For Immediate Release
Chicago, IL – May 11, 2012 – Zacks Equity Research highlights ProAssurance (PRA - Analyst Report) as the Bull of the Day and RadioShack as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford Motor ((F - Analyst Report) ), Fiat SpA () and General Motors ((GM - Analyst Report) )
Full analysis of all these stocks is available at https://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
ProAssurance Corp.'s (PRA - Analyst Report) first-quarter earnings surpassed the Zacks Consensus Estimate on the back of an improved top line. Additionally, enhanced operating cash flow and asset position aided in driving the book value of shares. Higher operating cash flow is also likely to translate into enhanced operating leverage and generation of excess capital for share repurchases.
Though the intense price and product competition, weak rate environment, loss cost trends and regulatory challenges limit the desired upside in the sector, we believe the benefits of geographic diversity, aggressive claims defense, stable ratings, improving ROE and strong financial position are likely to have a positive impact on the company over time.
Our six-month target price of $108.00 per share equates to about 15.2x our earnings estimate for 2012. Combined with the $1.00 per share annual dividend, this target price implies an expected return of 21% over that period, which is consistent with our Outperform recommendation.
Bear of the Day:
The nightmare of RadioShack Corp. persists as the company's first-quarter 2012 financial results were pathetic. The company's core consumer electronics retail business is on a secular downtrend and is unlikely to be revived in the near future. Customers increasingly prefer online purchase instead of visiting brick-and-mortar retail stores.
Loss of footfall is taking a toll on RadioShack's mobility business, on which the company is banking for its future growth. Further, instead of computers and cameras, majority of consumers prefer tablets and smartphones, which are less profitable for the retail industry.
In the last quarter, comparable store sales for the company-operated stores and kiosks decreased 4.2% year over year. This is a key retail performance indicator measuring growth from existing sales locations. We do not find any immediate growth catalyst and thus reaffirm our Underperform recommendation.
Latest Posts on the Zacks Analyst Blog:
Ford Shortens Summer Shutdown
Ford Motor Co. ((F - Analyst Report) ) plans to boost output by 40,000 vehicles by shortening the summer shutdown at its 13 North American plants to one week from the traditional two weeks. The move is based on the company’s aim to match output with improving demand for its vehicles and is consistent with its target to enhance annual production capacity by 400,000 vehicles.
Recently, the automaker revealed its fear to lose market share due to insufficient capacity to meet consumer demand. Most of the company’s plants are already operating at maximum capacity. As a result, adding a week of production to the plants turned out an easy way out from the capacity bottleneck issue.
The 13 plants include 6 assembly including Chicago Assembly, Dearborn Truck, Kentucky Truck, Louisville Assembly, Michigan Assembly and Kansas City Assembly. The remaining 7 plants include Dearborn Engine, Chicago Stamping, Cleveland Engine No. 1, Lima Engine, Essex Engine, Sterling and Rawsonville.
These plants are normally closed for two weeks around the U.S. Independence Day holiday on July 4 in order to switch production to the next model year. At that time, automakers gear up the facilities for the next vehicle models by making changes in engineering and design systems.
Ford is not exception to the capacity issue. Recently, Chrysler Group LLC – controlled by Italy’s Fiat SpA () – revealed its plan to give up normal two-week shutdown in summer for 2012 due to the same problem. However, no one has heard from General Motors Company ((GM - Analyst Report) ) regarding its production schedule.
Last month, U.S. saw a sluggish 2.3% growth in light vehicle sales to 1.18 million units from 1.16 million units in the same month last year. Meanwhile, it rose 9.5% to seasonally adjusted annual rate (SAAR) of 14.42 million units from 13.17 million units in April 2011.
The sluggish growth can be attributable to lower sales recorded by GM and Ford and fewer selling days (due to more Sundays than April last year). But thanks to the fuel-efficient lineups and pent up demand that kept the auto sales recovery on track.
Ford’s sales slid 5% to 180,350 vehicles due to shortages in production. The company’s top selling vehicle during the month was F-Series pickup trucks, which saw a 4% rise in sales to 47,453 units. Meanwhile, sales of the recently revamped models – Lincoln MKS sedan and MKT crossover – surged more than 50% during the month.
Ford, a Zacks #3 Rank (Hold) stock, posted a sharp 20% fall in profits to $1.6 billion in the first quarter of the year from $2.0 billion in the same quarter of 2011. On per share basis, profits ebbed 17% to 39 cents from 47 cents in the first quarter of 2011. Nevertheless, it was higher than the Zacks Consensus Estimate of 35 cents.
Get the full analysis of all these stocks by going to https://at.zacks.com/?id=2649.
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