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Zacks Analyst Blog Highlights: Ford, Toyota, Honda, Nissan and Automatic Data Processing – Press Releases

Zacks Market Commentaries — Thu, 03 Dec 2009 13:06:11 +0000

For Immediate Release

Chicago, IL – December 3, 2009 – 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: Ford (F), Toyota (TM), Honda (HMC), Nissan (NSANY) and Automatic Data Processing (ADP).

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Here are highlights from Wednesday’s Analyst Blog:

U.S. Auto Sales Reach Bottom?

The U.S. auto industry posted a flat November sales at 742,925 vehicles compared to the year-ago level, suggesting the market has bottomed. The seasonally adjusted rate was 10.9 million vehicles compared 10.4 million vehicles in November last year. Sales of cars and light trucks dipped 3% to 566,365 vehicles.

Automakers tried to regain sales through discounts and higher sales incentives. According to the auto information website Edmunds.com, sales incentives increased 2% to $2,713 per vehicle during the month. However, this has not proved very helpful in melting the ice. The high unemployment rate was cited as the primary factor behind the lagging sales.

Among the U.S. automakers, Ford (F) succeeded in sustaining a strong position in the market by posting flat sales at 122,846 vehicles during November. The automaker’s sales of crossovers, which imitates SUVs but with a higher fuel-efficiency, grew 26%. Its car sales rose 14%, driven by a fuel-efficient product line. However, sales of trucks and SUVs posted double-digit declines on account of a deteriorated construction industry conditions and fuel-inefficiency, respectively.

Sales at General Motors fell 2% to 151,427 vehicles. However, four of its core brands -- Buick, Cadillac, Chevrolet and GMC -- performed well. Chrysler sales were lagged with a 25% decline to 63,560 vehicles, despite an array of sales incentives, including zero percent financing and cash rebates offered by the automaker.

Toyota (TM) showed a 2.6% rise in sales to 133,700 vehicles in the U.S. helped by popular models including Camry (up 18% 27,385 vehicles), RAV4 crossover (up 35.1% 11,512 vehicles) and Prius (up 11% to 9,617 vehicles). Hyundai sales shot up 46% on the back of its top-selling fuel-efficient and low-cost sedan, Sonata.

Honda (HMC) recorded a 2.9% decline in sales to 74,003 vehicles driven by poor sales of Civic (23% decline) and the Fit (27% decline). Sales at Nissan (NSANY) were up 21% to 56,288 vehicles after declining for the past three months. Some of its vehicles, which showed significant sales increases, included Maxima (83.8%), Altima (43.1%), Frontier (71.4%) and Xterra (50.9%).

We believe the U.S. automotive market will gain its momentum next year as many automakers are projecting positive views by announcing production increases. However, we need to wait for a drop in the unemployment rate to support the revamped inventories.

ADP Sees 169,000 Jobs Lost

Job losses were widespread and roughly equally split between the service sector, which shed 81,000 jobs, and the goods-producing sector, which lost 88,000 jobs, according to ADP. The jobs lost in goods producing were equally split with construction and manufacturing both dropping 44,000.

Given that the service sector is far larger, with a total of 89.959 million people working in it, while the goods producing sector employs just 18.197 million, the goods producing sector continues to be hit much harder on a percentage basis. On the other hand, a decline of 44,000 jobs in manufacturing is actually the smallest drop in that area since May of 2008. However, this data seems at odds with the ISM data that came out yesterday, which pointed to a small increase in manufacturing employment in both October and November, with November's decline being smaller than October's.

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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 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.

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ADP Sees 169,000 Jobs Lost – Analyst Blog

Dirk Van Dijk — Wed, 02 Dec 2009 15:47:16 +0000

The National Employment Report by Automatic Data Processing (ADP), the largest processor of private sector payrolls, indicates that the economy lost 169,000 jobs in November. While that is an improvement over both the 190,000 jobs lost in October as reported by the Bureau of Labor Statistics (BLS) and the 195,000 that ADP now says the economy lost in October (revised from a loss of 203,000), it is far more than consensus expectations of a loss of only 100,000 jobs for the month.

Job losses were widespread and roughly equally split between the service sector, which shed 81,000 jobs, and the goods-producing sector, which lost 88,000 jobs, according to ADP. The jobs lost in goods producing were equally split with construction and manufacturing both dropping 44,000.

Given that the service sector is far larger, with a total of 89.959 million people working in it, while the goods producing sector employs just 18.197 million, the goods producing sector continues to be hit much harder on a percentage basis. On the other hand, a decline of 44,000 jobs in manufacturing is actually the smallest drop in that area since May of 2008. However, this data seems at odds with the ISM data that came out yesterday, which pointed to a small increase in manufacturing employment in both October and November, with November's decline being smaller than October's.

For construction, the declines have been relentless -- this is the 34th straight month of declines in that area. Since January 2007, over 1.7 million construction jobs have been lost. On the service side, the Financial services sector continues to drop jobs, by 17,000 in November -- the 24th straight decline there.

By business size, small businesses bore thee brunt of the jobs losses, losing 68,000 positions, followed by medium-sized companies (50 to 499 employees) which lost 57,000. Large businesses dropped 44,000 jobs in the month.

Relative to expectations -- and the very good news we had been seeing in the initial unemployment claims data -- this has to be seen as a very weak report, even if it does point to rather significant improvement over where we were earlier this year. Lately, the ADP numbers have done a good job tracking the official BLS numbers, but that has not always been the case. We will see on Friday morning just how accurate ADP was this month.

Dirk van Dijk, CFA is the Chief Equity Strategist for Zacks.com. With more than 25 years investment experience he has become a popular commentator appearing in the Wall Street Journal and on CNBC. Dirk is also the Editor in charge of the market-beating Zacks Strategic Investor service.
Read the full analyst report on "ADP"
Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Novatel Wireless, The Corporate Executive Board, Automatic Data Processing, Johnson & Johnson and Kraft Foods – Press Releases

Zacks Market Commentaries — Thu, 05 Nov 2009 12:40:35 +0000

For Immediate Release

Chicago, IL – November 5, 2009 – Zacks Equity Research highlights Novatel Wireless (NVTL) as the Bull of the Day and The Corporate Executive Board (EXBD) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Automatic Data Processing (ADP), Johnson & Johnson (JNJ) and Kraft Foods (KFT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=5506

Here is a synopsis of all five stocks:

Bull of the Day:

We upgrade our recommendation for Novatel Wireless (NVTL) to Outperform following the blockbuster financial results of its third quarter 2009.

We expect the top-line of Novatel to maintain its current growth rate supported by strong demand for MiFi mobile intelligent hotspot and USB modems.

The company has generated a record-high level of free cash flow and significantly improved its gross margin. In addition, the company has a very strong balance sheet, capable to support its long-run business endeavors. Management has made the decision to extend the MiFi platform with new features and functionality, as well as building a MiFi ecosystem through organic development and strategic partners.

Bear of the Day:

We maintain our Underperform rating on shares of The Corporate Executive Board (EXBD). While Q3 EPS beat expectations, the company continues to experience deterioration in key operating metrics, including contract value.

Given the current operating pressures, along with ongoing concerns regarding a slowing economy, we believe the shares should trade at a discount to the peer group average. As such, we anticipate that the company's shares should underperform the market in the near-term.

ADP Sees 203,000 Jobs Lost – Analyst Blog

Dirk Van Dijk — Wed, 04 Nov 2009 16:17:23 +0000

This morning, Automatic Data Processing (ADP), the biggest payroll processing firm, estimated that the economy lost 203,000 private sector jobs in October. That was more than the consensus estimate of 190,000 jobs lost. However, the September job loss numbers were revised to a loss of just 227,000 from the original read of 254,000. Thus the losses are coming from a higher base level, and if the revisions are included, this report was in line with consensus or perhaps a bit better.

Still, it indicates that while the economy might be expanding, employment isn’t. However, this is the seventh straight month where ADP has seen fewer jobs lost than the month before. This is similar to the pattern that we saw following the last two recessions.

While employment has always been considered a lagging indicator, it has been becoming more so with each passing decade. In part this reflects the changing nature of the workplace, with manufacturing jobs making up a much smaller part of the total.

Also, this time around an unusually high percentage of the job cuts are of the permanent variety (see "Permanent vs. Temporary Layoffs"). The graph below, originally from the Atlanta Fed, was also used in that post. The job loss numbers are a net number, with new jobs created offsetting other job losses. The rate of layoffs has slowed down, but the rate of job creation has not yet picked up (see "It's the Lack of Job Creation, Stupid!").

By sector, ADP saw 86,000 jobs lost in the service sector, which is far larger, but more stable than the goods producing sector. The service sector losses included 18,000 from financial services -- the 23rd straight month of declines there. The goods producing sector lost 117,000 jobs, including 65,000 in manufacturing and 51,000 in construction.

The read on manufacturing is in direct contrast with the ISM manufacturing survey which came out on Monday and indicated that manufacturing was actually gaining jobs in October. We will see on Friday which one was right when the Bureau of Labor Statistics (BLS) comes out with the official employment numbers. The consensus for the BLS (which includes government jobs, while ADP does not) report is for a decline of 175,000 jobs. The ADP report might make people a little bit more inclined to take the over on that number, but I don’t think by a lot.

By firm size, it looks like large firms, which tend to have better access to financing, are faring better than their little brothers. They lost a total of 53,000, while medium and small firms each lost 75,000 thousand. Traditionally, small businesses are one of the main engines of job creation in the country, something I wrote about here: "A Rarity: The Small-Business Loan." However those numbers are a little bit deceptive since small businesses employ more people overall than do large businesses.

Specifically, there are 17.9 million people working for firms with more than 500 employees, 42.3 million working for firms between 50 and 499 employees and 48.1 million working for firms with fewer than 50 workers. Thus on a percentage basis, large employers dropped 0.3% of their payroll in October, while medium-sized firms dropped 0.18% and small firms dropped less than 0.16%. As evidenced by the announcement yesterday by Johnson & Johnson (JNJ) that it would be trimming back its worldwide workforce by 7%, even the largest, most well-financed and stable of companies have not been immune from layoffs in this cycle.

All of this, however, is prelude to the big number on Friday. The September number was a major disappointment after months of steady improvement. The October report (and the revisions to September and August) will tell us if that was simply a temporary aberration, or the start of a new trend that we should be worried about. My gut tells me that it was an aberration.

The economy is getting back on track, but it seems like it is likely to be stuck in first gear for a while, but at least that is better than going in reverse. Of course there is a bit of a "chicken-and-the-egg" problem, since continued job losses tend to hurt the economy and can lead to further job losses.

A rising unemployment rate at a level over 10% is a recipe for Scrooge to rule Christmas, not Santa. However, it looks as if the fiscal and monetary stimulus program have managed to break that vicious cycle enough to generate at least some economic growth, but not yet enough to cause net job growth. History suggests that it will come, but might take a few more months.

Read the full analyst report on "ADP"
Read the full analyst report on "JNJ"
Zacks Investment Research

Finance Jobs Going Where the Growth Is – Asia

Jason Simpkins — Fri, 04 Sep 2009 17:07:51 +0000

China is Investing Billions in Renewable Energy One firm has already built China’s largest wind turbine manufacturing factory. And it’s working with the Chinese Science Academy to develop new wind, solar, and geothermal technologies… for which it will own 70% of the rights. But this company’s business reaches far beyond the Chinese border, with operations [...]

It’s the Lack of Job Creation, Stupid! – Analyst Blog

Dirk Van Dijk — Wed, 02 Sep 2009 18:10:01 +0000

With the release of the Automatic Data Processing (ADP) numbers this morning and the BLS jobs report due out on Friday (and initial claims tomorrow), jobs -- or the lack of them -- is clearly front and center.

Normally when people talk about job losses or gains, they are talking about net job creation. After all, even in the biggest booms, there are still some people who are losing their jobs, and even in the deepest darkest recessions, there are some folks who find new jobs.

There is an interesting article today by Andy Harless of Atlantic Asset Management posted on Economist View that disaggregates it into the rate of job destruction and the rate of job creation. It is a long and interesting article and is worth reading.

The key trends are shown in the graph below. If the blue line is above the pink line, it means that on-balance the economy is adding jobs, and when pink is higher than blue, we are losing jobs. It is the difference between the two lines that people usually talk about.

It turns out that the key problem is that the rate of job creation has fallen rather dramatically since 2000, from about 8% where it hovered in the 1990’s to 6% today. The rate at which jobs are going away jumped during the dot.com related recession of 2001, but then fell back. The rate at which the economy is dropping jobs is actually significantly less than it was at any time during the boom of the 1990’s.

Think about that for a minute -- during the Clinton Administration, when the economy added a net 22.5 million jobs, the rate of job destruction was actually higher than it was during the second quarter of this year! The difference is that back then there were lots of new jobs being created. If you lost your job in 1998 or 1999, it was not a big deal, there were plenty of new jobs being created. It is a very different story if you lost your job in 2008 or 2009, when the rate of job creation is 25% lower.

One of the key selling points of the huge tax cuts put into place in 2001 and 2003 -- tax cuts that were overwhelmingly targeted at the very top of the income distribution -- was that they would lead to entrepreneurs creating all sorts of new jobs. That clearly did not happen. The job growth that we saw between the middle of 2003 and the end of 2007 was almost entirely a function of the rate of existing jobs disappearing leveling out, not from any increase in the rate that new jobs were being created.

I think we can now safely put supply-side economics to bed -- it clearly does not work as advertised, at least when you are talking about the top marginal tax rates being below 50% (currently 35%, scheduled to go up to 39% when the Bush Administration tax cuts expire).

The theory may still have some validity when you are talking about the reduction in tax rates from over 90% in the 1950’s to under 50% by the early 1970’s. Clearly the part of the theory about lowering tax rates raising more tax revenues did not pan out too well, either.

High rates of job creation and destruction are signs of a dynamic economy, with old outmoded jobs being phased out -- often due to technological productivity improvements -- but new industries being created that more than make up for it. An economy where no one has lost their job and no new jobs were created would be static and hidebound.

Clearly we need to get the rate of job creation back up above the rate of job destruction, but for the long-term health and dynamism of the economy, we really need to see the rate of job creation increase more than we need to see the rate of job destruction brought down.

Read the full analyst report on "ADP"
Zacks Investment Research

Stock Investment in a Crisis, Two Early Indicators

Alexander Green — Fri, 06 Mar 2009 12:07:28 +0000

pHave we hit bottom? The U.S. unemployment crisis has changed the purchasing habits for the American consumer. The a href="http://www.investmentu.com/" class="alinks_links"Investment U/a Research Team gives us two stocks that are benefiting from the recession and this new way of life . /p pTheses stocks act as an early warning for what is to come and you don’t need the data from the U.S. Labor Department to give you the figures or warning./p pThis from the Team:/p blockquotepDuring most recessions, the auto sector has traditionally taken it on the chin. This week, we found out some interesting news that gives us some new insight into the changing buying habits of American consumers, and perhaps, new insight on investing./p pstrongAutoZone /strong(NYSE: a href="http://www.google.com/finance?q=NYSE%3AAZO" target="_blank"AZO/a) reported a href="http://money.cnn.com/news/newsfeeds/articles/globenewswire/160614.htm" target="_blank"increased sales and profits/a as customers lined#8230;/p/blockquote

AutoZone and Automatic Data Processing, Non-traditional Indicators

Investment U — Wed, 04 Mar 2009 16:22:20 +0000

AutoZone and ADP, Non-traditional Indicators by Investment U Research Team During most recessions, the auto sector has traditionally taken it on the chin. This week, we found out some interesting news that gives us some new insight into the changing buying habits of American consumers, and perhaps, new insight on investing. AutoZone (NYSE: AZO) reported increased sales and [...]

700,000 Jobs Lost in December?!?

Market Speculator — Fri, 09 Jan 2009 02:17:03 +0000

Article submission by Sean Hyman: Rumors are flying around everywhere. Traders and investors alike are pondering tomorrow’s employment report. Some are looking for 600,000 to even 700,000 jobs to be lost. While others like Bloomberg’s economists are forecasting a more conservative 515,000 jobs lost (down from 533,000 the previous month). So why all of the [...]

Why Hewlett-Packard (HPQ) Is Ready For Take-Off

Contrarian Profits — Mon, 08 Dec 2008 17:14:15 +0000

pstrongHewlett-Packard Co. /strong(NYSE:a href="http://finance.google.com/finance?q=NYSE%3AHPQ" target="_blank"HPQ/a) is making big strides even as the economy falls deeper into recession. HP#8217;s superior products and exemplary execution are key factors behind this trend, says strongHoracio Marquez/strong. And with the stock beaten down by broad market panic, Horacio says the company is a steal. He recommends building up a position in increments over the coming four months./p pThis from a href="http://www.moneymorning.com" class="alinks_links"Money Morning/a:/p blockquotepThere is no doubt that the global economic environment presents a very bleak outlook. The National Bureau of Economic Research (NBER) last week announced that the U.S. economy has been in a recession since last December – a situation that appears to be getting worse, given that the economy lost half a million jobs lost half a million#8230;/p/blockquote

IQ Trends TOP TEN TIMELY BUYS

CEO Blogger — Fri, 26 Sep 2008 14:23:21 +0000

“Our Timely Ten — our top ten current buys — is the best collection of high-quality stocks at or near historic low prices and high yields I have seen,” says Kelley Wright in IQ Trends. http://trackthepros.com/stocks/category/1760 “Strictly from an information standpoint, this is the most confusing, contradictory and divergent period I can recall. “I believe the market is [...]