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).
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on AVL - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
More From Zacks.com