Leucadia Again Rated Neutral - Analyst Blog
March 01 2012 - 6:00AM
Zacks
We recently maintained a Neutral
recommendation on Leucadia National Corporation
(LUK), expecting the company to perform in line with the
market.
We believe the company largely
benefits from its extensive diversifications into a variety of
businesses including manufacturing, oil and gas drilling services,
gaming entertainment, real estate activities, medical product
development operations and various other investment activities.
Moreover, Leucadia’s strategy to
grow through acquisitions of companies in crisis augments the
company’s profitability. Of late, Leucadia added one of the largest
beef processing companies in the United States, National Beef
Packing Company, LLC, to its portfolio. Post acquisition, National
Beef became a subsidiary of Leucadia.
However, the industries in which
Leucadia operates are vulnerable to general market conditions. The
company’s array of businesses including real estate, manufacturing,
oil and gas drilling services, and gaming entertainment were
adversely impacted due to economic downturns in the recent past.
Also, Leucadia’s investments in volatile materials such as base
metals reduce the value of its investments.
Recently, the company reported
disappointing fiscal year 2011 results with the net earnings
falling drastically to 7 cents per share from $7.66 per share
reported in the fiscal year 2010. The company’s top line, however,
fared well recording a 19% year–over-year increase. Intense
competition from its peers including Apollo Investment
Corporation (AINV) and The Blackstone
Group (BX) also raises concerns for the company.
The current Zacks Consensus
Estimate for the first quarter of 2012 is 40 cents, representing
annual growth of 700.0%. Estimates for the fiscal year 2012 and
2013 are $1.58 and $1.59, respectively.
APOLLO INV CP (AINV): Free Stock Analysis Report
BLACKSTONE GRP (BX): Free Stock Analysis Report
LEUCADIA NATL (LUK): Free Stock Analysis Report
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