CHICAGO, May 3, 2011 /PRNewswire/ -- Zacks Equity Research highlights Pool Corporation (Nasdaq: POOL) as the Bull of the Day and Everest Re Group (NYSE: RE) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Humana (NYSE: HUM), Loews Corp. (NYSE: L) and Diamond Offshore (NYSE: DO).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Pool Corporation's (Nasdaq: POOL) first-quarter 2011 earnings outperformed the Zacks Consensus Estimate. The company is an acknowledged leader in the industry. The potential for market growth is significant and cost-containment initiatives augur well for the business.
The upcoming quarter is seasonally strong. Pool generates the major portion of its revenue in the second quarter of every year. Hence, we upgrade the stock from a Neutral to an Outperform recommendation.
Our six-month target price of $36.00 equates to 25.2x our earnings estimate for 2011. This price target implies an expected total return of 19.8% over that period.
Everest Re Group (NYSE: RE) reported an operating loss in the quarter, wider than the Zacks Consensus estimate as well as year ago results. The quarter suffered hugely due to the Australian flooding in January, the New Zealand Earthquake in February and the Tohoku Earthquake in March.
We believe that its top-line growth will remain somewhat restricted due to the expected decline in the casualty line as a result of tough market conditions. Additionally, the potential for future reserve additions remains a challenge.
Our six-month target price of $83.00 equates to 36.9x our earnings estimate for 2011. With an annual dividend of $1.92 per share, this price target implies an expected negative total return of 7.8% over that period. This is consistent with our Underperform recommendation on the shares.
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Symbol of Terrorism Removed
The death of Osama bin Laden at the hands of U.S. Special Forces in a Pakistani city last night is major news on the global terrorism front. His removal from the scene deals a major psychological blow to al-Qaeda, bin Laden's organization.
Bin Laden's removal from the scene has the potential to separate the ethnic Arab al-Qaeda from the ethnic Afghan Taliban, giving our Afghan anti-insurgency effort a shot in the arm. Any long-term solution to Afghanistan that will allow the U.S. to drawdown its troops has to involve the elimination of al-Qaeda and the co-option of all or part of the Taliban insurgents into the Afghan state structure. Bin Laden's death last night brings us closer to that desirable goal of intra-Afghan dialogue and agreement.
Despite the heightened threat of reprisals from al-Qaeda in the near term, bin Laden's removal from the scene should bring down global threat perceptions. This development is particularly favorable when viewed in the backdrop of the ongoing Arab Spring for democracy and accountable governments. It is a major positive for the U.S. and the global economy for democracy to take hold in the Middle East and for al-Qaeda to be marginalized.
As important as the bin Laden story is, I do want to briefly touch on the ongoing earnings parade here. Humana (NYSE: HUM), the health insurer, came ahead of earnings and revenue expectations. Loews Corp. (NYSE: L), the hotels, financial services and energy conglomerate, missed expectations. The conglomerate is a majority owner of deepwater driller Diamond Offshore (NYSE: DO).
The overall thrust of first-quarter earnings reports has been stronger than pre-season expectations. This has reassured the market of the sustainability of corporate earnings despite concerns about margins and global turmoil. Today's bin Laden news should also reassure the markets by bringing down long-term terrorism threats.
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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