Electronic Arts, Airgas, General Motors, Ford Motor and Toyota Motor highlighted as Zacks Bull and Bear of the Day
CHICAGO, May 20, 2014 /PRNewswire/ -- Zacks Equity Research highlights Electronic Arts (Nasdaq:EA-Free Report) as the Bull of the Day and Airgas (NYSE:ARG-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onGeneral Motors Co. (NYSE:GM-Free Report), Ford Motor Co. (NYSE:F-Free Report) and Toyota Motor Corp. (NYSE:TM-Free Report).
Here is a synopsis of all five stocks:
The video game industry is an extremely competitive one and thanks to a rapidly changing marketplace—with the advent of more social games as well as tablet/phone platforms—many companies have been struggling to adapt. However, not all of the 'traditional' video game powers have struggled, as Electronic Arts (Nasdaq:EA-Free Report) has been soaring and it still remains positioned for more gains in the months ahead too.
Electronic Arts is one of the most famous developers and publishers of video game software and content, responsible for a variety of digital games under a number of categories. Arguably, the company is best known for having a hand in Madden NFL, The Sims, and Need for Speed franchises, though it has several other titles in a number of segments as well.
The stock has been an all-star performer over the past two years, as EA has appreciated by nearly 150% in the time frame. Plus, the stock has zoomed higher by over 50% just this year alone, making a pretty penny for those who have stayed in this growth story.
Yet with such amazing returns, investors have to be skeptical about a continuation of this trend. But if you look to recent earnings estimate revisions there is plenty of hope that EA can continue on this incredible streak for a bit longer.
When we think of companies that have been hit hard by the wild weather of the first quarter, ones that generally come to mind are those in the retail, transportation or travel industries. Yet while these might be the most well-known losers of the weather, some companies in the chemical space were also hit hard by the uncertainty.
A great example of this trend is Airgas (NYSE:ARG-Free Report), a Pennsylvania-based provider of industrial, medical and specialty gases. The company blamed the weather for its recent earnings miss, as the company was projected to put up $1.20/share in earnings, but only delivered $1.15/share instead, largely thanks to the negative impact of the cold on its refrigerant business.
However, the weakness for Airgas, and other chemical companies too, could be more than just a weather related issue. Sluggish business conditions and some economic uncertainty could spell trouble for this stock in the near term, a worry that can be confirmed by recent earnings estimate revisions for ARG.
Analysts have become extremely bearish on ARG's prospects for both the near term and the long term as of late. In fact, not a single estimate has moved higher in the past 30 days for any of the time periods that we study.
The poor trend is especially apparent when investors zero in on the current year time frame, as 12 estimates have gone lower in just the past 30 days. The consensus has also moved sharply lower as a result of these estimate revisions, as the current year has gone from $5.45/share 30 days ago to just $5.11/share today.
Additional content:
GM to Pay Maximum Fine for Late Recall
General Motors Co. (NYSE:GM-Free Report) agreed to pay a fine of $35 million to the U.S. safety regulators due to the late recall of 2.6 million older-model small cars associated with 31 crashes and 13 front-seat fatalities due to faulty ignition switches. This is the maximum fine which the government can impose. However, it only constitutes one day's revenue of General Motors based on sales in the first quarter of 2014.
General Motors identified the switch problem in 2001. As a matter of fact, the engineers provided different ways to rectify the defect but none of them was accepted due to cost concerns. The company finally announced a recall in Feb 2014.
According to General Motors, a heavy key ring or uneven roads can cause the ignition switch of the recalled cars to shift away from the run position, thus turning off the engine and electrical power. In such a situation, the front air bags will not inflate in case of a crash.
The National Highway Traffic Safety Administration (NHTSA), the auto safety supervisory body of the U.S. government, is investigating General Motors' delayed recall. Lawfully, the automakers are supposed to alert the NHTSA about any safety concern in vehicles within five business days of recognizing the problem.
Thus, General Motors has been accused of breaking the law. Congress says that the fine to be imposed on the automaker should be raised to $300 million. Moreover, the consumer safety advocate demands for a Justice Department investigation to decide the penalty.
Earlier, automakers like Ford Motor Co. (NYSE:F-Free Report) and Toyota Motor Corp. (NYSE:TM-Free Report) have been fined for late recalls. In 2013, Ford had to pay a $17.4 million fine for the late recall of Ford Escape SUVs with defective gas pedals. Toyota also paid a lump sum fine for delayed reporting of safety issues in its vehicles.
General Motors currently holds a Zacks Rank #3 (Hold).
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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