Zacks Bull and Bear of the Day Highlights: Illinois Tool Works, Regis, JPMorgan Chase, U.S. Bancorp and BB&T Corporation
CHICAGO, May 10, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Illinois Tool Works (NYSE: ITW) as the Bull of the Day and Regis Corp. (NYSE: RGS), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on JPMorgan Chase & Co. (NYSE: JPM), U.S. Bancorp (NYSE: USB) and BB&T Corporation (NYSE: BBT).
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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:
Illinois Tool Works' (NYSE: ITW) first quarter results were impressive as EPS surpassed the Zacks Consensus of $0.84 by 7 cents and increased 30% year over year, driven primarily by a healthy product demand. Benefits may also be derived both from strengthening auto markets in North America and Europe and construction and welding businesses.
Management's earnings outlook for the year is also encouraging as end-market demand continues to improve and opportunities from market penetration remains strong. Moreover, at the quarter end, acquired revenue stood at a staggering $329 million, making acquisitions still a prime growth catalyst.
Incremental benefits are also expected from restructuring activities and share buyback programs. Thus, anticipating strong financial growth in the quarters ahead, we upgrade Illinois Tool Works to an Outperform recommendation.
Regis Corp.'s (NYSE: RGS) third quarter 2011 earnings missed the Zacks Consensus Estimate due to sluggish same-store sales and lower margin. The economic downturn has severely impacted the company's earnings in the last few quarters, and Regis now expects same-store sales to be in the range of -1% to +1% for 2012, reflecting persistent economic challenges.
Slower traffic due to economic concerns remains a drag on same-store sales. Moreover, Regis outlook remains below consensus, as consumer-visit pattern is not rebounding quickly. Consumers across the globe are cutting back on expenditures, which is resulting in a slowdown in spending and longer recesses between salon visits.
The company also faces lingering risk from fashion changes. Hence, we maintain our Underperform rating on the stock.
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Another Bank Failure, Tally Hits 40 in 2011
U.S. regulators shuttered Cocoa Beach, Florida-based Coastal Bank, taking the number of failed banks thus far in 2011 to 40. This follows 157 bank failures in 2010, 140 in 2009 and 25 in 2008.
While the financials of bigger banks have been stabilizing on the back of an economic recovery, many smaller banks are still struggling to survive. Nagging issues like rock-bottom home prices along with still-high loan defaults and unemployment levels continue to trouble such institutions.
Lingering effects of the financial crisis continue to weigh on many banks. It becomes a prerequisite for such banks to absorb bad loans offered during the credit explosion, making them susceptible to some severe problems. The uncertain environment is aggravating the risk of bank failures even further.
Coastal Bank had total assets of about $129.4 million and total deposits of about $123.9 million as of March 31, 2011.
This failure represents another blow to the Federal Deposit Insurance Corporation (FDIC) fund meant for protecting customer accounts, as it has been appointed receiver for these banks.
The Federal Deposit Insurance Corporation (FDIC) insures deposits in 7,657 banks and savings associations in the country as well as promotes the safety and soundness of these institutions. When a bank fails, the agency reimburses customers deposits of up to $250,000 per account.
Though the FDIC has managed to shore up its DIF over the past few quarters, the outbreak of bank failures has tested its limits. As of December 31, 2010, the fund remained in the red with a deficit of $7.4 billion, slightly better than the deficit of $8.0 billion in the prior quarter. The agency expects the fund to swing back to a surplus later this year.
The failure of Coastal Bank is expected to cost the FDIC about $13.4 million.
Miami, Florida-based Premier American Bank, National Association has agreed to assume the assets and deposits of Coastal Bank. The FDIC and Premier American Bank, N.A. have agreed to share losses on $108.2 million of Coastal Bank's assets.
The number of banks on FDIC's list of problem institutions increased to 884 in the fourth quarter of 2010 from 860 in the previous quarter. This is the highest number since the savings and loan crisis in the early 1990s.
Increasing loan losses on commercial real estate could trigger hundreds of bank failures in the coming years. Going by the current rate of bank insolvencies, the DIF is likely to feel a $52 billion dent by 2014. However, the pace of bank failures has been slow so far this year.
With so many bank failures, consolidation has become the industry norm. The failure of Washington Mutual in 2008 was the largest in the U.S. banking history. It was acquired by JPMorgan Chase & Co. (NYSE: JPM). The other major acquirers of failed institutions since 2008 include U.S. Bancorp (NYSE: USB) and BB&T Corporation (NYSE: BBT).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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