For Immediate Release
Chicago, IL – November 22, 2010 – Zacks Equity Research highlights: Aflac (AFL) as the Bull of the Day and Whirlpool (WHR) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Telephone and Data Systems (TDS), AT&T Inc. (T) and Verizon Communication (V).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
Bull of the Day:
Aflac's (AFL) third quarter earnings came in modestly ahead of the Zacks Consensus Estimate due to improved investment yields and a favorable dollar/yen exchange rate. Higher annual premiums across the U.S. and Japan, healthy capital ratios, credit rating stability and modest improvement in fair value of investments were among other positives.
Moreover, the recent dividend appreciation coupled with the resumption of its stock buyback program reflects Aflac's fair liquidity while retaining investors' confidence. However, higher operating expenses and a decline in annualized ROE partially dampen the positives.
Overall, we believe a stable economy in the long run will gather momentum and negate interest and currency risk, thereby providing more profitable investment opportunities for Aflac. Our six-month target price of $64.00 per share equates to about 11.5x our earnings estimate for 2010.
Bear of the Day:
Whirlpool (WHR) is prone to global market and foreign exchange risks as nearly half of its operations are international in nature. Also, high customer concentration and growing competition are major threats to the company.
In addition, inventories are on the rise due to the weak economy, which is forcing the company to reduce its product prices and, therefore, its profit margins. In the most recent quarter, Whirlpool just managed to post earnings in-line with the Zacks Consensus Estimate.
The company is also facing a deteriorating balance sheet with an increased debt balance but reduced cash balance. These factors have led us to provide an Underperform recommendation on Whirlpool with a target price of $68.
Latest Posts on the Zacks Analyst Blog:
TDS Upgraded to Outperform
We are upgrading our long-term recommendation to Outperform from Neutral for Telephone and Data Systems (TDS). Currently, the stock has a Zacks #3 Rank (Hold), which signifies that for the short term (1-3 months), we are maintaining our Hold rating.
Telephone and Data Systems' is seeing the benefits from a number of actions taken in 2009 such as, bundled and unlimited service plans, early smartphone upgrades, expanded handset portfolio including Android-powered devices, and innovative programs like battery swap and overage protection. The company is offering competitive smartphones over the past several months, which are driving data revenues and are expected to do so, going forward.
During the third quarter of 2010, Telephone and Data Systems' earnings surpassed the Zacks Consensus Estimate by 2 cents. Both the wireline and wireless revenue increased owing to strong data revenues. The company's residential broadband and commercially managed service offerings contributed to strong data revenue growth.
The company is pursuing several initiatives to reinvigorate growth, which include the expansion of its 3G network, premium handset offerings and the potential launch of Long-Term Evolution (LTE) in 2012 in the wireless business and aggressive deployment of Triple-Play bundled wireline services.
Further, the new service named “The Belief Project” (launched in October) is expected to enhance long-term profits along with the reduced churn and higher gross subscriber additions.
Further, we remain impressed with Telephone and Data Systems' solid balance sheet, which provides flexibility and supports investment for future growth. The company is committed to providing benefits to shareholders in the form of dividends and share buybacks.
Telephone and Data Systems' currently pays an annual dividend of 45 cents per share. This represents a low dividend yield of approximately 1.24% compared with its peers AT&T Inc. (T) and Verizon Communication (V). Both the companies have dividend yields of approximately 6%.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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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AFLAC INC (AFL): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TELEPHONE &DATA (TDS): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
WHIRLPOOL CORP (WHR): Free Stock Analysis Report
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