For Immediate Release
Chicago, IL – November 20, 2009 – Zacks Equity Research highlights Principal Financial (PFG) as the Bull of the Day and Sohu.com (SOHU) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America (BAC), Wal-Mart (WMT) and Sears Holding Corp.(SHLD).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
We are upgrading our recommendation on the shares of Principal Financial (PFG) to Outperform. The company’s third quarter operating earnings were much ahead of the Zacks Consensus Estimate, driven primarily by the sequential improvement in domestic as well as global equity markets.
We believe that Principal’s strong franchise within the pension sector, which is aided by its diversification both in terms of products and geography, positions it well to benefit from the gradual recovery of the credit market. However, rising unemployment is reducing the number of participants in existing employee benefit plans.
Though we are concerned about higher delinquencies in its commercial mortgage portfolio, we expect the company to benefit from its decent capital level and cost containment measures.
While Sohu.com’s (SOHU) third-quarter earnings beat the Zacks Consensus Estimate and were in line with the company s own guidance, the outlook for the fourth quarter was far below expectation. The company’s operating expenses have been steadily going up, which we fear could limit the growth in earnings.
Moreover, recent delays in game launches, weak ad spending, which is hurting the brand advertising revenue and intense competition pose a threat. Strength in its online games and portal business are expected to be the strongest drivers for growth beyond 2010.
Currently, we see limited upside for Sohu’s revenue and earnings growth in the near term. We downgrade the stock to Underperform from our previous Neutral rating and set a six-month price target of $45.00.
Latest Posts on the Zacks Analyst Blog:
Initial Jobless Claims Flat(-ish)
With the pace of hiring as slow as it is, this hole in the safety net will have to be repaired as soon as possible. With no income, and more than six job seekers for every available job, those people are going to be in a world of hurt. Most Americans have very little in the way of savings to fall back on, especially outside of IRA’s and 401k plans. Tapping those would expose people to a 10% penalty and it would be considered taxable income for them. Yet many of them will probably be forced to do so, even if unemployment insurance is extended to them.
It is not just for humanitarian reasons that benefits should be extended. Without an income, people will have to do their banking at the local food bank, not at Bank of America (BAC), and even the local food bank needs a bailout these days. People will be hard-pressed to shop at even the Salvation Army, let alone Wal-Mart (WMT).
Extending benefits is one of the most effective forms of economic stimulus there is. It is far more effective than extending lavish tax credits to move-up homebuyers with incomes up to five times the national median. Unfortunately, the unemployed to not have as effective a lobby as the used home dealers (aka Realtors).
Sears Reports 3Q Loss
Sears Holding Corp.(SHLD), the fourth largest broadline retailer in the U.S., reported a third-quarter loss of $127 million or $1.09 per share compared to a loss of $146 million or $1.16 per share in the year-earlier quarter. Although Sears managed to reduce its quarterly loss year over year, this was the second consecutive quarterly loss for the company.
The quarterly figures included non-recurring items such as severance charges related to store closings, impairment charges, and pension plan expenses. Excluding the one-time charges, net loss was $94 million or 81 cents per share during the third quarter versus a net loss of $114 million or 90 cents per share in the year-ago quarter.
Sears reported total revenues of $10.2 billion during the quarter compared to $10.7 billion in the year-earlier quarter. The decrease in year-over-year sales was primarily due to a decline in comparable store sales partially offset by the effect of foreign currency translation. Domestic comparable store sales decreased 2.3% during the quarter, with the Sears Domestic division accounting for a 4.6% decrease partially offset by a 0.5% increase in the Kmart division.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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