CHICAGO, July 21, 2011 /PRNewswire/ -- 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: BlackRock Inc. (NYSE: BLK),
Bank of America Corporation (NYSE: BAC), Altria Group
Inc. (NYSE: MO), Reynolds American Inc. (NYSE: RAI) and
Lorillard, Inc. (NYSE: LO).
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Here are highlights from Wednesday's Analyst Blog:
BlackRock Rocks in Q2
BlackRock Inc.'s (NYSE: BLK) second quarter 2011 adjusted
earnings came in at $3.00 per share,
fairly ahead of the Zacks Consensus Estimate of $2.92.
The result also compares favorably with last year's earnings of
$2.96 and the prior-quarter's
earnings of $2.37.
Adjusted results for the quarter leave out the PNC LTIP funding
obligation, Merrill Lynch compensation contribution and income tax
law changes.
GAAP net income came in at $619
million or $3.21 per share,
against $568 million or $2.89 per share in the prior quarter and
$432 million or $2.21 per share in the year-ago quarter.
Better-than-expected results were primarily aided by strong
top-line growth, owing to a better investment performance and asset
mix, which were offset partially by higher operating expenses.
On June 1, 2011, BlackRock
completed the repurchase of Bank of America Corporation's
(NYSE: BAC) remaining ownership interest of 13.6 million preferred
shares for approximately $2.5
billion. The company issued $2.0
billion in debt to raise funds for the deal.
Quarter in Detail
On an operating basis, BlackRock's total revenue in the quarter
increased 4% sequentially and 17% year over year to $2.23 billion. However, total revenue missed the
Zacks Consensus Estimate of $2.34
billion.
Total expenses remained almost flat sequentially but crept up
11% year over year to $1.48 billion.
The year-over-year increase reflects a significant rise in employee
compensation and benefits expenses, general and administration
expenses, and direct fund expenses.
BlackRock's operating income on a GAAP basis stood at
$866 million, up 9% from $798 million in the prior quarter and 24% from
$697 million in the year-earlier
quarter.
Asset Position
Assets under management totaled $3.66
trillion as of June 30, 2011,
almost flat sequentially but up 16% year over year. The increase
was driven by market and competitive investment performance. Net
new business in long-term products was $18.4
billion during the reported quarter.
Our Take
Results for the reported quarter reflect financial strength in
the company. Though there are concerns related to the sluggish
economic recovery, we expect BlackRock to continue benefiting from
the growing need for risk management solutions within the financial
industry.
BlackRock currently retains a Zacks #3 Rank, which translates
into a short-term 'Hold' rating.
Altria In-Line, Affirms Outlook
Altria Group Inc. (NYSE: MO) posted adjusted earnings of
53 cents per share in the second
quarter of 2011, which was up 6.0% from the prior-year quarter and
in line with the Zacks Consensus Estimate.
The quarter benefited from strong operating income across its
tobacco businesses, lower asset impairment and exit costs, and
higher operating companies income (OCI) from its financial
services.
Quarter in Detail
Altria's total revenue declined 5.6% to $5.9 billion, as opposed to the prior-year
period. However, it exceeded the Zacks Consensus Estimate of
$4.4 billion. The decline was
attributable to lower net revenues from financial services as a
result of the previously-announced one-time charge related to
certain leveraged lease transactions. Revenue net of excise taxes
decreased 7.8% to $4.0 billion in the
second quarter of 2011.
For the quarter under review, operating income plummeted 15.3%
year over year to $1.3 billion.
Segment Details
Cigarettes Segment -Net revenue for the Cigarettes
segment increased 2.1% year over year to $5.7 billion, primarily due to higher list
prices, partially offset by lower shipment volume.
Furthermore, the adjusted operating income growth in the
cigarettes segment increased 2.8% in the second quarter of 2011 to
$1.5 billion. Adjusted operating
income excludes the restructuring costs that were primarily related
to the previously announced closure of PM USA's Cabarrus
manufacturing facility. Reported operating income in the quarter
increased 5.9% to $1.5 billion,
primarily due to higher list prices and lower asset impairment,
exit and implementation costs. This was partially offset by lower
shipment volume, higher U.S. Food and Drug Administration (FDA)
user fees and a $36 million charge
for the Scott case.
Smokeless Products -On the basis of the year-ago quarter,
net revenue in the Smokeless Products increased 3.6% to
$404 million, primarily due to higher
pricing, partially offset by lower shipment volume.
Furthermore, adjusted operating income for the segment grew a
robust 10.9% year over year to $224
million. Reported operating income increased 12.1% year over
year to $222 million in the quarter,
primarily due to higher pricing, lower selling, general &
administrative costs (SG&A), and lower restructuring costs,
partially offset by lower volume
Cigars -Net revenue for the Cigars segment declined 3.9%
year over year to $149 million,
primarily due to increased promotional investments. Furthermore,
both the adjusted and the reported operating income growth
decreased 16.1% in the second quarter of 2011 to $47 million.
Wine -Based on higher premium shipment volume, the Wine
segment's net revenues surged 9.4% to $116
million in the quarter. However, the adjusted operating
income increased 11.8% year-over-year to $19
million. Reported operating income in the second quarter of
2011 increased 58.3% to $19 million,
primarily due to lower restructuring costs and higher premium
volume.
Financial Services -Reported operating income for the
financial services segment in the second quarter of 2011 primarily
decreased to $463 million, due to a
charge of $490 million related to
certain leveraged lease transactions and lower gains on asset
sales. Adjusted operating income was $27
million in the second quarter of 2011.
Cost Savings, Share Repurchase and Financial Update
In the second quarter of 2011, Altria achieved cost savings of
$80 million. The company expects to
achieve at least $30 million in
additional cost savings by the end of 2011 and is on track to
exceed its goal of $1.5 billion in
cost reductions versus 2006.
In the second quarter of 2011, Altria repurchased 22.8 million
shares at an average price of $27.07
for a total cost of $616 million, as
part of its previously announced $1
billion 2011 one-year share repurchase program. Altria also
paid almost $1.6 billion in dividends
in the first half of 2011. Share repurchases under this program
depend upon marketplace conditions and other factors, and the
program remains subject to the discretion of Altria's Board of
Directors.
Altria also issued $1.5 billion of
senior unsecured notes with a coupon of 4.75% in the reported
quarter. The notes mature in May
2021. Altria also entered into a senior unsecured five-year
revolving credit agreement that provides for borrowings up to an
aggregate principal amount of $3.0
billion and expires on June 30,
2016. The credit agreement replaced Altria's $600 million senior unsecured 364-day revolving
credit agreement, which was to expire on November 16, 2011, and Altria's $2.4 billion senior unsecured three-year
revolving credit agreement, which was to expire on November 20, 2012.
Altria exited the year with cash and cash equivalents of
$2,064 million versus $2,314 million at the end of December 31, 2010. The company had long term debt
of $13.7 billion.
Business Outlook
Altria reaffirmed its full-year 2011 guidance for reported EPS
of between $1.70 and $1.76, which was
previously revised in June 2011 in
connection with a Philip Morris Capital Corporation (PMCC)
leveraged lease charge. This forecast includes estimated net
charges of 31 cents per share related
to a PMCC leveraged lease charge and SABMiller plc (SABMiller)
special items.
Additionally, Altria reaffirms its full-year 2011 guidance for
adjusted EPS, excluding special items, of $2.01 to $2.07, representing a growth rate of 6%
to 9% from an adjusted base of $1.90
per share in 2010.
Altria's first-half of 2011 adjusted EPS results exceeded
management's expectations, due to trade inventory dynamics and
higher equity earnings from Altria's investment in SABMiller.
Philip Morris USA (PM USA) believes that the trade has begun to
deplete cigarette inventories built in the second quarter and first
half of 2011, and expects this depletion to negatively impact PM
USA's 2011 third-quarter cigarette shipment volume and income.
Consequently, Altria expects its adjusted EPS growth to be stronger
in the fourth quarter of 2011 than in the third quarter of 2011.
Altria anticipates that 2011 second-half adjusted EPS growth will
be higher than the first half of 2011.
Management at Altria stated that the business environment for
2011 is expected to remain challenging. This is because adult
consumers remain under economic pressure and face high
unemployment. In addition, Altria's tobacco operating companies
also face a number of fears as they enter 2011.
Headquartered in Richmond,
Virginia, Altria engages in the manufacture and sale of
cigarettes, smokeless products, and wine in the United States and internationally. Also,
it competes with Reynolds American Inc. (NYSE: RAI) and
Lorillard, Inc. (NYSE: LO).
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