March 18, 2009
In a much-needed turn of events in the markets the past week, the major indices pulled together a solid rally over the trading sessions, as the markets all posted a 9% or greater gain, helping a select few increase their market shares. However, despite the upward direction, there were other stocks that could not benefit from the buyers mentality throughout the week, which pushed those shares to multi-digit losses for the week.
Despite the overall performance for insurers, Prudential Financial Inc. (PRU) posted some of the biggest gains throughout the markets over the past week. As one of the largest financial service institutions in the U.S., Prudential provide a wide range of insurance, investment management and other financial products and services.
One of the biggest concerns throughout the industry is the lack of capital that Prudential, along with rivals MetLife (MET) and Principle Financial Group (PFG), face. "Recent spread-widening and economic deterioration significantly impacted our analysis, which implies that most life and health insurers are at risk of needing to raise capital as their prospects for earning their way out of the credit losses are diminishing, especially for stock-market-sensitive names," analysts at Friedman, Billings, Ramsey stated early last week.
Even with downgrades within the sector, shares of PRU jumped nearly 65% throughout the trading sessions, climbing from $11.38 per share to $18.76 per share. Of the 522 members rating Prudential, only 8.3% expect the stock to beat the market. Not a well-rated stock. Nevertheless, investors think otherwise, as the stock moved higher in Monday’s trading session as well, adding nearly 2%, or $0.34, to start the week at $19.10 per share.
As a leading global financial services firm, JPMorgan Chase & Co. (JPM), is a leader in investment banking, asset management, private banking, private equity, custody and transaction services and retail and middle market financial services. Late last week, the company was labeled as the top-selling mutual fund group in the U.S. During the past year, investors placed more than $140B worth of capital into the company.
JPMorgan managed to record outflows of capital, excluding money market funds, of $1.3B, and with a dire economic environment for money managers, only a handful of groups managed to attract investors’ cash other than money markets.
Other news throughout the week, which helped propel the stock’s price, was the potential offering from Barclays Capital Group PLC (BCS), which operates in commercial and investment banking, insurance, financial and other related services in the United Kingdom, of $30M for JPM’s portfolio of NYSE market maker Bear Wagner Specialists LLC. When finalized, the deal will make Barclays the largest designated market maker on the NYSE, representing nearly 28% of the daily trading volume.
By the end of the week, shares of JPM were up nearly 50%, going from nearly $16 a share to just under $24 a share. Monday’s trading session could not continue with the previous week’s momentum, slipping $0.66, or 2.8%, to close the start of the week at $23.09 a share.
Last but not least, one of the largest specialty retailers of menswear in the U.S. and Canada, Men's Wearhouse Inc. (MW), targets middle and upper middle income men by offering quality merchandise at everyday low prices. With upgrades by analysts from both Stifel Nicolaus and Wedbush Morgan, the company’s stock was also bolstered by an earnings release late last week that pushed the stock up more than 20% on Thursday.
In the company’s 4Q report, MW beat market expectations, posting earnings of $1.5M, or $0.03 per share, albeit down from the previous year’s profit of $14.5M, or $0.28 per share. Sales were down as well, as retailers continue to be battered by the lack of spending from consumers. Overall revenues dropped 11%, from $535M to $476.4M.
Analysts, in the meantime, were looking for the men’s apparel retailer to record a quarterly loss of $0.16 per share on total sales of $490.25M. Looking ahead to 2009, MW is anticipating that the first half of the year will generate earnings between $0.45 and $0.65 per share, with sales increasing between 4% and 7% during the six-month period.
With gains over the past week of 45%-plus, the start of the new week brought a different result than the prosperity from last week. Shares of MW were down more than 3% by the close of Monday’s session, falling $0.45 to close at $13.63 per share. Over the past year, MW has traded in a range of $8.33 and $27.64 per share.
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