For Immediate Release
Chicago, IL – December 2, 2011 – Zacks Equity Research
highlights Berkshire Hathaway-B (BRK.B) as the
Bull of the Day and Arch Coal, Inc.'s (ACI) as the
Bear of the Day. In addition, Zacks Equity Research provides
analysis on Yahoo (YHOO), Costco
(COST) and Limited Brands (LTD).
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:
Berkshire Hathaway-B (BRK.B)
reported its third quarter 2011 operating earnings of $1.54 per
share up 36% year-over-year, led by higher operating income across
all the business segments except Finance & Financial Products.
Insurance, Railroad, Utilities and Energy, Manufacturing, Service
and Retailing have performed well.
Berkshire's property and casualty insurance business has been
the engine behind its growth. The company's insurance business
(which accounted for approximately 40% of its 2010 operating
income) maintains capital strength at exceptionally high
levels.
Our six-month target price of $91.00 per share equates to about
13.2X our earnings estimate for 2011. This target price implies an
expected total return of 17.0% over that period. This is consistent
with our Outperform recommendation on the stock.
Bear of the Day:
Arch Coal, Inc.'s (ACI) third quarter missed on
account of the Midwestern flooding and the geological challenges in
Appalachia. This was offset in part by improved metallurgical coal
shipments and robust met coal pricing. Going forward, increased
regulation and alternate energy sources, specifically natural gas,
continue to be major risks for coal miners like Arch Coal.
Though we believe the company is well-capitalized, low-cost
operations provide a competitive edge over smaller players in the
industry, we move to an Underperform recommendation on Arch Coal
due to the recent difficulties faced at the company's PRB
operations as well as the longwall outage at Mountain Laurel
(Appalachia).
Presently, the stock is trading at a premium to the peer group,
based on 2012 earnings estimates. The trailing 12-month EV/EBITDA
multiple is above the industry average. Our target price is $13,
valued at 10.9x 2011 EPS.
Latest Posts on the Zacks Analyst Blog:
Expect Enthusiasm to Wane
A day after indicating a shift in its monetary policy stance for
the first time since late 2008, China is again in the news today,
but this time with reports of slowing manufacturing activities. The
China report, coupled with the weak Initial Jobless Claims data on
the home front, will likely dampen the market's enthusiasm so
vividly on display in Wednesday's monster rally. But some
introspection would be called for anyway following such sharp
gains.
The Chinese Purchasing Managers Index (PMI) for November came in
weaker than expected this morning, putting the widely
watched measure of manufacturing activities into
contractionary territory for the first time in three years. We also
have PMI readings from other Asian countries as well that
overall paint a relatively soft picture of manufacturing activities
throughout the region. We have the U.S. manufacturing ISM
reading on the docket for a little later, but given
Wednesday's Chicago PMI reading and the overall tone of recent
economic news, the expectation is for favorable ISM
report.
The soft Chinese manufacturing reading brings into sharp
focus the growth outlook for the Chinese economy, thus far an
engine for the global economy. The debate lines would be around
whether Wednesday's action by the People's Bank of China reflected
its victory over persistent inflationary pressures or was
indicative of its efforts to get ahead of hard landing for the
economy. I subscribe to the former view, but have to concede that
the evolving European dislocation may have consequences for the
Chinese economy that many of us are unable to appreciate at
present.
On the U.S. front, the initial Jobless Claims data this morning
was clearly disappointing, particularly given the recent improving
trend in this key series. Wednesday's monster ADP report had
started showing up in raised expectations for Friday's non-farm
payroll report. It will be interesting to see if today's claims
data will dampen some of that positive momentum.
Overall, though, I wouldn't read too much into today's claims
numbers. This series is extremely 'jumpy' on a week-to-week basis
and the broad trend on the labor market front remains in the
positive direction.
In corporate news, Yahoo (YHOO) shares will
likely be in the spotlight following media reports of a number of
suitors getting ready to acquire the firm. We also have strong
same-store sales numbers for November from a host of retailers this
morning, further evidence of a positive start to the holiday
shopping season. The numbers are particularly impressive from
Costco (COST) and Limited Brands
(LTD).
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides
analysis from Zacks Equity Research about the latest news and
events impacting stocks and the financial markets.
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Continuous analyst coverage is provided for a universe of 1,150
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ARCH COAL INC (ACI): Free Stock Analysis Report
BERKSHIRE HTH-B (BRK.B): Free Stock Analysis Report
COSTCO WHOLE CP (COST): Free Stock Analysis Report
LIMITED BRANDS (LTD): Free Stock Analysis Report
YAHOO! INC (YHOO): Free Stock Analysis Report
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