Markets & Finance

S&P Downgrades Univision


Univision Communications (UVN): Downgrades to 3 STARS (hold) from 4 STARS (accumulate)

Analyst: Howard Choe

The leader in Hispanic broadcasting, Univision's second-quarter results were on the low side of projections and the company has modestly lowered its outlook for the rest of 2002, citing a softer economy and startup costs. Univision posted second-quarter earnings per share of $0.09 vs. $0.12, a penny short of the Street's consensus. S&P is lowering its 2002 earnings per share estimate to $0.36 from $0.40. S&P also notes that an option expense would have lowered 2001 operating earnings per share by 65%. Growth in ad spending is at risk in light of mixed economic data, but S&P says Univision is O.K. to hold.

Lamar Advertising (LAMR) and Hearst-Argyle Television (HTV): Downgrades to 3 STARS (hold) from 4 STARS (accumulate)

Analyst: Howard Choe

Lamar posted second-quarter earnings per share at breakeven vs. a year-ago loss of $0.21, in line with S&P's estimate. Same-store revenues rose 1.7%, slightly better than S&P expected, but EBITDA was flat -- in line with expectations. Lamar's third-quarter guidance is below S&P's projections and mirrors caution expressed by some broadcasters recently. With the economic outlook uncertain, Lamar is fairly valued at 14 times the enterprise value-EBITDA multiple. S&P also is downgrading Hearst-Argyle Television to bring it in line with its more cautious stance on broadcasters.

Whole Foods Market (WFMI): Maintains 4 STARS (accumulate)

Analyst: Joseph Agnese

The company reported July quarter earnings per share of $0.36 vs. $0.29 -- $0.02 above the Street's estimate. Sales rose 21%, on 17% square-foot growth and a 10.5% increase in comp-store sales, all above S&P's expectations. Margins widened as improved direct store expenses were partially offset by new stores. S&P is raising the fiscal 2002 (Sept.) earnings per share estimate by $0.05 to $1.41 as S&P is seeing seeing fourth-quarter comp-sales growth of more than 9% -- above expectations -- with sales growth greater than 15%. With shares trading at 25 times S&P's fiscal 2003 earnings per share estimate of $1.65, given the continued expansion and strong comp-store growth, Whole Foods is attractive compared to peers.


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