Among the biggest losers in Wednesday's early trading are
Allied Irish Banks (
AIB
),
Whitney Holdings (Nasdaq: WTNY)
and
Lexmark (
LXK
)
.
|
Top Percentage Losers --Wednesday, July 14,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Loss
|
52-Week High
|
52-Week Low
|
Whitney Holdings
(Nasdaq: WTNY) |
$8.56 |
-14.2
%
|
$15.29 |
$7.78 |
Allied Irish Banks
(
AIB
) |
$2.34 |
-6.0
%
|
$10.42 |
$2.06 |
| Lexmark (
LXK
) |
$33.15 |
-5.3
%
|
$42.14 |
$14.23 |
|
*Table includes companies with minimum market
capitalizations of $200 million and three month trading
volumes of at least 100,000 shares. All percentage returns
are listed as of 11:45AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
More Distress in Ireland
Ireland's two largest banks, the
Bank of Ireland (
IRE
)
and
Allied Irish Banks (
AIB
)
, are both shedding roughly -6% today on concerns that neither bank
would fare well in a stress test. Those are tests by bank examiners
to see if a bank could withstand a range of negative economic
scenarios and still keep its capital base intact. Similar fears
dogged U.S. banks in late 2008, although all major U.S.
institutions ended up passing their tests.
The tests are not intended to highlight potential bankruptcy
concerns. But they could lead regulators to force these banks to
shore up their capital bases by injecting fresh capital. Allied
Irish Banks has already begun the process of capital-raising, but
may have a hard time raising the $9.4 billion it thinks it needs to
withstand any further scrutiny. Bank of Ireland is in a better
financial situation after a recent capital raise, but would be
dragged down by a yet-weaker Irish economy were Allied Irish Banks
to struggle.
Action to Take -->
It's important to remember that U.S. bank stocks rallied sharply
after the stress tests were completed. These Irish banks are very
inexpensive by a wide range of metrics, and will eventually be bid
up by investors or a strategic acquirer. But investors should wait
these tests out anyway, as the headlines are likely to remain
daunting for at least a little while longer.
------------------------------------
Whitney's Woes
The economic impact of the Gulf Cost spill is starting to be noted
in
public company
results.
Whitney Holdings (Nasdaq: WTNY)
, which operates a network of banks in Florida, Louisiana and
Texas, has just boosted its estimate for delinquent loans, which
will result in a large second-quarter charge. That's pushing shares
down more than -14% in Wednesday trading. The bank also notes that
Florida real
estate
trends also remain very weak, and loan delinquencies remain high.
We've seen very little pre-announcement activity from companies
that derive a solid chunk of business in the Florida panhandle and
Louisiana. But it seems inevitable that this region will see a
sharp slowdown in business activity throughout this summer. At the
margin , it will negatively impact any national retailers or
restaurant chains that have a number of franchises in the area.
Shares of Whitney Holdings now trade right at tangible
book value
, which will be a catalyst for shares down the road, once loan
losses are coming back down.
Action to Take -->
Whitney's management will hold a conference call in two weeks to
provide greater detail about the regional economic slowdown. It
will be a worthwhile call for anyone invested in this area.
------------------------------------
Lexmark Stalls Out
Shares of printer maker
Lexmark (
LXK
)
are off sharply after Morgan Stanley slashed estimates and lowered
its rating to "underperform." Analyst Caty Huberty sees competitive
headwinds brewing, and now thinks that profits will be flat in
2010, 2011 and 2012. Shares of Lexmark had been rising throughout
the past year, in part due to supply constraints at printer rival
Hewlett-Packard (
HPQ
)
. Hewlett-Packard has resolved its internal manufacturing issues,
and now looks to take back lost
market share
.
This is a very low-growth industry, especially when you consider
that office workers are looking to print less of what they read
online. Although Lexmark may see modest growth this year, it's
worth noting that sales had fallen in each of the last five years,
a trend that may well resume once again in 2011.
Action to Take -->
Half of Lexmark's stock price is now accounted for in its cash
balances. And management will likely keep doing the only thing it
can: buy back stock. The share count has shrunk from 133 million in
2004 to a recent 79 million. At some point, another tech firm will
swoop in and buy this company's still-prodigious
cash flow
streams. But for now, shares are dead money.
-- David Sterman
David Sterman has worked as an investment analyst for nearly two
decades. He started his career in equity research at Smith Barney,
culminating in a position as Senior Analyst covering European
banks. David has also served as Director of Research at Individual
Investor and has made numerous media appearances over the years,
primarily on CNBC and Bloomberg TV. David has a master's degree in
management from Georgia Tech. Read More...
Disclosure: Neither David Sterman nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
StreetAuthority