For Immediate Release
Chicago, IL – August 26, 2013 – Zacks Equity Research highlights Nationstar Mortgage Holdings (NSM-Free Report) as the Bull of the Day and Martin Marietta Materials (MLM-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Harmony Gold (HMY-Free Report), AngloGold Ashanti Ltd. (AU-Free Report) and Avalon Rare Metals Inc. (AVL-Free Report).
Here is a synopsis of all five stocks:
Based in Lewisville, Texas, Nationstar is one of the leading residential mortgage services companies in the U.S., with a servicing portfolio of $312 billion. The company offers servicing, origination, and real estate services to financial institutions and consumers.
On August 6, 2013, Nationstar reported its second quarter 2013 results. Pro-forma earnings for the quarter came in at of $1.50 per share substantially ahead of the Zacks Consensus Estimate of $0.97 per share.
Earnings were up in comparison to both the prior quarter pro forma earnings of $0.85 per share and Q2 2012 pro forma earnings of $0.44 per share.
Total revenues came in at $603.7 million, up 40% from the prior quarter and up 198% from the second quarter of 2012. Total originations during the quarter surged to $7.1 billion, up 109% from $3.4 billion in the first quarter.
Pro forma servicing portfolio stood at $435 billion and the bulk acquisition and flow pipelines grew to the $400 billion during the quarter.
Weak results have led to sharp downward estimates revisions, sending this construction materials company to a Zacks Rank # 5 (Strong Sell).
Headquartered in Raleigh, North Carolina, Martin Marietta Materials (MLM-Free Report) is the country’s second largest producer of construction aggregates, used primarily for construction of roads, highways and other infrastructure projects and in the domestic commercial and residential construction industries.
The company operates through approximately 300 quarries, distribution yards and plants located in 28 states, Canada, the Bahamas and the Caribbean Islands.
MLM reported its second quarter FY 2013 results on July 30, 2013. Diluted EPS for the quarter came in at $0.88 per share, down substantially from the Zacks Consensus Estimate of $1.11 per share. The company said that the results were affected by excessive rainfall in most of their key markets-- particularly in the midwestern and southeastern states.
According to company estimates that the precipitation reduced shipment volumes between 1.5 million and 1.7 million tons, lowering net earnings by up to $0.11 per diluted share in addition to significantly affecting the operational productivity.
For the full-year, the company anticipates aggregates product line shipments to increase by 1% to 3%.
Harmony Gold Cut to Underperform
On Aug 22, we downgraded our recommendation on gold miner Harmony Gold (HMY-Free Report) to Underperform. Our view reflects high operating costs, volatility in gold prices and labor issues.
Harmony Gold, on Aug 14, recorded a wider loss of 20 cents per share for fourth-quarter fiscal 2013 (ended Jun 30, 2013) versus a loss of 2 cents a year ago and 5 cents in the sequentially prior quarter. The results were hurt by a hefty impairment charge and temporary closure of the company’s Kusasalethu mine. Lower gold prices contributed to a double-digit decline in sales. Harmony Gold is progressing with its cost reduction program in a weak gold price environment.
Following the release of the fourth quarter results, the Zacks Consensus Estimate for Harmony Gold for fiscal 2014 went down 42% to 33 cents per share. The company now retains a Zacks Rank #5 (Strong Sell).
Harmony Gold, which is among the prominent gold miners in South Africa along with AngloGold Ashanti Ltd. (AU-Free Report), remains one of the highest cost major South African gold producers. Apart from electricity supply concerns, the company has labor issues, resulting in high operational costs. Cash operating costs rose on a sequential basis in the most recent quarter due to rise in electricity tariffs.
Moreover, Harmony Gold’s operations are likely to be impacted by a slower-than-expected ramp-up in production at mines and gold price volatility. Weak gold prices coupled with higher costs are significantly affecting the company’s profitability.
Harmony Gold also remains exposed to geopolitical risks associated with potential mine shut downs and labor strikes. Labor disruptions at Kusasalethu resulted in a decline in gold production in fiscal 2013 and cost the company roughly R1.2 billion ($116 million). Harmony Gold faces tough labor and wage negotiations (with demand for significant wage hike) and the labor relation environment remains volatile in the gold industry.
Mining Stocks That Warrant a Look
While we prefer to avoid Harmony Gold, another company in the mining industry with a favorable Zacks Rank is Avalon Rare Metals Inc. (AVL-Free Report), which carries a Zacks Rank #2 (Buy).
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