CHICAGO, Aug. 23, 2011 /PRNewswire/ -- Zacks Equity
Research highlights Fastenal Co. (Nasdaq: FAST) as the Bull
of the Day and Cincinnati Financial (Nasdaq: CINF) as the
Bear of the Day. In addition, Zacks Equity Research provides
analysis JPMorgan Chase & Co. (NYSE: JPM), U.S.
Bancorp (NYSE: USB) and BB&T Corporation (NYSE:
BBT).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
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:
Fastenal Co. (Nasdaq: FAST) is one of the leading
distributors of industrial and construction supplies and fasteners.
It has a diversified customer base that helps it retain its market
position even during the toughest times. Moreover, the hub and
spoke model employed to improve the level of customer services will
also increase customer satisfaction and benefit its business going
forward.
In addition, Fastenal is focused on expanding its product
portfolio. Furthermore, the company's collaborative efforts to work
with state governments will strengthen its position in the local
market.
Earnings in the most recent quarter marginally exceeded the
Zacks Consensus Estimate by $0.01 per
share. Given these conditions, we upgraded our recommendation on
shares of Fastenal to Outperform from Neutral and set a target
price of $41.
Bear of the Day:
We downgraded our recommendation on Cincinnati Financial
(Nasdaq: CINF) following the wider-than-expected operating loss
reported by the company in second quarter 2011 owing to huge cat
losses. Moreover, the Commercial Lines segment will remain somewhat
weak due to the sluggish economy, although the decline in business
is moderating.
The company is expected to face limited investment growth due to
continued low yields for investment options. We expect pressure on
top line until the soft insurance market cycle turns
completely.
Our six-month target price of $25.00 equates to about 42.4x our earnings
estimate for 2011. We view the $1.60
per common share annual dividend as secure, implying a negative
return of about 4.7% over that period. This is consistent with our
Underperform recommendation on the shares.
Latest Posts on the Zacks Analyst Blog:
Bank Failures Crawl Up to 68
Bank failures continue with no end in sight. Last Friday, U.S.
regulators closed down three more banks in Florida, Georgia and Illinois, taking the total number to 68 so far
in 2011. Looking back, there were 157 bank failures in 2010, 140 in
2009 and 25 in 2008.
While the financials of bigger banks have been stabilizing on
the back of an economic recovery, many smaller banks are still
struggling to survive. Nagging issues like rock-bottom home prices
along with still-high loan defaults and unemployment levels
continue to trouble such institutions.
Lingering effects of the financial crisis continue to weigh on
many banks. It becomes obligatory for such banks to absorb bad
loans offered during the credit explosion, making them susceptible
to severe problems. The uncertain environment is aggravating the
risk of bank failures even further.
The most recent failed banks are:
- Palm Beach, Florida-based
Lydian Private Bank, with total assets of about $1.70 billion and total deposits of about
$1.24 billion as of June 30, 2011.
- Statesboro, Georgia-based
First Southern National Bank, with about $164.6 million in total assets and $159.7 million in total deposits as of
June 30, 2011.
- Geneva, Illinois-based First
Choice Bank, with about $141.0
million in total assets and $137.2
million in total deposits as of June
30, 2011.
These bank failures represent another jolt to the deposit
insurance fund (DIF), meant for protecting customer accounts.
The Federal Deposit Insurance Corporation (FDIC) insures
deposits in 7,575 banks and savings associations in the country as
well as promotes the safety and soundness of these institutions.
When a bank fails, the agency reimburses customer deposits of up to
$250,000 per account.
Though the FDIC has managed to shore up its deposit insurance
fund during the last few quarters, the ongoing bank failures have
kept it under pressure. As of March 31,
2011, the fund remained in the red with a deficit of
$1.0 billion, though substantially
better than the deficit of $7.4
billion in the prior quarter.
The failure of Lydian Private Bank is expected to deal a blow of
about $293.2 million to the FDIC,
while First Southern National Bank and First Choice Bank will cost
about $39.6 million and $31.0 million, respectively.
Miami, Florida-based Sabadell
United Bank, National Association has agreed to assume
the assets and deposits of Lydian Private Bank. The FDIC and
Sabadell United Bankhave agreed to share losses on $907.1 million of Lydian Private Bank's
assets.
Albany, Georgia-based Heritage
Bank of the South has agreed to assume the assets and deposits
of First Southern National Bank. The FDIC and Heritage Bank of the
Southhave agreed to share losses on $115.7
million of First Southern National Bank's assets.
Oak Brook, Illinois-based
Inland Bank & Trust has agreed to assume the assets and
deposits of First Choice Bank.
The number of banks on FDIC's list of problem institutions saw a
marginal increase to 888 in the first quarter from 884 in the
previous. This is the highest number since way back in March 31, 1993, when there were 928 problem
institutions due to the savings and loan crisis.
Increasing loan losses on commercial real estate could trigger
hundreds of bank failures in the coming years. Going by the current
rate of bank insolvencies, the DIF is likely to feel a $52 billion dent by 2014. However, considering
the track record so far this year, the FDIC does not expect the
number of bank failures in 2011 to surpass that of 2010.
With so many bank failures, consolidation has become the
industry fashion. For almost all the failed banks, the FDIC enters
into a purchase agreement with healthy institutions. When
Washington Mutual collapsed in 2008 (branded as the largest bank
failure in the U.S. history), it was acquired by JPMorgan Chase
& Co. (NYSE: JPM). The other major acquirers of failed
institutions since 2008 include U.S. Bancorp (NYSE: USB) and
BB&T Corporation (NYSE: BBT).
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
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