The Zacks Analyst Blog Highlights: ProAssurance, Tenneco, AutoZone, Ford Motor and Commercial Vehicle Group

Zacks


For Immediate Release

Chicago, IL – February 20, 2013 – 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 ProAssurance Corp. (PRA), Tenneco Inc. (TEN), AutoZone Inc. (AZO), Ford Motor Co. (F) and Commercial Vehicle Group Inc. (CVGI).

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Here are highlights from Tuesday’s Analyst Blog:

ProAssurance Lifted to Outperform

On Feb 16, Zacks Investment Research upgraded ProAssurance Corp. (PRA) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

ProAssurance has remained steady based on its strong third-quarter results, followed by the closure of two acquisitions – Independent Nevada Doctors Insurance Exchange (:INDIE) and Medmarc Insurance Group – in the past two months. While the recent stock split makes the stock more attractive to a diverse group of investors, the special dividend payout in Dec 2012 boosted shareholders’ confidence in the stock.

Moreover, this independently traded specialty writer of medical professional liability insurance delivered positive earnings surprises in all of the last 4 quarters with an average beat of 38.7%. The long-term expected earnings growth rate for this stock is 7.5%.

On Nov 6, ProAssurance reported third-quarter 2012 operating earnings per share of $1.71, striding ahead of the Zacks Consensus Estimate of $1.61 by 6.2%. Growth was driven by a 8.6% year-over-year accretion in total revenue to $176 million, while total expenses witnessed a decline of 6.8% to $92.4 million.

Consequently, the Zacks Consensus Estimate for 2012 remained flat at $4.01 per share as no revisions were made to estimates over the last 30 days. Following a similar revision trend, the Zacks Consensus Estimate rose by a penny to $3.67 per share for 2014.

This reflects that though intense price and product competition along with regulatory challenges limit the desired upside, benefits of geographic diversity, stable ratings, improving ROE and strong financial position are likely to have a positive impact on ProAssuarnce over time.

 

Tenneco Cut to Underperform

 

On Feb 18, we downgraded emission control and ride control systems manufacturer Tenneco Inc. (TEN) to Underperform, based on its lower-than-expected fourth quarter earnings, high customer concentration and sluggish demand for high-margin aftermarket parts.

Why the Downgrade?

Despite reporting a 25% rise in adjusted profit to $40.0 million or 66 cents per share in the fourth quarter of 2012, Tenneco’s’ EPS missed the Zacks Consensus Estimate by a couple of cents. Revenues dipped 1.7% to $1.75 billion and fell short of the Zacks Consensus Estimate of $1.78 billion.

Following the release of the fourth quarter results, the Zacks Consensus Estimate for 2013 decreased 4.0% to $3.62 per share. The Zacks Consensus Estimate for 2014 also went down 2.9% to $4.40 per share. With the Zacks Consensus Estimates for both 2013 and 2014 going down, the company retains a Zacks Rank #5 (Strong Sell).

Tenneco remains under pressure as automotive retailers like AutoZone Inc. (AZO) demand heavy pricing concessions. In addition, the company faces high customer concentration as the company’s top 10 aftermarket customers, including Ford Motor Co. (F), constitute 50% of its total aftermarket sales.

Softness in demand for aftermarket parts compared to original equipments (:OE) is also challenging for the company. The replacement cycles of the aftermarket products are longer, owing to the improved quality of OE parts and higher average useful life of automotive parts.

Other Stocks to Consider

Commercial Vehicle Group Inc. (CVGI) is performing well in the same industry where Tenneco operates. The stock retains a Zacks Rank #1 (Strong Buy).

 

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Read the analyst report on PRA

Read the analyst report on TEN

Read the analyst report on AZO

Read the analyst report on F

Read the analyst report on CVGI

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