The Zacks Analyst Blog Highlights: Freddie Mac, Fannie Mae, BankUnited, Comerica and Yum! Brands

CHICAGO, Nov. 22, 2013 /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 the Freddie Mac (OTCBB:FMCC-Free Report), Fannie Mae (OTCBB:FNMA-Free Report), BankUnited, Inc. (NYSE: BKU-Free Report), Comerica, Inc. (NYSE: CMA-Free Report) and Yum! Brands Inc. (NYSE: YUM-Free Report).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

Freddie, Fannie Recapitalization Plan Rejected

 

Recently, Miami-based equity fund manager Fairholme Capital Management LLC's plan to recapitalize Freddie Mac (OTCBB:FMCC-Free Report) and Fannie Mae (OTCBB:FNMA-Free Report) was rejected by the White House. The National Economic Council Director Gene Sperling stated that recapitalization would create two new 'too big to fail' financial institutions.

 

Last week, Fairholme had announced its intention to acquire the insurance businesses of these two Government Sponsored Enterprises (GSEs) – Freddie Mac and Fannie Mae – through exchange of equities worth $52 billion. Fairholme is the largest stakeholder of preferred shares in these two GSEs.

 

This recapitalization plan would have resolved the uncertainty related to the future of Freddie Mac and Fannie Mae and freed them from government control. However, any proposal to recapitalize these GSEs requires government approval.

 

Freddie Mac and Fannie Mae, that own or guarantee nearly 67% of all the U.S. residential loans, were on the brink of collapse in 2008. The U.S. government bailed out the companies by taking approximately 80% stakes in both. Though an aggregate of $188 billion of capital was infused in these GSEs, the major part of it has been returned to the government in the form of dividends.

 

Additionally, if Freddie Mac and Fannie Mae were recapitalized, they would have likely dominated the mortgage market and possessed economies of scale. All these would restrict the entry of new firms in the market.

 

The government is against such a duopoly and wants to build a stronger mortgage market with scope for healthy competition among firms. Further, the government intends to restructure the entire housing mortgage market through housing finance reforms.

At present, both Freddie Mac and Fannie Mae have a Zacks Rank #3 (Hold). Some better-ranked finance stocks include BankUnited, Inc. (NYSE: BKU-Free Report) and Comerica, Inc. (NYSE: CMA-Free Report). Both these carry a Zacks Rank #2 (Buy).

 

Yum! Reorganizes Business Units

Louisville, Kentucky-based restaurant giant, Yum! Brands Inc. (NYSE: YUM-Free Report) recently announced a complete restructuring of its business divisions. According to the reshuffling, the company will be merging its Yum! Restaurants International (YRI) and the U.S. divisions for each of its three brands — KFC, Pizza Hut and Taco Bell.

However, the company will continue to operate its other two divisions — Yum! Restaurants China and Yum! Restaurants India — separately on expectations of potential growth. This reorganization is an attempt by the Yum! Brands to improve its brand recognition and concentrate on individual geographical markets, thus boosting its business.

These structural changes are expected to take effect from Jan 1, 2014. From the beginning of fiscal 2014, Yum! Brands will be posting its financial results for the following divisions — KFC, Pizza Hut, Taco Bell, Yum! Restaurants China and Yum! Restaurants India. The company will no longer be providing separate results for the U.S. and YRI divisions.

As part of the realignment, Yum! Brands also announced few executive changes. Rick Carucci, the President of Yum! Brands, will step down in Mar 2014.

Niren Chaudhary — President of Yum! Restaurants India — and Sam Su — vice chairman of Yum! Brands and chairman as well as Chief Executive Officer (CEO) of Yum! Restaurants China — will be reporting to David C. Novak — CEO of Yum! Brands. Additionally, the CEOs of all the three brands will now be directly working under Novak. These leadership changes are in line with YUM! Brands' focus on streamlining its organizational structure.

YUM! Brands' initiative to restructure its business comes in the wake of witnessing disappointing financial results for the past few quarters due to weak performance in its China division. China, which once played a pivotal role in the company's growth story, began to falter after fourth-quarter 2012 due to bad publicity resulting from the quality issue. Moreover, poor sales performance at KFC China in September compelled YUM! Brands to state that the China comps will continue to be down in the fourth quarter.

YUM! Brands has a Zacks Rank #4 (Sell).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

 

Get the full Report on FMCC - FREE

Get the full Report on FNMA - FREE

Get the full Report on BKU - FREE

Get the full Report on CMA - FREE

Get the full Report on YUM - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

 

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

 

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

 

SOURCE Zacks Investment Research, Inc.



RELATED LINKS
http://www.zacks.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.