For Immediate Release
Chicago, IL - April 13, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
JPMorgan Chase & Co.
(
JPM
),
Bank of America Corporation
(
BAC
),
Citigroup Inc.
(
C
),
Wells Fargo & Company
(
WFC
) and
Costco Wholesale Corporation
(
COST
).
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free Profit from the Pros newsletter:
http://at.zacks.com/?id=5513
Here are highlights from Thursday's Analyst
Blog:
Foreclosures Declined in Q1
In the first quarter of 2012, foreclosure activity has fallen to
the lowest level since the fourth quarter of 2007. This was
reported by RealtyTrac, the leading online marketplace of
foreclosure properties, while releasing its foreclosure market
report. According to the report, foreclosure filings for the
reported quarter dipped 2% from the prior quarter and 16% from the
prior-year quarter, with a total of 572,928 properties receiving
default, auction or repossession notices.
Though there was a drop in foreclosures in the first quarter of
2012, these will surely increase in the upcoming months following
the $25 billion settlement deal that took place between five
mortgage servicers -
JPMorgan Chase & Co.
(
JPM
),
Bank of America Corporation
(
BAC
),
Citigroup Inc.
(
C
), Ally Financial Inc. and
Wells Fargo & Company
(
WFC
), 49 states' attorneys general and the regulators. The deal is
expected to speed up the rate of the foreclosure activities across
the nation, which was almost frozen till now.
The major indicator, which confirmed that the foreclosures will
shot up over the next several months, is the rise in the default
notices issued and foreclosure auctions (depending on the state's
foreclosure procedure). Default notices increased 7% in March 2012
from the previous month, but fell 11% from the prior-year
month.
Additionally, properties foreclosed in the first three months of
2012 took an average of 370 days to complete the foreclosure
process, up from 348 days in the previous quarter. Further, the top
10 states with the highest foreclosure activities were California,
Florida, Illinois, Georgia, Michigan, Arizona, Texas, Ohio,
Pennsylvania and Wisconsin.
Moreover, the primary reason for the dip in overall foreclosures
for the quarter under review is the decline in foreclosure activity
in 24 states with a non-judicial foreclosure process. In these
states, foreclosures declined 8% from December 2011 quarter and 28%
from March 2011 quarter to 329,854 properties.
However, the 26 states, where a judicial foreclosure process is
followed, witnessed an increase in foreclosures. Here, foreclosure
filings surged 8% from the prior quarter and 10% from the
prior-year quarter, with a total of 243,074 properties receiving
default, auction or repossession notices.
In Conclusion
With nearly all the problems related to flawed paper work
getting resolved, the downtrend in foreclosures will get reversed
very soon. Moreover, the settlement deal clearly describes the
procedures to be followed while foreclosing a property. This will
allow the mortgage servicers to step up the foreclosure
activities.
Also, there will be additional pressure on the home prices
across the nation as many properties are expected to come to the
market due to increased foreclosure activities. Though the huge
surge in foreclosures may dampen the housing prices in the
near-term, this will enable the housing market to revive over the
longer term.
Moreover, we hope that there would be enough number of buyers
for these properties; otherwise the housing market will have a
little chance to regain a solid foothold. As for now, we should
gear up to see an exceptional rise in foreclosure activities in the
upcoming quarters.
Costco's Balanced Approach
Costco Wholesale Corporation
(
COST
) continues to be a dominant retail wholesaler based on the breadth
and quality of merchandises it offers. The company's strategy to
sell products at heavily discounted prices has helped it to remain
on a positive growth track amid beleaguered economic conditions as
budget-conscious customers continue to see it as a viable option
for low-cost necessities. Having delivered comparable-store sales
growth consistently, Costco is well positioned in the warehouse
club industry.
Comps Remain Healthy
The company sustains its sales momentum as it moves further into
2012. After an 8% increase in February, Costco's
comparable-store sales for the month of March climbed 6%,
reflecting comparable sales growth of 6% at its U.S. locations and
7% at its international divisions. In the prior-year period, the
company delivered comparable-store sales growth of 13%.
Excluding the effects of higher gasoline prices and foreign
currencies fluctuation, Costco's comparable-store sales for March
climbed 6%, with U.S. and international comparable sales increasing
5% and 9%, respectively.
The Drives
A differentiated product range enables Costco to provide an
upscale shopping experience to its members, resulting in market
share gains and higher sales per square foot. Moreover, the company
continues to maintain a healthy membership renewal rate. Costco
also remains committed to opening new clubs in domestic and
international markets. The company's diversification strategy is a
natural hedge against risks that may arise in specific markets.
Healthy Quarterly Results
Consumers seeking discounts started flocking to warehouse clubs,
leading to improved sales of discretionary items. Consequently,
Costco witnessed double-digit growth in the top line during the
second quarter of 2012 that subsequently led to an increase in the
bottom line. The company's international operations have been the
major driver.
Costco's second quarter earnings of 90 cents a share came ahead
of the Zacks Consensus Estimate of 88 cents, and rose 13.9% from 79
cents earned in the prior-year quarter. In the first quarter of
2012, the company had posted 12.7% growth in the bottom line
After registering a growth of 12.4% in the first quarter, the
warehouse retailer's total revenue, which includes net sales and
membership fee, climbed 10% year over year to $22,967 million
during the second quarter, surpassing the Zacks Consensus Estimate
of $22,737 million. Net sales jumped 10.1% to $22,508 million,
whereas membership fee rose 7.7% to $459 million.
Costco's comparable-store sales for the quarter rose 8%,
reflecting a comparable sales increase of 8% both at its U.S.
locations and international divisions. The results were favorably
impacted by rising gasoline prices, but adversely affected by
foreign exchange fluctuations.
Closing Commentary
Based on the pulse of the economy, we believe that
budget-constrained consumers will remain watchful of their spending
and look for discounts. Consequently, we could see competitive
pricing, compelling products and innovative ways to attract
shoppers.
Given the pros and cons, we maintain our long-term "Neutral"
recommendation on the stock. Moreover, Costco holds a Zacks #3 Rank
that translates into a short-term 'Hold' rating.
Costco currently operates 601 warehouses, which include 434 in
the United States and Puerto Rico, 82 in Canada, 32 in Mexico, 22
in the United Kingdom, 13 in Japan, 8 in Taiwan, 7 in Korea and 3
in Australia.
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BANK OF AMER CP (
BAC
): Free Stock Analysis Report
CITIGROUP INC (
C
): Free Stock Analysis Report
COSTCO WHOLE CP (
COST
): Free Stock Analysis Report
JPMORGAN CHASE (
JPM
): Free Stock Analysis Report
WELLS FARGO-NEW (
WFC
): Free Stock Analysis Report
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