Two major finance companies are taking an unwarranted beating on Wall Street because of the interest rate concerns pummeling bank and thrift stocks, analysts said.

Shares of Associates First Capital Corp., the nation's largest consumer finance company and a major commercial financier, have fallen 27% from their high point in April, and shares of Heller Financial Inc., a leader in asset-based lending, have fallen 30%. The rock-bottom prices have spurred a handful of analysts this month to begin covering these stocks, which are being unanimously touted as significant buying opportunities.

"Every analyst is looking to be a hero, and this presents a very good chance to become one," said E. Reilly Tierney, analyst at Fox-Pitt, Kelton Inc. in New York.

The two stocks have been stung by the general fear among investors that the performance of financial companies will be hampered by rising interest rates. Heller's stock has been trading at roughly nine times its estimated 1999 earnings, instead of what some analysts would consider a more appropriate 13 times earnings. Associates First is trading at about 17.5 times estimated 1999 earnings; Bruce Harting, an analyst with Lehman Brothers, argued that the multiple should be more than 20 times earnings.

In part because of their funding sources, finance companies are not as affected by rising interest rates as banks and thrifts are, and therefore "the way this market is knocking these stocks is unfair," said Jerry Robinson, an analyst with Stephens Inc. in Atlanta.

"These companies' margins don't decline in a rising interest rate environment, or at least not half as seriously as banks'," Mr. Robinson said. "These guys have generally funded their loans at variable rates, so they can adjust easily."

In addition, when interest rates climb, finance companies, unlike banks, tend to gain loan volume, he said.

"If I'm a commercial finance firm, a bank might steal my loan when interest rates are low," Mr. Robinson said, "but credit quality deteriorates at the margin for banks when interest rates climb; not so much for finance firms."

Some analysts said that besides the crushing effect of interest rate concerns on these stocks, the stocks have been tainted by the performance of two other firms in the commercial finance sector: New York-based CIT Group and Finova Group Inc. of Phoenix.

CIT has been struggling with its acquisition of Newcourt Credit Group, which was announced in March. Because of the worsening performance of Toronto-based Newcourt, CIT recently reduced its original bid of 0.92 shares for each of Newcourt's to 0.7. According to a Sept. 18 report by David B. Sochol, an analyst with Legg Mason Capital Markets in Baltimore, Newcourt's operating performance has continued to deteriorate.

Finova has raised concerns among analysts because of a decline in asset quality. In the second quarter, the commercial lender's restructured loans increased 59% from the first quarter, to $300 million.

"Other firms especially Heller, which unlike Associates is pretty much all commercial finance -- are stuck with CIT and Finova, which are dealing with some significant issues," Mr. Tierney said. "Their stumbling has hurt the whole group."

Their troubles also prompted four analysts to begin pushing Heller's and Associates First's stocks. Katrina Blecher, the regional bank analyst for Brown Brothers, Harriman & Co. in New York, this month added Associates First with a "short-term neutral/long-term buy" rating.

"In this market, the consumer remains a very strong driver," Ms. Blecher said. She said Heller and Associates, which normally trade at a 1% discount to their peers, are trading at a 9% discount.

Jennifer S. Scutti, who began covering Heller for Prudential Securities Inc. on Sept. 16, recommended that investors accumulate the stock.

"Our 1999 and 2000 estimates reflect roughly 15% to 17% growth, which could prove conservative," the analyst wrote in a report.

"Because all financials are under pressure, we've been finding these incredibly good values," said Darrell G. Hendrix, an analyst with Friedman, Billings, Ramsey & Co. Mr. Hendrix, who said his firm would begin expanding its coverage of finance companies, added that "top-quality" lenders such as Heller and Associates First are the ones likely to "lead the sector out of the doldrums."

Mr. Hendrix initiated coverage of Heller on Sept. 15 with a " buy" recommendation. Lehman's Mr. Harting started covering Associates First on Sept. 2, also with a "buy" rating.

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