Business & Finance
Business and Finance
Business and Finance
Tue, June 15, 2010
Mon, June 14, 2010 
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights Assurant (NYSE: [ AIZ ]) as the Bull of the Day and Nokia (NYSE: [ NOK ]) the Bear of the Day. In addition, Zacks Equity Research provides analysis on CarMax (NYSE: [ KMX ]), AutoZone (NYSE: [ AZO ]) and Home Depot (NYSE: [ HD ]).
Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].
Here is a synopsis of all five stocks:
[ Bull of the Day ]:
We are upgrading our recommendation on the shares of Assurant (NYSE: [ AIZ ]) on the back of higher earnings expectations led by share repurchases and positive results from its Solutions and Employee Benefits segments. The recent dividend increase also places our optimism on Assurant's solid cash generation capabilities.
Its first quarter earnings were substantially ahead of the Zacks Consensus Estimate, benefiting from higher premiums from the Employee Benefits and Specialty segments, partially offset by lower investment income.
However, its Specialty unit is expected to be sluggish in the near term, but we believe its conservative investment portfolio and robust capital management will lift the stock above its peers in the long term.
[ Bear of the Day ]:
Nokia (NYSE: [ NOK ]) is facing serious problems in the high-end feature-rich smartphone segment. Smartphones are expected to become the next-generation choice, taking over the market share from basic mobile handsets.
As of now, unfortunately Nokia has failed to introduce any smartphone to ably compete with BlackBerry, iPhone, or any Android-based handsets. Nokia's inability in the high-margin lucrative smartphone market will put more pressure on its earnings going forward. Feature-rich software and services are the main characteristics of any smartphone which Nokia seriously lacks.
There is no near-term visibility about the launch of the upgraded Symbian. Additionally, the company's network infrastructure solutions wing is still facing economic headwinds. We downgrade our recommendation to Underperform due to the absence of any catalyst.
Latest Posts on the Zacks [ Analyst Blog ]:
Rough Retail Sales Report
Retail Sales in May were far below expectations, coming in with a decline of 1.2% on the month when the consensus of economists was looking for an increase of 0.2%. If auto sales are stripped out, the numbers were still disappointing, with a 1.1% decline when a 0.1% increase was expected.
If there is a silver lining in this report it is that both the headline number, and the ex-autos number, for April were revised upwards from an increase of 0.4% to 0.6%. That is a very thin silver lining. Relative to a year ago -- against a very easy comparison -- total sales were up 6.9%, while sales excluding automobiles were 6.1% higher than a year ago. On both counts that is a significant slow down from the year-over-year rates in April, when total sales were up 9.0% and up 7.8% excluding autos.
The 1.7% decline in sales for auto and parts dealers was a big surprise since it does not seem to match up well with the new auto sales numbers that the car companies released last week for May. The category includes not just auto dealers, such as CarMax (NYSE: [ KMX ]), but also the parts stores like AutoZone (NYSE: [ AZO ]). Year-over-year, though, sales in the category are up a very healthy 11.2%, although that is a big decline from the 15.2% year-over-year increase in April.
The area that suffered the most in May was the Building Materials stores like Home Depot (NYSE: [ HD ]), where sales plunged 9.3% on the month and are up just 3.1% year over year. That was a big reversal from April, when the hardware stores were the strongest category, with an 8.4% rise, that brought the year-over-year growth to 13.9%.
The reason is most likely a surge of activity in April as people tried to spruce up their houses for sale ahead of the expiration of the home buyer tax credit. When the tax credit expired on April 30, sales fell off a cliff. If the two months are averaged together, the decline works out to 0.85 per month, which is probably a better way of looking at the group.
Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].
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.
About the Analyst Blog
Updated throughout every trading day, the [ Analyst Blog ] provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
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Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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