Zacks Bull and Bear of the Day Highlights: Hilltop Holdings, Guess?, JPMorgan Chase, Bank of America and Citigroup
CHICAGO, March 20, 2012 /PRNewswire/ -- Zacks Equity Research highlights Hilltop Holdings, Inc. (NYSE: HTH) as the Bull of the Day and Guess? Inc.'s (NYSE: GES) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC) and Citigroup Inc. (NYSE: C).
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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 recommendation on Hilltop Holdings, Inc. (NYSE: HTH) to Outperform based on its fourth quarter earnings that modestly surpassed the Zacks Consensus Estimate, based on a higher-than-expected top line that benefited from improved premiums, investment income and net realized gain coupled with lower-than-expected expenses.
Hilltop's capital position remains sound along with a risk-free balance sheet that lays scope for efficient capital deployment. This is also evident from the new share buyback program, fostering shareholders' confidence in the stock.
Overall, Hilltop should continue to tread ahead with its strategic approach in order to capitalize on the opportunities that the markets provide on stabilization. Our six-month price target is $10.00 per share, reflecting about 0.8x our book value estimate of $12.33 per share at September 30, 2012. This target price implies an expected total return of 15.9% over that period.
Guess? Inc.'s (NYSE: GES) fourth quarter and fiscal 2012 earnings missed year-ago earnings by 5.4% and 1.9%, respectively. Severe austerity measures taken by the European government to combat the debt crisis in the region resulted in reduced spending by consumers there.
Though this was offset by the slight increase in per capita income of the North American region, operating margin shrank, owing to higher SG&A as well as promotional activities. Same-store sales also declined in the quarter. In the wholesale segment, reorders for the fall collections as well as spring/summer orders also missed the mark.
Though the valuation on a price-to-book basis looks attractive (trailing 12-month ROE of 25.9%, well above the industry average), our six-month target price of $30.00 per share equates to about 10.0x our earnings estimate for 2012. We retain our Underperform recommendation.
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Foreclosures Plunge, Will Rise Soon
Last week, RealtyTrac, the leading online marketplace of foreclosure properties, released its foreclosure market report for February 2012. According to the report, foreclosure filings for the month dipped 2% from the prior month and 8% from the prior-year month, with a total of 206,900 properties receiving default, auction or repossession notices.
This was the lowest annual decline in foreclosure activity since October 2010. Actually, the drop in foreclosure activities in larger states was chiefly responsible for the fall in its results, though 21 states reported a rise in the foreclosure activities in February 2012.
Though there was a drop in overall foreclosure activity for the month under review, they are bound to increase in the upcoming months due to the $25 billion settlement deal that took place between mortgage servicers – JPMorgan Chase & Co. (NYSE: JPM),Bank of America Corporation (NYSE: BAC), Citigroup Inc. (NYSE: C), among others – 49 states' attorneys general and the regulators. The deal will speed up the rate of the foreclosure activities, which was almost frozen until now.
The major indicator, which confirmed that the foreclosures will surge over the next several months, is the rise in the new default notices issued. Issuance of default notice, the first step in the foreclosure process, inched up 1% on a month-over-month basis, but dipped 7% year over year to 58,886. Moreover, issuance of default notices increased nearly 20% year-over-year in those states where court orders are required before the foreclosure procedure begins.
Conversely, in February 2012, foreclosure auctions fell 2% from January 2012 and 13% from February 2011 to 84,180 properties. Likewise, the final stage -- i.e. bank repossessions -- slipped 4% from the previous month and 1% from the year-ago month to 63,834 properties. The top 10 states with the highest foreclosure activities were Nevada, California, Arizona, Georgia, Florida, Illinois, Michigan, South Carolina, Ohio and Wisconsin.
Further, for the month under review, foreclosure activity in 26 states with a judicial foreclosure process declined 2% from January 2012 but rose 24% from February 2011. However, in 24 states where a non-judicial foreclosure process is followed, there was 5% fall from the prior month and 23% decline on year-over-year basis.
Still a Long Way to Go
With nearly all the problems related to flawed paper work getting resolved, the downtrend in foreclosures will get reversed very soon. Moreover, the settlement deal clearly describes the procedures to be followed while foreclosing a property. This will allow the mortgage servicers to step up the foreclosure activities. Moreover, RealtyTrac expects foreclosures to rise 25% this year to 1 million homes, compared with 804,000 homes that were foreclosed in 2011.
Also, there will be additional pressure on the home prices across the nation as many properties are expected to come to the market due to increased foreclosure activities. We hope that there would be enough number of buyers for these properties; otherwise the housing market will have little chance of regaining a solid foothold. As for now, we should gear up to see an exceptional rise in foreclosure activities.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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