For Immediate Release
Chicago, IL – March 20, 2012 – Zacks Equity Research highlights
Hilltop Holdings, Inc. ( HTH) as the Bull of the
Day and Guess? Inc.'s ( GES) as the Bear of the
Day. In addition, Zacks Equity Research provides analysis on
JPMorgan Chase & Co. ( JPM), Bank of
America Corporation ( BAC) and Citigroup
Inc. ( C).
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 Hilltop Holdings,
Inc. ( HTH) to Outperform based on its fourth quarter
earnings that modestly surpassed the Zacks Consensus Estimate,
based on a higher-than-expected top line that benefited from
improved premiums, investment income and net realized gain coupled
with lower-than-expected expenses.
Hilltop's capital position remains sound along with a risk-free
balance sheet that lays scope for efficient capital deployment.
This is also evident from the new share buyback program, fostering
shareholders' confidence in the stock.
Overall, Hilltop should continue to tread ahead with its
strategic approach in order to capitalize on the opportunities that
the markets provide on stabilization. Our six-month price target is
$10.00 per share, reflecting about 0.8x our book value estimate of
$12.33 per share at September 30, 2012. This target price implies
an expected total return of 15.9% over that period.
Bear of the Day:
Guess? Inc.'s ( GES) fourth quarter and fiscal
2012 earnings missed year-ago earnings by 5.4% and 1.9%,
respectively. Severe austerity measures taken by the European
government to combat the debt crisis in the region resulted in
reduced spending by consumers there.
Though this was offset by the slight increase in per capita
income of the North American region, operating margin shrank, owing
to higher SG&A as well as promotional activities. Same-store
sales also declined in the quarter. In the wholesale segment,
reorders for the fall collections as well as spring/summer orders
also missed the mark.
Though the valuation on a price-to-book basis looks attractive
(trailing 12-month ROE of 25.9%, well above the industry average),
our six-month target price of $30.00 per share equates to about
10.0x our earnings estimate for 2012. We retain our Underperform
recommendation.
Latest Posts on the Zacks Analyst Blog:
Foreclosures Plunge, Will Rise
Soon
Last week, RealtyTrac, the leading online marketplace of
foreclosure properties, released its foreclosure market report for
February 2012. According to the report, foreclosure filings for the
month dipped 2% from the prior month and 8% from the prior-year
month, with a total of 206,900 properties receiving default,
auction or repossession notices.
This was the lowest annual decline in foreclosure activity since
October 2010. Actually, the drop in foreclosure activities in
larger states was chiefly responsible for the fall in its results,
though 21 states reported a rise in the foreclosure activities in
February 2012.
Though there was a drop in overall foreclosure activity for the
month under review, they are bound to increase in the upcoming
months due to the $25 billion settlement deal that took place
between mortgage servicers – JPMorgan Chase &
Co. ( JPM), Bank of America Corporation (
BAC), Citigroup Inc. ( C), among others – 49
states’ attorneys general and the regulators. The deal will speed
up the rate of the foreclosure activities, which was almost frozen
until now.
The major indicator, which confirmed that the foreclosures will
surge over the next several months, is the rise in the new default
notices issued. Issuance of default notice, the first step in the
foreclosure process, inched up 1% on a month-over-month basis, but
dipped 7% year over year to 58,886. Moreover, issuance of default
notices increased nearly 20% year-over-year in those states where
court orders are required before the foreclosure procedure
begins.
Conversely, in February 2012, foreclosure auctions fell 2% from
January 2012 and 13% from February 2011 to 84,180 properties.
Likewise, the final stage -- i.e. bank repossessions -- slipped 4%
from the previous month and 1% from the year-ago month to 63,834
properties. The top 10 states with the highest foreclosure
activities were Nevada, California, Arizona, Georgia, Florida,
Illinois, Michigan, South Carolina, Ohio and Wisconsin.
Further, for the month under review, foreclosure activity in 26
states with a judicial foreclosure process declined 2% from January
2012 but rose 24% from February 2011. However, in 24 states where a
non-judicial foreclosure process is followed, there was 5% fall
from the prior month and 23% decline on year-over-year basis.
Still a Long Way to Go
With nearly all the problems related to flawed paper work
getting resolved, the downtrend in foreclosures will get reversed
very soon. Moreover, the settlement deal clearly describes the
procedures to be followed while foreclosing a property. This will
allow the mortgage servicers to step up the foreclosure activities.
Moreover, RealtyTrac expects foreclosures to rise 25% this year to
1 million homes, compared with 804,000 homes that were foreclosed
in 2011.
Also, there will be additional pressure on the home prices
across the nation as many properties are expected to come to the
market due to increased foreclosure activities. We hope that there
would be enough number of buyers for these properties; otherwise
the housing market will have little chance of regaining a solid
foothold. As for now, we should gear up to see an exceptional rise
in foreclosure activities.
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
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events impacting stocks and the financial markets.
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BANK OF AMER CP (BAC): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
GUESS INC (GES): Free Stock Analysis Report
HILLTOP HLDGS (HTH): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
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