Zacks Analyst Blog Highlights: AutoNation, GM, Ford, Martha Stewart Living Omnimedia and Kmart

Business Wire, April 21, 2008

CHICAGO -- 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: AutoNation, Inc. (NYSE: AN), GM (NYSE: GM), Ford (NYSE: F), Martha Stewart Living Omnimedia (NYSE: MSO) and Kmart (Nasdaq: SHLD).

See the latest posts to the Analyst Blog:

http://www.zacks.com/blog/post_info.html?g=6

Here are highlights from Friday's Analyst Blog:

AutoNation's Road Still Bumpy

AutoNation, Inc. (NYSE: AN) continues to improve margins by altering its product mix and increasing its focus on selling parts and services in order to improve profitability. The company's revenue growth and cost cutting remain strong. AutoNation is also returning cash to its shareholders through a share buyback program.

However, we are concerned about market conditions and the company's exposure to GM (NYSE: GM) and Ford (NYSE: F). We reiterate our Hold recommendation due to difficult industry conditions. Thus, we set a six-month target price of $16.50.

AutoNation is worst affected by sales decline in California and Florida where it holds a majority of market share. This is compounded by the imploding housing market across the nation, which has adversely affected consumers willingness and ability to make large-ticket purchases, especially autos. The company estimated that overall industry new vehicle sales will decline from 16.1 million units in 2007 to mid-15 million units in 2008.

Currently, shares of AutoNation are trading at 11.3x our 2008 EPS estimate of $1.34, near the industry median of 11.6x. As AutoNation is the largest company in the industry and has a relatively low debt level, we believe it should trade at a higher multiple. The company is working towards reducing costs and is focused on attaining profitability than market share.

Kmart Weighing on Martha Stewart

Martha Stewart Living Omnimedia (NYSE: MSO) is beginning to execute on its original strategy of leveraging its Martha Stewart brand across its business segments, signing a slew of high-margin merchandising deals since 2006, and repositioning its website away from on-line commerce to becoming an interactive, ad-generating aggregator of content from its publishing and broadcasting business.

As a result, Internet revenue is more than doubling, and we expect the segment's operating margins, which turned positive in 2Q06 to expand exponentially throughout 2008. Meanwhile, sales and operating earnings in the flagship publishing division have been growing vigorously since recovering in mid-2005.

Revenue from Kmart (Nasdaq: SHLD), which accounted for 76% of the Merchandising segment's revenue and 21% of MSO's total revenue is set to decline sharply in 2008. Beginning February 1, 2008, the guaranteed minimum royalty payments Kmart is obligated to pay MSO will drop sharply to a maximum of $20 million and $15 million for the years ended January 31, 2009 and 2010, respectively. Total minimum royalties Kmart paid MSO for the year ended January 31, 2008 are $65 million.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.