Hanover Insurance Group, U.S. Steel, Credit Suisse Group, Julius Baer Group
and Bank of America highlighted as Zacks Bull and Bear of the Day
CHICAGO, June 10, 2013
CHICAGO, June 10, 2013 /PRNewswire/ --Zacks Equity Research highlights
Hanover Insurance Group (NYSE:THG- Free Report) as the Bull of the Day and
U.S. Steel Company (NYSE:X- Free Report) as the Bear of the Day. In addition,
Zacks Equity Research provides analysis on the Credit Suisse Group AG (NYSE:CS
- Free Report), Julius Baer Group Ltd. (OTC:JBAXY- Free Report) and Bank of
America Corporation (NYSE:BAC - Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Although the stock market has been pretty sluggish lately, there are a few
corners that are still holding up rather well. One such sector that is leading
the market is undoubtedly financials, as these have taken a leadership role,
and are seeing fresh capital from those following a sector rotation strategy.
In particular, the insurance segment has been doing quite well, as it is a
relatively low beta sector that has been able to perform well no matter what
the broad market trends have been. While many investors may be focusing in on
the giants in the industry, there are a few small cap securities which may be
offering more compelling values at this time, such as the Hanover Insurance
Group (NYSE:THG- Free Report).
Hanover Insurance Group is based in the great city of Worcester, Massachusetts
and is in the property and casualty segment of the insurance industry. The
firm has four segments; commercial, personal, Chaucer (think boats, planes,
etc.) and a broad other property and casualty division.
THG is pretty spread out among these businesses, though the Chaucer division,
in the most recent quarter, contributed the most in terms of operating income
before income taxes. It is also worth noting that for the most recent quarter,
income before income taxes saw good growth while the premiums taken in also
represented a decent level of growth in terms of year-over-year figures.
Bear of the Day:
Although the U.S. economy has seen some decent figures on the industrial
production front, many investors remain lukewarm at best about the materials
sector. Part of the reason for this is because many other markets—such as
China and Europe—are still facing extremely sluggish conditions, which is
curtailing demand for a variety of materials.
This trend has been especially apparent in the steel market, as a number of
key producers have found it to be incredibly difficult to grow earnings or
even revenues in this lethargic environment. In particular, this gloomy
situation has been terrible news for the once-giant U.S. Steel Company
(NYSE:X- Free Report).
U.S. Steel is still the country's largest domestically owned integrated steel
producer, though its glory days have since long past. Now, the company is a
mere shell of its former self, struggling to remain profitable in the face of
extreme levels of foreign competition.
This terrible trend is especially apparent when investors look at the earnings
estimate picture for the company. Estimates have fallen like a stone for all
time periods we follow, with the consensus now projecting a full year loss for
U.S. Steel of about $1.31/share.
This represents an incredible slide, as just two months ago the consensus was
at (a positive) 99 cents/share. Current quarter figures are equally
depressing; the consensus from two months ago was at $0.41/share, while the
current figure comes in at -$0.79/share.
Credit Suisse to Divest German Unit
Credit Suisse Group AG (NYSE:CS - Free Report) is considering the sale of a
part of its German wealth management unit to reduce expenses in its onshore
businesses in Western Europe. The strategic sale is part of the bank's efforts
to reorganize its business by developing core businesses and downsizing
After combining its private bank with its asset management wing last year,
Credit Suisse has been consistently striving to improve its market position in
the intensely competitive European market. Management expects such measures to
drive the company toward its desired performances.
The aforementioned sale is a part of the Swiss bank's strategy to achieve
CHF1.9 billion in cost reduction by the end of 2015. A major chunk of these
expense savings, totaling CHF750 million, will be from the private banking
Currently, many global banks are struggling to reduce costs amid the sovereign
debt crisis in Europe. Among others, Credit Suisse is resorting to extensive
restructuring measures to address low profitability. Notably, the bank faced
huge headwinds in the private banking segment in 2012, with a declining margin
caused by decreased client activity.
To mitigate these headwinds, in Nov, 2012, the company announced 300 job cuts
in the bank's retail and private banking divisions in Switzerland starting Jan
Similar Action by Other Banks
Given a pressured operating environment, lower returns and stringent capital
norms, many Swiss banks are rightsizing their businesses. In Sep, 2012, as
part of its integration process and cost reduction efforts, Julius Baer Group
Ltd. (OTC:JBAXY- Free Report) announced 30%–40% reduction in workforce at its
recently acquired foreign wealth management division of Merrill Lynch − a unit
of Bank of America Corporation (NYSE:BAC - Free Report).
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