Zacks Industry Rank Analysis Highlights: American Eagle Outfitters, bebe stores, Hormel Foods, Smithfield Foods and Tyson Foods.

CHICAGO -- Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week's analysis include American Eagle Outfitters (Nasdaq: AEOS), bebe stores (Nasdaq: BEBE), Hormel Foods (NYSE: HRL), Smithfield Foods (NYSE: SFD) and Tyson Foods (NYSE: TSN). To see the Zacks Industry Rank and the trend in earnings estimates revisions for all 208 industry groups, visit http://at.zacks.com/?id=3154.

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

In the spirit of Thanksgiving, I'm going to talk a little turkey. There are three companies within the Zacks Rank universe that provide turkey products: Hormel Foods (NYSE: HRL), Smithfield Foods (NYSE: SFD) and Tyson Foods (NYSE: TSN). None of these companies are turkey pure plays, however, as there is not a company within the Zacks Rank universe that focuses solely on the big birds.

This morning, HRL reported fourth-quarter profits of 64 cents per share, topping expectations by a penny. Revenue growth of 5% was paced by the company's specialty foods segment, as well as by grocery products and refrigerated products. Jennie-O Turkey Store generated 1.5% sales growth, but experienced an 11.7% decrease in operating profits because of higher meat prices. Hormel expects live turkey production to increase in 2007.

The company guided for fiscal 2007 profits to be in a range of $2.15 to $2.25 per share. Analysts are presently forecasting earnings of $2.19 per share, though this could change following today's conference call. HRL is a Zacks #2 Rank stock.

Smithfield Foods is scheduled to report fiscal second-quarter earnings on Nov 30, before the market opens. The company has missed expectations three times during the past four quarters. Analysts are expecting the company to report profits of 47 cents per share, a penny below the forecast of 60 days ago. SFD is a Zacks #3 Rank ("hold") stock.

Last week, Tyson reported an adjusted loss of seven cents per share for its fiscal fourth quarter; analysts were expecting a two-cent loss. The miss was the third in four quarters for the largest meat and poultry producer. Tyson's guidance for fiscal 2007 profits of 50 to 80 cents per share was viewed as being disappointing by analysts, who quickly cut their forecasts. The new consensus estimate for profits of 64 cents per share is 10 cents below the pre-earnings release forecast. TSN is a Zacks #5 Rank ("strong sell") stock.

Conditions this year have not been favorable to the meat and poultry producers. Earlier in the year, there was an oversupply of chickens. The chicken market appears to be stabilizing. Feeder and live cattle futures have been under pressure over the past few months, however, and this could be causing some overhang. Conversely, pork bellies are trading near 52-week highs.

The day after Thanksgiving is referred as "Black Friday", because traditionally it is the day when retailers achieve profitability. For consumers, however, it may be better known as "Bargain Friday" with many stores offering steep discounts.

There are two trendy retailers that are attracting customers without having to rely on door buster promotions: American Eagle Outfitters (Nasdaq: AEOS) and bebe stores (Nasdaq: BEBE). Both are Zacks #2 Rank ("buy") stocks.

American Eagle Outfitters, which targets young men and women, beat analysts' profit expectations by a penny as third-quarter revenues and earnings set new record highs for the 11th consecutive quarter. Sales at stores opened at least a year rose 13%, contributing to total sales growth of 20%. (The company recorded revenues of $696.3 million.) Earnings reached 66 cents per share, thanks in part to improved gross margins. Gross profits widened to 49.2%, from 46.4% a year ago. AEOS guided for fourth-quarter profits to be in the range of 94 to 96 cents per share, positively surprising analysts. Over the past seven days, nearly all of the covering analysts have adjusted their forecasts, causing the consensus estimate to rise eight cents to 97 cents per share.

BEBE, which sells women's clothing, generated fiscal first-quarter profits of 22 cents, two cents above expectations. Same-stores sales rose 12.8%, contributing to an overall increase in revenues of 24.5% (to $157.1 million). Gross margins widened to 50.5% as the company was able to push through higher initial prices and reduce the volume of markdown merchandise sold. Following the report, analysts adjusted their fiscal 2007 forecasts upwards to $1.01 per share.

The interactive Zacks Industry Rank List allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. See the list at http://at.zacks.com/?id=3208.

About Zacks Industry Rank and the Zacks Rank

Zacks Industry Rank is calculated by averaging the Zacks Rank for all covered companies within a given industry. The Zacks Rank is assigned to approximately 4400 stocks and ranges from #1 ("Strong Buy") to #5 ("Strong Sell"). Both the Zacks Industry Rank and the Zacks Rank are quantitative indicators designed to cover periods of 1-3 months.

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +31.8%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 143.6% annually (+4.8% vs. +11.8%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

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