CHICAGO, Aug. 19, 2011 /PRNewswire/ -- Zacks.com announces
the list of stocks featured in the Analyst Blog. Every day the
Zacks Equity Research analysts discuss the latest news and events
impacting stocks and the financial markets. Stocks recently
featured in the blog include: Citi Trends Inc. (Nasdaq:
CTRN), The Goldman Sachs Group Inc. (NYSE: GS) M&T
Bank Corp. (NYSE: MTB) The Allstate Corporation
(NYSE: ALL) and Freddie Mac (OTC: FMCC).
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Here are highlights from Thursday's Analyst Blog:
Citi Trends' Net Loss Widens
Citi Trends Inc. (Nasdaq: CTRN) recently reported
disappointing second-quarter 2011 results. The company's net loss
widens 16 folds to $10.0 million
compared with $0.6 million in the
year-ago quarter.
Net loss per share came in at 69
cents versus 4 cents in the
year-ago quarter, primarily due to negative comparable store sales.
Moreover, net loss was higher than the Zacks Consensus Estimate of
64 cents per share.
During the quarter, Citi Trends recorded a 0.9% year-over-year
growth in net sales to $130.2
million, missing the Zacks Consensus Estimate of
$131.0 million. Comparable store
sales dropped 11.9% in the second quarter of fiscal 2011.
Citi Trends' gross profit plunged 10.0% from the prior-year
period to $43.5 million, mainly due
to higher cost of sales. Gross margin came in at 33.4% compared
with 37.4% in prior-year quarter.
Selling, general and administrative expenses increased 14.1%
year over year to $50.7 million.
Accordingly, the company's operating loss increased almost 16 folds
to $15.2 million compared with
$0.9 million in the year-ago
period.
Citi Trends ended the quarter with a debt-free balance sheet and
cash and cash equivalents of $49.5
million compared with $84.6
million in the prior-year period. Shareholders' equity at
the end of the quarter was $208.7
million compared with $195.6
million in the year-ago period.
Goldman Pressed with Allegations
The Goldman Sachs Group Inc. (NYSE: GS) and two of its
mortgage subsidiaries, along with M&T Bank Corp.
(NYSE: MTB) was sued by bond insurer CIFG Assurance North America
Inc. The complaint lodged claims that Goldman and M&T Bank
misrepresented documents and convinced CIFG to insure
mortgage-backed securities worth $275
million.
CIFG alleged that Goldman and its subsidiaries along with
M&T Bank issued misleading statements and omissions related to
the mortgage-backed securities from a portfolio of 6,204 loans,
most of which were made by M&T Bank, which has concealed risks
associated with the securities.
The bond insurer also claimed that Goldman and M&T Bank did
not fully reveal the quality of the securitized portfolio and
concerns associated with the mortgage market. Goldman sold the
portfolio GSAA Home Equity Trust 2007-S1 in February 2007 after getting it insured from CIFG
by presenting untrue statements.
CIFG has filed lawsuit in the New York
State Supreme Court in Manhattan. The company's demands for damages
include repayment of compensation, to be paid by CIFG and an order
for Goldman and M&T Bank to repurchase the nonperforming loans
from the portfolio.
Earlier this week, Goldman was also sued by The Allstate
Corporation (NYSE: ALL), the largest publicly traded U.S. home
and auto insurer. The complaint lodged claims that Goldman
misrepresented documents as an underwriter in the sale of over
$123 million in mortgage-backed
securities from April 2006 to
March 2007.
Last week, Goldman was sued by National Credit Union
Administration (NCUA), the U.S. regulator of credit unions. The
complaint lodged claims that Goldman violated federal and state
securities laws and misrepresented documents as an underwriter in
the sale of $1.2 billion in
mortgage-backed securities.
However, the regulators are proactively trying to recover losses
of credit unions through lawsuits against banks that were involved
in malpractices related to selling mortgage-backed securities. The
proceeds from these lawsuits would increase NCUA's insurance and
emergency support funds to a considerable extent.
Earlier in July, Goldman was also sued by Liberty Mutual
Insurance Co. and several other investors including Peerless
Insurance Co., Employers Insurance Co., Safeco and Liberty Life
Assurance Co. for misrepresenting the financial condition of
Freddie Mac (OTC: FMCC) as an underwriter of Freddie's
offering of Series Z preferred stock in late 2007.
According to the lawsuit, Freddie Mac issued 240 million shares
of Series Z preferred shares in November
2007, which increased approximately $5.9 billion. The shares were supported by
billions of dollars in subprime residential mortgages. The
investors alleged that Goldman misled them with statements and
omissions related to the preferred stock offering based on which
they invested $37.5 billion.
Last year, Goldman settled a charge by paying $550 million for not disclosing the buyers the
role of a hedge fund in formulating the CDOs and taking a short
position and betting on them to perform poorly in the open market.
The SEC has stepped up its investigation on Wall Street companies
over the sale of CDOs that were responsible for significant losses
suffered by the investors and financial crisis.
The continuous increasing number of lawsuits will dent Goldman's
reputation and its financials, though investors, who have lost
their hard-earned money in such investments, should feel
relieved.
Shares of Goldman currently retain a Zacks #3 Rank, which
translates into a short-term Hold rating. However, considering the
fundamentals, we maintain a long-term Underperform recommendation
on the stock.
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