CHICAGO, July 6, 2012 /PRNewswire/ -- Zacks Equity Research highlights Citi Trends, Inc. (Nasdaq: CTRN) as the Bull of the Day and Ford Motor Company (NYSE: F) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onAmerisafe Inc. (Nasdaq: AMSF), SeaBright Holdings, Inc. (NYSE: SBX) and Employers Holdings Inc. (NYSE: EIG).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We are upgrading our long-term recommendation on Citi Trends, Inc. (Nasdaq: CTRN) to Outperform on the back of the company's better-than-expected first-quarter 2012 results. After reporting a loss in three consecutive quarters, Citi Trends posted positive earnings of $0.69 per share.
Despite a 5% decline in comparable store sales, Citi Trends net sales increased 4.5% from the prior-year quarter, beating the Zacks Consensus Estimate. We believe Citi Trends effective cost-control initiatives and inventory management has helped it to drive growth.
Moreover, Citi Trends' extensive focus on store expansion strategy will drive top-line growth in the future. Looking ahead, the company has taken prudent steps to reduce inventory shrinkages, which we believe will facilitate its operational performance.
We are disappointed with Ford Motor Company's (NYSE: F) higher structural and commodity costs. The automaker expects to lose between $500 million and $600 million in 2012 in Europe, owing to the ongoing debt crisis.
Despite exceeding the Zacks Consensus Estimate by $0.04 per share in the first quarter of 2012, the company's profits fell sharply by 20% to $1.6 billion. Profits from all the operating regions declined except North America. Revenue in the quarter slipped 2% to $32.4 billion, barely surpassing the Zacks Consensus Estimate.
As such, we have downgraded our recommendation on the stock to Underperform from Neutral and set a target price of $8.75. This valuation is derived at 6.5x 2012 EPS, and reflects our recommendation downgrade.
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Optimistic on Amerisafe Growth
We have upgraded our recommendation on Amerisafe Inc. (Nasdaq: AMSF) to Outperform based on consistent top-line growth and sound financial position witnessed over the last few quarters, which paves the way for an improved growth outlook.
The company's first-quarter 2012 operating earnings of 45 cents per share outpaced the Zacks Consensus Estimate of 33 cents per share and the prior-year quarter earnings of 35 cents per share. Consequently, operating net income escalated 28.6% year over year to $8.4 million.
Reported results reflect higher premiums written and earned that shored up the top line, underwriting results and investment portfolio. These factors also drove the capital position, book value of the shares and return on equity (ROE), while also improving combined ratio and other profitability metrics. These positives were mitigated by higher-than-expected loss and loss adjustment expenses (LAE) and tax expense along with lower investment yields.
Amerisafe has a history of profitable underwriting in the hazardous industries in which it operates. We believe that the company's specialized knowledge and extensive experience of insuring employers engaged in hazardous industries will help it serve its policyholders better, leading to enhanced employer loyalty and policy retention.
After a period of consistent declines in the past years, Amerisafe's top line started improving in 2011 with growth of 13.1% over 2010, followed by 17.5% year-over-year growth in the first quarter of 2012. The upward trend was driven by higher premiums and improvement in investment income.
Additionally, Amerisafe's strong underwriting results are reflected by its steady operating performance, stemming from prudent management practices, better product pricing and demand structure, effective loss control, safety measures and an active claims management system. These factors have generated positive calendar-year reserve development trends.
Looking ahead, we believe that Amerisafe is well positioned to capitalize on changing market dynamics, wherein the workers' compensation market remains firm, as carriers re-evaluate their positions, thereby providing a boost to the company's fundamental growth and competitive edge against peers such as SeaBright Holdings, Inc. (NYSE: SBX) and Employers Holdings Inc. (NYSE: EIG).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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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