For Immediate Release
Chicago, IL – November 16, 2012 – Zacks Equity Research highlights Triumph Group, Inc. (NYSE: (TGI - Analyst Report) as the Bull of the Day and Republic Services, Inc. (NYSE: RSG) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Charles Schwab Corporation (SCHW - Analyst Report), TD Ameritrade Holding Corporation (AMTD - Analyst Report) and E*TRADE Financial Corporation (ETFC - Analyst Report).
Here is a synopsis of all five stocks:
Bull of the Day:
We are upgrading our recommendation on Triumph Group, Inc. (TGI - Analyst Report) from Neutral to Outperform based on the huge organic growth the company has experienced on the back of high demand in the industry. Also, efforts of lowering costs, increasing margins and a strong balance sheet bode well for the stock.
The company's concerted efforts in achieving these positives would in turn increase shareholders value which is considered to be an added perk. TGI reported strong results in the second quarter 2013 with earnings of $1.57 per share, an increase of 36.5% year over year. Also, there was a huge jump in revenue of 18.7%, leading it to stand at $938 million.
However, factors like the cyclality of the aerospace market, lower demand on the military front, foreign currency fluctuations and Government spending in defense may pose a certain risk to the growth of the company.
Bear of the Day:
We reaffirm our Underperform recommendation on Republic Services, Inc. (RSG) with a target price of $24. The company's third-quarter 2012 adjusted earnings of $0.47 per share missed the Zacks Consensus Estimate of $0.49 and were also behind the year-ago adjusted earnings of $0.53.
Total revenues decreased 3.3% year over year to $2.047 billion, trailing behind the Zacks Consensus Estimate of $2.115 billion for the quarter. The top line declined due to reduction in fuel surcharge, volumes and recycling commodities pricing, partially offset by inflationary effect of core prices and acquisitions (net of divestitures).
The company intends to spend nearly $30 million in restructuring activities, thereby contracting margins in the next quarter. Our price target of $24 is based on 12.6x our fiscal 2013 earnings estimate of $1.90 per share.
Schwab Reports Flat DARTs
In its monthly market activity report for October 2012, The Charles Schwab Corporation (SCHW - Analyst Report) reported almost flat Daily Average Revenue Trades (DARTs) compared with the prior month and declining 14% from the prior-year month to 439,700. This implies that the company witnessed insufficient trading activity. Further, the month was also impacted by weather-related market closures for two days.
Schwab’s net new assets bought by the new and existing clients totaled $24.7 billion, surging significantly both from October 2011 and September 2012. Also, this included a $15.7 billion inflow related to a mutual fund clearing services client. Further, total client assets stood at $1.90 trillion, improving 13% compared with October 2011 and at par compared with September 2012.
Schwab opened 74,000 brokerage accounts in the reported month, climbing 16% compared with both October 2011 and September 2012. The company’s active brokerage accounts totaled 8.73 million, up 2% year over year and almost at par compared with the prior-month.
Moreover, clients’ banking accounts augmented 10% year over year and 1% over the prior-month to 851,000. Similarly, the number of corporate retirement plan participants was 1,557 million, improving 6% from October 2011 and 1% from September 2012.
Almost similar to Schwab, TD Ameritrade Holding Corporation (AMTD - Analyst Report) recorded DARTs of 330,000, down 19% year over year and 7% from the prior month. The dip largely resulted from the uncertain economic recovery and investors’ reluctance to invest in the equity markets. Moreover, the month under review excluded two trading days due to closed markets following Hurricane Sandy.
Likewise, E*TRADE Financial Corporation (ETFC - Analyst Report) also reported a fall in DARTs both from the prior-year month and prior month. DARTs for October were 124,246, declining 21% from October 2011 and 10% from September 2012.
Lower trading activities and fluctuating interest rates are expected to continuously impact the company’s financials in the near term. Further, we remain concerned about the company’s low capital intensity relative to its peers. However, its focus on low-cost capital structure will help it sustain better results in the upcoming quarters.
Schwab currently retains a Zacks # 3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we maintain a long-term Neutral recommendation on the stock.
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