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Business, Finance, Occupation & Industry

Wells Fargo Reports Record Quarterly Net Income

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By Business Wirevia The Motley Fool

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Wells Fargo Reports Record Quarterly Net Income

Q1 Net Income of $5.2 Billion; EPS of $0.92, Up 23 Percent from Prior Year

SAN FRANCISCO–(BUSINESS WIRE)– Wells Fargo & Company (NYS: WFC) :

  • Continued strong financial results:
    • Record Wells Fargo net income of $5.2 billion, up 22 percent from first quarter 2012
    • Record diluted earnings per share of $0.92, up 23 percent
    • Revenue of $21.3 billion, compared with $21.6 billion
    • Noninterest expense of $12.4 billion, down $593 million
      • 58.3 percent efficiency ratio, improved from 60.1 percent
    • Pre-tax pre-provision profit (PTPP)1 of $8.9 billion, up 2 percent
    • Return on average assets (ROA) of 1.49 percent, up 18 basis points
    • Return on equity (ROE) of 13.59 percent, up 145 basis points
  • Continued loan and deposit growth:
    • Total average loans of $798.1 billion, up $29.5 billion from first quarter 2012
      • Quarter-end loans of $800.0 billion, up $33.4 billion
      • Quarter-end core loans2 of $709.1 billion, up $50.8 billion
    • Total average core deposits of $925.9 billion, up $55.4 billion from first quarter 2012
      • Quarter-end core deposits of $939.9 billion, up $51.2 billion
  • Continued improvement in credit quality:

    • Net charge-offs of $1.4 billion, a decline of $976 million from first quarter 2012

      • Net charge-off rate of 0.72 percent (annualized), lowest since second quarter 20063

    • Non-performing assets of $22.9 billion, down $3.8 billion from first quarter 2012

    • $200 million (pre-tax) reserve release4 due to continued strong credit performance
  • Strengthened capital levels; increased dividends and continued share repurchases:
    • Tier 1 common equity5 under Basel I increased $14.1 billion from first quarter 2012 to $113.6 billion, with Tier 1 common equity ratio of 10.38 percent under Basel I at March 31, 2013
    • Estimated Tier 1 common equity ratio of 8.39 percent under current Basel III capital proposals6
    • Increased quarterly common stock dividend to $0.25 per share in first quarter 2013 and purchased approximately 17 million shares of common stock
    • Received a non-objection to 2013 Capital Plan under the Comprehensive Capital Analysis and Review (CCAR), which included a dividend rate of $0.30 per share for second quarter 2013, subject to Board approval. The 2013 plan also included an increase in common stock repurchase activity compared with actual repurchases in 2012.

From: http://www.dailyfinance.com/2013/04/12/wells-fargo-reports-record-quarterly-net-income/

Business, Finance, Occupation & Industry

7 Things You Need to Know About U.S. Bancorp

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By John Grgurich, The Motley Fool

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Heard about U.S. Bancorp lately? Probably not, and that’s a good thing. U.S. Bancorp is the big bank with small drama: quietly — but profitably — going about its business year in and year out, and rewarding the patient, insightful investor who’s looking for something a bit off the beaten path.

As a quick way of introduction to U.S. Bancorp, here are seven of my favorite things about this often overlooked bank.

1. U.S. Bancorp is a bigger bank than you think
Again, it’s not bank that’s in the news everyday, but for its size, it easily could be. With more than $353 billion in total assets, it’s the seventh largest bank in the country, just ahead of Bank of New York Mellon , another low-drama bank that rewards the patient, long-term investor.

In and of itself, being big means nothing. But a big bank that’s well-managed and conservatively run — like U.S. Bancorp — means it has enough resources and reach to generate profit, but likely won’t get itself, or its investors, into trouble.

2. Great 2012 share-price performance
We all know that investor darling Bank of America returned better than 100% for investors in 2012, but less well-known is the fact that shares in U.S. Bancorp gained a big 15.81% in the same time period.

3. Great return on assets
ROA measures how well a company performs relative to its total assets and is broadly a measure of management effectiveness.

U.S. Bancorp’s ROA is a big 1.58% trailing 12 months. JPMorgan Chase‘s ROA is only 0.92% TTM — this from a bank widely recognized to be very well run.

4. Great return on equity
ROE is another measurement of management effectiveness, and looks at the amount of net income a company makes with its shareholder’s money.

U.S. Bancorp’s ROE is a big 14.59% TTM, significantly better than JPMorgan’s 10.98%, and slightly better even than the normally indomitable Wells Fargo , which has an ROE of 12.89%.

5. Solid fourth-quarter earnings
In the fourth quarter of 2012, U.S. Bancorp grew its revenue by 5.1% year over year, and its net income by 5.2% year over year. Not staggering, but solid, and easily beating B of A’s -20.7% and -63.2% for the same respective categories.

6. U.S. Bancorp pays a solid dividend
2.3% isn’t the biggest dividend in the world, but it’s healthy. Wells Fargo only pays 2.7%, BNY Mellon only pays 1.9%, and investor-favorite B of A only pays 0.3%.

7. Great stress-test performance
U.S. Bancorp had a Tier 1 common ratio of 9% for 2013 and a stressed minimum of 8.3%, arguably better than JPMorgan’s 10.4% and 6.3% (respective) performance. As a result, U.S. Bancorp will be raising its dividend by 18% and will be buying back $2.25 billion in shares.  

Foolish bottom line
In banking, it pays to be healthy and strong. U.S. Bancorp is practically the poster child for this. It’s a low-drama,

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

People's United Financial Stock: 9 Critical Numbers

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By John Maxfield, The Motley Fool

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Given that you clicked on this article, it seems safe to assume you either own stock in People’s United Financial or are considering buying shares in the near future. If so, then you’ve come to the right place. The table below reveals the nine most critical numbers that investors need to know about People’s United stock before deciding whether to buy, sell, or hold it.

But before getting to that, a brief introduction is in order. Founded in 1842, People’s United is one of the oldest financial institutions in the country. And today, it’s one of the largest regional banks in New England, with locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire, and Maine. It currently operates 418 branches and has $30 billion in assets.

As you can see in the table above, People’s United exhibits a number of core strengths. Its net interest margin exceeds the industry average by 16 basis points, showing prudent interest rate risk. Its nonperforming loans ratio is far below its typical peer, demonstrating a convincing handle on credit risk. And finally, it pays out a generous 89% of its earnings via dividends.

On the other hand, People’s United’s paradoxically low return on equity is indicative of death by a thousand cuts. It’s slightly less leveraged than its peers, has a smaller proportion of income generated by fees, and its efficiency ratio is marginally higher. Taken together, the cumulative effect is to drive down its ROE. And what’s not represented here, moreover, is the downward trend in the bank’s tangible book value per share, which has fallen from above $15 in 2007 to down below $9 today.

Many investors are scared about investing in big banking stocks after the crash, but the sector has one notable standout. In a sea of mismanaged and dangerous peers, it rises above as “The Only Big Bank Built to Last.” You can uncover the top pick that Warren Buffett loves in The Motley Fool’s new report. It’s free, so click here to access it now.

The article People’s United Financial Stock: 9 Critical Numbers originally appeared on Fool.com.


John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Carnival: Buy, Sell, or Hold?

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By Zarr Pacificador, The Motley Fool

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LONDON — I’m always searching for shares that can help ordinary investors like you make money from the stock market.

Right now, I am trawling through the FTSE 100 (UKX) and giving my verdict on every member of the blue-chip index.

I hope to pinpoint the very best buying opportunities in today’s uncertain market, as well as highlight those shares I feel you should hold… and those I feel you should sell.

I’m assessing every share on five different measures. Here’s what I’m looking for in each company:

  1. Financial strength: Low levels of debt and other liabilities.
  2. Profitability: Consistent earnings and high profit margins.
  3. Management: Competent executives creating shareholder value.
  4. Long-term prospects: A solid competitive position and respectable growth prospects.
  5. Valuation: An underrated share price.

A look at Carnival
Today, I’m evaluating Carnival  , a global cruise and travel company, which currently trades at 2,303 pence. Here are my thoughts:

1. Financial strength: Carnival has adequate liquidity to cover financial obligations, with net gearing of only 35% and an interest cover of five times. Although the net debt of 5.8 billion pounds is quite high at five times operating profits, cash flow is set to improve as the company intends to reduce shipbuilding and plans to introduce only two to three ships annually from 2013 to 2015 compared to a five-per-year average in the past.

2. Profitability: While revenue-per-share growth has been consistently increasing by 10% per year over the last 10 years, earnings per share have declined from a high of 197 pence in 2008 to 103 pence in 2012. Operating margin and return on equity (ROE) have also deteriorated from 20% in 2003 to 11% in 2012 and 12% in 2008 to 6% in 2012, respectively.

3. Management: Micky Arison is the CEO and chairman of Carnival Plc and Carnival Corporation. The son of the company’s founder, Ted Arison, has been Carnival Corporation‘s CEO since 1979 and Carnival Plc‘s CEO since 2003. He has more than 30 years of experience in the industry and has built Carnival into the biggest cruise company in the world with a market capitalization of 4 billion pounds and earnings of over 9 billion pounds to date. Management has committed to increasing shareholder returns and opportunistic share repurchases the next few years and has announced the renewal of its $1 billion (660 million pound) share repurchase program.

4. Long-term prospects: Carnival is the largest cruise company in the world, with 100 ships operating in the U.S., the U.K., Canada, and continental Europe. It owns a portfolio of leading brands that include Carnival Cruise Lines and Princess Cruises in North America and P&O Cruises and Cunard Line in the U.K.

The past couple of years have been a challenging time for the cruise industry: The global economic slowdown and volatile fuel prices have dampened demand and increased costs resulting in earnings per share declining in three out of the last four years. However, the company has responded by intensifying cost-efficiency efforts, reducing fuel consumption per unit by a cumulative 21% since 2007 and expects around another 5% reduction per unit in 2013. Also, with travel …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

7 Things You Need to Know About Wells Fargo

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By John Grgurich, The Motley Fool

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With more than $1.4 trillion in assets, I wouldn’t exactly call Wells Fargo an under-the-radar bank, but it typically doesn’t make the headlines the way its big-bank peers do. That’s a good thing.

If you can be the fourth-largest bank in the U.S., be the top holding in Warren Buffet’s Berkshire Hathaway, and still remain as low-drama as Wells can, in my book, that means you’re running a big bank the way a big bank is supposed to be run. Bank of America and Citigroup CEOs, take note.

Without further ado, then, here are some of my favorite things about Wells: seven easy metrics, benchmarks, and points of view that will help you get your head around this gentle — but high performing — banking giant:

1. Outstanding 2012 share-price performance
Many of the country’s big banks did well in 2012, but that shouldn’t take anything away from Wells’ outstanding performance — it returned 20.23% to shareholders from January 3 to December 31 of last year.

JPMorgan Chase shareholders saw a net gain of 25.70% in the price of their shares over the course of 2012, but they had to live through the agony of the London Whale in the process. There was no similar drama for Wells stockholders.

2. Solid year-to-date share-price performance
Wells shareholders have made a handsome 5.53% on their positions this year. Shareholders in investor darling B of A have only seen a return of 1.25% so far.

But perhaps best of all, Wells shareholders didn’t have to endure a $10 billion-plus Fannie Mae settlement for housing-boom misdeeds in the process.

3. Great fourth-quarter performance
For the fourth quarter of last year, Wells grew its revenue by 8.10% year over year and its net income by 23.90%. Kudos to the higher-drama Citi on this metric, though; it grew its income by 25.10% for Q4 on just 5.00% revenue growth for the same period.

4. Fabulous stress-test results
On the Federal Reserve‘s 2013 stress tests, Wells had an actual Tier 1 common ratio of 9.9% and a stressed minimum of 7%, well above the Fed’s 5% requirement. This cool-under-pressure performance allowed the bank to raise its dividend by 20%.  

5. Fabulous return on equity
Return on equity, or ROE, is a favorite metric for bank analysts. Wells has an ROE of 12.89%, easily topping Citi’s 4.27%, and blowing B of A’s 1.79% out of the water. Wells even beats the ever-boastful JPMorgan on this metric, with its ROE of 10.98%.

6. #1 in U.S. home loans
In case you hadn’t heard, let me be the first to inform you that the U.S. housing market is rebounding, thanks in no small part to the Fed’s third round of quantitative easing: which is aimed specifically at boosting the housing sector.

The good news for Wells investors is, the superbank is the No. 1 home lender in the country. And as Wells kept its nose very clean …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Capco Outlines 'Industrialization Imperative' for Global Financial Services

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By Business Wirevia The Motley Fool

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Capco Outlines ‘Industrialization Imperative’ for Global Financial Services

“If you want to make it in the years ahead, you have to stop ‘making it all’ today,” according to a new report from Capco. Instead, industrialize non-core activity. Focus totally on product and service innovation. Maximize delivery efficiency.

NEW YORK–(BUSINESS WIRE)– Capco, a global business and technology consultancy dedicated solely to the financial services industry, today shared its vision of an industrialized path to increased ROE, uptake of surplus banking capacity and return to sustainably profitable banking business. Capco is part of FIS™ (NYS: FIS) , the world’s largest global provider dedicated to banking and payments technologies.

Rob Heyvaert, CEO and Founder of Capco and Corporate Executive Vice President of FIS says: “To return to the ROE levels of 15% historically required by investors, banks must now seize the chance to address deep structural issues. Growth opportunity and sustainable value creation demand fresh approaches.”

Stephen O’Sullivan, a Europe-based Partner with Capco, comments: “Banks can no longer do it all, if you want to make it in the years ahead, you have to stop ‘making it all’ today. Look long and hard at existing services and processes. Then identify areas that external expertise and technology can handle more efficiently.”

O’Sullivan adds: “Headcount reduction and tactical cost cutting are no longer sufficient to achieve healthy cost/income ratios. Nor will they enable the break-through innovation demanded to access the unbanked and emerging wealth – crucial to achieve uptake of the sector’s current excess capacity. It is estimated that one of the top eight global banks could be taken entirely out of the equation yet leave enough capacity to meet existing customer demand.”

However, Capco believes that financial institutions enjoy significant advantages, even as the threat of new mobile and social media entrants becomes a reality. While financial services lag behind other major industry sectors when it comes to streamlining processes and collaboration models with partners, the industry does have invaluable experience dealing with data and privacy protection, as well as the burden of ever-evolving regulation. Capco considers that by re-addressing fundamental operating models, institutions can develop more efficient platforms to compete with new entrants in tapping the huge unbanked and wealth in emerging markets opportunities.

What can banks do now? Capco’s vision of an industrialized bank is one that ‘does the right things in the right …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

British American Tobacco: Buy, Sell, or Hold?

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By Zarr Pacificador, The Motley Fool

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LONDON — I’m always searching for shares that can help ordinary investors like you make money from the stock market. Right now, I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. 

I hope to pinpoint the very best buying opportunities in today’s uncertain market, as well as highlight those shares I feel you should hold… and those I feel you should sell.

I’m assessing every share on five different measures. Here’s what I’m looking for in each company:

  1. Financial strength: Low levels of debt and other liabilities.
  2. Profitability: Consistent earnings and high profit margins.
  3. Management: Competent executives creating shareholder value.
  4. Long-term prospects: A solid competitive position and respectable growth prospects.
  5. Valuation: An underrated share price.

A look at British American Tobacco
Today, I’m evaluating British American Tobacco  , a British multinational tobacco company, which currently trades at 3,482 pence. Here are my thoughts:

1. Financial strength: British American Tobacco is in a solid financial position with net debt of only 1.5 times operating profits and interest cover a hefty 13 times. The company also generates consistent and stable free cash flows averaging over 3 billion pounds per year for the past three years.

2. Profitability: Revenues have increased 7% per year for the past five years while earnings per share has grown by 13% per year and dividends per share by 15% per year for the past decade. Operating margins have expanded from around 10% early in the decade to around 35% the last few years. The 10-year average return on equity (ROE) and return on capital employed (ROCE) have been a remarkable 60% and 35%, respectively.

3. Management: Nicandro Durante assumed the post of CEO in March 2011. He was previously the COO and has been with the company since 1981. British American Tobacco‘s share buyback program, which was suspended in 2009, was resumed in 2011. It has bought back 750 million pounds’ and 1.25 billion pounds’ worth of shares in 2011 and 2012, respectively. The board has agreed on repurchasing 1.5 billion pounds’ worth of shares for 2013.

4. Long-term prospects: British American Tobacco is the world’s second-largest tobacco company by market share, with a portfolio of 200 brands sold in around 180 markets worldwide. The group has significant exposure to emerging markets, where it derives around 70% of its profits.

The group’s four well-known brands, which it refers to as the Global Drive Brands (GDBs — Lucky Strike, Kent, Dunhill, and Pall Mall) accounted for 35% of the group’s revenues in 2011, and have performed well the last few years increasing volume and market share. As of the last trading statement, GDBs have increased volume by 3% and market share by 0.3%. However, group volumes declined by 1.6% due to the difficult trading conditions in some of its major markets, particularly Southern Europe. But revenues at constant rates of exchange still grew by 4% and adjusted diluted earnings per share were up by 7%. Also, the group saw increases in …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Should This Energy Company Be So Cheap?

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By Taylor Muckerman and Joel South, The Motley Fool

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Taking a look at Apache‘s footprint in the energy production space, its tough to determine exactly why the company is down 43% since April 29, 2011. One reason that the investment community has focused on for this downward spiral is its exposure to Egypt. Being the largest producer in this region during the last couple of years, which included the Arab Spring and the overturn of the Egyptian government, has taken its toll. Even though temperatures have cooled there, uncertainty still seems to be reigning supreme with regards to Apache’s share performance.

How does Apache stack up against its peers?
Looking at the company’s return on equity average for the last three years compared to peers also leads me to believe that it is performing well enough to warrant the discount its trading at to be erased. Apache is currently trading at a 15.4 times price-to-earnings ratio, below the likes of Devon Energy , EOG Resources , and Anadarko Petroleum , all while leading this group with its three-year average ROE of 13%. I believe this imbalance is likely to correct as the company’s assets begin  performing up to expectations, which could mean great things for Apache shareholders.

Hear the details on Motley Fool analyst Taylor Muckerman‘s position on Apache in the following video:

Apache wasn’t the only energy company to be burned by recent asset grabs
Energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company’s management and spiraling debt picture. While the debt issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you’re invited to check out The Motley Fool‘s brand-new premium report on the company. Simply click here now to access your copy.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Taylor Muckerman and Joel South“, contentId: “cms.24887”, …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

CORRECTING and REPLACING Tower Group Announces Closing of Merger with Canopius Holdings Bermuda Limi

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By Business Wirevia The Motley Fool

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CORRECTING and REPLACING Tower Group Announces Closing of Merger with Canopius Holdings Bermuda Limited and Trading of Tower Group International, Ltd. Common Shares on March 14, 2013

NEW YORK–(BUSINESS WIRE)– First graph, fifth sentence of release has been replaced and now reads: It is expected that the opening price of Tower Ltd. common shares, which will have a new CUSIP number of G8988C105, will be based on the closing price of Tower Group, Inc. on March 13, 2013, adjusted to account for the 1.1330 exchange ratio.

The corrected release reads:

TOWER GROUP ANNOUNCES CLOSING OF MERGER WITH CANOPIUS HOLDINGS BERMUDA LIMITED AND TRADING OF TOWER GROUP INTERNATIONAL, LTD. COMMON SHARES ON MARCH 14, 2013

Tower Group, Inc. (NAS: TWGP) announced the closing of its merger with Canopius Holdings Bermuda Limited (Canopius Bermuda), which will become effective later today following the close of trading on The NASDAQ Global Select Market (NASDAQ). Upon closing of the merger, Tower will become an indirect wholly-owned subsidiary of Canopius Bermuda, which will change its name effective at the closing to Tower Group International, Ltd. (Tower Ltd.). Under the terms of the merger agreement, Tower stockholders will receive 1.1330 common shares of Tower Ltd. for each outstanding share of Tower common stock held. Tower Ltd. common shares will be listed on NASDAQ under the symbol “TWGP,” which is the same trading symbol as is currently used by Tower, and are expected to begin trading at the market opening on March 14, 2013. It is expected that the opening price of Tower Ltd. common shares, which will have a new CUSIP number of G8988C105, will be based on the closing price of Tower Group, Inc. on March 13, 2013, adjusted to account for the 1.1330 exchange ratio.

Michael H. Lee, President and Chief Executive Officer, said, “After working diligently on the merger with Canopius Bermuda for more than one year, we are very pleased with the successful completion of this transformative and strategically important transaction. We expect this merger to be immediately accretive and to eventually allow us to achieve our long-term ROE target of 13 to 15%. From a strategic standpoint, we believe this merger will position Tower to build a profitable, diversified international specialty business that has the potential to create substantial long-term value for our stockholders. As a result of the merger, we will create an efficient Bermuda-domiciled holding company structure that will combine Tower’s businesses with certain of Canopius’s reinsurance …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Tower Group Announces Closing of Merger with Canopius Holdings Bermuda Limited and Trading of Tower

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By Business Wirevia The Motley Fool

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Tower Group Announces Closing of Merger with Canopius Holdings Bermuda Limited and Trading of Tower Group International, Ltd. Common Shares on March 14, 2013

NEW YORK–(BUSINESS WIRE)– Tower Group, Inc. (NAS: TWGP) announced the closing of its merger with Canopius Holdings Bermuda Limited (Canopius Bermuda), which will become effective later today following the close of trading on The NASDAQ Global Select Market (NASDAQ). Upon closing of the merger, Tower will become an indirect wholly-owned subsidiary of Canopius Bermuda, which will change its name effective at the closing to Tower Group International, Ltd. (Tower Ltd.). Under the terms of the merger agreement, Tower stockholders will receive 1.1330 common shares of Tower Ltd. for each outstanding share of Tower common stock held. Tower Ltd. common shares will be listed on NASDAQ under the symbol “TWGP,” which is the same trading symbol as is currently used by Tower, and are expected to begin trading at the market opening on March 14, 2013. The opening price of Tower Ltd. common shares, which will have a new CUSIP number of G8988C105, will be reduced by 13.3% to account for the 13.3% increase in shares received by existing Tower stockholders as a result of the merger.

Michael H. Lee, President and Chief Executive Officer, said, “After working diligently on the merger with Canopius Bermuda for more than one year, we are very pleased with the successful completion of this transformative and strategically important transaction. We expect this merger to be immediately accretive and to eventually allow us to achieve our long-term ROE target of 13 to 15%. From a strategic standpoint, we believe this merger will position Tower to build a profitable, diversified international specialty business that has the potential to create substantial long-term value for our stockholders. As a result of the merger, we will create an efficient Bermuda-domiciled holding company structure that will combine Tower’s businesses with certain of Canopius’s reinsurance business and give us access to U.S., Bermuda and Lloyd’s markets. Finally, we also want to thank everyone who worked on this transaction, including the bankers and attorneys as well the staff and Board members from Canopius Group Limited and Tower Group.”

About Tower Group, Inc.

Tower Group, Inc. offers diversified property and casualty insurance products and services through its operating subsidiaries.

Our Commercial Insurance Segment offers a broad range of commercial lines property and casualty insurance products to small to mid-sized businesses distributed through a network of retail, …read more
Source: FULL ARTICLE at DailyFinance

News, Politics, Government

Despite Super Bowl Ad Rejection, SodaStream Remains Bubbly

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By Zacks.com, Contributor

Getting a commercial rejected from the Super Bowl telecast is turning out to be the best thing to happen to SodaStream International (SODA) in quite some time. The maker of home beverage carbonation systems had its first ever Super Bowl commercial rejected by CBS, supposedly due to the references made to two of the biggest sponsors of the Super Bowl, Coke and Pepsi. It ran a shorter, and tamer commercial during the game instead. But the original commercial, entitled “Game Changer” has been put up on YouTube and has already garnered 4.3 million views and counting. Not too shabby for a company with a $990 million market cap making its first advertising push into the U.S. market. SodaStream, headquartered in Israel, makes home soda makers, flavored syrups, gas cylinders and bottles. It entered the U.S. market in 2009. The U.S. market now makes up about a third of the company’s sales and turned profitable in 2012. It sells its beverage systems in 15,000 retailers across the United States and in thousands of retailers worldwide. SodaStream went public in November 2010. Since then, it has been a growth machine. In 2012, earnings are expected to grow 57%. Analysts expect another 27% growth in 2013 and over the next five years, earnings are projected to grow 30.4%. On Nov. 7, SODA reported record third quarter results. Revenue jumped 48.7% to $112.5 million as it saw gains in all geographic regions and product categories. Earnings rose 66.7% to 80 cents per share, which beat the Zacks Consensus by 17.7%. SodaStream has been running circles around the analysts. It has surprised on every earnings report since it went public in 2010. It is expected to report fourth quarter results on March 6. The Zacks Consensus Estimate is looking for 38 cents. Stay tuned. Special Offer: If you’ll be paying for college anytime in the next decade, don’t miss this new free report. There are many moves you can make today to lower college costs and increase financial aid options. Find out how in 12 Insider Tricks to Pay For College. Read it now FREE. It’s not every day that you can find a company with strong double digit earnings growth and a valuation that isn’t at nosebleed levels. SodaStream trades with a forward P/E of 18 which is more expensive than the S&P 500 at 13.5x, but compared with high growth peers, it is downright cheap. It also has other solid fundamentals. SodaStream has a 1-year return on equity (ROE) of 18.1%, which is well above its peers at 10.6%. SodaStream is a Zacks Rank #1 (Strong Buy). It’s got the great combination of being a small-cap aggressive growth company with still manageable valuations. SODA data by YCharts Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec. Read the full Snapshot Report on SODA …read more
Source: FULL ARTICLE at Forbes Latest

News, Politics, Government

CBOE Pays Fat Dividend, Stock Tagging New Highs

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By Zacks.com, Contributor CBOE Holdings (CBOE) has been gaining traction with an annual dividend yield of 3.9% and a long-term growth rate of 12.5%, making this options and futures leader a promising pick for investors seeking both growth and income. This Zacks Rank #2 (Buy) declared a special dividend of 75 cents on December 11, which led to a 52-week high. CBOE is the leading options exchange in the U.S., which offers equity, index and ETF options. It also provides proprietary products such as S&P 500 options, along with options and futures products on the CBOE Volatility Index. With a market cap of  $2.9 billion, the company competes with CME Group (CME) and IntercontinentalExchange (ICE), among others. CBOE has been paying regular dividends since 2008. In 2012, the annual dividend payout was raised to $1.29 per share from 20 cents in 2010, reflecting an increase at an annual compound growth rate of 154% since 2010. The strong cash flows generated by the company along with the absence of debt have resulted in a sturdy balance sheet and abundant free cash. While the company recently paid a special dividend, it last hiked its dividend by 25% to 15 cents in July 2012. CBOE also deploys its excess capital through share buybacks from time to time. On Nov. 1, CBOE reported operating earnings per share of 43 cents in the third quarter of 2012, which exceeded the Zacks Consensus Estimate by 13.2% but fell short of year-ago earnings. Over the last four quarters, CBOE has generated an average earnings surprise of 6.6%. Operating net income declined 15.7% year-over-year to $37.7 million. However, reported net income increased to $45.8 million or 52 cents per share from $41.3 million or 45 cents in the year-ago period. Results mirrored lower operating expenses and steady revenue per contract, partially offset by the impact of the ongoing market volatility. Subsequently, total operating revenues declined 11% year-over-year to $128.3 million, while operating expenses declined 2% to $67.5 million. Nevertheless, management reaffirmed its guidance for 2012. The company’s diverse product line, market share gains and disciplined financial management should allow it to continue delivering strong results, especially once the low industry-wide trading activity rebounds to its historical highs. The Zacks Consensus Estimate for 2012 is currently pegged at $1.66, which is up 1.2% in the last 30 days as 9 of 14 estimates moved higher. This implies year-over-year growth of 5.6%. The Zacks Consensus Estimate for 2013 is $1.87, representing a year-over-year increase of 12.7%. Special Offer: What you don’t own is just as important as what investments you do own. Top investing experts named names when it comes to securities to avoid in the year ahead. Get the results in this free downloadable report, 24 Widely-Held Investments You Should Sell Now. Shares of CBOE currently trade at the 12-month forward earnings of 17.5x, a 12% premium to the peer group average of 15.6x. The premium valuation is justified given its strong fundamentals. ROE stands at 56.9%, compared with the peer group average of 16.2%. CBOE has been continuously outperforming the NASDAQ since last year, and has also been outperforming its 200 days moving averages since the end of December. The stock has gained 28.5% over the past year, compared with NASDAQ’s return of 12.6%. Special Offer: On January 29th, join Steve Forbes, income investing expert Richard Lehmann and growth superstar Jim Oberweis for a one-hour exclusive Webcast, The Forbes Investor Playbook: How to Safely Grow Your Wealth in 2013. Seats are limited—sign up now!
Source: FULL ARTICLE at Forbes Latest