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Bull of the Day

Nelnet recently reported strong results for the first quarter, beating the Zacks Consensus Estimate by 22 cents.

Growth and Income

Analysts estimate that Nelnet will produce long-term EPS growth of 17.0%, and its stock has a dividend yield of 1.5%.

The Zacks #2 Rank stock trades at 6.0x 2011 consensus estimates.

Business

Nelnet is a transaction processing and finance company. It provides education-related products and services including student loan servicing, claim processing, and post-default collections.

The federal government recently eliminated the role of private lenders in originating federal student loans. However, Nelnet is expected to play a major role as a participant in the Department of Education’s servicing contract, under which it will service and collect government guaranteed loans.

Nelnet services over 1.2 million borrowers for the Department of Education.

Due to a decline in its student loan origination business, analysts are forecasting Nelnet's earnings to decline over the next two years. Longer term, however, they are more bullish and expect NNI to have long-term EPS growth of 17%.

First-Quarter Results

Nelnet's fee-based revenue from its payment processing and enrollment services businesses increased $6.3 million, or 14%, to $50.7 million, compared with the same period in 2009. The company also reported earnings per share of $1.14, soaring past the Zacks Consensus Estimate by 22 cents, or 23.9%.

Estimates

In the last month, the Zacks Consensus Estimate for 2010 is up 51 cents, or 14.4%, to $4.05, and the Zacks Consensus Estimate for 2011 is up 34 cents, or 12.5%, to $3.06.

Read the March 31 commentary on Nelnet

Last Week's Growth and Income Zacks Rank Buys

Target (TGT) is a blue chip retailer with an expected long-term EPS growth rate of 12.5% and a dividend yield of 1.3%. Click here for a closer look.

Ecolab (ECL) easily beat first-quarter estimates, and management guided higher for the rest of the year. This Zacks #2 Rank stock trades at 20.3x 2010 consensus EPS estimates and 16.2x 2011 consensus EPS estimates. For additional information, click here.

Johnson Controls (JCI) recently beat analyst estimates, and management raised its earnings guidance for the full year. JCI is a Zacks #2 Rank stock that trades at 14.1x fiscal 2010 EPS estimates. Click here for more details.

Gentex (GNTX) recently reported record results for the first quarter. The company beat analyst estimates for the fourth consecutive quarter. In those quarters, the average beat was 38.4%. Click here to read more.

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