House & Home
House and Home
House and Home 
Mon, June 7, 2010
Sun, June 6, 2010
Sat, June 5, 2010
Fri, June 4, 2010
TRW Automotive Holdings, Cincinnati Financial, Bank of America, Wells Fargo & Co. and Citigroup
CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights TRW Automotive Holdings (NYSE: [ TRW ]) as the Bull of the Day and Cincinnati Financial (Nasdaq: [ CINF ]) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America Corp. (NYSE: [ BAC ]), Wells Fargo & Co. (NYSE: [ WFC ]) and Citigroup (NYSE: [ C ]).
Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].
Here is a synopsis of all five stocks:
[ Bull of the Day ]:
TRW Automotive Holdings (NYSE: [ TRW ]) is well positioned to take advantage of an industry rebound, given its advanced technology portfolio, leading diversification and improved cost structure. The company's innovative product portfolio is capable of generating top- and bottom-line growth.
TRW has been successful in its restructuring and cost containment actions to mitigate the impact of the industry-wide downturn, as reflected in the better-than-expected first-quarter results.
As such, we are maintaining our long-term Outperform recommendation for the stock with a target price of $36.
[ Bear of the Day ]:
Cincinnati Financial's (Nasdaq: [ CINF ]) first quarter earnings disappointed the Zacks Consensus Estimate, primarily due to lower-than-expected earned premium. Its Commercial Lines segment prime premium contributor has been suffering from soft market conditions, exerting downward pressure on pricing and restricting growth.
Not much improvement is expected here in 2010. However, its Personal Lines segment is expected to clock a modest positive growth. We remain cautious on the investment portfolio with an above-average equity concentration.
Our six-month target price of $24.00 equates to about 14.8X our earnings estimate for 2010. We view $1.58 per common share annual dividend as secure, implying a negative return of about 6.9% over that period. This is consistent with our Underperform recommendation on the shares.
Latest Posts on the Zacks [ Analyst Blog ]:
BofAa™s Mortgage Forgiveness On Track
As part of the execution of its previously announced mortgage forgiveness program, Bank of America Corp. (NYSE: [ BAC ]) said on Wednesday that it has got in touch with 10,000 of the most distressed mortgage borrowers. According to the company, the first lot of modifications is expected to start in late June.
According to the agreement with state attorneys general to help homeowners who got high-risk home loans from Countrywide Financial, BofA announced in March that it would forgive about $3 billion in principal loan amount to about 45,000 troubled borrowers.
The borrowers had taken those loans before BofA acquired Countrywide Financial in mid-2008. However, following the acquisition, BofA has stopped such loans. According to the relief plan, BofA will offer up to 30% of total loan balances for homeowners who owe more than 20% of the value of their home and missed at least two months of mortgage payments.
The initiative to forgive some troubled borrowersa™ total mortgage balances to some extent is part of an initiative started in 2008 under the bank's National Homeownership Retention Program.
Following the execution, BofA will be the first U.S. mortgage lender to take such a systematic approach to reducing mortgage principal to help distressed borrowers by preventing foreclosures.
BofA expects to get in touch with the remaining 35,000 customers over the next several years. In the expectation of losing a significant amount of money for this program, BofA has already started reserving cash. However, the loss is expected to be smaller than the loss the bank would have incurred had it chosen foreclosure. The federal government will pay 18% of the forgiven mortgage principal.
Among the other banks, Wells Fargo & Co. (NYSE: [ WFC ]) has modified more than 52,000 mortgage loans it absorbed when it acquired Wachovia Corp. In addition, Wells Fargo had reduced the principal on those loans by more than $2.6 billion.
BofAa™s first quarter 2010 earnings came in at 28 cents per share, substantially ahead of the Zacks Consensus Estimate of 9 cents. However, this compares unfavorably with the earnings of 44 cents in the prior-year quarter.
Strong capital markets activity and lower provision for credit losses were the primary factors that helped BofA bounce back to profitability after incurring significant losses for the last couple of quarters.
The market turmoil was more harmful to BofA than its peers except Citigroup (NYSE: [ C ]). However, BofA concluded its biggest acquisitions in this period. Following Countrywide, the company acquired Merrill Lynch almost during the height of the financial crisis last year.
Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].
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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