Business & Finance
Business and Finance
Business and Finance
Thu, June 17, 2010
Wed, June 16, 2010 Nelnet, Northern Trust, News Corp., Time Warner and Walt Disney
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights Nelnet (NYSE: [ NNI ]) as the Bull of the Day and Northern Trust Corporation (Nasdaq: [ NTRS ]) the Bear of the Day. In addition, Zacks Equity Research provides analysis on News Corp. (Nasdaq: [ NWSA ]), Time Warner Inc. (NYSE: [ TWX ]) and Walt Disney Company (NYSE: [ DIS ]).
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 ]:
Nelnet's (NYSE: [ NNI ]) first quarter earnings were well ahead of the Zacks Consensus Estimate, primarily reflecting a decrease in interest expenses and the benefits of a diversification of revenue through fee-based businesses.
In recent years, Nelnet has expanded products and services generated from businesses that are not dependent upon a new federal program which forbids private sector companies from making new federal student loans. We believe that increasing revenues from its fee-based business and servicing of loans for the Education department coupled with restructuring initiatives should support its earnings.
As such, we have an Outperform recommendation on the stock. Our six-month target price of $24.00 equates to 5.9X our earnings estimate for 2010. With a quarterly dividend of $0.07 per share, this price target implies an expected total return of 22.9% over that period.
[ Bear of the Day ]:
Northern Trust Corporation's (Nasdaq: [ NTRS ]) first quarter earnings of $0.64 per share were below the Zacks Consensus Estimate attributed to lower net interest income and higher non-interest expenses. Low interest rates, which appear poised to stay for much of 2010, continue to restrain earnings, impacting net interest income, securities lending and mutual fund fees.
Credit quality also continues to remain a concern. The company continues to suffer from weakness in the broader economic environment. Credit metrics such as non-accrual loans, nonperforming assets and net charge-offs have increased over the prior-year levels.
Our six-month target price of $45.00 per share equates to about 15.3X our estimate for 2010. Combined with the $1.12 per share annual dividend, this target price implies an expected negative return of 7.7% over that period. This is consistent with our Underperform recommendation on the shares.
Latest Posts on the Zacks [ Analyst Blog ]:
News Corp Proposes, BSkyB Disposes
News Corp. (Nasdaq: [ NWSA ]) on Tuesday declared its intention to acquire a 61% stake in British Sky Broadcasting Group Plc. (BSkyB) for 7.8 billion (US$11.5 billion) or 700 pence per share. The Rupert Murdoch-led News Corp. already owns a 39% stake in BSkyB.
However, BSkyBa™s management has rejected the offer as too low and stated that they may support an offer of more than 800 pence per share. Nevertheless, BSkyB has entered into an agreement with News Corp. to work together to obtain the required approvals from regulatory authorities in the event of a merger. Moreover, both companies have decided to discuss on a valuation, which benefits all shareholders.
News Corp.a™s offer of 700 pence per share represents a premium of 16.7% over BSkyBa™s closing price of 600 pence on Monday. According to News Corp, the offer also values BSkyB at approximately 11.8X the lattera™s EBITDA (earnings before interest, taxes, depreciation and amortization) of 1.1 billion (US$1.7 billion) for the preceding twelve months ended Mar 31, 2010. News Corp. plans to finance the deal by utilizing its cash hoard of US$8.1 billion as of Mar 31, 2010 and borrowed funds.
News Corp. also disclosed that it made an initial offer of 675 pence per share to BSkyB last Thursday. The initial offer represented a premium of 17.6% over BSkyBa™s closing price of 574 pence per share on Wednesday.
British Sky Broadcasting together with its subsidiaries operates the leading pay television service in the UK and Ireland as well as broadband and telephony services. The company had approximately 9.8 million customers and 16,000 employees as of Mar 31, 2010.
News Corp.a™s offer for BSkyB is targeted at its strategy of further diversifying its revenue streams, trimming exposure to cyclical advertising revenues and bolstering direct consumer subscription revenues. The acquisition, if it materializes, is expected to significantly boost News Corp.a™s reach and will provide it the necessary scale to compete effectively with other media giants, such as Time Warner Inc. (NYSE: [ TWX ]) and Walt Disney Company (NYSE: [ DIS ]).
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.
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