For Immediate Release
Chicago, IL – January 22, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Bank of America (BAC), JPMorgan (JPM), Wal-Mart (WMT), Big Lots (BIG) and Southwest Airlines Co. (LUV).
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Here are highlights from Thursday’s Analyst Blog:
Initial Jobless Claims Rise
How the Stimulus Package Has Helped
In the first three months of fiscal year 2010, Federal Spending on unemployment benefits was $19.0 billion — higher than it was in the first three months of fiscal 2009. Aside from increased aid to states to pay for Medicare, it was the single-biggest increase of any line item in the Federal budget.
Without those extended benefits, almost six million people (and their families) would be left with no income at all. That is a near-perfect recipe for them to default on all their debts, especially their mortgages if they are underwater on their house. Thus indirectly, the extended benefits are another way of propping up the big banks that own those mortgages, like Bank of America (BAC) and JPMorgan (JPM). Those six million would probably max out their credit cards and then default on them, so the banks are benefiting on that front as well.
The income from the extended benefits also means that people can continue to buy basic goods from Wal-Mart (WMT) or Big Lots (BIG). As they do, it keeps the workers in those stores employed, as well as the workers who make and transport those goods on the job.
According to the non-partisan Congressional Budget Office, increasing aid to the unemployed is one of the most cost-effective ways to create jobs there is. In fact, of all the policy options they looked at, the only other one that carries close to as much bank for the buck would be to reduce payroll (Social Security and Medicare) taxes on employers who show a net increase in their payrolls. Thus, it is wise spending from a hard-nosed economic point of view as well as from a humanitarian point of view.
Southwest Airlines Outperforms
Southwest Airlines Co. (LUV) declared encouraging fourth quarter 2009 financial results. Quarterly operating revenue of $2,712 million was down 0.8% year-over-year, but better than the Zacks Consensus Estimate of $2,644 million. Fourth quarter GAAP net income was $116 million or 16 cents per share compared to a GAAP net loss of $56 million or 8 cents per share in the prior-year quarter.
However, excluding special items, adjusted net income was $74 million or 10 cents per share compared to $61 million or 8 cents per share in the year-ago quarter. Fourth quarter adjusted EPS of 10 cents was significantly higher than the Zacks Consensus Estimate of 5 cents per share.
Despite facing an extremely challenging airline industry, Southwest Airlines has achieved its 37th consecutive year of profitability in 2009. The introduction of new products and programs, coupled with implementation of cost-effective processes, are the main reasons for these impressive results. The company already has seen strong revenue and booking trends in early 2010, which has prompted management’s year-over-year increase in revenue guidance for the first quarter of 2010.
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