Business & Finance
Fri, October 1, 2010Thu, September 30, 2010Wed, September 29, 2010Tue, September 28, 2010Mon, September 27, 2010Sun, September 26, 2010Fri, September 24, 2010Thu, September 23, 2010Wed, September 22, 2010Tue, September 21, 2010Mon, September 20, 2010Fri, September 17, 2010Thu, September 16, 2010Nelnet, Northern Trust, PPG, Home Depot and Ethan Allen
Published in Business and Finance on Friday, September 24th 2010 at 14:11 GMT by Market Wire
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: Nelnet (NYSE: [ NNI ]) as the Bull of the Day and Northern Trust Corporation (Nasdaq: [ NTRS ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PPG Industries (NYSE: [ PPG ]), Home Depot (NYSE: [ HD ]) and Ethan Allen (NYSE: [ ETH ])
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 ]) second quarter earnings came in well ahead of the Zacks Consensus Estimate, reflecting a fall in interest expenses and the benefits of revenue diversification.
Though the student loan reform law has barred the company from originating federal student loans since July, in recent years, Nelnet has expanded in areas that are independent of the federal program. Increasing revenues from its fee-based business and servicing of loans for the Education department coupled with restructuring initiatives should support its earnings. Also with an expectation for a low interest rate environment, its floor income is projected to benefit.
While the challenging economic environment and anticipation of increase in compliance costs due to the recent financial reform act are the downsides, Nelnet's solid capital levels and debt reduction efforts are encouraging. Hence we have an Outperform recommendation on NNI shares.
[ Bear of the Day ]:
We have downgraded the recommendation for Northern Trust Corporation (Nasdaq: [ NTRS ]) to Underperform from Neutral given uncertain prospects related to changes within the financial services industry and regulatory environment.
Low interest rates continue to restrain earnings, impacting net interest income and securities lending fees. Moreover, the recent Dodd-Frank Act will ring in numerous regulatory changes over the next several years.
Our six-month target price of $44.00 per share equates to about 15.2x our estimate for 2010. Combined with the $1.12 per share annual dividend, this target price implies an expected negative return of 8.0% over that period.
Latest Posts on the Zacks [ Analyst Blog ]:
Used Home Prices Rebound Slightly
The median price of a home was $178,600 in August. That is down 1.9% from July but still up 0.8% from a year ago. With the months of supply still in the double digits -- and higher than they were during the heart of the 2008 housing bust -- it seems very clear to me that the price of existing homes will continue to fall over the next six months to a year.
Fortunately, relative to incomes and rents, existing homes are far more reasonably priced than they were in 2007 or 2008. They are not cheap by historical standards, but not wildly high as they used to be. That fact will probably limit the coming decline to between 5 and 10% as measured by the Case Schiller index, not a repeat of the earlier decline of over 30%.
Why am I spilling so much ink (or electrons) over the months of supply? Because it is the biggest factor in the future direction of existing home prices. It is existing home prices that are important to the economy, not the level of turnover. The sale of an existing asset, like a used home, creates almost no economic activity.
Oh sure, it is very important to the income of realtors, and when people move in to a anew for thema house they tend to redecorate. That is great for paint firms like PPG Industries (NYSE: [ PPG ]), retailers like Home Depot (NYSE: [ HD ]) that sell the paint and perhaps for furniture stores like Ethan Allen (NYSE: [ ETH ]), but it pales to the amount of activity that takes place when a new home is built and sold. New homes also need paint, but they also need lumber, wall board, roofing materials and especially labor. Turnover of existing homes does nothing in that regard.
Used home prices are a different story altogether. For the vast majority of Americans, equity in their houses is their most important asset and store of wealth. Or at least before the housing bubble popped and erased over $8 trillion in housing wealth it was. As it stands now, 23% of all homes with mortgages (about 70% of all homes, the rest are owned free and clear) are aunderwatera and an additional 5% have less than 5% positive equity. Thus if home prices do decline another 5%, they too will own more on their houses than the house is worth.
Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].
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