Zacks Industry Rank Analysis Highlights: Barrick Gold, Iamgold, J.C. Penny, Trinity Industries and Wabtec.

CHICAGO -- Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week's analysis include Barrick Gold (NYSE:ABX), Iamgold (NYSE:IAG), J.C. Penny (NYSE:JCP), Trinity Industries (NYSE:TRN) and Wabtec (NYSE:WAB). To see the Zacks Industry Rank and the trend in earnings estimates revisions for all 208 industry groups, visit http://at.zacks.com/?id=2563.

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

Commodities and commodity stocks showed a discomforting degree of downside volatility last week. Multiple mining, steel and oil stocks posted notable short-term declines. Much of this movement has been in reaction to commodity prices, where a great deal of speculation has occurred. In addition, the U.S. markets have been gripped by inflation fears ever since the FOMC left the door wide open for a potential rate hike in June.

Ironically, the earnings outlook for commodity stocks has not changed. Mining-Non Ferrous, Steel-Specialty Alloys and Oil Field Machinery & Equipment hold the top three spots on the Industry Rank table this week. Last week, the consensus estimate for 2006 earnings declined for only two of the 30 companies within these groups. This implies that analysts remain bullish on the growth prospects for these industries.

One glimmer of hope in the post-Fed meeting downpour was Iamgold (NYSE:IAG). The company recently reported first-quarter earnings of 13 cents per share, five cents above expectations. In response to the positive results, five of the six covering analysts raised their forecasts for full-year earnings. The new consensus estimate, for profits of 45 cents per share, is nine cents above the forecast of a week ago.

The upward revisions to Iamgold followed a similar reaction to Barrick Gold's (NYSE:ABX) first-quarter report, which was released nine days prior. ABX topped expectations by six cents with profits of 29 cents per share. The company also reaffirmed its guidance for gold production (8.6-8.9 million ounces at a cost of $275-$290 per ounce) and its guidance for copper production (350 million pounds at 75-80 cents per pound). 12 of the 18 covering analysts responded by raising their forecasts, causing the full-year consensus estimate to jump by 29 cents to $1.40 per share.

Both stocks belong to Mining-Gold, a group that I have not focused on this year because the trend in estimate revisions has not been as strong as it has been for other commodity-related groups. Nonetheless, Mining-Gold does have an above-average Industry Rank of 2.75. This group contains two Zacks #1 Rank stocks, ABX and IAG, and three Zacks #2 Rank stocks.

Although commodity-related groups continue to dominate the Industry Rank table, there are other sectors with positive estimate revision momentum. One of those sectors is Transportation, and within this sector is the Transportation-Equipment & Leasing group.

Out of the nine companies, two are designated Zacks #1 Rank and five are designated Zacks #2 Rank. The story behind the numbers is the strength in the railroad industry. Railroads have been seeing a surge in activity because of overall economic expansion, greater mining activity and gains in market share. The gains in market share reflect a shift in preference towards railroads instead of trucks because of higher energy prices.

The two Zacks #1 Rank stocks in Transportation-Equipment & Leasing are Trinity Industries (NYSE:TRN) and Wabtec (NYSE:WAB). TRN recently announced the largest first-quarter operating profit in its history. In addition to strong demand for railcars, the company is benefiting from last year's federal highway bill, sustained revenues from its Inland Barge unit and a growing backlog for wind towers. Analysts have raised full-year estimates on TRN by 21 cents over the past few weeks, to $3.01 per share. WAB recently raised its full-year guidance to $1.60 per share. The company more than doubled its net income, generating a first-quarter profit of 41 cents per share, versus 20 cents a year prior. Revenues are rising and margins are expanding because of strong demand for locomotive and freight car components.

Alert investors may also notice the presence of a group from the Retail-Wholesale sector near the top of the Industry Rank table. Retail-Major Department Stores jumped in rank because of strong earnings from its sole component, J.C. Penny (NYSE:JCP). A little over a week ago, JCP reported first-quarter profits of 90 cents per share, four cents above expectations. Same-store sales, a key retail statistic, rose 1.3%. The company also raised its full-year guidance to between $4.24 and $4.34 per share. Nearly all (13 of the 14) of the covering analysts raised their forecasts in response.

As of the end of last week, approximately 80% of the companies within the Zacks Rank universe(a) have reported first-quarter results. Positive earnings surprises are exceeding negative surprises by a ratio of 1.8:1, a slight deterioration from the fourth-quarter. The ratio of positive sales surprises to misses(b) is stable at 1.6:1.

The trend in earnings estimate revisions remains slightly negative. Analysts have cut forecasts on 37 more companies than they have raised forecasts on(c). The average change(d) in full-year estimates is -1.6%. Growth prospects remain very positive, however, with analysts projecting the average company within the Zacks Rank universe to increase profits by 23.0% this year(e).

To see the complete analysis and listing of the Zacks Sector Rank and Industry Rank scores, go to http://at.zacks.com/?id=2563.

(a)The Zacks Rank is assigned to companies with earnings estimates made available by brokerage analysts. The Zacks' database contains earnings estimates for approximately 4400 companies.

(b)Since sales estimates are not available for all companies, the sample size is smaller. As of last Friday, sales estimates were only available on 2810 of the 3392 companies within the Zacks Rank universe that have reported so far.

(c)Revisions in estimates are tracked for the four-week period following a company's earnings report. The rationale behind the four-week period is to measure analysts' reactions to a company's quarterly report.

(d)To prevent the impact of skewing caused by outliers, this number reflects the average of 90% of the companies of the companies that have reported. When the top and bottom 5% are included, the average change in estimates is -8.8%.

(e)The growth rate is calculated on the groups of Zacks Rank stocks that have reported first-quarter earnings, excluding outliers. Including the top and bottom 5% causes the average growth rate to jump to 44 %. There are 21 companies with projected growth rates in excess of 1000%.

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.

For over 18 years, 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 +33%. 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 129.7% annually (+5.2% vs. +11.9%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2564.

The Zacks Rank, and all of its recommendations, is created by Zacks & Co., member NASD. Zacks.com displays the Zacks Rank with permission from Zacks & Co. on its web site for individual investors.

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 by going to http://at.zacks.com/?id=2565.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

(f)The Zacks Performance Rank performance is the total return of equal weighted simulated portfolios consisting of those stocks with the indicated Zacks Rank net of fees. Results reflect the reinvestment of dividends and other earnings. Simulated results do not represent actual trading and may not reflect the impact that economic and market factors might have had on decision-making if an adviser were actually managing a client's money.

(g)The S&P 500 Index ("S&P 500") is a well-known, unmanaged index of the prices of 500 large-company common stocks selected by Standard & Poor's. The S&P 500 includes the reinvestment of all dividends, no transaction costs, and represents the gross returns before management fees.

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.