Zacks Bull and Bear of the Day Highlights: Flagstar, Fred's, St. Jude Medical,
NuVasive and Coventry Health Care
CHICAGO, April 17, 2013
CHICAGO, April 17, 2013 /PRNewswire/ --Zacks Equity Research highlights
Flagstar (NYSE:FBC) as the Bull of the Day and Fred's (Nasdaq:FRED) as the
Bear of the Day. In addition, Zacks Equity Research provides analysis on St.
Jude Medical Inc. (NYSE:STJ), NuVasive Inc. (Nasdaq:NUVA) and Coventry Health
Care Inc. (NYSE:CVH).
Full analysis of all these stocks is available at
Here is a synopsis of all five stocks:
Bull of the Day:
This mortgage lenders and local bank might be worth a look at current prices.
The housing market remains resilient and has been a bright spot in an
otherwise drab economic backdrop.
While most homebuilders like Toll Brothers and Lennar have been bidding up
ahead of their numbers and are trading at relatively high valuations,
companies like Flagstar (NYSE:FBC) are relatively inexpensive on a valuation
basis and have seen their share prices cut by over a third.
The nice think about the mortgage play is that you don't have to worry if
customers are buying new or old homes or what the cost of lumber or land is.
They simply profit from the transactions, no matter who's buying; as long as
the buyer secures a mortgage of course.
Even though all of Flagstar's physical branches are in the state of Michigan
(They are the largest banking company headquartered in the state), Flagstar
has assets of $14.1 billion and along with traditional services, is one of the
top-tier mortgage originators in the country and one of the nation's top 15
largest savings banks.
During the last housing boom, Flagstar was one of the top lenders amidst a
circle of many who didn't live to see the revival of the space. Flagstar not
only emerged from the great recession (with a few bumps and bruises), but has
remained a strong player in the mortgage origination space.
Bear of the Day:
Outside of its home state of Tennessee, you're not likely to hear the name
Fred's (Nasdaq:FRED) tossed around too often when referring to grocery stores
or pharmacies. When I Googled "FRED", I got everything from Barney Rubble's
ole pal to a sheik French jeweler; Fred's was on page 6 for me.
To be fair, they operate over 700 stores across the southeastern part of the
US and I know that they have their loyal following. Heck, there are plenty of
lesser known companies that are thriving! But for Fred's, it's a matter of the
revenue and EPS numbers that just aren't adding up and competition from the
likes of Walmart, Walgreens and others that are making matters worse.
FRED is a Zacks Rank #5 and is ranked as a "sell" overall. Even though the
stock yields a 1.8% dividend, this might not be the place you want to park
your investment dollars.
Last month, Fred's posted fourth-quarter fiscal 2012 (quarter ended Feb 2013)
earnings of 18 cents per share, missing the Zacks Consensus Estimate by a
penny and was the second miss in a row after a 14.3% miss in Q32012.
Earnings declined 30.7% from the prior-year quarter due to the ongoing tough
retail environment, challenging results in general merchandise departments and
higher operating expenses.
Latest Posts on the Zacks Analyst Blog:
Will St. Jude Beat Earnings This Quarter?
St. Jude Medical Inc. (NYSE:STJ) is set to report its first-quarter 2013
results before the opening bell on Wednesday, Apr 17. Let us see how things
are shaping up prior to the announcement.
In the last quarter, the medical device major posted a 2.22% positive earnings
surprise on the back of strategic realignment initiatives to reduce operating
expenses. However, organic revenue growth declined.
Factors to Consider this Quarter
New growth drivers such as an innovative product line along with restructuring
efforts to streamline the underlying business will likely be accretive for STJ
in the long term. The company has received a number of regulatory approvals
for its latest offerings as well as initiated a number of clinical trials in
the first quarter, which is encouraging.
While St. Jude's business fundamentals remain strong, we are concerned
regarding the uncertainty prevailing at the company's core implantable cardiac
defibrillators (ICD) business. Domestic sales are likely to remain dampened
until the pending disputes involving the warning letter issued by the FDA for
its Sylmar facility is resolved. Meanwhile, we expect international revenues
to boost overall revenues.
However, we are cognizant about the ongoing stiff global austerity measures
and difficult healthcare environment. Further, the Med-Tech medical devices
tax is expected to impact margins, beginning this quarter.
Our proven model does not conclusively show that St. Jude is likely to beat
earnings estimate this quarter. That is because a stock needs to have both a
positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks
Rank of #1, 2 or 3 for this to happen. This is not the case here, as you will
Zacks Earnings ESP: The Most Accurate estimate stands at 91 cents, while the
Zacks Consensus Estimate is pegged at 92 cents. This comes to a difference of
Zacks Rank #3 (Hold): St. Jude's Zacks Rank #3 (Hold) lowers the predictive
power of ESP. The Zacks Rank #3 together with -1.09% earnings ESP makes
surprise prediction difficult.
Other Stocks to Consider
Here are some other companies from the medical sector you may want to consider
as our model shows they have the right ingredients to post an earnings beat
NuVasive Inc. (Nasdaq:NUVA), Earnings ESP of +18.18% and a Zacks Rank #1
Coventry Health Care Inc. (NYSE:CVH), Earnings ESP of +7.69% and a Zacks Rank
#1 (Strong Buy).
Get the full analysis of all these stocks by going to
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
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