Zacks Bull and Bear of the Day Highlights: Patterson-UTI Energy, Amerisafe, Tiffany, Wal-Mart and Family Dollar
CHICAGO, Sept. 15, 2011 /PRNewswire/ -- Zacks Equity Research highlights Patterson-UTI Energy (Nasdaq: PTEN) as the Bull of the Day and Amerisafe, Inc. (Nasdaq: AMSF) as the Bear of the Day. In addition, Zacks Equity Research provides analysis Tiffany (NYSE: TIF), Wal-Mart (NYSE: WMT) and Family Dollar (NYSE: FDO).
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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 Patterson-UTI Energy (Nasdaq: PTEN) shares to Outperform from Neutral, reflecting strong demand for its services in North America. The company has been benefiting from increased activity in the unconventional oil and liquids-rich plays in the region, which have more than made up for the soft natural gas fundamentals.
We believe Patterson-UTI's earnings will continue to push higher, benefiting from its growing premium land rig fleet and the current boom in pressure pumping services. Additionally, the company's stellar financial health (free cash flow positive and a debt-free balance sheet) stands it in good stead.
As such, we believe Patterson-UTI Energy is well positioned going forward and view it as an attractive investment. This is reflected in our upgrade of the company's shares to Outperform from Neutral and our $27 price objective, which is based on 2011 P/E multiple of 11.7X.
Amerisafe, Inc.'s (Nasdaq: AMSF) second-quarter earnings lagged the Zacks Consensus Estimate substantially, due to high underwriting loss and reduced investment income coupled with higher expenses, which significantly deteriorated the combined ratio, operating cash flow and ROE.
The top-line growth was only cushioned by higher premiums written and earned as other revenue sources failed to showcase growth. Though the pricing environment has witnessed some improvement, the company is expected to face uncertainty for the next few quarters as the market weakness continues to hurt payrolls.
Our six-month target price of $18.00 per share equates to about 14.6x our earnings estimate for 2011. With no dividend supplement, this target price implies a total expected negative return of 7.8% over that period, which is consistent with our Underperform recommendation.
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Losing the War on Poverty
Things are not just bad at the bottom of the income scale, but in the middle of it as well. After adjusting for inflation, median (half above, half below) household income fell by 2.3% to $49,445. That is down by 6.4% since the start of the Great Depression and is 7.1% below the peak all the way back in 1999. Real median incomes are at their lowest level since 1996.
"Households" refers to both Families and to individuals living on their own. The median income for families was $61,544 while for individuals on their own it was $29,730.
In 2010, all age groups saw real median income fall. The decline was particularly acute among young households, those where the head of household is 24 yeas old or younger, where the median income plunged an astounding 9.34%, the largest drop on record, and down 15.28% since 2007.
Despite a growing overall population, the number of households headed by someone under 25 years old has actually dropped each year since 2005. This is a key group as far as resolving the housing overhang is concerned. The low rate of household formation reflects kids moving back in with their parents. If they don't have jobs, or if the jobs don't pay, it is sort of hard to get your own place.
The news was not quite as bad for their older brothers and sisters. Median incomes for the 25 to 34 year group, fell by 1.90% and are down 6.69% from 2007. That is the key age for people buying their first house (the under 25 group tend to rent an apartment first when starting out).
The 35 to 44 year old group fared the best of any age group, with a decline of just 0.72% for the year, but down 5.64% since 2007. The next group up, though, the 45 to 54 year olds, saw a sharp 4.3% drop for the year, and its median income is down 9.24% from 2007. The pre-retirement group, those between 55 and 64 years old, saw a 2.31% decline for the year and is down 6.25% since 2007.
Median income for the elderly (65 or older) fell by 1.45% for the year. However, they have fared the best by far since 2007, with a 5.52% increase. In part that reflects a much larger than usual increase in Social Security payments in 2009. It also probably reflects increases in dividend income, which is generally a much larger fraction of total income for people in retirement than those who are still working. People living on a "fixed income" have generally done better in the lesser Depression than those who are not on a "fixed income." Fixed is better than declining.
Distribution of Income
There was relatively little change on the year in the distribution of income between the top and the bottom of the scale, but if one takes a step back there has been a fairly relentless shifting of the size of the pie slices towards the top of the income distribution. The top 20% of the income distribution (Q5, or purple in the graph below) now gets 50.2% of the total income, up from 49.8% in 2000 and just 43.3% in 1970 (up in each decade snapshot). Of that, most has gone to the top 5%, with only a moderate increase in the income share of the 6th through 20th percentiles.
The top 5% now get 21.3% of the total income, up from 21.1% in 2000, and just 16.3% in 1970. In contrast, the share of income that is going to the bottom 20% has been shrinking. It does not look that dramatic on the graph, since it was low to begin with. It is down to 3.3% from 3.6% in 2000, and from 4.1% in 1970.
The next quintile up has also seen its share of the pie decline over time. It is currently at 8.5%, down from 8.9% a decade ago and 10.8%. The second graph combines the bottom two quintiles to show the share of income the bottom 40% get relative to the top 5% over time. As recently as 1980, the two groups gathered close to the same share of the national income pie, but the difference has widened dramatically over the years.
The relentless increase in the share of the income pie by the top of the distribution means that those retailers and manufacturers who focus on the wealthy have a tailwind, while those that focus on the bottom of the scale face a stiff headwind. In other words, good for Tiffany's (NYSE: TIF) and bad for Wal-Mart (NYSE: WMT) and Family Dollar (NYSE: FDO).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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