For Immediate Release
Chicago, IL - May 7, 2012 - Zacks Equity Research highlights:
) as the Bull of the Day and
Citi Trends, Inc.
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
The Goldman Sachs Group Inc.
Deutsche Bank AG
Full analysis of all these stocks is available at
Here is a synopsis of all five stocks:
Bull of the Day
) first-quarter 2012 earnings of $0.40 per share beat the Zacks
Consensus Estimate of $0.33, and surged 60% from the prior-year
quarter. The quarter witnessed healthy revenue growth and
profitability at its retail segment, improved performance at
Cabela's CLUB Visa program, increased merchandise gross margin and
boost in market share.
Merchandise gross margin expanded 150 basis points to 34.5%
during the quarter. Management reiterated its long-term goal of
increasing the margin by 200-300 basis points. Driven by improving
trends, the company expects earnings to increase at a double-digit
rate in fiscal 2012.
The company looks to enhance its retail square footage growth by
focusing on its next-generation store format and new Outpost store
format. Moreover, the company remains committed on alleviating bad
debt risk in its credit card business. The gradual improvement in
the economy has lowered delinquencies and charge-offs.
Bear of the Day
Citi Trends, Inc.'s
) falling comparable store sales, coupled with rising cost of goods
sold and operating expenses, battered fourth-quarter 2011 results.
The company incurred a quarterly loss of $0.18 per share, falling
drastically from the year-ago quarter earnings of $0.64 per share.
The results, however, bettered the Zacks Consensus Estimate of a
loss of $0.20 per share.
Further, due to uncertainty hovering around sales, given the
global economic unrest, the company decided not to provide any
guidelines unless it finds any near-term catalysts to drive sales.
Intense competition from other retailers, seasonal nature of
business and risks associated with sourcing merchandise from
developing countries may further undermine the company's future
Currently, we are maintaining a long-term Underperform
recommendation on the stock. Our target price of $10.00 is based on
P/CF (price-to-cash flow) multiple of 8.27x.
Latest Posts on the Zacks
Basel Proposes New Rules for Banks
Last Thursday, the Basel Committee on Banking Supervision came
up with a series of new stringent capital rules for the largest
U.S. banks, based on the fundamental review of trading book capital
requirements. Basel proposed increased capital holding by banks to
align with the risk of heavy losses in the trading market.
As per the newly proposed rules, banks will be restricted beyond
an extent in transferring assets between trading and banking books.
They need to provide regulators with details related to the selling
and buying of securities in their trading books. Moreover, more
capital would be required to maintain to avoid the risk of credit
In trading books, portfolios of securities, which are actively
traded by banks, are represented while banking books enclose
products that the banks plan to hold to maturity.
Trading activities of the banks would be reduced once the new
rules get approved as capital requirements would be enhanced.
Moreover, this is expected to reduce the profitability of large
financial institutions involved in extensive trading activities
The Goldman Sachs Group Inc.
Deutsche Bank AG
Before the approval of the proposed rules, the Basel Committee
awaits feedback until September 2012. When the review of responses
is complete, the committee will declare the amendments to the Basel
In July 2009, the Basel Committee issued "Basel 2.5," which
inculcated modifications to the market risk framework. These
amendments significantly enhanced capital requirements for trading
activities, mainly for securitizations and planned credit products,
based on the losses incurred by the banks during the financial
The current proposal contains a revised market risk framework
that includes the measures to enhance trading book capital
requirements. However, Basel 2.5 did not consider the calculation
methods in estimating capitals. According to the Committee, the
Value at Risk (VAR) measure, which takes into account prospective
losses on a portfolio for most situations mainly covering 95% of
trading days, was proved to be a poor measure during the financial
Now, the Basel Committee plans to use "expected losses" while
calculating banks' capital instead of using the VAR measure.
The oversight body of the Basel Committee on Banking Supervision
is planning proactive actions to ensure that the world's largest
banks are strengthening their capital and liquidity positions to
confront another financial meltdown. The committee is set to carry
out on-site assessments of the banks' financial conditions.
Previously, a global agreement, known as Basel III (named after
the city of Switzerland), was passed in July 2011. Under the
agreement, banking giants throughout the world would have to
maintain an extra 1% to 2.5% of capital on their balance sheets in
addition to the Basel III mandate of 7% by 2019. The percentage
will vary depending on the size of their balance sheets. Based on a
particular bank's importance and position in the overall financial
system, the regulators will formulate a method to identify target
A weak capital level is always a threat to the global economy.
Needless to say, meeting new rules would act as building blocks of
the still unstable world economy, with fewer bank collapses and
less involvement of taxpayers' money for bailing out troubled
Get the full analysis of all these stocks by going to
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BARCLAY PLC-ADR (BCS): Free Stock Analysis
CABELAS INC (CAB): Free Stock Analysis Report
CITI TRENDS INC (CTRN): Free Stock Analysis
DEUTSCHE BK AG (DB): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
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