Zacks Bull and Bear of the Day Highlights: Lincoln Electric, China Life Insurance, DirecTV, Electronic Arts and Wynn Resorts
CHICAGO, May 9, 2012 /PRNewswire/ -- Zacks Equity Research highlights Lincoln Electric Holdings (LECO) as the Bull of the Day and China Life Insurance - ADR (LFC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on DirecTV (DTV),Electronic Arts (EA) and Wynn Resorts (WYNN).
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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:
Lincoln Electric Holdings (LECO) reported fiscal 2012 first quarter adjusted EPS of $0.76, versus $0.50 in the year-earlier quarter. Total revenue increased 21% year over year to a record $727 million. Both outperformed the respective Zacks Consensus Estimates.
Lincoln Electric continues to focus on its growth strategies, which include acquisitions and new product introductions. Allied with its aim of turning cost-competitive, Lincoln Electric is implementing various cost-control measures. We believe that the company will post strong growth on the heels of an economic recovery and investments in the emerging markets.
We reiterate our Outperform recommendation with a target price of $58.00. Our long-term Outperform recommendation on the stock indicates that it will perform above the overall market. Our $58.00 target price, 18.0x our 2012 EPS estimate, reflects this view.
We are downgrading our recommendation on China Life Insurance - ADR (LFC) to Underperform from Neutral due to the lack of any significant growth catalyst amid the prevailing interest rate, market and currency risks. China Life's full-year 2011 earnings declined steeply from the prior year, due to low premium income and increased impairment losses.
Operating cash flow also declined substantially due to increased claim expenses and adverse changes in the fair values of securities. Despite a strong brand name, significant competition on the domestic front limits earnings growth. Though an extensive domestic distribution channel, strong balance sheet and stable ratings augur strength, we expect limited upside in the near term.
Our six-month target price of $36.00 equates to 25.9x our earnings estimate for 2012. Combined with the $0.81 per ADR annual dividend, this target price implies an expected total return of a negative 8.7% over that period.
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Can't Cut Through the Greece
The focus following the European elections over the weekend was on France. But it seems like the bigger elections-related story is Greece, where an unclear mandate is leaving heightening concerns about its recently agreed bailout. The markets appear to be willing to give the new socialist French president the benefit of the doubt, but Greece seems again to be moving to center stage for all the wrong reasons.
A non-partisan and technocratic government in Greece agreed to the terms of a fresh bailout, which was to be implemented by a new government elected through parliamentary elections last weekend. But the election has failed to clear the air by giving a fractured mandate.
With the mainstream parties unable to put together a viable coalition, it is now up to the more extremist parties to try forming the government. These parties were able to increase their standing with the Greek electorate by opposing the new bailout and the associated austerity measures.
Greece is ground zero of the Euro-zone debt crisis, and these political developments appear on track to keep the country on the spot. With a major part of the new parliament opposed to the harsh new austerity measures that the interim technocratic government agreed to as the price of a fresh bailout, the new elections have raised rather answered any questions.
Not only is the status of that bailout in doubt now, but so is the country's position within the Euro-zone. In a best-case scenario, the country goes back to the polls next month, hoping for a more decisive mandate. Either way, Greece is again in the eye of the storm.
It is fairly quiet on the home front, with nothing major on the economic calendar. On the earnings front, DirecTV (DTV) missed expectations of subscriber additions, but its top-line was barely below consensus. And we got weaker-than-expected results from Electronic Arts (EA) and Wynn Resorts (WYNN) after the close on Monday.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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