CHICAGO, July 5, 2011 /PRNewswire/ -- Zacks Equity Research highlights Discover Financial Services' (NYSE: DFS) as the Bull of the Day and Masco Corporation (NYSE: MAS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Toyota Motor Corp. (NYSE: TM), Honda Motor Co. (NYSE: HMC) and Nissan Motor Co.
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Discover Financial Services' (NYSE: DFS) second quarter earnings came in dramatically ahead of the Zacks Consensus Estimate, driven by lower loan loss provision, higher transaction and credit card sales volumes that also drove the loan loss reserve release growth. Higher consumer spending and merchant acceptance also contributed to the substantial expansion of income across direct banking and payment services segments.
While the SLC acquisition enhances its already strong student loan portfolio, dividend increment and share buyback further injects optimism. The company's extensive network, sound capital position and cost containment initiatives will help accentuate growth over the long term.
Our six-month target price of $32.00 equates to 9.4x our earnings estimate for 2011. Given the expected annual cash dividend of $0.24, this price target implies an expected total return of 20.7% over that period.
Masco Corporation (NYSE: MAS) is highly dependent on the U.S. housing industry. Falling prices have made homes a less lucrative investment to buyers, which reduces demand for Masco products. Rising prices of raw materials are also affecting margins to a large extent.
In addition, Masco is vulnerable to unfavorable currency fluctuations due to its extensive international presence. The company's high dependency on a few individual customers offers little room for margin expansion. In the most recent quarter, the company reported a loss of $0.05 per share, which was wider than the Zacks Consensus Estimate for a loss of $0.03.
Our long-term Underperform recommendation on the stock indicates that it will perform below the overall market. Our $11 target price, 52.4x our 2011 EPS estimate, reflects this view.
Latest Posts on the Zacks Analyst Blog:
Japan's Auto Sales Slide
Auto sales in Japan slashed 22% to 351,828 vehicles in June, which can be attributable to the sluggish macroeconomic environment in the country after the earthquake and tsunami in Japan on March 11 that killed thousands and broke down the infrastructure. In the first half of the year, sales had surged 28% to 1,919,247 vehicles from the year-ago level.
Almost all the major Japanese automakers are plagued by the natural disaster in the country. They have suspended and cut down their production in the wake of plant outages and parts supply shortage. These actions will undoubtedly lead to lower revenues and earnings.
Toyota Motor Corp. (NYSE: TM) projected a 31% drop in full year profit to Yen 280 billion ($3.5 billion) from Yen 408 billion a year ago driven by lower sales on account of the earthquake in Japan and stronger yen.
The automaker has projected global sales to decrease to 7.24 million vehicles from 7.31 million vehicles in fiscal 2011, which will reduce earnings by Yen 120 billion. These figures included sales at truck maker Hino Motors Ltd. and compact carmaker Daihatsu Motor Co.
The company revealed that it expects to gear up its production level from 90% of normal to near full level in July and then to completely normal by the end of the year. It plans to make up for the lost production in Japan by manufacturing an additional 350,000 cars and trucks from October through March 2012.
On the other hand, Honda Motor Co. (NYSE: HMC) expects a stark 63.5% drop in profit to Yen 195 billion ($2.4 billion) for the fiscal year from Yen 534 billion recorded in the previous fiscal year.
The company anticipates global vehicle sales to dip 6% to 3.3 million vehicles from 3.51 million vehicles a year ago on lower production due to parts shortage resulting from the twin disaster in Japan.
Meanwhile, Nissan Motor Co. (PINK: NSANY) revealed that it expects a 15.4% fall in profit to Yen 270 billion ($3.4 billion) due to the same reason. It also anticipates a 14.4% dip in operating profit to Yen 460 billion ($5.73 billion) during the year.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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