Zacks Equity Research highlights China Fire & Security Group (Nasdaq: CFSG) as the Bull of the Day and National City (NYSE: NCC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Whole Foods (Nasdaq: WFMI), Harmony Gold (NYSE: HMY) and FactSet (NYSE: FDS).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.
Here is a synopsis of all five stocks:
Bull of the Day: China Fire & Security Group (Nasdaq: CFSG)
CFSG again announced strong revenue growth for the first quarter of 2008. As the leader in China’s industrial fire safety market, CFSG is well-positioned to leverage the growth potential of this market. Its revenue and earnings have exceeded the market consensus for four consecutive quarters since the market began covering this company in July 2007. We believe that CFSG can grow its earnings 30% annually for the next five years. We don’t think its current price fairly reflects the company’s growth prospects, so we are maintaining Buy rating on CFSG’s stock.
Bear of the Day: National City (NYSE: NCC)
NCC’s 1Q08 net loss of $0.27 per diluted share was substantially worse than the estimates, primarily due to higher loss provisions and mark-to-market losses on the mortgage loans held for sale. During the quarter, credit metrics deteriorated significantly and net-interest income fell short of expectations. NCC has taken several initiatives to restructure its mortgage operations, we continue to see elevated risks in NCC’s mortgage and residential development loan portfolio, and expect higher losses in the coming quarters.
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Whole Foods (Nasdaq: WFMI)
Whole Foods reported second quarter results that were in-line with our estimates, but below consensus expectations. The market was clearly disappointed, and WFMI shares sold off by more than 10% after the report.
Integration costs from the Wild Oats acquisition continue to be a drag on earnings. What's more, there are growing fears that the soft economic environment may force consumers to choose cheaper alternatives to Whole Foods higher-priced organic products. Even so, we think the company's strong natural foods brand and expansion plans should enable the company to re-accelerate earnings growth in 2009.
Harmony Gold (NYSE: HMY)
Harmony Gold is benefiting from higher gold prices. Going forward, Harmony is focused on reducing its overall operating costs through its CONOPS agreement and the shut down of loss-making shafts. The company is also reducing its headcount as a measure of cost control.
The company reported headline earnings from continuing operations of $22.48 million during the quarter, compared to a profit of $41.72 million in the third quarter of FY07. The loss in this quarter is primarily attributable to a 45.21% year over year decline to 332,662 oz in gold production. Headline earnings per diluted ADR during the quarter was $0.06, compared to a headline profit of $0.11 per diluted ADR in the prior year quarter.
FactSet (NYSE: FDS)
FactSet continues to demonstrate healthy growth as it expands internationally and enhances its offerings through strategic acquisitions. The company's flagship offering, Portfolio Manager Workstation (PMW) is a staple among asset managers and the addition of Thomson's WorldScope database will grow its addressable market within its customer base.
However, increasing competition from companies like S&P and ongoing turmoil within its customer base are likely to pressure top-line. We therefore maintain our Hold on the stock with a six-month target price of $62.50.
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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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