CHICAGO, May 28, 2013 /PRNewswire/ -- 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 includeMcGraw-Hill Financial Inc. (NYSE:MHFI), Take-Two Interactive (Nasdaq:TTWO), Activision Blizzard (Nasdaq:ATVI), Microsoft (Nasdaq:MSFT) and Sony(NYSE:SNE).
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Here are highlights from Monday's Analyst Blog:
Surprise Jump in U.S. Gasoline Supplies
The U.S. Energy Department's weekly inventory release showed that gasoline stockpiles increased unexpectedly, as domestic production and imports jumped. The report further revealed that crude and distillate supplies were down from the week-ago levels. Meanwhile, refiners scaled down their utilization rates by 0.7%.
The Energy Information Administration (EIA) Petroleum Status Report, containing data of the previous week ending Friday, outlines information regarding the weekly change in petroleum inventories held and produced by the U.S., both locally and abroad.
The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. It is an indicator of current oil prices and volatility that affect the businesses of the companies engaged in the oil and refining industry.
Analysis of the Data
Crude Oil: The federal government's EIA report revealed that crude inventories fell by 338,000 barrels for the week ending May 17, 2013, following a decrease of 624,000 barrels in the previous week.
The analysts surveyed by Platts – the energy information arm of McGraw-Hill Financial Inc. (NYSE:MHFI) – had expected crude stocks to go down some 1.2 million barrels. A slide in domestic production led to the stockpile drawdown with the world's biggest oil consumer even as refiners reduced their utilization rates and imports spiked.
However, crude inventories at the Cushing terminal in Oklahoma – the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange – were up 449,000 barrels from the previous week's level to 50.17 million barrels. Stocks are currently just under the all-time high of 51.86 million barrels reached in January.
Despite the weekly inventory decrease, at 394.55 million barrels, current crude supplies are 3.2% above the year-earlier level, and exceeds the upper limit of the average for this time of the year. The crude supply cover was down from 26.5 days in the previous week to 26.1 days. In the year-ago period, the supply cover was 25.7 days.
Gasoline: Supplies of gasoline were up for the second time in as many weeks despite an improvement in domestic consumption. The rise in gasoline inventories could be attributed to spiraling production and imports.
The 3.01 million barrels gain – contrary to analysts' projections for a 200,000 barrels decrease in supply level – took gasoline stockpiles up to 220.68 million barrels. Following this build, the existing inventory level of the most widely used petroleum product is 9.8% higher than the year-earlier level and is close to the top half of the average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) were down 1.05 million barrels last week, as against analysts' expectations for a 1.1 million barrels gain in inventory level. The decrease in distillate fuel stocks – the first in 6 weeks – could be attributed to stronger demand, partially offset by higher imports and production.
At 118.81 million barrels, distillate supplies are essentially flat with the year-ago level but are in the lower limit of the average range for this time of the year.
Refinery Rates: Refinery utilization was down 0.7% from the prior week to 87.3%. The analysts were expecting the refinery run rate to increase 0.7% to 88.7%.
Video Game Sales Plunge in April
Video game retail sales plunged in Apr 2013. According to market research firm NPD, sales decreased 25.0% to $495.2 million from $630.0 million reported in Apr 2012. However, sales in dollar terms were almost half from $992.5 million reported in March and declined massively from $810.0 million reported in Feb, 2013.
Software sales declined 17.0% year over year to $254.3 million in April. This was much worse than $602.4 million reported in March and $369.9 million reported in February. Although sales decline was massive in the month, NPD noted that new games launched in Apr 2013 jumped 118% in unit sales and 130.0% in dollar sales.
Injustice: Gods Among Us from Warner Bros. Interactive was the top-selling game in the month, pushing March topper BioShock Infinite from Take-Two Interactive (Nasdaq:TTWO) to the #3 position. Dead Island: Riptide from Deep Silver took the #2 spot. Activision Blizzard (Nasdaq:ATVI) had two games in the top-ten list namely Call of Duty: Black Ops 2 and Skylanders Giants.
Currently, both Take-Two and Activision carry a Zacks Rank #3 (Hold).
Hardware sales fell a massive 42.0% year over year to $109.5 million from $221.6 million reported in March. March hardware sales were lower than $244.2 million reported in February.
Microsoft's(Nasdaq:MSFT) Xbox 360 was again the top-selling console. However, it sold just 130,000 units in April compared with 261,000 units sold in March. This was also much less than 302,000 units sold in February. On a year-over-year basis, Xbox unit sales declined 45.0%.
As per NPD data, Nintendo's 3DS handheld sales grew 52.0% year over year last month. However, PlayStation developer Sony(NYSE:SNE) did not provide any sales data.
The huge decline in hardware unit sales primarily reflects a matured console market. Moreover, customers postponed their purchases as both Sony and Microsoft are slated to release their new console hardware by the end of this year.
According to NPD, total US video game sales were $802.0 million in Apr, 2013.
Our Take
We expect video game sales to remain sluggish over the next few months. Although we believe that the ongoing transition from the physical to the digital platform will ultimately benefit the video game industry (due to the cost effectiveness), low priced digital games have failed to offset the rapid decline in high-priced retail sales in recent times.
Moreover, declining software sales remain a concern. We believe that the rapid adoption of free-to-play games will continue to cannibalize retail software sales in 2013. Further, the highly fragmented video game market will continue to witness increased competitive pressures, which will hurt overall profitability.
However, we believe that the highly anticipated launch of new hardware consoles from Microsoft and Sony will boost the sagging video game retail sales market by the end of 2013.
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