.0% of total revenue, generated $112.0 million, up 3.7% year over year. Structures and Systems revenue was $154.2 million (28.9% of total revenue), up from $82.7 million in the year-ago quarter.

Margins

Cost of sales in the quarter spiked 17.9% year over year to $447.2 million. The company’s operating margin dropped marginally to 6.7% in the reported quarter from 7.6% in the year-ago comparable quarter.

Enhanced product availability improved margins compared with the prior year in the Aviation Supply Chain segment. However, margins in the MRO segment and Government and Defense Services were lower on a year-over-year basis due to delayed aircraft availability issues at the company’s airlift operation as well as unscheduled maintenance inspections. Moreover, the company’s Structures and Systems segment continued to face higher-than-expected start-up costs and cost overruns.

Selling, general and administrative expense was $51.3 million, up from $44.1 million in the year-ago quarter.

Balance Sheet

Exiting the third quarter of 2012, AAR Corp’s cash and cash equivalents were approximately $59.3 million, significantly up from $27.9 million in the previous quarter. Net property, plant and equipment were $357.1 million, up from $345.1 million in the sequentially preceding quarter.

During the quarter, the company completed the sale of $175 million of senior unsecured notes due 2022, the proceeds of which were used to repay a part of its borrowings incurred under the revolving credit agreement during the purchase of Telair and Nordisk. On February 13, 2012, the company paid a quarterly cash dividend of $0.075 per share to its stockholders of record as of January 30, 2012.

Based in Wood Dale, Illinois, AAR Corp. provides various products and services to the aviation and defense industries worldwide. The company operates in four segments: Aviation Supply Chain; Maintenance, Repair, and Overhaul; Structures and Systems; and Government & Defense Services. The company competes directly with its peers such as Goodrich Corp (GR), Boeing Co (BA), Lockheed Martin Corporation (LMT).

We currently maintain a long-term Neutral recommendation on the stock. AIR has a Zacks # 3 Rank, which translates into a short-term Hold rating (1-3 months).

 
AAR CORP (AIR): Free Stock Analysis Report
 
BOEING CO (BA): Free Stock Analysis Report
 
GOODRICH CORP (GR): Free Stock Analysis Report
 
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Earnings per share (excluding one-time items but including stock-based compensation expenses) increased 14.4% from 52 cents in the year-ago quarter. Excluding one-time items and stock-based compensation expenses, non-GAAP earnings stood at 62 cents per share compared with 54 cents per share in the year-ago quarter. This was well above management’s guided range of 55 cents to 58 cents per share.

Revenues

Total revenue in the reported quarter increased 2.9% year over year to $9.06 billion. This was within the management’s guided range of 1.0% – 5.0%. Total revenue also surpassed the Zacks Consensus Estimate of $9.03 billion. The upsurge was primarily attributed to strong new software license sales, which rose 7.1% year over year to $2.37 billion in the quarter.

Software license update and product support revenues (46.0% of the total revenue) also grew a healthy 8.3% to $4.07 billion. As a result, total software revenue (69.0% of the total revenue) climbed 7.9% year over year to $6.44 billion.

Hardware systems continued to disappoint with revenues declining 12.5% year over year to $1.48 billion. Revenues from hardware systems products were $869.0 million, down 16.0% year over year, while revenues from hardware systems support amounted to $610.0 million, down 7.0% year over year. The decline in hardware sales was primarily attributed to lower volumes. Oracle also stopped selling certain third party products which had a negative impact on hardware sales.

Database and middleware revenues were $4.49 billion, up 9.6% from the year-ago quarter. Applications revenues were $1.93 billion, up 4.1% from the year-ago quarter. Service revenues totaled $1.14 billion, flat on a year-over-year basis.

Operating Performance

Operating income on a non-GAAP basis (excluding one-time items but including stock-based compensation expenses) increased 7.5% to $4.05 billion, driven by lower operating expenses. Non-GAAP operating margin surged 200 bps year over year to 44.7% due to the higher-margin software business.

Total operating expenses inched down 0.6% in the quarter, mainly due to lower general and administrative expenses (down 8.

Quarterly Performance

JA Solar’s revenues in the reported quarter were $309.1 million comfortably ahead of the Zacks Consensus Estimate of $256 million. However, revenues decreased 21.4% from $393.2 million reported in the third quarter of 2011 and 49.5% from $612.7 million reported in the fourth quarter of 2010.

Total shipments in the fourth quarter of 2011 were 398MW, above the company's previously provided guidance range of 310MW to 330MW. This represents a 10.6% decline from 445MW in the third quarter of 2011 and a 14.0% decrease from 463MW in the fourth quarter of 2010.

Gross profit in the fourth quarter of 2011 was $1.4 million, compared with a gross loss of $16.9 million in the third quarter of 2011 and gross profit of $117.6 million in the fourth quarter of 2010.

Total operating expenses in the fourth quarter of 2011, which included an impairment of long-lived assets of $48.2 million related to the company's multi-crystalline wafer manufacturing facility in Donghai, were $78.9 million, compared with $27.0 million in the third quarter of 2011 and $23.8 million in the fourth quarter of 2010.

Operating loss in the fourth quarter of 2011 was $77.5 million, compared with an operating loss of $43.9 million in the third quarter of 2011 and operating income of $93.8 million in the fourth quarter of 2010. Excluding long-lived assets impairment of $48.2 million, operating loss would have been narrower at $29.3 million.

Other income in the fourth quarter of 2011 was $33.2 million, compared with other loss of $2.1 million in the third quarter of 2011 and other income of $56.5 million in the fourth quarter of 2010. Included in other income in the fourth quarter of 2011 was a one-time non-cash gain of $29.8 million arising from the negative goodwill recognized in the acquisition of Solar Silicon Valley.

However, not all countries have given up on alternative energy as China continues to storm ahead in this sector. While this has been welcomed news for many who are pushing for more alternative energy usage, many do not like how the country has gone about becoming the dominate player in the space (read Oil Bull Market Is No Place For MLP ETF Investors).

In addition to having an undervalued currency—a factor which can help with exports—Chinese solar companies have pretty much unlimited opportunities for financing which has helped them to ramp up supply and bring marginal costs down extremely low.

This has also led to accusations of dumping, whereby Chinese companies sell their products at a loss in order to push the less subsidized American firms out of business. In fact, SolarWorld Industries America estimates dumping margins in excess of 100% while worldwide prices for panels have fallen by about 40% in 2011 alone.

Given the hurt that this has put on the domestic solar manufacturing industry, as well as the fact that this is one of the few exporting industries and it is an election year, many looked for the government to do something in order to at least partially rectify this situation. It appears that in some small way these wishes have been granted as the US Commerce Department announced that it would impose tariffs on solar panels imported from China (read Forget FXI: Try These China ETFs Instead).

However, the tariffs are quite low across the board and are unlikely to have much of an influence on the broad solar market. Duties were below 5% across the board with Trina Solar (TSL) seeing fees of 4.7%, Suntech Power (STP) having to pay 2.9%, and 3.59% for everyone else.

Industry analysts were expecting a tariff for quite some time, but few participants thought it would be this low.

Company Description

Procera Networks, Inc. provides network traffic awareness,
analysis and control solutions for broadband service providers. It
offers intelligent policy enforcement solutions that enable mobile
and broadband network operators and entities to manage private
networks.

PKT Tops Expectations Three Straight Times

PKT has beaten the Zacks Consensus Estimate in each of the last
three quarters. One of the beats, in the September 2011 quarter
saw the company post earnings of $0.14, $0.18 ahead of the Zacks
Consensus Estimate of a loss of $0.04. The stock then moved
higher by 24% after that 450% beat.

The string of beats started in the June 2011 quarter when the
company posted EPS of one cent, but that was five cents ahead of
the Zacks Consensus Estimate of a loss of four cents. The stock
moved higher by nearly 5% following the report.

PKT Recently Reported Earnings

On February 21, 2012 the company reported revenue of $16 million
roughly $4 million more than the Zacks Consensus Estimate and
double the $8 million reported in the year ago period. EPS
of $0.12 was $0.08 ahead of the estimate or a 200% beat. As a
result the stock moved higher by about 7%.

Earnings Estimates Bumped Up

Following the most recent earnings report, analysts bumped up
their earnings estimates for 2012. The Zacks Consensus Estimate
for 2012 EPS moved from $0.35 in February 2012 to the current
level of $0.41.

Valuations

Due to the recent shift to profitability, metrics like PE can now
be computed. This means some pretty high numbers for a small
company. A trailing PE of 86x means that it’s very likely to be
higher than just about any industry average, but as earnings
continue to come in this metric will fall. The same can be said
about forward PE. A price to sales metric of 7x will also come
back to the industry average of 2.5x as sales increase in the next
few quarters.

The Chart

The chart shows just what aggressive growth investors are looking
for, a consistent upward trend. The stock crossed its 200 day
moving average line about five months ago and hasn’t looked back
since. Many stocks can say this, but as PKT continues to grow its
sales and earnings, more investors will dial up this
telecommunications play. PKT is a Zacks #1 Rank (Strong Buy).

Brian Bolan is the Aggressive Growth Stock Strategist
for

Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service

 
PROCERA NETWRKS (PKT): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Top-line expansion was supported by increases in both net interest income and fee-based revenue. Its diverse revenue stream, improving credit quality and solid capital levels are impressive.

Though a low interest rate environment and regulatory issues remain our concerns, we believe that the company's loan growth will be encouraging and it will raise dividend and buyback shares following the stress test results.
 
US BANCORP (USB): Free Stock Analysis Report
 
To read this article on Zacks.com click here.