Zacks Bull and Bear of the Day Highlights: Snap-on, DTS, Inc., Tessera Technologies, Colgate-Palmolive and Gentiva Health Services

Business Wire, Sept 3, 2008

CHICAGO -- Zacks Equity Research highlights Snap-on, Inc. (NYSE: SNA) as the Bull of the Day and DTS, Inc. (Nasdaq: DTSI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Tessera Technologies (Nasdaq: TSRA), Colgate-Palmolive Co. (NYSE: CL) and Gentiva Health Services (Nasdaq: GTIV).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day: Snap-on, Inc. (NYSE: SNA)

Snap-on has reported upside earnings surprises for ten consecutive quarters, which has caught the attention of earnings momentum investors. The management has successfully delivered more predictable and consistent financial performance through the implementation of the Driven to Deliver and Rapid Continuous Improvement programs. With the stock's pull-back to the low-$50s, its valuation compels us to recommend a Buy rating.

Through a structured approach of supply chain and franchise improvement initiatives, order-fill rates are improving and profitability is increasing across all operating segments except the Tools Group. The acquisition of ProQuest Business Solutions has added value for global original equipment manufacturers (OEM) and enhanced the productivity and profitability of their dealerships.

Bear of the Day: DTS, Inc. (Nasdaq: DTSI)

The company's fortunes depend on the rate at which consumers adopt technologies, like DVDs and home theaters. Apart from the current economic slowdown, which we anticipate will continue to dampen earnings growth, we think the slowing demand for DVD players will moderate revenue growth for DTS' DVD components.

DTS also faces stiff competition from Dolby Laboratories, a challenge in nearly all markets and product categories. Dolby's long-standing market position and inclusion in various industry standards make it a strong rival. We think the valuation multiple expansion is unjustified, given the risks posed by a worse-than-expected consumer-led economic slowdown, and rate the stock a Sell.

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Tessera Technologies (Nasdaq: TSRA)

Tessera Technologies, Inc.'s advanced packaging technologies have industry-wide application. June quarter top-line results beat consensus estimates while the bottom-line missed slightly. We continue to rate shares of TSRA a Buy.

The stock is currently trading at a 15.1x multiple of our 2009 earnings estimate (P/E). Considering the company's market strength and the potential of its IP, we expect solid revenue and earnings growth to continue, even without any further blockbuster developments. The firm has won five major lawsuits and now receives royalty on approximately 80% of the DRAM market, which should be a catalyst in 2009.

Colgate-Palmolive Co. (NYSE: CL)

Colgate-Palmolive has had a stellar long-term growth record. The company's tight financial controls and history of new product innovations coupled with efforts to enhance shareholder value through share repurchases and dividend increases support a positive long-term view on the stock. However, rising raw material/fuel costs and the costs related to the implementation of the restructuring plan remain concerns.

Colgate-Palmolive stock has traded in a P/E multiple range of 18 to 27 over the last four years. However, during the last time of earnings de-acceleration and a corporate restructuring in the mid-1990s, Colgate's stock traded at a P/E in the low 20 s. The stock is currently trading at a P/E multiple of 20.8, which is in the middle quartiles of the historical range. Positive earning surprises along with savings from the company's restructuring and business-building plan should support future growth.

Gentiva Health Services (Nasdaq: GTIV)

Gentiva recently reported better-than-expected 2Q08 net income of $12 million (up 34% y/y), or EPS of $0.41, reflecting solid increases in Medicare related revenues in Home Health buoyed by higher episodic patient admissions (up 10% y/y), increases in revenue per episode.

We believe the $147 million sale of CareCentrix is positive in terms of both lowering long-term debt and supporting the management's stated growth via acquisition strategy of its core home care business. We retain a Hold rating at current levels.

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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