For Immediate Release
Chicago, IL – April 1, 2010 – Zacks Equity Research highlights Starwood Hotels & Resorts Worldwide (HOT) as the Bull of the Day and Everest Re (RE) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Automatic Data Processing (ADP), Ford (F) and General Electric (GE).
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 Starwood Hotels & Resorts Worldwide (HOT) to Outperform. The company’s fourth quarter operating earnings were well ahead of the Zacks Consensus Estimate, primarily driven by better-than-expected revenue.
Though the company continued to experience a decrease in revenue per available room (RevPAR), the rate of deterioration has moderated. In fact, in the recent months, the industry is showing signs of RevPAR improvement.
Going forward, the company’s strong pipeline, significant international exposure, solid balance sheet, shift to a fee-based business model and a less capital-intensive timeshare business augur well. However, considering the sluggish recovery of the economy and the slow booking pace, we expect the top-line improvement to be slow.
We are downgrading our recommendation on Everest Re (RE) to Underperform. The company has recently announced its initial loss estimates from the earthquake in Chile and the European Windstorm Xynthia. The losses are substantial.
Also, the company’s fourth quarter earnings missed the Zacks Consensus Estimate, primarily as a result of prior-year reserve additions. Going ahead, the casualty line and the marine books are expected to decline due to tough market conditions.
Additionally, the potential for future reserve additions also remains a challenge. However, the company’s solid diversification of product lines and its strategy of shifting its business mix towards property line, where rates are improving, from U.S. casualty writings and targeting international markets augur well.
Latest Posts on the Zacks Analyst Blog:
ADP Report Disappointing
Automatic Data Processing (ADP) reported that in March the economy lost 23,000 private sector jobs. ADP is generally in a good position to know since it is by far the largest payroll processing firm in the country.
This report is the most important precursor to the big jobs report from the Bureau of Labor Statistics, due out on Friday. The consensus expectation was that the ADP report would show a net gain of 40,000 jobs, and that expectation had been rising in recent days.
While this is the smallest decline since February of 2008, this is only because the February numbers were revised to show a loss of 24,000 rather than the originally reported 20,000 jobs lost. The losses were concentrated in the goods-producing side of the economy, which is much smaller — but more volatile — than the service side of the economy. The goods-producing sector lost 51,000 jobs during the month, while the service sector gained 28,000 jobs. Within the goods producing sector, it looks like most of the losses were concentrated in Construction, since Manufacturing lost only 9,000 jobs.
How much larger is the Service sector than the Goods Producing sector? More than five times as big, employing 89.146 million in March versus only 17.554 million in the goods-producing sector (Manufacturing, Mining and Construction).
Breakdown by Size of Firm
By size of firm, most of the jobs were lost by small businesses (under 50 employees), which shed 12,000 jobs. Mid-sized business (50-499 employees) fared the best with a loss of only 4,000 jobs, while large businesses (500+) lost a total of 7,000 jobs. The Service-versus-Goods split was apparent at all business size levels.
Small service businesses actually added 15,000 jobs, but that was more than offset by a loss of 27,000 small-firm goods-producing jobs. That is not a very big part of the economy to begin with — only 6.454 million in March. That means that we lost 0.42% of all jobs in the sector in the month. It sure doesn’t feel like much of a recovery if you are working at a small goods-producing firm.
While it is not broken down at that level, I suspect that most of those job losses were in the Construction field, which would fit with the extremely low level of housing starts and new home sales (an all-time record low in February, breaking the January record, with data going back to 1963).
Among mid-sized firms, the goods-producing side lost 14,000 jobs while the service side gained 10,000 jobs. Among large firms, 10,000 goods-producing jobs were lost, while 3,000 service jobs were gained. The large goods-producing sector is very small in terms of overall jobs. (It has been a long time since the typical American worker was on the factory floor of a major manufacturer like Ford [F] or General Electric [GE]). Thus the percentage loss among large goods-producing firms was almost as high as among small goods producers, at 0.29%.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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