First Bancorp, Titan Machinery, Fiat, Honda Motor and General Motors highlighted as Zacks Bull and Bear of the Day

Jan 06, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 6, 2014 /PRNewswire/ -- Zacks Equity Research highlights First Bancorp (Nasdaq:FBNC-Free Report) as the Bull of the Day and Titan Machinery (Nasdaq:TITN-Free Report)as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheFiat S.p.A. (OTC:FIATY-Free Report), Honda Motor Co., Ltd. (NYSE: HMC-Free Report) and General Motors Company (NYSE: GM-Free Report).


Here is a synopsis of all five stocks:

Bull of the Day:

Earnings estimates have been rising for First Bancorp (Nasdaq:FBNC-Free Report) following its last positive earnings surprise. It is a Zacks Rank #1 (Strong Buy) stock.

The valuation picture looks attractive too with the stock trading at very reasonable multiples to earnings and book value.

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina. It has 96 branches, with 81 in North Carolina, 7 in South Carolina and 8 in Virginia. The company has total assets of approximately $3.2 billion.

First Bancorp reported better-than-expected third quarter results back on October 23. Earnings per share came in at 30 cents, beating the Zacks Consensus Estimate of 25 cents. It was a stellar 36% increase over the same quarter last year.

Net interest income actually declined 2% year-over-year as the decline in interest income was larger than the decline in interest expense. However, the adjusted net interest margin was relatively stable.

Non-interest income more than doubled though, due in part to an 11% increase in service charges on deposit accounts. The company also booked gains on foreclosed properties. Meanwhile, non-interest expenses were basically flat year-over-year.

Bear of the Day:

Titan Machinery (Nasdaq:TITN-Free Report) delivered disappointing quarterly results on December 5. Since then, analysts have slashed their estimates for both this year and next, sending the stock to a Zacks Rank of 5 (Strong Sell).

It was also Titan's third earnings miss in four quarters. Investors should consider avoiding this stock until its earnings momentum improves.

Titan Machinery owns and operates agricultural and construction equipment stores. It has a network of 105 North American dealerships in North Dakota, South Dakota, Iowa, Minnesota, Montana, Nebraska, Wyoming, Wisconsin, Colorado, Arizona, and New Mexico. It also has 14 European dealerships in Romania, Bulgaria, Serbia, and Ukraine. The Titan Machinery dealerships represent one or more of the CNH Industrial brands.

Titan Machinery reported its fiscal 2014 third quarter results on December 5. Earnings per share came in at 27 cents, well below the Zacks Consensus Estimate of 50 cents. It was a -59% decrease from the same quarter last year.

Revenue actually rose 1% year-over-year due largely to higher service and parts sales. However, 'Agriculture' revenue fell 4% as same-store sales dropped 6.5%. Management noted "pricing pressure" in the industry.

Gross profit declined from 16.2% to 15.9% of revenue. Meanwhile, operating expenses increased 17%, leading to a -38% drop in operating income.

Additional content:

Fiat Rises on Chrysler Deal

Share price of Italian automaker Fiat S.p.A. (OTC:FIATY-Free Report) jumped 15.1% to $9.55 on Jan 2, 2014, after the automaker signed an agreement with the UAW Retiree Medical Benefits Trust (VEBA Trust) to acquire 100% stake in Chrysler Group. The VEBA Trust owns 41.5% of Chrysler.

Fiat, which holds a 58.5% stake in Chrysler, had been trying to acquire the remaining shares from the trust for months. However, the two owners were not able to settle on the purchase price earlier. In Sep 2013, this conflict also resulted in announcement of an IPO by Chrysler.

Fiat will be paying $1.75 billion in cash to finance the transaction. Further, the Chrysler Group will pay about $1.9 billion as extraordinary dividends to make partial payment for the deal.

The deal is expected to close by Jan 20. Fiat will not require additional capital to finance the deal. Both Fiat and Chrysler will make the payments from their respective cash balances.

Chrysler Group and the UAW have also signed a memorandum of understanding under which Chrysler Group will provide VEBA Trust with $700 million in four equal installments. The first payment will be made on the closing of the deal. The remaining three installments will be made over the next three years on the same date. As a result of this payment, UAW will support the industrial operations at Chrysler Group and the further implementation of the Fiat-Chrysler alliance.

Fiat strives to become the largest player in the automaker industry, beating automaker aces like Honda Motor Co., Ltd. (NYSE: HMC-Free Report) and General Motors Company (NYSE: GM-Free Report). With the completion of this merger, Fiat will become the seventh largest company in the auto industry.

Notably, Italian unions apprehend that the merger will negatively impact production and employment in the country. However, Fiat expects the deal to prove beneficial in the long run.

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SOURCE Zacks Investment Research, Inc.