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Wells Fargo"s (WFC) Q4 Earnings Beat on Higher Fee Income

Wells Fargo's (WFC) Q4 numbers are driven by strong equity gains and asset-based fees. However, lower interest income due to lower yields on earning assets is the undermining factor. Wells Fargo’s WFC fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate of 1.09. Also, the bottom line improved 86% year over year.Results included the impact of an $875-million decline in allowance for credit losses, backed by an improving economic environment and a $943-million net gain on the sales of Corporate Trust Services business and Wells Fargo Asset Management, offset by a $268-million loss of impairment of certain leased rail cars.Improved investment banking and other asset-based fees, and strong equity gains in WFC’s affiliated venture capital and private equity businesses as well as lower costs, supported the bank. Yet, reduced net interest income (NII) due to low yields from earning assets and lower loans affected the results.In 2021, earnings per share came in at $4.99 compared with 43 cents per share in 2020. The reported figure also surpassed the Zacks Consensus Estimate of $4.68.In the fourth quarter, net income came in at $5.75 billion compared with $3.09 billion recorded in the prior-year quarter. In 2021, net income was $21.5 billion compared with $3.4 billion reported in the prior year.The quarter’s total revenues came in at $20.86 billion, surpassing the Zacks Consensus Estimate of $18.73 billion. Moreover, the top line was higher than the year-ago quarter’s $18.5 billion.Quarterly revenue generation from the business segments improved on a year-over-year basis. The Consumer Banking and Lending as well as Commercial Banking segment’s total quarterly revenues increased 1%, respectively. Further, revenues in the Corporate and Investment Banking as well as the Wealth and Investment Management units rose 11% and 6%, respectively.Revenues for the full year came in at $78.5 billion, surpassing the Zacks Consensus Estimate of $76.1 billion. Revenues also rose 6% year over year.NII Drops on Lower Loans, Costs FallWells Fargo’s NII for the fourth quarter came in at $9.3 billion, down 1% year over year due to low yields on earning assets and lower loan balances, largely offset by a reduced mortgage-backed securities premium amortization, higher interest income from loans purchased from securitization pools and Paycheck Protection Program loans and a decrease in long-term debt. Also, net interest margin (NIM) (on a taxable-equivalent basis) shrank 5 basis points to 2.11%.Non-interest income at Wells Fargo came in at $11.6 billion, up 26.9% year over year. This was steered by robust results in its affiliated venture capital and private equity businesses, and net gains from the sales of divested businesses. Higher card, deposit-related and investment banking fees, debt underwriting and advisory fees were partially offset by lower mortgage banking revenues, impairment of certain leased rail cars and lower trading activity in spread products.Non-interest expense was $13.2 billion for the fourth quarter, down 11% year over year. This decrease was due to lower personnel expense, consultant spend and occupancy expense as well as lower restructuring charges and operating losses.WFC’s efficiency ratio of 63% was below 80% recorded in the year-ago quarter. A fall in efficiency ratio indicates a rise in profitability.As of Dec 31, 2021, average loans were $875 billion, 2.5% up, sequentially. Average deposits came in at $1.47 trillion, up 1.3% from the prior quarter’s figure.Credit Quality StrongWells Fargo’s credit quality metrics were robust during the December quarter. The provision for credit losses was a benefit of $452 million as of Dec 31, 2021 compared with the benefit of $179 million in the prior-year quarter. Non-performing assets decreased to $7.3 billion for the fourth quarter from $8.9 billion reported in the year-earlier period.Net charge-offs were $423 million or 0.19% of average loans for the reported quarter, down 27.6% from $584 million of 0.26% a year ago.Capital Position Decent, Profitability Ratios ImproveWells Fargo maintained a sturdy capital position. Its Tier 1 common equity under Basel III (fully phased-in) increased to $140.6 billion from $138.3 billion witnessed in the prior-year quarter. However, the Tier 1 common equity to total risk-weighted assets ratio was reported at 11.4 % under Basel III (fully phased-in) as of Dec 31, 2021, down from 11.6% in the corresponding period of 2020.Return on assets was 1.17%, up from the prior-year quarter’s 0.64%. Return on equity was 12.8%, comparing favorably with the year-ago quarter’s 6.6%.Capital-Deployment ActivitiesWells Fargo repurchased 139.7 million shares or $7 billion in the fourth quarter of 2021.Our ViewpointWells Fargo is focused on maintaining its financial position despite a number of legal tensions. In addition, WFC is working on its strategic initiatives, which might help regain the confidence of its clients and shareholders. Improving credit quality, lower expenses and strong capital-deployment activities are encouraging.Nevertheless, top-line headwinds along with lower NII and NIM are expected to prevail amid an uncertain economic environment.Wells Fargo & Company Price, Consensus and EPS Surprise Wells Fargo & Company price-consensus-eps-surprise-chart | Wells Fargo & Company QuoteCurrently, Wells Fargo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Dates & Expectations of Other BanksBOK Financial BOKF is slated to report fourth-quarter 2021 results on Jan 19.Over the past 30 days, the Zacks Consensus Estimate for BOKF’s quarterly earnings has moved marginally southward. This indicates an 18.1% decline from the prior-year quarter’s actuals.The PNC Financial Services Group, Inc. PNC is scheduled to announce quarterly numbers on Jan 18.Over the past 30 days, PNC’s fourth-quarter earnings estimates have been revised marginally downward over the past month. However, the same is likely to witness a 10.7% rise from the prior-year reported number.Bank of America BAC is scheduled to announce quarterly numbers on Jan 19.Over the past 30 days, the Zacks Consensus Estimate for Bank of America’s quarterly earnings has moved 2.6% south to 76 cents, calling for a 28.8% jump from the prior-year reported number. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report BOK Financial Corporation (BOKF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Green Energy: A Bubble In Unrealistic Expectations

Green Energy: A Bubble In Unrealistic Expectations Authored by David Hay via Everegreen Gavekal blog, “You see what is happening in Europe. There is hysteria and some confusion in the markets. Why?…Some people are speculating on climate change issues, some people are underestimating some things, some are starting to cut back on investments in the extractive industries. There needs to be a smooth transition.” - Vladimir Putin (someone with whom this author rarely agrees) “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of its citizens.” – John Maynard Keynes (an interesting observation for all the modern day Keynesians to consider given their support of current inflationary US policies, including energy-related) Introduction This week’s EVA provides another sneak preview into David Hay’s book-in-process, “Bubble 3.0” discussing what he thinks is the crucial topic of “greenflation.”  This is a term he coined referring to the rising price for metals and minerals that are essential for solar and wind power, electric cars, and other renewable technologies. It also centers on the reality that as global policymakers have turned against the fossil fuel industry, energy producers are for the first time in history not responding to dramatically higher prices by increasing production.  Consequently, there is a difficult tradeoff that arises as the world pushes harder to combat climate change, driving up energy costs to painful levels, especially for lower income individuals.  What we are currently seeing in Europe is a vivid example of this dilemma.  While it may be the case that governments welcome higher oil and natural gas prices to discourage their use, energy consumers are likely to have a much different reaction. Summary BlackRock’s CEO recently admitted that, despite what many are opining, the green energy transition is nearly certain to be inflationary. Even though it’s early in the year, energy prices are already experiencing unprecedented spikes in Europe and Asia, but most Americans are unaware of the severity. To that point, many British residents being faced with the fact that they may need to ration heat and could be faced with the chilling reality that lives could be lost if this winter is as cold as forecasters are predicting. Because of the huge increase in energy prices, inflation in the eurozone recently hit a 13-year high, heavily driven by natural gas prices on the Continent that are the equivalent of $200 oil. It used to be that the cure for extreme prices was extreme prices, but these days I’m not so sure.  Oil and gas producers are very wary of making long-term investments to develop new resources given the hostility to their industry and shareholder pressure to minimize outlays. I expect global supply to peak sometime next year and a major supply deficit looks inevitable as global demand returns to normal. In Norway, almost 2/3 of all new vehicle sales are of the electric variety (EVs) – a huge increase in just over a decade. Meanwhile, in the US, it’s only about 2%. Still, given Norway’s penchant for the plug-in auto, the demand for oil has not declined. China, despite being the largest market by far for electric vehicles, is still projected to consume an enormous and rising amount of oil in the future. About 70% of China’s electricity is generated by coal, which has major environmental ramifications in regards to electric vehicles. Because of enormous energy demand in China this year, coal prices have experienced a massive boom. Its usage was up 15% in the first half of this year, and the Chinese government has instructed power providers to obtain all baseload energy sources, regardless of cost.  The massive migration to electric vehicles – and the fact that they use six times the amount of critical minerals as their gasoline-powered counterparts –means demand for these precious resources is expected to skyrocket. This extreme need for rare minerals, combined with rapid demand growth, is a recipe for a major spike in prices. Massively expanding the US electrical grid has several daunting challenges– chief among them the fact that the American public is extremely reluctant to have new transmission lines installed in their area. The state of California continues to blaze the trail for green energy in terms of both scope and speed. How the rest of the country responds to their aggressive take on renewables remains to be seen. It appears we are entering a very odd reality: governments are expending resources they do not have on weakly concentrated energy. And the result may be very detrimental for today’s modern economy. If the trend in energy continues, what looks nearly certain to be the Third Energy crisis of the last half-century may linger for years.  Green energy: A bubble in unrealistic expectations? As I have written in past EVAs, it amazes me how little of the intense inflation debate in 2021 centered on the inflationary implications of the Green Energy transition.  Perhaps it is because there is a built-in assumption that using more renewables should lower energy costs since the sun and the wind provide “free power”.  However, we will soon see that’s not the case, at least not anytime soon; in fact, it’s my contention that it will likely be the opposite for years to come and I’ve got some powerful company.  Larry Fink, CEO of BlackRock, a very pro-ESG* organization, is one of the few members of Wall Street’s elite who admitted this in the summer of 2021.  The story, however, received minimal press coverage and was quickly forgotten (though, obviously, not be me!).  This EVA will outline myriad reasons why I think Mr. Fink was telling it like it is…despite the political heat that could bring down upon him.  First, though, I will avoid any discussion of whether humanity is the leading cause of global warming.  For purposes of this analysis, let’s make the high-odds assumption that for now a high-speed green energy transition will continue to occur.  (For those who would like a well-researched and clearly articulated overview of the climate debate, I highly recommend the book “Unsettled”; it’s by a former top energy expert and scientist from the Obama administration, Dr. Steven Koonin.) The reason I italicized “for now” is that in my view it’s extremely probable that voters in many Western countries are going to become highly retaliatory toward energy policies that are already creating extreme hardship.  Even though it’s only early autumn as I write these words, energy prices are experiencing unprecedented increases in Europe.  Because it’s “over there”, most Americans are only vaguely aware of the severity of the situation.  But the facts are shocking…  Presently, natural gas is going for $29 per million British Thermal Units (BTUs) in Europe, a quadruple compared to the same time in 2020, versus “just” $5 in the US, which is a mere doubling.  As a consequence, wholesale energy cost in Great Britain rose an unheard of 60% even before summer ended.  Reportedly, nine UK energy companies are on the brink of failure at this time due to their inability to fully pass on the enormous cost increases.  As a result, the British government is reportedly on the verge of nationalizing some of these entities—supposedly, temporarily—to prevent them from collapsing.  (CNBC reported on Wednesday that UK natural gas prices are now up 800% this year; in the US, nat gas rose 20% on Tuesday alone, before giving back a bit more than half of that the next day.) Serious food shortages are expected after exorbitant natural gas costs forced most of England’s commercial production of CO2 to shut down.  (CO2 is used both for stunning animals prior to slaughter and also in food packaging.)  Additionally, ballistic natural gas prices have forced the closure of two big US fertilizer plants due to a potential shortfall of ammonium nitrate of which “nat gas” is a key feedstock.  *ESG stands for Environmental, Social, Governance; in 2021, Blackrock’s assets under management approximated $9 ½ trillion, about one-third of the total US federal debt. With the winter of 2021 approaching, British households are being told they may need to ration heat.  There are even growing concerns about the widespread loss of life if this winter turns out to be a cold one, as 2020 was in Europe.  Weather forecasters are indicating that’s a distinct possibility.   In Spain, consumers are paying 40% more for electricity compared to the prior year.  The Spanish government has begun resorting to price controls to soften the impact of these rapidly escalating costs. (The history of price controls is that they often exacerbate shortages.) Naturally, spiking power prices hit the poorest hardest, which is typical of inflation whether it is of the energy variety or of generalized price increases.  Due to these massive energy price increases, eurozone inflation recently hit a 13-year high, heavily driven by natural gas prices that are the equivalent of $200 per barrel oil.  This is consistent with what I warned about in several EVAs earlier this year and I think there is much more of this looming in the years to come. In Asia, which also had a brutally cold winter in 2020 – 2021, there are severe energy shortages being disclosed, as well.  China has instructed its power providers to secure all the coal they can in preparation for a repeat of frigid conditions and acute deficits even before winter arrives.  The government has also instructed its energy distributors to acquire all the liquified natural gas (LNG) they can, regardless of cost.  LNG recently hit $35 per million British Thermal Units in Asia, up sevenfold in the past year.  China is also rationing power to its heavy industries, further exacerbating the worldwide shortages of almost everything, with notable inflationary implications. In India, where burning coal provides about 70% of electricity generation (as it does in China), utilities are being urged to import coal even though that country has the world’s fourth largest coal reserves.  Several Indian power plants are close to exhausting their coal supplies as power usage rips higher. Normally, I’d say that the cure for such extreme prices, was extreme prices—to slightly paraphrase the old axiom.  But these days, I’m not so sure; in fact, I’m downright dubious.  After all, the enormously influential International Energy Agency has recommended no new fossil fuel development after 2021—“no new”, as in zero.  It’s because of pressure such as this that, even though US natural gas prices have done a Virgin Galactic to $5 this year, the natural gas drilling rig count has stayed flat.  The last time prices were this high there were three times as many working rigs.  It is the same story with oil production.  Most Americans don’t seem to realize it but the US has provided 90% of the planet’s petroleum output growth over the past decade.  In other words, without America’s extraordinary shale oil production boom—which raised total oil output from around 5 million barrels per day in 2008 to 13 million barrels per day in 2019—the world long ago would have had an acute shortage.  (Excluding the Covid-wracked year of 2020, oil demand grows every year—strictly as a function of the developing world, including China, by the way.) Unquestionably, US oil companies could substantially increase output, particularly in the Permian Basin, arguably (but not much) the most prolific oil-producing region in the world.  However, with the Fed being pressured by Congress to punish banks that lend to any fossil fuel operator, and the overall extreme hostility toward domestic energy producers, why would they?  There is also tremendous pressure from Wall Street on these companies to be ESG compliant.  This means reducing their carbon footprint.  That’s tough to do while expanding their volume of oil and gas.  Further, investors, whether on Wall Street or on London’s equivalent, Lombard Street, or in pretty much any Western financial center, are against US energy companies increasing production.  They would much rather see them buy back stock and pay out lush dividends.  The companies are embracing that message.  One leading oil and gas company CEO publicly mused to the effect that buying back his own shares at the prevailing extremely depressed valuations was a much better use of capital than drilling for oil—even at $75 a barrel. As reported by Morgan Stanley, in the summer of 2021, an US institutional broker conceded that of his 400 clients, only one would consider investing in an energy company!  Consequently, the fact that the industry is so detested means that its shares are stunningly undervalued.  How stunningly?  A myriad of US oil and gas producers are trading at free cash flow* yields of 10% to 15% and, in some cases, as high as 25%. In Europe, where the same pressures apply, one of its biggest energy companies is generating a 16% free cash flow yield.  Moreover, that is based up an estimate of $60 per barrel oil, not the prevailing price of $80 on the Continent. *Free cash flow is the excess of gross cash flow over and above the capital spending needed to sustain a business.  Many market professionals consider it more meaningful than earnings.  Therefore, due to the intense antipathy toward Western energy producers they aren’t very inclined to explore for new resources.  Another much overlooked fact about the ultra-critical US shale industry that, as noted, has been nearly the only source of worldwide output growth for the past 13 years, is its rapid decline nature.  Most oil wells see their production taper off at just 4% or 5% per year.  But with shale, that decline rate is 80% after only two years.  (Because of the collapse in exploration activities in 2020 due to Covid, there are far fewer new wells coming on-line; thus, the production base is made up of older wells with slower decline rates but it is still a much steeper cliff than with traditional wells.)  As a result, the US, the world’s most important swing producer, has to come up with about 1.5 million barrels per day (bpd) of new output just to stay even.  (This was formerly about a 3 million bpd number due to both the factor mentioned above and the 2 million bpd drop in total US oil production, from 13 million bpd to around 11 million bpd since 2019).  Please recall that total US oil production in 2008 was only around 5 million bpd.  Thus, 1.5 million barrels per day is a lot of oil and requires considerable drilling and exploration activities.  Again, this is merely to stay steady-state, much less grow.  The foregoing is why I wrote on multiple occasions in EVAs during 2020, when the futures price for oil went below zero*, that crude would have a spectacular price recovery later that year and, especially, in 2021.  In my view, to go out on my familiar creaky limb, you ain’t seen nothin’ yet!  With supply extremely challenged for the above reasons and demand marching back, I believe 2022 could see $100 crude, possibly even higher.  *Physical oil, or real vs paper traded, bottomed in the upper teens when the futures contract for delivery in April, 2020, went deeply negative.  Mike Rothman of Cornerstone Analytics has one of the best oil price forecasting records on Wall Street.  Like me, he was vehemently bullish on oil after the Covid crash in the spring of 2020 (admittedly, his well-reasoned optimism was a key factor in my up-beat outlook).  Here’s what he wrote late this summer:  “Our forecast for ’22 looks to see global oil production capacity exhausted late in the year and our balance suggests OPEC (and OPEC + participants) will face pressures to completely remove any quotas.”  My expectation is that global supply will likely max out sometime next year, barring a powerful negative growth shock (like a Covid variant even more vaccine resistant than Delta).  A significant supply deficit looks inevitable as global demand recovers and exceeds its pre-Covid level.  This is a view also shared by Goldman Sachs and Raymond James, among others; hence, my forecast of triple-digit prices next year.  Raymond James pointed out that in June the oil market was undersupplied by 2.5 mill bpd.  Meanwhile, global petroleum demand was rapidly rising with expectations of nearly pre-Covid consumption by year-end.  Mike Rothman ran this chart in a webcast on 9/10/2021 revealing how far below the seven-year average oil inventories had fallen.  This supply deficit is very likely to become more acute as the calendar flips to 2022. In fact, despite oil prices pushing toward $80, total US crude output now projected to actually decline this year.  This is an unprecedented development.  However, as the very pro-renewables Financial Times (the UK’s equivalent of the Wall Street Journal) explained in an August 11th, 2021, article:  “Energy companies are in a bind.  The old solution would be to invest more in raising gas production.  But with most developed countries adopting plans to be ‘net zero’ on carbon emissions by 2050 or earlier, the appetite for throwing billions at long-term gas projects is diminished.” The author, David Sheppard, went on to opine: “In the oil industry there are those who think a period of plus $100-a-barrel oil is on the horizon, as companies scale back investments in future supplies, while demand is expected to keep rising for most of this decade at a minimum.”  (Emphasis mine)  To which I say, precisely!  Thus, if he’s right about rising demand, as I believe he is, there is quite a collision looming between that reality and the high probability of long-term constrained supplies.  One of the most relevant and fascinating Wall Street research reports I read as I was researching the topic of what I have been referring to as “Greenflation” is from Morgan Stanley.  Its title asked the provocative question:  “With 64% of New Cars Now Electric, Why is Norway Still Using so Much Oil?”  While almost two-thirds of Norway’s new vehicle sales are EVs, a remarkable market share gain in just over a decade, the number in the US is an ultra-modest 2%.   Yet, per the Morgan Stanley piece, despite this extraordinary push into EVs, oil consumption in Norway has been stubbornly stable.  Coincidentally, that’s been the experience of the overall developed world over the past 10 years, as well; petroleum consumption has largely flatlined.  Where demand hasn’t gone horizontal is in the developing world which includes China.  As you can see from the following Cornerstone Analytics chart, China’s oil demand has vaulted by about 6 million barrels per day (bpd) since 2010 while its domestic crude output has, if anything, slightly contracted. Another coincidence is that this 6 million bpd surge in China’s appetite for oil, almost exactly matched the increase in US oil production.  Once again, think where oil prices would be today without America’s shale oil boom. This is unlikely to change over the next decade.  By 2031, there are an estimated one billion Asian consumers moving up into the middle class.  History is clear that more income means more energy consumption.  Unquestionably, renewables will provide much of that power but oil and natural gas are just as unquestionably going to play a critical role.  Underscoring that point, despite the exponential growth of renewables over the last 10 years, every fossil fuel category has seen increased usage.  Thus, even if China gets up to Norway’s 64% EV market share of new car sales over the next decade, its oil usage is likely to continue to swell.  Please be aware that China has become the world’s largest market for EVs—by far.  Despite that, the above chart vividly displays an immense increase in oil demand.  Here’s a similar factoid that I ran in our December 4th EVA, “Totally Toxic”, in which I made a strong bullish case for energy stocks (the main energy ETF is up 35% from then, by the way):  “(There was) a study by the UN and the US government based on the Model for the Assessment of Greenhouse Gasses Induced Climate Change (MAGICC).  The model predicted that ‘the complete elimination of all fossil fuels in the US immediately would only restrict any increase in world temperature by less than one tenth of one degree Celsius by 2050, and by less than one fifth of one degree Celsius by 2100.’  Say again?  If the world’s biggest carbon emitter on a per capita basis causes minimal improvement by going cold turkey on fossil fuels, are we making the right moves by allocating tens of trillions of dollars that we don’t have toward the currently in-vogue green energy solutions?” China's voracious power appetite increase has been true with all of its energy sources.  On the environmentally-friendly front, that includes renewables; on the environmentally-unfriendly side, it also includes coal.  In 2020, China added three times more coal-based power generation than all other countries combined.  This was the equivalent of an additional coal planet each week.  Globally, there was a reduction last year of 17 gigawatts in coal-fired power output; in China, the increase was 29.8 gigawatts, far more than offsetting the rest of the world’s progress in reducing the dirtiest energy source.  (A gigawatt can power a city with a population of roughly 700,000.) Overall, 70% of China’s electricity is coal-generated. This has significant environmental implications as far as electric vehicles (EVs) are concerned.  Because EVs are charged off a grid that is primarily coal- powered, carbon emissions actually rise as the number of such vehicles proliferate. As you can see in the following charts from Reuters’ energy expert John Kemp, Asia’s coal-fired generation has risen drastically in the last 20 years, even as it has receded in the rest of the world.  (The flattening recently is almost certainly due to Covid, with a sharp upward resumption nearly a given.) The worst part is that burning coal not only emits CO2—which is not a pollutant and is essential for life—it also releases vast quantities of nitrous oxide (N20), especially on the scale of coal usage seen in Asia today. N20 is unquestionably a pollutant and a greenhouse gas that is hundreds of times more potent than CO2.  (An interesting footnote is that over the last 550 million years, there have been very few times when the CO2 level has been as low, or lower, than it is today.)  Some scientists believe that one reason for the shrinkage of Arctic sea ice in recent decades is due to the prevailing winds blowing black carbon soot over from Asia.  This is a separate issue from N20 which is a colorless gas.  As the black soot covers the snow and ice fields in Northern Canada, they become more absorbent of the sun’s radiation, thus causing increased melting.  (Source:  “Weathering Climate Change” by Hugh Ross) Due to exploding energy needs in China this year, coal prices have experienced an unprecedented surge.  Despite this stunning rise, Chinese authorities have instructed its power providers to obtain coal, and other baseload energy sources, such as liquified natural gas (LNG), regardless of cost.  Notwithstanding how pricey coal has become, its usage in China was up 15% in the first half of this year vs the first half of 2019 (which was obviously not Covid impacted). Despite the polluting impact of heavy coal utilization, China is unlikely to turn away from it due to its high energy density (unlike renewables), its low cost (usually) and its abundance within its own borders (though its demand is so great that it still needs to import vast amounts).  Regarding oil, as we saw in last week’s final image, it is currently importing roughly 11 million barrels per day (bpd) to satisfy its 15 million bpd consumption (about 15% of total global demand).  In other words, crude imports amount to almost three-quarter of its needs.  At $80 oil, this totals $880 million per day or approximately $320 billion per year.  Imagine what China’s trade surplus would look like without its oil import bill! Ironically, given the current hostility between the world’s superpowers, China has an affinity for US oil because of its light and easy-to-refine nature.  China’s refineries tend to be low-grade and unable to efficiently process heavier grades of crude, unlike the US refining complex which is highly sophisticated and prefers heavy oil such as from Canada and Venezuela—back when the latter actually produced oil. Thus, China favors EVs because they can be de facto coal-powered, lessening its dangerous reliance on imported oil.  It also likes them due to the fact it controls 80% of the lithium ion battery supply and 60% of the planet’s rare earth minerals, both of which are essential to power EVs.     However, even for China, mining enough lithium, cobalt, nickel, copper, aluminum and the other essential minerals/metals to meet the ambitious goals of largely electrifying new vehicle volumes is going to be extremely daunting.  This is in addition to mass construction of wind farms and enormously expanded solar panel manufacturing. As one of the planet’s leading energy authorities Daniel Yergin writes: “With the move to electric cars, demand for critical minerals will skyrocket (lithium up 4300%, cobalt and nickel up 2500%), with an electric vehicle using 6 times more minerals than a conventional car and a wind turbine using 9 times more minerals than a gas-fueled power plant.  The resources needed for the ‘mineral-intensive energy system’ of the future are also highly concentrated in relatively few countries. Whereas the top 3 oil producers in the world are responsible for about 30 percent of total liquids production, the top 3 lithium producers control more than 80% of supply. China controls 60% of rare earths output needed for wind towers; the Democratic Republic of the Congo, 70% of the cobalt required for EV batteries.” As many have noted, the environmental impact of immensely ramping up the mining of these materials is undoubtedly going to be severe.  Michael Shellenberger, a life-long environmental activist, has been particularly vociferous in his condemnation of the dominant view that only renewables can solve the global energy needs.  He’s especially critical of how his fellow environmentalists resorted to repetitive deception, in his view, to undercut nuclear power in past decades.  By leaving nuke energy out of the solution set, he foresees a disastrous impact on the planet due to the massive scale (he’d opine, impossibly massive) of resource mining that needs to occur.  (His book, “Apocalypse Never”, is also one I highly recommend; like Dr. Koonin, he hails from the left end of the political spectrum.) Putting aside the environmental ravages of developing rare earth minerals, when you have such high and rapidly rising demand colliding with limited supply, prices are likely to go vertical.  This will be another inflationary “forcing”, a favorite term of climate scientists, caused by the Great Green Energy Transition. Moreover, EVs are very semiconductor intensive.  With semis already in seriously short supply, this is going to make a gnarly situation even gnarlier.  It’s logical to expect that there will be recurring shortages of chips over the next decade for this reason alone (not to mention the acute need for semis as the “internet of things” moves into primetime).  In several of the newsletters I’ve written in recent years, I’ve pointed out the present vulnerability of the US electric grid.  Yet, it will be essential not just to keep it from breaking down under its current load; it must be drastically enhanced, a Herculean task. For one thing, it is excruciatingly hard to install new power lines. As J.P. Morgan’s Michael Cembalest has written: “Grid expansion can be a hornet’s nest of cost, complexity and NIMBYism*, particularly in the US.”  The grid’s frailty, even under today’s demands (i.e., much less than what lies ahead as millions of EVs plug into it) is particularly obvious in California.  However, severe winter weather in 2021 exposed the grid weakness even in energy-rich Texas, which also has a generally welcoming attitude toward infrastructure upgrading and expansion. Yet it’s the Golden State, home to 40 million Americans and the fifth largest economy in the world, if it was its own country (which it occasionally acts like it wants to be), that is leading the charge to EVs and seeking to eliminate internal combustion engines (ICEs) as quickly as possible.  Even now, blackouts and brownouts are becoming increasingly common.  Seemingly convinced it must be a role model for the planet, it’s trying desperately to reduce its emissions, which are less than 1%, of the global total, at the expense of rendering its energy system more similar to a developing country.  In addition to very high electricity costs per kilowatt hour (its mild climate helps offset those), it also has gasoline prices that are 77% above the national average.  *NIMBY stands for Not In My Back Yard. While California has been a magnet for millions seeking a better life for 150 years, the cost of living is turning the tide the other way.  Unreliable and increasingly expensive energy is likely to intensify that trend.  Combined with home prices that are more than double the US median–$800,000!–California is no longer the land of milk and honey, unless, to slightly paraphrase Woody Guthrie about LA, even back in the 1940s, you’ve got a whole lot of scratch.  More and more people, seem to be scratching California off their list of livable venues.  Voters in the reliably blue state of California may become extremely restive, particularly as they look to Asia and see new coal plants being built at a fever pitch.  The data will become clear that as America keeps decarbonizing–as it has done for 30 years mostly due to the displacement of coal by gas in the US electrical system—Asia will continue to go the other way.  (By the way, electricity represents the largest share of CO2 emission at roughly 25%.)  California has always seemed to lead social trends in this country, as it is doing again with its green energy transition.  The objective is noble though, extremely ambitious, especially the timeline.  As it brings its power paradigm to the rest of America, especially its frail grid, it will be interesting to see how voters react in other states as the cost of power leaps higher and its dependability heads lower.  It’s reasonable to speculate we may be on the verge of witnessing the Californication of the US energy system.  Lest you think I’m being hyperbolic, please be aware the IEA (International Energy Agency) has estimated it will cost the planet $5 trillion per year to achieve Net Zero emissions.  This is compared to global GDP of roughly $85 trillion. According to BloombergNEF, the price tag over 30 years, could be as high as $173 trillion.  Frankly, based on the history of gigantic cost overruns on most government-sponsored major infrastructure projects, I’m inclined to take the over—way over—on these estimates. Moreover, energy consulting firm T2 and Associates, has guesstimated electrifying just the US to the extent necessary to eliminate the direct consumption of fuel (i.e., gasoline, natural gas, coal, etc.) would cost between $18 trillion and $29 trillion.  Again, taking into account how these ambitious efforts have played out in the past, I suspect $29 trillion is light.  Regardless, even $18 trillion is a stunner, despite the reality we have all gotten numb to numbers with trillions attached to them.  For perspective, the total, already terrifying, level of US federal debt is $28 trillion. Regardless, as noted last week, the probabilities of the Great Green Energy Transition happening are extremely high.  Relatedly, I believe the likelihood of the Great Greenflation is right up there with them.  As Gavekal’s Didier Darcet wrote in mid-August:  ““Nowadays, and this is a great first in history, governments will commit considerable financial resources they do not have in the extraction of very weakly concentrated energy.” ( i.e., less efficient)  “The bet is very risky, and if it fails, what next?  The modern economy would not withstand expensive energy, or worse, lack of energy.”  While I agree this an historical first, it’s definitely not great (with apologies for all the “greats”).  This is particularly not great for keeping inflation subdued, as well as for attempting to break out of the growth quagmire the Western world has been in for the last two decades.  What we are seeing in Europe right now is an extremely cautionary case study in just how disastrous the war on fossil fuels can be (shortly we will see who or what has been a behind-the-scenes participant in this conflict). Essentially, I believe, as I’ve written in past EVAs, we are entering the third energy crisis of the last 50 years.  If I’m right, it will be characterized by recurring bouts of triple-digit oil prices in the years to come.  Along with Richard Nixon taking the US off the gold standard in 1971, the high inflation of the 1970s was caused by the first two energy crises (the 1973 Arab Oil Embargo and the 1979 Iranian Revolution).  If I’m correct about this being the third, it’s coming at a most inopportune time with the US in hyper-MMT* mode. Frankly, I believe many in the corridors of power would like to see oil trade into the $100s, and natural gas into the teens, as it will help catalyze the shift to renewable energy.  But consumers are likely to have a much different reaction—potentially, a violently different reaction, as I noted last week.  The experience of the Yellow Vest protests in France (referring to the color of the vest protestors wore), are instructive in this regard.  France is a generally left-leaning country.  Despite that, a proposed fuel surtax in November 2018 to fund a renewable energy transition triggered such widespread civil unrest that French president Emmanuel Macron rescinded it the following month. *MMT stands for Modern Monetary Theory.  It holds that a government, like the US, which issues debt in its own currency can spend without concern about budgetary constraints.  If there are not enough buyers of its bonds at acceptable interest rates, that nation’s central bank (the Fed, in our case) simply acquires them with money it creates from its digital printing press.  This is what is happening today in the US.  Many economists consider this highly inflationary. The sharp and politically uncomfortable rise in US gas pump prices this summer caused the Biden administration to plead with OPEC to lift its volume quotas.  The ironic implication of that exhortation was glaringly obvious, as was the inefficiency and pollution consequences of shipping oil thousands of miles across the Atlantic.  (Oil tankers are a significant source of emissions.)  This is as opposed to utilizing domestic oil output, as well as crude from Canada (which is actually generally better suited to the US refining complex).  Beyond the pollution aspect, imported oil obviously worsens America’s massive trade deficit (which would be far more massive without the six million barrels per day of domestic oil volumes that the shale revolution has provided) and costs our nation high-paying jobs. Further, one of my other big fears is that the West is engaging in unilateral energy disarmament.  Russia and China are likely the major beneficiaries of this dangerous scenario.  Per my earlier comment about a stealth combatant in the war on fossil fuels, it may surprise you that a past NATO Secretary General* has accused Russian intelligence of avidly supporting the anti-fracking movements in Western Europe.  Russian TV has railed against fracking for years, even comparing it to pedophilia (certainly, a most bizarre analogy!).  The success of the anti-fracking movement on the Continent has essentially prevented a European version of America’s shale miracles (the UK has the potential to be a major shale gas producer).  Consequently, the European Union’s domestic natural gas production has been in a rapid decline phase for years.  Banning fracking has, of course, made Europe heavily reliant on Russian gas shipments with more than 40% of its supplies coming from Russia. This is in graphic contrast to the shale output boom in the US that has not only made us natural gas self-sufficient but also an export powerhouse of liquified natural gas (LNG).  In 2011, the Nord Stream system of pipelines running under the Baltic Sea from northern Russia began delivering gas west from northern Russia to the German coastal city of Greifswald.  For years, the Russians sought to build a parallel system with the inventive name of Nord Stream 2.  The US government opposed its approval on security grounds but the Biden administration has dropped its opposition.  It now appears Nord Stream 2 will happen, leaving Europe even more exposed to Russian coercion.  Is it possible the Russian government and the Chinese Communist Party have been secretly and aggressively supporting the anti-fossil fuel movements in America?  In my mind, it seems not only possible but probable.  In fact, I believe it is naïve not to come that conclusion.  After all, wouldn’t it be in both of their geopolitical interests to see the US once again caught in a cycle of debilitating inflation, ensnared by the twin traps of MMT and the third energy crisis? *Per former NATO Secretary General, Anders Fogh Rasumssen:  Russia has “engaged actively with so-called non-governmental organizations—environmental organizations working against shale gas—to maintain Europe’s dependence on imported Russian gas”. Along these lines, I was shocked to listen to a recent podcast by the New Yorker magazine on the topic of “intelligent sabotage”.  This segment was an interview between the magazine’s David Remnick and a Swedish professor, Adreas Malm.  Mr. Malm is the author of a new book with the literally explosive title “How To Blow Up A Pipeline”.   Just as it sounds, he advocates detonating pipelines to inhibit fossil fuel distribution.  Mr. Remnick was clearly sympathetic to his guest but he did ask him about the impact on the poor of driving energy prices up drastically which would be the obvious ramification if his sabotage recommendations were widely followed.  Mr. Malm’s reaction was a verbal shrug of the shoulders and words to the effect that this was the price to pay to save the planet. Frankly, I am appalled that the venerable New Yorker would provide a platform for such a radical and unlawful suggestion.  In an era when people are de-platformed for often innocuous comments, it’s incredible to me this was posted and has not been pulled down.  In my mind, this reflects just how tolerant the media is of attacks on the fossil fuel industry, regardless of the deleterious impact on consumers and the global economy. Surely, there is a far better way of coping with the harmful aspects of fossil fuel-based energy than this scorched earth (literally, in the case of Mr. Malm) approach, which includes efforts to block new pipelines, shut existing ones, and severely restrict US energy production.  In America’s case, the result will be forcing us to unnecessarily and increasingly rely on overseas imports.  (For example, per the Wall Street Journal, drilling permits on federal land have crashed to 171 in August from 671 in April.  Further, the contentious $3.5 trillion “infrastructure” plan would raise royalties and fees high enough on US energy producers that it would render them globally uncompetitive.) Such actions would only aggravate what is already a severe energy shock, one that may be worse than the 1970s twin energy crises.  America has it easy compared to Europe, though, given current US policy trends, we might be in their same heavily listing energy boat soon. Solutions include fast-tracking small modular nuclear plants; encouraging the further switch from burning coal to natural gas (a trend that is, unfortunately, going the other way now, as noted above); utilizing and enhancing carbon and methane capture at the point of emission (including improving tail pipe effluent-reduction technology); enhancing pipeline integrity to inhibit methane leaks; among many other mitigation techniques that recognize the reality the global economy will be reliant on fossil fuels for many years, if not decades, to come.  If the climate change movement fails to recognize the essential nature of fossil fuels, it will almost certainly trigger a backlash that will undermine the positive change it is trying to bring about.  This is similar to what it did via its relentless assault on nuclear power which produced a frenzy of coal plant construction in the 1980s and 1990s.  On this point, it’s interesting to see how quickly Europe is re-embracing coal power to alleviate the energy poverty and rationing occurring over there right now - even before winter sets in.  When the choice is between supporting climate change initiatives on one hand and being able to heat your home and provide for your family on the other, is there really any doubt about which option the majority of voters will select? Tyler Durden Tue, 10/26/2021 - 19:30.....»»

Category: worldSource: nytOct 26th, 2021

CSX"s Q4 Earnings & Revenues Beat Estimates, Increase Y/Y

CSX's Q4 results benefit from growth across all its businesses, and revenues from the July 2021 acquisition of Quality Carriers. CSX Corporation’s CSX fourth-quarter 2021 earnings of 42 cents per share surpassed the Zacks Consensus Estimate by a penny. The bottom line improved in double digits year over year owing to higher revenues.Total revenues of $3,427 million outperformed the Zacks Consensus Estimate of $3296 million. The top line jumped 21.3% year over year owing to growth across all its businesses, and revenues from Quality Carriers, which the company acquired in July 2021.Fourth-quarter operating income climbed 12% to $1,366 million. Operating ratio (operating expenses as a percentage of revenues) deteriorated to 60.1% from 57% in the prior-year quarter, with operating expenses increasing 28% year over year. With respect to this metric, lower the value, the better.CSX expects capital expenditures to be approximately $2 billion in 2022.CSX Corporation Price, Consensus and EPS Surprise CSX Corporation price-consensus-eps-surprise-chart | CSX Corporation QuoteSegmental PerformanceMerchandise revenues climbed 4% year over year to $1,937 million in the quarter under review. However, merchandise volumes dipped 3% from the year-ago period, primarily due to 23% drop in automotive volumes as a result of semiconductor shortage.Coal revenues ascended 39% year over year to $523 million in the reported quarter. Coal volumes decreased 2% with decline in domestic coal volumes due to lower shipments of utility coal resulting from an outage at a major coal-producing location.Intermodal revenues augmented 16% year over year to $551 million. Volumes were flat year over year. While domestic shipments fell due to supply constraints, international shipments rose owing to strong demand, inventory replenishments and growth in rail volumes from east-coast ports.Effective third-quarter 2021, CSX introduced a new segment — Trucking — which comprises the operations of Quality Carriers. Revenues from the segment totaled $210 million in the fourth quarter.Other revenues jumped 87% to $206 million in the reported quarter.Liquidity & Share BuybackCSX, carrying a Zacks Rank #2 (Buy), exited the fourth quarter with cash and cash equivalents of $2,239 million compared with $3,129 million at the end of December 2020. Long-term debt totaled $16,185 million compared with $16,304 million at 2020-end. As of Dec 31, 2021, net cash provided by operating activities was $5,099 million compared with $4,263 million in the year-earlier period.As of Dec 31, 2021, CSX repurchased 90 million shares for $2,886 million.Sectorial SnapshotWithin the broader Transportation sector, J.B. Hunt Transport Services JBHT, United Airlines UAL and Delta Air Lines DAL recently reported fourth-quarter 2021 results.J.B. Hunt Transport Services, carrying a Zacks Rank #1 (Strong Buy), reported fourth-quarter 2021 earnings of $2.28 per share, surpassing the Zacks Consensus Estimate of $1.99. The bottom line surged 58.3% year over year on the back of higher revenues across all segments. You can see the complete list of today’s Zacks #1 Rank stocks here.J.B. Hunt’s operating revenues of $3,497 million also outperformed the Zacks Consensus Estimate of $3,287.8 million. The top line jumped 27.7% year over year. Total operating revenues, excluding fuel surcharges, rose 21.7% year over year.United Airlines, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding 39 cents from non-recurring items) of $1.60 per share in the fourth quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $2.23. The amount of loss narrowed by 77.1% year over year.United Airlines’ operating revenues of $8,192 million also outperformed the Zacks Consensus Estimate of $7,930.9 million. The top line surged more than 100% year over year, with passenger revenues, accounting for 84% of the top line, soaring 185.4% to $6,878 million.Delta, carrying a Zacks Rank #5 (Strong Sell), reported fourth-quarter 2021 earnings (excluding 86 cents from non-recurring items) of 22 cents per share, outpacing the Zacks Consensus Estimate of 15 cents. Results came against the year-ago quarter’s loss of $2.53 per share. Strong holiday travel demand and favorable pricing aided the December quarter’s results.Delta’s revenues came in at $9,470 million, which not only beat the Zacks Consensus Estimate of $9,232.1 million, but also soared in excess of 100% from the year-ago figure as people resorted to air travel during the holidays. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CSX Corporation (CSX): Free Stock Analysis Report Delta Air Lines, Inc. (DAL): Free Stock Analysis Report United Airlines Holdings Inc (UAL): Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

PPG Industries (PPG) Tops Q4 Earnings and Revenue Estimates

PPG Industries (PPG) Q4 results are driven by higher selling prices, offset by raw material cost inflation and lower sales volumes. PPG Industries Inc. PPG logged net income from continuing operations of $267 million or $1.12 per share in fourth-quarter 2021, down from the year-ago quarter’s profit of $272 million or $1.14 per share.Barring one-time items, adjusted earnings were $1.26 per share in the reported quarter, down from $1.69 logged in the year-ago quarter. However, the figure topped the Zacks Consensus Estimate of $1.19.Net sales rose roughly 11.5% year over year to $4,190 million. The figure beat the Zacks Consensus Estimate of $4,030.5 million.The company benefited from higher year-over-year sales in the Industrial Coatings segment in the quarter, led by selling price increases. It also witnessed strength in the Performance Coatings business. However, it faced headwinds from raw material cost inflation and supply-chain disruptions in the quarter.PPG Industries, Inc. Price, Consensus and EPS Surprise  PPG Industries, Inc. price-consensus-eps-surprise-chart | PPG Industries, Inc. Quote Segment HighlightsPerformance Coatings: Net sales in the segment were around $2.5 billion in the fourth quarter, up around 16% year over year, driven by acquisitions and higher prices. Sales volume in the segment inched down around 2%. Selling prices rose 8% year over year.Segment income declined roughly 19% year over year to $243 million. The downside was caused by raw material and logistics cost inflation, higher manufacturing costs and lower sales volumes, partly offset by increased selling prices along with restructuring cost savings.Industrial Coatings: Sales in the segment totaled around $1.7 billion, up around 6% from the prior-year quarter’s figure of $1.6 billion. Sales volumes declined 8% year over year and selling prices were up 9% year over year.Net income in the segment totaled $105 million, down around 63% year over year. It was lower than the previous year’s levels primarily due to raw material cost inflation and higher operating costs due to intermittent manufacturing outages as well as reduced sales volumes. The downside was partly offset by higher selling prices, restructuring cost savings and acquisition-related earnings.FY21 ResultsAdjusted earnings for full-year 2021 were $6.77 per share compared with earnings of $6.12 per share a year ago. Net sales increased 21% year over year to $16,802 million.FinancialsPPG Industries ended the fourth quarter with cash and cash equivalents of $1,005 million, down roughly 45% year over year. The long-term debt rose around 27.1% year over year to $6,572 million.OutlookWhile the company expects demand to remain strong, it apprehends supply and pandemic-related disruptions in the fourth quarter to continue in first-quarter 2022, affecting its ability to manufacture and deliver products. It also expects raw material cost inflation to persist along with higher logistics and labor costs. PPG Industries is undertaking measures to increase selling prices to offset the incremental inflation.PPG Industries projects earnings per share (EPS) between 84 cents and$1.02 for first-quarter 2022. Adjusted EPS are expected in the range of $1.02-$1.20, excluding amortization expenses of 14 cents and costs related to earlier approved and communicated business restructuring of 4 cents.The company expects aggregate net sales volumes to be down a mid-single-digit percentage on a year-over-year basis for first-quarter 2022. The corporate expenses are projected to be around $70 million. The first quarter is typically higher than other quarters. Net interest expenses are forecast to be around $25 million.Price PerformanceShares of PPG Industries have rallied 15.9% in the past year compared with a 8.8% rise of the industry.Image Source: Zacks Investment ResearchZacks Rank & Key PicksPPG Industries currently carries a Zacks Rank #4 (Sell).Some better-ranked stocks in the basic materials space are Albemarle Corporation ALB, Nutrien Ltd. NTR and AdvanSix Inc. ASIX.Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 51.3% for the current year. The Zacks Consensus Estimate for ALB's earnings for the current year has been revised 5.4% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.Albemarle beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with the average being 22.1%. ALB has rallied around 25% over a year.Nutrien, sporting a Zacks Rank #1, has a projected earnings growth rate of 51.4% for the current year. The Zacks Consensus Estimate for NTR's current year earnings has been revised 15.1% upward in the past 60 days.Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 33% in a year.AdvanSix has a projected earnings growth rate of 3.9% for the current year. The Zacks Consensus Estimate for ASIX’s earnings for the current year has been revised 2% upward in the past 60 days.AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with the average being 46.9%. ASIX has surged 85.1% over a year. ASIX sports a Zacks Rank #1. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PPG Industries, Inc. (PPG): Free Stock Analysis Report Albemarle Corporation (ALB): Free Stock Analysis Report AdvanSix (ASIX): Free Stock Analysis Report Nutrien Ltd. (NTR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Associated Banc-Corp (ASB) Q4 Earnings Beat, Revenues Down Y/Y

Rise in loan balance and provision benefit support Associated Banc-Corp's (ASB) Q4 results. Associated Banc-Corp’s ASB fourth-quarter 2021 earnings of 49 cents per share surpassed the Zacks Consensus Estimate of 42 cents. The bottom line improved from 40 cents in the prior-year quarter.Results gained from growth in loan balance and provision benefits. However, lower rates and a decline in both net interest income and non-interest income were the major headwinds.Net income available to common shareholders was $74 million, up 20% from the year-ago quarter.In 2021, earnings of $2.18 per share beat the consensus estimate of $2.11 and were up 17% year over year. Net income available to common shareholders was $333.9 million, up 16%.Revenues Fall, Expenses RiseNet revenues came in at $268.3 million, down 2% year over year. The top line beat the Zacks Consensus Estimate of $266.1 million.In 2021, net revenues decreased 17% to $1.06 billion. The top line matched the consensus estimate.Net interest income (NII) was $186.8 million, inching down 1%. Net interest margin was 2.40%, down 9 basis points (bps).Non-interest income fell 5% to $82.1 million. The decline was mainly due to lower net mortgage banking income and the absence of gains on the sale of branches in the reported quarter.Non-interest expenses rose 5% to $182.2 million. The increase was mainly due to higher personnel costs and other expenses.Efficiency ratio (on a fully tax-equivalent basis) was 65.46%, up from 58.02% in the prior-year quarter. A rise in efficiency ratio indicates deterioration in profitability.As of Dec 31, 2021, total loans were $24.2 billion, up 3% sequentially. Total deposits rose 2% to $28.5 billion.Credit Quality ImprovesProvisions for credit losses were a benefit of $6 million against the provision of $17 million in the prior-year quarter. As of Dec 31, 2021, the ratio of net charge-offs to annual average loans was 0.10%, down 31 bps.As of Dec 31, 2021, total non-performing assets were $160.1 million, down 29% year over year. Further, total non-accrual loans came in at $130.4 million, plunging 38%.Capital Ratios Deteriorate, Profitability Ratios ImproveAs of Dec 31, 2021, Tier 1 risk-based capital ratio was 11.02%, down from the 11.81% recorded in the corresponding period of 2020. Common equity Tier 1 capital ratio was 10.31%, down from 10.45%.At the end of the fourth quarter, annualized return on average assets was 0.87%, up from 0.78% recorded in the prior-year period. Return on average tangible common equity was 11.09%, up from the year-ago quarter’s 9.75%.Share Repurchase UpdateDuring the quarter, Associated Banc-Corp repurchased 1.1 million shares worth $25 million.2022 OutlookManagement anticipates NII to be more than $800 million. Non-interest income is expected to exceed $300 million.Management projects auto finance loan growth of more than $1.2 billion and total commercial loan growth in the range of $750 million to $1 billion.Non-interest expenses are expected to be in the range of $725-$740 million.Effective tax rate is expected to be 19-21%, assuming no change in the corporate tax rate.Common equity tier 1 ratio is expected to be 9.5% or higher, and tangible common equity ratio is estimated at or above 7.5%.The company expects to adjust provisions to indicate changes to risk grades, economic conditions, loan volumes and other indications of credit quality.Our TakeAssociated Banc-Corp’s business restructuring efforts are likely to keep supporting financials. The company has a solid balance-sheet position, making it well poised for growth. Associated BancCorp Price, Consensus and EPS Surprise Associated BancCorp price-consensus-eps-surprise-chart | Associated BancCorp QuoteAssociated Banc-Corp currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksCommerce Bancshares Inc.’s CBSH fourth-quarter 2021 earnings per share of 94 cents matched the Zacks Consensus Estimate. The bottom line, however, declined 10.5% from the prior-year quarter.CBSH’s results primarily benefited from an improvement in non-interest income, a slight rise in loan balance and provision benefit. However, an increase in non-interest expenses and a fall in net interest income were the major headwinds.Hancock Whitney Corporation’s HWC fourth-quarter 2021 adjusted earnings of $1.51 per share outpaced the Zacks Consensus Estimate of $1.35. The bottom line improved 29% from the prior-year quarter.HWC’s results benefited from higher non-interest income, fall in non-interest expenses and provision benefit. However, a decline in net interest income, which reflected lower interest rates, was the undermining factor.Washington Federal’s WAFD first-quarter fiscal 2022 (ended Dec 31) earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 69 cents. The figure reflects a year-over-year jump of 39%.WAFD’s results primarily benefited from increased revenues, decreased provision for credit losses and a robust loan balance. The company’s balance-sheet position remained strong during the quarter. However, an increase in expenses was the undermining factor. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Commerce Bancshares, Inc. (CBSH): Free Stock Analysis Report Washington Federal, Inc. (WAFD): Free Stock Analysis Report Associated BancCorp (ASB): Free Stock Analysis Report Hancock Whitney Corporation (HWC): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 21st, 2022

The Zacks Rank Explained: How to Find Strong Buy Computer and Technology Stocks

Finding strong, market-beating stocks with a positive earnings outlook becomes easier with the Zacks Rank. Whether you're a growth, value, income, or momentum-focused investor, building a successful investment portfolio takes skill, research, and a little bit of luck.But what's the best way to find the right combination of stocks? Because funding things like your retirement, your kids' college tuition, or your short- and long-term savings goals will definitely require significant returns.Enter the Zacks Rank.What is the Zacks Rank?A unique, proprietary stock-rating model, the Zacks Rank uses earnings estimate revisions, or changes to a company's earnings expectations, to help investors create a winning portfolio.There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.Agreement is the extent to which all brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of analysts revising their estimates higher, the better chance the stock will outperform.Magnitude is the size of the recent change in the consensus estimate for the current and next fiscal years.Upside is the difference between the most accurate estimate, which is calculated by Zacks, and the consensus estimate.Surprise is made up of a company's last few quarters' earnings per share surprises; companies with a positive earnings surprise are more likely to beat expectations in the future.Each one of these factors is given a raw score that's recalculated every night, and then compiled into the Zacks Rank. Using this data, stocks are classified into five groups, ranging from "Strong Buy" to "Strong Sell."The Power of Institutional InvestorsThe Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.Institutional investors are responsible for managing the trillions of dollars invested in mutual funds, hedge funds, and investment banks. Research has shown that these investors can and do move the market due to the large amount of money they deal with, and thus, the market tends to move in the same direction as them.In order to figure out the fair value of a company and its shares, these investors will build valuation models focused on earnings and earnings expectations. Because if you raise estimates for the bottom line, it creates a higher fair value for a company.Institutional investors will use these changes to help in their decision-making, typically buying stocks with rising estimates and selling those with falling estimates. Higher earnings expectations can translate into a rise in stock price and bigger gains for the investor.Since it can often take weeks, if not months, for an institutional investor to build a position (given their size), retail investors who get in at the first sign of upward earnings estimate revisions have a distinct advantage over these larger investors, and can benefit from the expected institutional buying that will follow.Not only can the Zacks Rank help you take advantage of trends in earnings estimate revisions, but it can also provide a way to get into stocks that are highly sought after by professionals.How to Invest with the Zacks RankThe Zacks Rank is known for transforming investment portfolios. In fact, a portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 32 years, with an average annual return of +25.41%.Moreover, stocks with a new #1 (Strong Buy) ranking have some of the biggest profit potential, while those that fell to a #4 (Sell) or #5 (Strong Sell) have some of the worst.Let's take a look at Vocera Communications (VCRA), which was added to the Zacks Rank #1 list on December 29, 2021.Headquartered in San Jose, CA, Vocera operates as a leading provider of secure, integrated, intelligent communication, and clinical workflow solutions. It mainly focuses on supporting mobile workers based across healthcare, retail, hospitality industries, and other mission-critical mobile work environments in the United States and globally. Out of these industries, healthcare is its largest vertical market.Two analysts revised their earnings estimate higher in the last 60 days for fiscal 2021, while the Zacks Consensus Estimate has increased $0.03 to $0.69 per share. VCRA also boasts an average earnings surprise of 109.6%.Earnings are forecasted to see growth of 21.1% for the current fiscal year, and sales are expected to increase 16.8%.Even more impressive, VCRA has gained in value over the past four weeks, up 20.4% compared to the S&P 500's loss of 1.8%.Bottom LineWith a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Vocera Communications should be on investors' shortlist.If you want even more information on the Zacks Ranks, or one of our many other investing strategies, check out the Zacks Education home page.Discover Today's Top StocksOur private Zacks #1 Rank List, based on our quantitative Zacks Rank stock-rating system, has more than doubled the S&P 500 since 1988. Applying the Zacks Rank in your own trading can boost your investing returns on your very next trade. See Today's Zacks #1 Rank List >> 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vocera Communications, Inc. (VCRA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Factors to Pay Attention to Ahead of RPC"s (RES) Q4 Earnings

Improved drilling operations by the explorers and producers are likely to have generated handsome cashflows for RPC's (RES) oilfield services. RPC, Inc. RES is set to report fourth-quarter 2021 earnings results on Jan 26, before the opening bell.In the last reported quarter, RPC’s adjusted earnings per share of two cents beat the Zacks Consensus Estimate of a penny, backed by higher activity levels in all the service lines and improved pricing.RPC’s bottom line beat the Zacks Consensus Estimate thrice and missed the same in the trailing four quarters, the average surprise being 50%. This is depicted in the graph below:Let’s see how things have shaped up prior to this announcement.RPC, Inc. Price and EPS Surprise RPC, Inc. price-eps-surprise | RPC, Inc. QuoteTrend in Estimate RevisionThe Zacks Consensus Estimate for its fourth-quarter earnings per share of 3 cents has witnessed no upward or downward movements in the past seven days. The estimated figure suggests an improvement of 200% as compared with the prior-year reported number.The consensus estimate for fourth-quarter revenues of $241.4 million indicates a 62.4% increase from the year-ago reported figure.Factors to ConsiderThe pricing scenario of oil in the fourth quarter of 2021 has improved drastically from the prior year comparable period, thanks to the rolling out of coronavirus vaccines. With higher crude prices, drilling activities ramped up significantly across the globe as compared to the prior quarter.Improved drilling operations by the explorers and producers are likely to have generated handsome cashflows for RPC’s oilfield services. This is because oilfield service players assist energy companies in efficiently setting up oil wells.Earnings WhispersOur proven model does not indicate an earnings beat for RPC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.Earnings ESP: RPC’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: RPC currently carries a Zacks Rank #3.Stocks to ConsiderHere are some firms that you may want to consider as these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:PBF Energy Inc. PBF has an Earnings ESP of +253.12% and is a Zacks #3 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.PBF Energy is scheduled to release fourth-quarter results on Feb 10. The Zacks Consensus Estimate for PBF’s earnings is pegged at 11 cents per share, suggesting an increase of 102.4% from the prior-year reported figure.Viper Energy Partners VNOM has an Earnings ESP of +12.82% and a Zacks Rank of 3.Viper Energy is scheduled to report fourth-quarter results on Feb 22. The Zacks Consensus Estimate for Viper Energy’s earnings is pegged at 20 cents per unit, suggesting an improvement of 66.7% from the prior-year reported figure.Valero Energy Corporation VLO has an Earnings ESP of +10.16% and a Zacks Rank #3.Valero Energy is scheduled to release fourth-quarter earnings on Jan 27. The Zacks Consensus Estimate for Valero Energy’s earnings is pegged at $1.58 per share, suggesting an increase of 249.1% from the prior-year reported figure.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Valero Energy Corporation (VLO): Free Stock Analysis Report RPC, Inc. (RES): Free Stock Analysis Report PBF Energy Inc. (PBF): Free Stock Analysis Report Viper Energy Partners LP (VNOM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

What"s in the Cards for Packaging Corp"s (PKG) Q4 Earnings?

Packaging Corp's (PKG) Q4 performance is likely to reflect benefits from solid packaging demand for essential products and strong containerboard and corrugated products demand. Packaging Corporation of America PKG is set to release fourth-quarter 2021 results after the closing bell on Jan 26.Q3 ResultsIn the last reported quarter, Packaging Corp’s earnings and revenues beat the respective Zacks Consensus Estimate. The top and the bottom line increased year over year. The company has a trailing four-quarter earnings surprise of 13.01%, on average.Q4 EstimatesThe Zacks Consensus Estimate for Packaging Corp’s fourth-quarter earnings per share is currently pegged at $2.08, suggesting growth of 56.4% from the prior-year quarter’s levels. The Zacks Consensus Estimate for total sales is pinned at $1.92 billion, indicating a rise of 11.8% from the year-ago quarter’s levels.Factors at PlayPackaging products are essential for the distribution of food, beverage and pharmaceutical products. Hence, the elevated demand for meat, fruit and vegetables, processed food, beverages, medicine and other consumer products in response to the coronavirus pandemic is expected to have aided the Packaging segment’s October-December quarter performance. Strong demand for containerboard and corrugated products is likely to have driven the segment. The Zacks Consensus Estimate for the segment’s quarterly revenues is pegged at $1,788 million, calling for a year-over-year jump of 16%. The consensus mark for the company’s operating income is pinned at $302 million, indicating year-over-year growth of 42%. The segment’s volume will be lower due to three fewer shipping days and the scheduled outage at the DeRidder Mill.The e-commerce boom has been driving the company’s box demand. Packaging Corp’s containerboard mills set an all-time quarterly sales volume record and its box plants set new records for the total corrugated product shipments in third-quarter 2021. The company is likely to have gained from this momentum in the fourth quarter as well.  The pandemic has affected paper consumption in schools, offices and businesses, straining paper demand. Also, the paper segment has been impacted unfavorably by the dismal paper demand due to the rising preference for electronic data transmission, e-readers and electronic document storage alternatives. These are likely to get reflected in the company’s results for the quarter to be reported. The Zacks Consensus Estimate for Paper segment’s revenues is pegged at $144 million for the December-end quarter, suggesting a year-over-year decline of 7.7%. The Zacks Consensus Estimate for the segment’s operating income is pinned at $9.40 million, calling for an increase from the prior-year quarter’s $2.5 million.Elevated material costs, higher energy and wood costs, coupled with rising scheduled outage costs might have dented the company’s margins during the fourth quarter.Packaging Corporation of America Price and EPS Surprise  Packaging Corporation of America price-eps-surprise | Packaging Corporation of America Quote What Our Model IndicatesOur proven model doesn’t conclusively predict an earnings beat for Packaging Corp this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Earnings ESP: The Earnings ESP for Packaging Corp is -0.72%.Zacks Rank: Packaging Corp currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Price PerformanceIn a year’s time, shares of Packaging Corp have declined 0.9% against the industry’s growth of 14.9%.Image Source: Zacks Investment ResearchStocks Poised to Beat Earnings EstimatesHere are some Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:W.W. Grainger, Inc. GWW currently has an Earnings ESP of +2.29% and a Zacks Rank of 2. The Zacks Consensus Estimate for fourth-quarter 2021 earnings has moved up 0.2% in the past 30 days to $5.25 per share, suggesting year-over-year growth of 43.4%.The Zacks Consensus Estimate for quarterly revenues is pegged at $3.2 billion, which indicates an improvement of 11.3% from the prior-year quarter’s levels. Grainger has a long-term earnings growth rate of 13%.AGCO Corporation AGCO currently has an Earnings ESP of +25% and a Zacks Rank of 2. The Zacks Consensus Estimate for fourth-quarter 2021 earnings is currently pegged at $1.72 per share, suggesting 11.7% growth from the year-ago quarter’s tally.The Zacks Consensus Estimate for quarterly revenues is pinned at $3.04 billion, highlighting year-over-year growth of 11.9%. AGCO corporation has a trailing four-quarter earnings surprise of 47.5%, on average. It has a long-term earnings growth of 19.1%.Terex Corporation TEX currently has an Earnings ESP of +1.36% and a Zacks Rank #3. The Zacks Consensus Estimate for fourth-quarter 2021 earnings have been stable in the past 30 days and is currently pegged at 55 cents per share. This indicates 162% growth from the prior-year quarter’s tally.The Zacks Consensus Estimate for quarterly revenues is pegged at $948.5 million, which indicates an year-over-year improvement of 20.5%. Terex has a trailing four-quarter earnings surprise of 80.4%, on average.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Terex Corporation (TEX): Free Stock Analysis Report AGCO Corporation (AGCO): Free Stock Analysis Report W.W. Grainger, Inc. (GWW): Free Stock Analysis Report Packaging Corporation of America (PKG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Bank Stock Roundup: JPM, C, WFC, BAC & PNC in Focus on Q4 Earnings Beat

Major banks, including JPM, C, WFC, BAC & PNC, surpass Q4 earnings estimates on revenue strength, solid loan balance and provision benefit. Yet, rising cost expectations lead to bearish investor sentiments. Major banks’ Q4 earnings have been in full swing over the past four trading days. Almost all banks, including JPMorgan JPM, Citigroup C, Wells Fargo WFC, Bank of America BAC and PNC Financial PNC that announced quarterly results, beat earnings estimates on revenue strength, decent rise in loan demand and provision benefit.During the fourth quarter, a modest rise in loan demand drove net interest income (NII). However, major banks’ net interest margin growth was hampered by considerable deposits in their balance sheets and lower interest rates.On the fee income front, major banks’ top line received support from the solid performance of investment banking (IB) and equity trading businesses, while dismal fixed-income trading performance and weakness in mortgage banking were disappointing. Consumer banking business improved, as reflected in the increase in usage of debit/credit cards.Reserve release by major banks (driven by improving economic outlook) supported the results. Overall, banks’ balance sheet and liquidity positions remained solid.On the other hand, as major banks continued to spend heavily on technology upgrades and undertook efforts to streamline operations, expenses rose during the quarter. Also, a rise in compensation and benefit costs led to higher costs. Further, management commentary surrounding expenses disappointed investors, leading to a pessimistic stance.This, along with bearish sentiments across the broader markets, weighed heavily on major banks’ share price movement over the past four trading sessions.Image Source: Zacks Investment Research(See the last bank stock roundup here: Bank Stock Roundup for the Week Ending Dec 24, 2021)Re-cap of the Week’s Important Earnings1. Robust advisory business, reserve release and a rise in loan demand drove JPMorgan’s fourth-quarter 2021 earnings of $3.33 per share. The bottom line handily outpaced the Zacks Consensus Estimate of $3.01. Results included net credit reserve releases. Excluding this, earnings came in at $2.86 per share.However, disappointing trading performance, lower interest rates and an increase in operating expenses were the major headwinds for JPMorgan’s quarterly results. Also, the company’s mortgage fees and related income plunged during the quarter.2. Citigroup delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 beat the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter.Citigroup’s investment banking revenues jumped, driven by equity underwriting and growth in advisory revenues. The dismal consumer banking business and higher operating expenses were the major headwinds.3. Wells Fargo’s fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate of 1.09. Also, the bottom line improved 86% year over year. Results included certain non-recurring items.Improved IB and other asset-based fees and strong equity gains in WFC’s affiliated venture capital and private equity businesses, as well as lower costs, supported the bank’s performance. Yet, a decline in NII due to low yields from earning assets and lower loans were the undermining factors.4. Bank of America’s fourth-quarter 2021 earnings of 82 cents per share beat the Zacks Consensus Estimate of 76 cents. The bottom line compared favorably with 59 cents earned in the prior-year quarter. Results in the quarter included a net reserve release of $851 million.Solid improvement in the lending scenario, consumer spending and economic rebound supported Bank of America’s NII growth. Further, robust IB performance and asset management business acted as tailwinds. However, trading numbers were not so impressive.5. PNC Financial pulled off a fourth-quarter 2021 earnings surprise of 1.94% on substantial recapturing of credit losses. Earnings per share, as adjusted (excluding pre-tax integration costs related to the BBVA USA acquisition), of $3.68 surpassed the Zacks Consensus Estimate of $3.61 and improved 12.5% year over year.Fee income growth on higher asset management revenues and corporate services supported PNC Financial’s results. However, higher expenses, margin contraction and a decline in loans were the headwinds.Price PerformanceHere is how the seven major stocks performed: Image Source: Zacks Investment ResearchOver the past four trading sessions, shares of U.S. Bancorp plunged 10%, while that of PNC Financial tanked 6.9%.What’s Next in the Banking Space?Over the next five trading days, the earnings season will continue full-fledged, with a number of banks coming out with their quarterly numbers. Also, investors will watch for clues on the timing of interest rate hikes at the end of the two-day FOMC meeting, which is scheduled on Jan 25-26. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

What"s in the Cards for Nasdaq (NDAQ) This Earnings Season?

Nasdaq's (NDAQ) fourth-quarter performance is likely to have benefited from higher organic growth and contributions from the acquisition of Verafin. Nasdaq, Inc. NDAQ is slated to report fourth-quarter 2021 earnings on Jan 26, before the opening bell. The company delivered an earnings surprise in each of the last four quarters, the average being 8.7%.Factors to ConsiderNasdaq’s fourth-quarter performance is likely to have benefited from revenue growth in the Solutions segments, organic growth in Market Services business and contributions from the acquisition of Verafin.Non-trading revenues are expected to have benefited from the better performance of Market Technology and continued strong growth of Market Data, Index and Analytics businesses. Higher SaaS revenues and growing Anti Financial Crime Technology business are likely to have driven Market Technology.The Zacks Consensus Estimate for Analytics businesses revenues is pegged at $52 million, indicating an increase of 13% from the year-ago reported figure. The consensus estimate for Index revenues is pegged at $123 million, suggesting growth of 26.8% from the year-ago reported figure.Market Technology revenues are likely to have been driven by the positive impact of the acquisition of Verafin and continued growth in surveillance solutions, growing Anti Financial Crime Technology business, higher change request revenues, higher SaaS revenues and a favorable impact of foreign exchange rates. The Zacks Consensus Estimate for Market Technology revenues is pegged at $128 million, suggesting growth of 20.7% from the prior-year reported figure.Market Services segment revenues are likely to have been driven by higher organic revenue, higher equity derivatives, cash equities, trade management services revenues, and strong operating leverage on higher trading revenues.The Investment Intelligence segment is expected to have benefited from higher proprietary data revenues from new sales and a favorable foreign exchange rate impact, higher licensing revenues from an increase in average AUM in ETPs linked to Nasdaq indexes, higher licensing revenues from futures trading linked to the Nasdaq-100 Index as well as growth in eVestment platform driven by new sales, strong retention, and higher average revenue per client from expanded offerings. The Zacks Consensus Estimate for Investment Intelligence segment revenues is pegged at $278 million, indicating a 16.8% increase from the year-ago reported figure.Solid growth in the Nasdaq-listed issuer base across the U.S. and Nordic markets, organic growth, higher U.S. listings revenues, owing to expansion in the listed-issuer base, increased adoption across the breadth of Investor Relations, and newer ESG Advisory and reporting offerings are likely to have driven the Corporate Platforms segment. The Zacks Consensus Estimate for Corporate Services segment revenues is pegged at $157 million, indicating a 9% increase from the year-ago reported figure.Q4 VolumesNasdaq reported solid volumes for fourth-quarter 2021. U.S. equity options volume increased 9.4% year over year to 811 million contracts. European options and futures volume increased 5.2% year over year to 18.3 million contracts.Though revenues per contract for U.S. equity options remained flat year over year at 11 cents, the same for European options and futures dropped by a cent to 55 cents.Under its cash equities, Nasdaq’s U.S. matched equity volume in the fourth quarter grossed 118.6 billion shares, up 2.8% from the prior-year quarter. European equity volume increased 6.4% year over year to $299 billion. Under fixed income commodities, European fixed income volume increased 26.7% to 7.6 million contracts. In the fourth quarter, there were 4,974 listed companies on Nasdaq compared with 4,051 in the year-ago period. Total listings grew 21.3% year over year to 5,415.The consensus estimate for listing revenues is pegged at $101 million, suggesting growth of 14.8% from the year-ago reported figure.Expenses are expected to have risen on higher organic growth, increase from the impact of acquisitions and increase from the impact of changes in foreign exchange rates.Interest expenses are likely to have increased in the fourth quarter due to higher debt balances related to the Verafin acquisition.Accelerated share repurchase (ASR) is anticipated to have provided an additional boost to the bottom line. Nasdaq expects to receive the remaining shares related to the ASR program in the fourth quarter.The Zacks Consensus Estimate for earnings stands at $1.78, indicating an 11.2% increase from the prior-year reported figure.What Our Quantitative Model StatesOur proven model does not conclusively predict an earnings beat for Nasdaq this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case as you can see below.Earnings ESP: Nasdaq has an Earnings ESP of -0.11%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Nasdaq, Inc. Price and EPS Surprise Nasdaq, Inc. price-eps-surprise | Nasdaq, Inc. QuoteZacks Rank: Nasdaq currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Stocks to ConsiderHere are some stocks from the finance sector with the perfect combination of elements to surpass estimates in their upcoming releases.Ameriprise Financial AMP has an Earnings ESP of +0.69% and a Zacks Rank #2. The Zacks Consensus Estimate for AMP’s 2022 earnings implies a year-over-year increase of 10.5%.AMP’s earnings surpassed estimates in each of the last four quarters, the average beat being 6.4%. The Zacks Consensus Estimate for Ameriprise Financial’s 2022 earnings has moved 1.1% north in the past 30 days.Hamilton Lane HLNE has an Earnings ESP of +0.36% and a Zacks Rank #2.Hamilton Lane’s earnings surpassed estimates in each of the last four quarters, the average beat being 36%. The Zacks Consensus Estimate for HLNE’s 2022 earnings has moved 3.3% north in the past 30 days.SEI Investments SEIC has an Earnings ESP of +1.24% and a Zacks Rank #2. The Zacks Consensus Estimate for SEIC’s 2022 earnings implies a year-over-year increase of 8.3%.SEI Investments' earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 1.8%. The Zacks Consensus Estimate for SEIC’s 2022 earnings has moved 2% north in the past 30 days.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Nasdaq, Inc. (NDAQ): Free Stock Analysis Report Ameriprise Financial, Inc. (AMP): Free Stock Analysis Report SEI Investments Company (SEIC): Free Stock Analysis Report Hamilton Lane Inc. (HLNE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

What"s in the Cards for Progressive (PGR) in Q4 Earnings?

Improved rates, solid policies in force and higher retention in its strong performing Vehicle and Property businesses are likely to have aided Progressive's (PGR) Q4 earnings. The Progressive Corporation PGR is slated to report fourth-quarter 2021 earnings on Jan 26 before market open. The company delivered an earnings surprise in one of the three reported quarters of 2021 and missed estimates in the other two.Factors to Consider    Improved rates, solid policies in force and higher retention in its strong performing Vehicle and Property businesses are likely to have driven premiums in the fourth quarter of 2021. The Zacks Consensus Estimate for net premiums written is pegged at $10.8 billion.Policies in force are likely to have improved given the company’s focus on segmentation and prudent risk selection. The Zacks Consensus Estimate for personal lines policies in force is pegged at 22.8 million, indicating an increase of 6.7% from the year-ago reported figure.A higher invested asset base is likely to have aided investment income, partly weighed down by a near-zero interest rate. The Zacks Consensus Estimate for the metric is pegged at $209 million.Improved premiums, increase in service revenues and fees as well as other revenues are likely to have fueled revenues. The Zacks Consensus Estimate for fourth-quarter revenues stands at $12 billion, suggesting 13% year-over-year growth.Progressive is a leading auto insurer in the United States and has one of the largest auto insurance groups. It is also the largest seller of motorcycle policies, the market leader in commercial auto insurance and one of the top 15 homeowners carriers based on premiums written.  Its personal auto business is likely to have benefited from its focus on marketing and competitive product offerings as well as its strong market presence.Expenses might have risen on higher loss and loss-adjustment expenses, and policy acquisition costs plus other underwriting expenses. The consensus estimate for loss and loss adjustment expenses ratio is pegged at 77.The Zacks Consensus Estimate for earnings is pegged at 99 cents, indicating a 45.9% decrease from the year-ago quarter reported number.What the Zacks Model SaysOur proven model predicts an earnings beat for Progressive this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).Earnings ESP: Progressive has an Earnings ESP of +1.01%. This is because the Most Accurate Estimate of $1.00 is pegged higher than the Zacks Consensus Estimate of 99 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. The Progressive Corporation Price, Consensus and EPS Surprise The Progressive Corporation price-consensus-eps-surprise-chart | The Progressive Corporation QuoteZacks Rank: Progressive currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Other Stocks to ConsiderSome insurance stocks also with the right combination of elements to deliver an earnings beat this time around are:Arch Capital Group ACGL has an Earnings ESP of +1.48% and a Zacks Rank of 2. The Zacks Consensus Estimate for the fourth quarter is pegged at $1.02, indicating an increase of 82.1% from the year-ago reported figure.Arch Capital delivered an earnings beat in all the three reported quarters of 2021.Allstate Corporation ALL has an Earnings ESP of +10.90% and a Zacks Rank #3. The Zacks Consensus Estimate for the fourth quarter is pegged at $2.77, indicating a decrease of 52.8% from the year-ago reported figure.Allstate beat earnings estimates in two of the three reported quarters of 2021 while missing in one.W.R. Berkley Corporation WRB has an Earnings ESP of +4.40% and a Zacks Rank of 3. The Zacks Consensus Estimate for the fourth quarter is pegged at $1.21, indicating an increase of 31.5% from the year-ago reported figure.W.R. Berkley beat earnings estimates in all the three reported quarters of 2021.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report W.R. Berkley Corporation (WRB): Free Stock Analysis Report The Allstate Corporation (ALL): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis Report Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 21st, 2022

RenaissaceRe (RNR) to Report Q4 Earnings: What"s in Store?

RenaissanceRe's (RNR) fourth-quarter results are likely to reflect higher premiums, new business growth and rate increases across business lines, partly offset by elevated costs. RenaissanceRe Holdings Ltd. RNR is scheduled to report fourth-quarter 2021 earnings on Jan 25, after the closing bell.Q4 EstimatesThe Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at $3.71. It reported a loss of $1.59 per share in the prior-year quarter.The consensus mark for revenues stands at $1.5 billion, suggesting growth of 34.5% from the year-ago quarter’s reported figure.Earnings Surprise HistoryRenaissanceRe has an unimpressive earnings surprise history. Its bottom line beat estimates in two of the trailing four quarters and missed twice, the average negative surprise being 15.34%. This is depicted in the chart below:RenaissanceRe Holdings Ltd. Price and EPS Surprise RenaissanceRe Holdings Ltd. price-eps-surprise | RenaissanceRe Holdings Ltd. QuoteFactors to NoteIn the fourth quarter, RenaissanceRe’s premiums are likely to have benefited from rate increases across the property market and, professional liability, general casualty and other specialty lines of business. New business growth and policy renewals might have contributed to the to-be-reported quarter’s premiums. The Zacks Consensus Estimate for fourth-quarter net premiums earned is pegged at $1.4 billion, which indicates a surge of 40.3% from the prior-year quarter.A continued low-interest rate environment and lower returns from fixed maturity and equity investments portfolio may have impacted RNR’s net investment income in the to-be-reported quarter. The consensus mark for net investment income stands at $80 million, suggesting a decline of 2.4% from the year-ago quarter.An increase in net premiums earned, partly offset by reduced investment income, might get reflected in RenaissanceRe’s top line in the to-be-reported quarter.The property and casualty (P&C) insurer’s fourth-quarter underwriting performance is likely to have gained on improved pricing, boosting the bottom line. However, the continued incidence of catastrophe losses might have partly offset RenaissanceRe’s underwriting results in the to-be-reported quarter. Also, escalating expenses due to the rise in net claims and claim expenses incurred, and operational costs may have weighed on RNR’s margins in the December quarter, making an earnings beat uncertain.What Our Quantitative Model PredictsOur proven model does not conclusively predict an earnings beat for RenaissanceRe this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.Earnings ESP: RenaissanceRe has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Zacks Rank: RNR carries a Zacks Rank #3.Stocks to ConsiderSome stocks worth considering from the P&C insurance  space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.48% and a Zacks Rank #2. ACGL is scheduled to report fourth-quarter results on Feb 9. You can see the complete list of today’s Zacks #1 Rank stocks here.The Allstate Corporation ALL has an Earnings ESP of +5.05% and a Zacks Rank #3. ALL is slated to release fourth-quarter results on Feb 2.W. R. Berkley Corporation WRB has an Earnings ESP of +4.41% and a Zacks Rank of 3 at present. WRB is slated to release fourth-quarter results on Jan 27.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.  5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report W.R. Berkley Corporation (WRB): Free Stock Analysis Report RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis Report The Allstate Corporation (ALL): Free Stock Analysis Report Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

4 Stocks Worth Buying After Strong Earnings Reports This Week

These four relatively safe buy-ranked stocks reported strong earnings results this week. Just 8.6% of the S&P 500 have reported earnings results so far, of which 86% have topped earnings estimates while 79% have topped revenue estimates. The earnings results are stronger than the five-year average while being slightly lower than last year. Revenues, on the other hand, are stronger on both counts. So while it’s too early to identify a trend using this group as a barometer, initial results seem to indicate that this earnings season will be more or less as expected.The three sectors with the most results out so far are transportation, finance and retail. All of the transportation and retail stocks have beaten both revenue and earnings results. And in the case of finance, 83% have beaten on earnings and 61% on revenue.The retail sector appears to be benefiting from the ability to pass on increased costs to a strong consumer in the final quarter of the year.The transportation sector continues to benefit from strong demand for finished goods, as well as ongoing economic recovery and construction strength that are driving materials demand. Container and labor shortages continue to help prices and profitability.One transportation stock that reported strong results this week is J.B. Hunt Transport Services JBHT. The company beat earnings estimates by 14.6% on revenue that beat by 6.4%. Technology enhancements, operating efficiencies and stronger pricing offset increased expenses. J.B. Hunt recently raised its quarterly dividend by 33%. The Transportation – Truck industry to which J.B. Hunt belongs is in the top 6% of Zacks ranked industries. The Zacks #1 (Strong Buy) stock has a Growth Score of B but a Value Score of D, but it’s still worth considering given its growth prospects and because it is currently trading below its median value over the past year. In the last 7 days, analysts have taken their 2022 and 2023 earnings estimates up an average 2.2% and 4.1%, respectively.Bank stocks are a mixed bag. The increasing loan demand can only be considered a good thing, since they increase a bank’s net interest income (NII). And at the moment, strength is coming not only from higher loan balances but also from strong equity trading and investment banking business. The expected increase in interest rates through the current year should also raise the NII. But since they also depress the value of fixed-income assets with the bank, they are a double-edged sword. Additionally, some banks are increasing spending on employee retention, which has an effect on their efficiency ratio, while others are trimming their workforces. So the impact on their earnings results is different.Which brings us to the two banking stocks I will be highlighting here: BankUnited BKU and PacWest Bancorp PACW.BankUnited’s reported earnings were about 24% higher than expected on revenue that was 10% better than expected. The company’s loan balance grew by a billion dollars, the strongest since the second quarter of 2016. NII increased both sequentially and from the prior year. It offered a special employee bonus during the quarter. BankUnited is also a relatively safer stock to buy right now since it combines both value and growth (it scores a B for both in our style score system). The Zacks Rank #2 (Buy) stock belongs to the Banks - Major Regional industry (top 18%).PacWest Bancorp beat earnings expectations by 7.6% on revenue that beat by 3.7%. It reported loan growth of 11.8% and NII growth of 8.8%. the 10.5% increase in expenses was attributed to the HOA acquisition costs and related operating expenses. The Zacks Rank #2 stock belongs to the Banks – West industry (top 22%) and has a Value Score of B, which makes it a relatively safe stock.Analysts are yet to update their estimates on the two banking stocks.Another stock worth buying is bauxite, alumina and aluminum products producer Alcoa AA. The continued strength in alumina and aluminum pricing, and solid operational performance led to the 22.6% earnings surprise that came on revenue that surprised by a more sedate 1.4%. The Zacks Rank #2 stock belongs to the Metal Products – Distribution (top 10%), which is in the industrial products sector. Alcoa is a balanced choice with As on both value and growth considerations. Its estimates are yet to be updated.One-Month Price PerformanceImage Source: Zacks Investment Research 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alcoa (AA): Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report BankUnited, Inc. (BKU): Free Stock Analysis Report PacWest Bancorp (PACW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

People"s United (PBCT) Q4 Earnings Beat, Revenues Decline

Controlled non-interest expenses, robust capital position and provision benefits amid a decline in loans and net interest income drive People's United (PBCT) Q4 earnings. People's United Financial Inc. PBCT reported fourth-quarter 2021 operating earnings of 36 cents per share, which outpaced the Zacks Consensus Estimate of 31 cents. The bottom line is above the year-ago quarter’s 35 cents.The quarterly results reflect controlled expenses and increasing deposit balance. Benefits from the provision for credit losses and a strong capital position also supported the financials. However, a decline in net interest income (NII) and reduced loans were headwinds.Net income available to common shareholders was $146.4 million compared with a net loss of $148.8 million reported in the prior-year quarter.For 2021, the net income available to common shareholders was $590.8 million compared with the $205.5 million reported in 2020. Operating earnings per share were $1.48, up from the prior year’s $1.27. The same surpassed the consensus estimate of $1.42.Revenues Fall on Lower NII, Deposits RiseTotal revenues (comprising net interest income and non-interest income) were down 417.7% year over year to $461.6 million in the fourth quarter. The top line beat the Zacks Consensus Estimate of $458.2 million.In 2021, total revenues were down 8.5% from the prior-year level to $2.07 billion.NII, on a fully taxable basis, totaled $369.6 million, down 5.3% year over year. The net interest margin (annualized) declined to 2.51% from the prior-year quarter’s level to 2.84%.Non-interest income declined 44.1% year over year to $99.6 million. A rise in bank service charges, investment management fees, and cash management fees was offset by a decline in operating lease income, net customer interest rate swap income and other non-interest income.Non-interest expenses decreased 57% on a year-over-year basis to $277.7 million. A decline in occupancy and equipment costs, amortization of other acquisition-related intangible assets, operating lease expenses and other non-interest expenses led to the fall.The company’s efficiency ratio was 54.1% compared with the prior-year quarter’s 55.5%. A decline in the ratio indicates higher profitability.As of Dec 31, 2021, total loans were $37.85 billion, down 4.2% from the prior quarter. Also, total deposits rose 1.7% on a sequential basis to $53.76 billion.Credit Quality ImprovesProvision for credit losses was negative $5.9 million against $14.7 million in the year-ago quarter. Also, Net loan charge-offs declined 78.4% year over year to $2.9 million. Net loan charge-offs, as a percentage of average total loans, were 0.03% on an annualized basis, contracting 9 bps.As of Dec 31, 2021, non-performing assets were $293.6 million, down 14.1% year over year. However, the ratio of non-performing loans to total loans expanded 1 bp from the year-earlier quarter’s level to 0.76%.Capital Position & Profitability Ratios StrongAs of Dec 31, 2021, the total risk-based capital ratio increased to 13.9% from 12.4% recorded in the year-earlier period. The tangible equity ratio of 7.8% was up from 7.5% in the year-ago period.Return on average tangible stockholders’ equity was 12.4%, while return on average assets was 0.92% as of Dec 31, 2021. Both ratios were negative in the prior-year quarter.Our ViewpointPBCT put up a decent performance in the fourth quarter. Though a fall in revenues and a decline in loan balance might restrict bottom-line expansion in the upcoming quarters, People’s United’s efforts to strengthen its deposit franchise are encouraging. This is likely to continue in the near future, supported by the company’s strong balance sheet position and controlled expenses.People's United Financial, Inc. Price, Consensus and EPS Surprise  People's United Financial, Inc. price-consensus-eps-surprise-chart | People's United Financial, Inc. QuoteCurrently, People’s United carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksState Street’s STT fourth-quarter 2021 adjusted earnings of $2.00 per share outpaced the Zacks Consensus Estimate of $1.91. The bottom line was 18.3% higher than the prior-year level.State Street’s results reflected investment servicing wins, provision benefits and improvement in fee income. However, a rise in expenses, a fall in net interest revenues and lower interest rates were the undermining factors.BOK Financial’s BOKF earnings per share of $1.71 missed the Zacks Consensus Estimate of $1.81. The bottom line decreased 22.6% from the prior-year quarter.Results were undermined by lower fees and commissions, and a decline in the loan balance. Nonetheless, lower expenses, higher net interest revenues and provision benefits were tailwinds for BOKF.F.N.B. Corporation’s FNB fourth-quarter 2021 adjusted earnings per share of 30 cents met the Zacks Consensus Estimate. The bottom line reflects a rise of 7.1% from the prior-year quarter.F.N.B. Corporation’s results were primarily aided by a rise in fee income, lower expenses and provision benefits. However, a fall in NII was the undermining factor. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report State Street Corporation (STT): Free Stock Analysis Report People's United Financial, Inc. (PBCT): Free Stock Analysis Report BOK Financial Corporation (BOKF): Free Stock Analysis Report F.N.B. Corporation (FNB): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

First Horizon (FHN) Q4 Earnings & Revenues Beat, Stock Dips

First Horizon's (FHN) Q4 earnings results gain from higher deposit balance, provision benefits and improving credit quality despite a low-rate economy that hurt margins. Shares of First Horizon National Corporation FHN tumbled 1.1%, likely mirroring investors’ concerns over the top-line decline in the fourth quarter. Adjusted earnings per share of 48 cents beat the Zacks Consensus Estimate of 38 cents. The figure also improved 4% year over year. Results excluded after-tax impacts of 8 cents per share from notable items related to the IBERIABANK Corporation merger.Results reflect higher deposit balance, provision benefits and improving credit quality. However, a decline in net interest income (NII) and fee income affected revenues. Also, higher expenses and pressure on margin due to low interest rates were spoilsports.Net income available to common shareholders was $219 million, down from $234 million recorded in the prior-year quarter.For 2021, the net income available to common shareholders was $962 million compared with the $822 million reported in 2020. Adjusted earnings per share were $2.07, up from the prior year’s $1.22 and surpassing the consensus estimate of $1.96.Revenues & Expenses Fall, Deposits ClimbTotal revenues were $745 million, down 8% year over year. Nonetheless, the top line outpaced the consensus estimate of $733.5 million.In 2021, total revenues were down 3% from the prior-year level to $3.07 billion. Nonetheless, the reported figure met the consensus mark.NII declined 5% year over year to $498 million. Also, the net interest margin shrunk 30 basis points (bps) to 2.42%.Non-interest income was $247 million, declining 14% from the year-ago level.Non-interest expenses increased 4% year over year to $528 million.The efficiency ratio was 70.88%, up from the year-ago period’s 62.71%. A rise in the efficiency ratio indicates a decrease in profitability.Total period-end loans and leases, net of unearned income, were $54.86 billion, down 1% from the prior quarter’s end. Total period-end deposits of $74.89 billion increased 1% from the prior quarter.Credit Quality ImprovesNon-performing loans and leases of $275 million declined 29% from the prior-year period. Further, as a percentage of period-end loans on an annualized basis, the allowance for loan losses was 1.22%, down 43 bps from the previous-year quarter.The fourth quarter witnessed net charge-offs of $1 million, reducing from the prior-year quarter’s $29 million. Moreover, the provision for credit losses was a benefit of $65 million against expenses of $1 million in the prior-year quarter.However, the allowance for loan and lease losses of $670 million increased 30% from the year-ago period.Capital Position WeakAs of Dec 31, 2021, the Common Equity Tier 1 ratio was 9.9%, up from 9.7% reported at the end of the year-earlier quarter.However, the total capital ratio was 12.4%, down from the previous-year quarter’s 12.6%. Tier 1 leverage ratio was 8.1%, down from 8.2% in the prior year.Our ViewpointFirst Horizon benefits from an attractive geographic footprint and rising deposit balances. The company’s inorganic expansion efforts will also support financials. It remains on track to fully integrate systems related to the IBERIABANK Corporation merger in February 2022 and achieve $200 million of annualized net cost savings by fourth-quarter 2022. It achieved $104 million of annualized net cost savings in 2021.Nevertheless, mounting expenses and near-zero interest rates remain major concerns.First Horizon Corporation Price, Consensus and EPS Surprise  First Horizon Corporation price-consensus-eps-surprise-chart | First Horizon Corporation QuoteFirst Horizon currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksState Street’s STT fourth-quarter 2021 adjusted earnings of $2.00 per share outpaced the Zacks Consensus Estimate of $1.91. STT's bottom line was 18.3% higher than the prior-year level.State Street’s results reflected investment servicing wins, provision benefits and improvement in fee income. However, a rise in expenses, a fall in net interest revenues and lower interest rates were the undermining factors.BOK Financial’s BOKF earnings per share of $1.71 missed the Zacks Consensus Estimate of $1.81. The bottom line decreased 22.6% from the prior-year quarter.Results were undermined by lower fees and commissions, and a decline in the loan balance. Nonetheless, lower expenses, higher net interest revenues and provision benefits were tailwinds for BOKF.F.N.B. Corporation’s FNB fourth-quarter 2021 adjusted earnings per share of 30 cents met the Zacks Consensus Estimate. FNB's bottom line reflects a rise of 7.1% from the prior-year quarter.F.N.B. Corporation’s results were primarily aided by a rise in fee income, lower expenses and provision benefits. However, a fall in NII was the undermining factor. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report State Street Corporation (STT): Free Stock Analysis Report BOK Financial Corporation (BOKF): Free Stock Analysis Report First Horizon Corporation (FHN): Free Stock Analysis Report F.N.B. Corporation (FNB): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 21st, 2022

Schlumberger (SLB) Q4 Earnings & Revenues Beat Estimates

Higher contributions from Europe/CIS/Africa and strong North America rig activities aid Schlumberger's (SLB) Q4 earnings. Schlumberger Limited SLB has announced fourth-quarter 2021 earnings of 41 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 39 cents. The bottom line significantly increased from the year-ago quarter’s earnings of 22 cents.The oilfield service giant recorded total revenues of $6,225 million, outpacing the Zacks Consensus Estimate of $6,094 million. The top line also improved 12.5% from the year-ago quarter’s $5,532 million.The strong quarterly earnings resulted from higher contributions from Europe/CIS/Africa, strong North America rig activity and increased well construction activities in the U.S. Gulf of Mexico.Segmental PerformanceRevenues in the Digital & Integration unit totaled $889 million, up 7% from the year-ago quarter’s levels. Pre-tax operating income of $335 million was up 25% year over year. The outperformance resulted from higher contributions from Europe/CIS/Africa, and increased sales in offshore North America and the Permian. The positives were partially offset by lower contributions from the Asset Performance Solutions (APS) projects.Revenues in the Reservoir Performance unit increased 3% year over year to $1,287 million. Pre-tax operating income was $200 million, surging 111% year over year. The upside in profit was led by a surge in stimulation activities in the Middle East & Asiaalong with higher intervention activities across the international offshore markets, particularly in the U.K. and Latin America.Revenues in the Well Construction segment rose 28% from the year-earlier quarter’s level to $2,388 million. Pre-tax operating income improved 101% year over year to $368 million. Strong North America rig activities and increased well construction activities in the U.S. Gulf of Mexicoaided the segment.Revenues in the Production Systems segment amounted to $1,765 million, up 7% from the year-ago quarter’s numbers. Pre-tax operating income rose 3% from the prior-year quarter’s levels to $159 million. Increased revenues in subsea, well production, and midstream production systems were responsible for the improvements. This was offset partially by a decline in revenues in surface production systems.Cash FlowDespite the company’s $22 million of severance payments through the December-end quarter, the oilfield service firm generated a free cash flow of $1.3 billion.FinancialsCapital expenditure in the quarter was $447 million. As of Dec 31, 2021, the company had approximately $3,139 million in cash and short-term investments. It had long-term debt of $13,286 million at the end of the fourth quarter, representing a debt to capitalization of 48.2%.Forward ViewFor 2022, Schlumberger projects a capital investment of $1.9-$2 billion.  Last year, the figure was $1.7 billion.Fuel demand has improved drastically, so has oil price, owing to the roll-out of coronavirus vaccines at a massive scale. The company expects the trend to continue for the next few years, which will drive upstream investment, especially in international resources. Being a leading player in the oilfield service space, the company expects to capitalize on the improving demand for oilfield services.Zacks Rank & Stock to ConsiderThe company currently carries a Zacks Rank #3 (Hold).Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.BP plc BP, based in London, the U.K., is a fully integrated energy company, with a strong focus on renewable energy. BP has a strong portfolio of upstream projects, which has been backing impressive production growth. BP announced that before declaring results for the December-end quarter, it has intended to execute an additional $1.25 billion of share repurchases. The company continues to anticipate buying back $1 billion worth of shares by every quarter, considering Brent crude price at $60 per barrel. On the dividend front, the company projects a hike in the annual dividend per ordinary share of 4% through 2025.Royal Dutch Shell plc (RDS.A) is a fully integrated energy company, as it participates in every aspect related to energy, from oil production to refining and marketing. As of 2020 end, Shell likely had proved reserves of 9.1 billion oil-equivalent barrels.The BG acquisition has made Shell the largest liquefied natural gas (or LNG) producer in the world. With LNG demand likely to rise significantly in the near-to-medium term, Shell’s position as a major supplier of LNG should help meet the fuel’s growing demand and improve the cash flow.Eni SPA E is among the leading integrated energy players in the world. Its upstream operations involve the exploitation and production of oil and natural gas resources. Through midstream activities, the company transports and stores hydrocarbons. Eni also engages in refining hydrocarbons and distributing the end products in 71 nations. Apart from providing natural gas, the company generates and sells electricity.Eni currently has a Zacks Style score of A for Momentum, and B for Value and Growth. Eni beat the Zacks Consensus Estimate three times in the last four quarters and missed once, with an earnings surprise of 0.43%, on average. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP): Free Stock Analysis Report Schlumberger Limited (SLB): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report Eni SpA (E): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

CarMax (KMX) Down 16% Since Last Earnings Report: Can It Rebound?

CarMax (KMX) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. It has been about a month since the last earnings report for CarMax (KMX). Shares have lost about 16% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is CarMax due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. CarMax Beats Q3 Earnings EstimatesCarMax reported third-quarter fiscal 2022 (ended Nov 30, 2021) net earnings per share of $1.53, beating the Zacks Consensus Estimate of $1.48. This outperformance can be attributed to higher-than-anticipated revenues from the company’s used and wholesale vehicles segment. The bottom line also increased from $1.42 per share recorded in the year-ago period.The auto retailer registered revenues of $8,527.8 million for the November-end quarter, beating the Zacks Consensus Estimate of $7,891 million. Also, the top line recorded a 64.5% year-over-year increase.Segmental PerformanceCarMax’s used-vehicle net sales summed $6,435.6 million for the reported quarter, up 53% year over year owing to an increase in average retail selling prices and higher unit sales. The metric also surpassed the consensus mark of $6,070 million. The units sold in this segment edged up 16.9% year over year to 227,424 vehicles. The average selling price of used vehicles soared 30.8% from the year-ago quarter to $27,995. Comparable store used-vehicle units grew 15.8%, while revenues climbed 51.4% from the prior-year level. Used-vehicle gross profit per unit (GPU) came in at $2,235, up from the prior-year quarter’s $2,151.For the fiscal third quarter, wholesale vehicle revenues skyrocketed 132.1% from the year-ago level to $1,922.3 million. The reported figure also beat the Zacks Consensus Estimate of $1,508 million. Units sold and average selling price surged 48.5% and 58.4% year over year to 187,630 and $9,890, respectively. Wholesale vehicle GPU came in at $1,131, which increased from the year-ago period’s $906.Other sales and revenues rose 15.7% year over year to $169.9 million for the fiscal third quarter. CarMax Auto Finance witnessed a 5.9% year-over-year decline in income to $166 million for the November-end quarter.Other TidbitsSelling, general and administrative expenses flared up 33.7% from the prior-year quarter to $575.9 million. The firm had cash/cash equivalents and long-term debt of $62.6 million and $2,602.6 million, respectively, as of Nov 30, 2021.During the fiscal third quarter, CarMax bought back 0.9 million shares of common stock for $115.3 million under the share repurchase program. As of Nov 31, 2021, it had $876.2 million remaining under the share-repurchase authorization.CarMax opened one new location during the fiscal third quarter and aims to open four new stores in the fiscal fourth quarter.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates review.VGM ScoresCurrently, CarMax has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CarMax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CarMax, Inc. (KMX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Paychex (PAYX) Down 9.9% Since Last Earnings Report: Can It Rebound?

Paychex (PAYX) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. It has been about a month since the last earnings report for Paychex (PAYX). Shares have lost about 9.9% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Paychex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Paychex Beats On Q2 Earnings & Revenues EstimatesPaychex reported better-than-expected second-quarter fiscal 2022 results.Adjusted earnings of 91 cents per share beat the Zacks Consensus Estimate by 15.2% and increased 25% on a year-over-year basis. Total revenues of $1.11 billion beat the consensus mark by 4.6% and increased 13% year over year.Revenues in Detail                  Revenues from Management Solutions increased 14% year over year to $832 million. The segment benefited from higher checks per payroll for HCM services and net gain in worksite employees for HR solutions, higher revenue per client resulting from improved price realization, growth in the company’s client bases across HCM, and ancillary products resulting from strong sales performance and high levels of retention, improved market conditions on asset-based revenues for retirement services, and increase in funding for temporary staffing clients.Professional employer organization (“PEO”) and Insurance Solutions revenues were $262.4 million, up 11% from the year-ago quarter. The uptick was due to an increase in the number of average worksite employees, impact of an increase in average wages per worksite employee, higher revenues on state unemployment insurance and rise in PEO health insurance revenues.Interest on funds held for clients decreased 5% year over year to $14.1 million.Operating PerformanceAdjusted operating income increased 24% year over year to $440.3 million. Adjusted EBITDA of $495.1 million increased 21% year over year.Balance Sheet & Cash FlowPaychex exited second-quarter fiscal 2022 with cash and cash equivalents of $636.2 million compared with $1.10 billion at the end of the prior quarter. Long-term debt was $797.5 million compared with $797.4 million in the prior quarter.Cash provided by operating activities was $169.8 million in the reported quarter. During the reported quarter, the company paid out $238.3 million in dividends.Fiscal 2022 ViewFor fiscal 2022, total revenues are now expected to register 10-11% growth compared with the prior expectation of 8%. Adjusted earnings per share are now expected to register 18-20% growth compared with the prior expectation of 12-14%. Management Solutions revenues are now expected to grow 10-11% compared with the prior expectation of 8%. Adjusted operating margin is expected to be almost 39-40% compared with the prior expectation of 38-39%. Adjusted EBITDA margin is now expected to be nearly 44% compared with the prior expectation of 43%.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in estimates review.VGM ScoresAt this time, Paychex has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Paychex has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Paychex, Inc. (PAYX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Netflix (NFLX) Q4 Earnings Beat, User Growth Misses Estimates

Netflix (NFLX) adds 8.28 million subscribers in the second quarter of 2021, missing its expectation of 8.5 million additions, thus reflecting growing competition. Netflix NFLX reported fourth-quarter 2021 earnings of $1.33 per share, beating the Zacks Consensus Estimate by 62.2% and the company’s guidance of 80 cents. The figure increased 11.8% year over year.Revenues of $7.71 billion increased 16% year over year and beat the consensus mark by 0.09%. Average revenue per membership increased 7% year over year both on a reported basis and on a foreign-exchange neutral basis.The streaming giant added 8.28 million paid subscribers globally against the addition of 8.51 million in the year-ago quarter, missing its guidance of 8.5 million paid-subscriber additions.At the end of the fourth quarter, Netflix had 221.84 million paid subscribers globally, up 8.9% year over year, missing management’s expectation of 222.06 million.The miss reflects growing competition from services launched by Apple AAPL, Disney DIS and Comcast CMCSA. However, the year-over-year growth benefited from Netflix’s solid content portfolio. Netflix, Inc. Price Netflix, Inc. price | Netflix, Inc. Quote Netflix now expects first-quarter 2022 paid net additions to be 2.5 million compared with the year-ago quarter’s 3.98 million, reflecting lack of new content, stiff competition and macro-economic impact of COVID in several parts of the world.Netflix expects to end the first quarter of 2022 with 224.34 million paid subscribers globally, indicating growth of 8% from the year-ago quarter.Shares of this Zacks Rank #3 (Hold) company were down almost 20% in after-hours trading following the results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.In the past year, Netflix shares have underperformed Apple and Comcast, while outperforming Disney.While Netflix shares fell 12.3%, Apple and Comcast returned 20.2% and 2.2%, respectively. Disney shares dropped 13.8% in the past year.Segmental Revenue DetailsUnited States and Canada (UCAN) reported revenues of $3.31 billion, which rose 11% year over year and accounted for 42.9% of total revenues. ARPU grew 9% from the year-ago quarter on a foreign-exchange neutral basis.Paid-subscriber base increased 1.7% from the year-ago quarter to 75.22 million. The company added 1.19 million paid subscribers, up 38.4% year over year.Europe, Middle East & Africa (EMEA) reported revenues of $2.52 billion, which climbed 18.1% year over year and accounted for 32.7% of total revenues. ARPU grew 6% from the year-ago quarter on a foreign-exchange neutral basis.Paid-subscriber base increased 11% from the year-ago quarter to 74.04 million. The company added 3.54 million paid subscribers, down 20.6% year over year.Latin America’s (LATAM) revenues of $964 million increased 22.2% year over year, contributing 12.5% of total revenues. ARPU grew 17% from the year-ago quarter on a foreign-exchange neutral basis.Paid-subscriber base rose 6.4% from the year-ago quarter to 39.96 million. The company added 0.97 million paid subscribers, down 19.8% year over year.Asia Pacific’s (APAC) revenues of $871 million soared 27.2% year over year and accounted for 11.3% of total revenues. Netflix witnessed strong growth in both Japan and India.ARPU increased 2% year over year on a foreign-exchange neutral basis.Paid-subscriber base jumped 28% from the year-ago quarter to 32.63 million. The company added 2.58 million paid subscribers, up29.6% year over year.Content DetailsNetflix’s fourth-quarter content slate included returning seasons of The Witcher (484 million hours viewed), You (468 million hours viewed), Emily in Paris (287 million hours viewed), Cobra Kai (274 million hours viewed) and Maid (469 million hours viewed).Korean thriller Squid Game was viewed for 1.65 billion hours in its first four weeks and is now Netflix’s biggest TV season ever. The fourth quarter also featured the conclusion of La Casa de Papel aka Money Heist (6.7 billion hours viewed over its lifetime).Hit movies in the reported quarter included Red Notice (364 million hours viewed in its first four weeks), The Unforgivable (215 million hours viewed), Army of Thieves (158 million hours viewed), Love Hard (134 million hours viewed), Back to the Outback (105 million hours viewed) and The Harder They Fall (122 million hoursviewed).Don’t Look Up, released on Christmas Eve, was viewed for 353 million hours, making the movie the second most popular movie ever in Netflix’s history.In November, Netflix launched mobile games on Android and iOS. Currently, ten games are available within the Netflix mobile app.Operating DetailsMarketing expenses increased 4% year over year to $792.7 million. As a percentage of revenues, marketing expenses decreased 120 basis points (bps) to 10.3%.Operating income declined 33.8% year over year to $631.8 million. Operating margin contracted 620 bps on a year-over-year basis to 8.2%.Balance Sheet & Free Cash FlowNetflix had $6.03 billion of cash and cash equivalents as of Dec 31, 2021, compared with $7.52 billion as of Sep 30, 2021.Long-term debt was $14.7 billion as of Dec 31, 2021, unchanged from Sep 30, 2021.Streaming content obligations were $23.16 billion compared with $22.4 billion as of Sep 30, 2021.Netflix reported free cash outflow of $569 million compared with free cash flow outflow of $106.3 million in the previous quarter.GuidanceFor the first quarter of 2022, Netflix forecasts earnings of $2.86 per share, indicating 23.7% decline from the figure reported in the year-ago quarter.The Zacks Consensus Estimate for the same is pegged at $3.43 per share, currently higher than the company’s expectation, indicating decline of 8.53% from the figure reported in the year-ago quarter.Total revenues are anticipated to be $7.903 billion, suggesting growth of 10.3% year over year. The consensus markfor revenues stands at $8.11 billion, higher than the company’s expectation and indicating 13.29% growth from the figure reported in the year-ago quarter.Operating margin is projected at 25.5% compared with 22.1% in the year-ago quarter.For 2022, Netflix expects operating margin between 19% and 20% compared with 21% reported in 2021. Operating margin is expected to suffer from unfavorable forex (roughly 2% negative impact). 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Comcast Corporation (CMCSA): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

BankUnited (BKU) Q4 Earnings & Revenues Beat, Stock Down 6.48%

Rise in revenues, along with strong loans and deposits, supports BankUnited's (BKU) Q4 results. However, increase in expenses and provision for credit losses are headwinds. BankUnited, Inc.’s BKU fourth-quarter 2021 earnings per share of $1.41 surpassed the Zacks Consensus Estimate of $1.14. The bottom line also jumped 58.4% from the prior-year quarter.Results primarily benefited from higher revenues and rise in loans and deposit balances. However, a rise in expenses and poor credit quality were the undermining factors. Probably due to these concerns, shares of the company tanked 6.5% following the release.Net income was $125.3 million, up 46.1% year over year.In 2021, earnings of $4.52 per share beat the consensus estimate of $4.26 and were up substantially from $2.06 in 2020. Also, net income of $414.9 million was substantially up from $197.9 million in 2020.Revenues & Expenses RiseNet revenues were $251.6 million, up 10% year over year. The top line beat the Zacks Consensus Estimate of $229.2 million.In 2021, net revenues increased 5.1% to $929.8 million. The top line surpassed the consensus estimate of $910.5 million.Net interest income totaled $206 million, up 6.5%. The improvement was driven by a fall in interest expenses. Net interest margin rose 11 basis points (bps) year over year to 2.44%.Non-interest income was $45.6 million, increasing 29.3%. The increase was due to a rise in all components, except for gain on investment securities and other incomes.Non-interest expenses surged 52.3% to $187.9 million. The rise was mainly due to discontinuance of cash flow hedges.As of Dec 31, 2021, net loans were $23.63 billion, up from $23.61 billion recorded as of Dec 31, 2020. Total deposits amounted to $29.4 billion, up from $27.5 billion recorded on Dec 31, 2020.Credit Quality WorsensIn the reported quarter, the company recorded a provision of credit losses worth $0.2 million against recovery of $1.6 million in the prior-year quarter. As of Dec 31, 2021, the ratio of net charge-offs to average loans was 0.29%, up 3 bps year over year.Ratio of non-performing loans to total loans was 0.87%, down 15 bps from the prior-year quarter.Capital Ratios DeterioratesAs of Dec 31, 2021, Tier 1 leverage ratio was 8.4%, down from 8.6% as of Dec 31, 2020. Common Equity Tier 1 risk-based capital ratio was 12.6%, at par with the prior-year period level. Total risk-based capital ratio was 14.3%, down from 14.7%.Share Repurchase UpdateDuring the quarter, BankUnited repurchased almost 4.4 million shares for $181.8 million, at an average price of $41.45 per share.Our ViewBankUnited’s efforts to strengthen fee income sources and a strong balance-sheet position are expected to keep supporting financials in the days to come. However, higher expenses and poor credit quality remain major concerns.BankUnited, Inc. Price, Consensus and EPS Surprise BankUnited, Inc. price-consensus-eps-surprise-chart | BankUnited, Inc. QuoteCurrently, BankUnited carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Release Schedule of Other BanksZions Bancorporation ZION is scheduled to release fourth-quarter and full-year 2021 results on Jan 24.Over the past 30 days, the Zacks Consensus Estimate for Zions Bancorporation’s quarterly earnings has remained unchanged at $1.33. This implies a 19.9% decrease from the prior-year quarter.Prosperity Bancshares PB is scheduled to release fourth-quarter and full-year 2021 results on Jan 26.Over the past 30 days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has remained unchanged at $1.37. This suggests a 7.4% decrease from the prior-year quarter.East West Bancorp, Inc. EWBC is slated to report fourth-quarter and full-year 2021 results on Jan 27.Over the past 30 days, the Zacks Consensus Estimate for East West Bancorp’s quarterly earnings has remained unchanged at $1.55. This indicates a 34.8% increase from the prior-year quarter. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Zions Bancorporation, N.A. (ZION): Free Stock Analysis Report BankUnited, Inc. (BKU): Free Stock Analysis Report Prosperity Bancshares, Inc. (PB): Free Stock Analysis Report East West Bancorp, Inc. (EWBC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Texas Capital (TCBI) Q4 Earnings Top Estimates, Costs Fall

Texas Capital's (TCBI) fourth-quarter earnings and revenues surpass estimates on lower costs and a sturdy capital position amid a recovering economy. Texas Capital Bancshares TCBI reported adjusted earnings per share of $1.19 for fourth-quarter 2021, surpassing the Zacks Consensus Estimate of 91 cents. Moreover, results compare favorably with the prior-year quarter’s $1.14.Robust capital position and lower expenses were driving factors. Moreover, provision for credit losses recorded benefits. Yet, a fall in net interest income (NII) and fee income plus pressed margins were deterrents. Further, results reflect a decline in both loans and deposit balances.Net income available to common stockholders came in at $60.82 million, up 5.3% year over year.For the full year, earnings per share came in at $4.6, comparing favorably with the year-ago earnings of $1.12 per share. Net income available to common shareholders was $235.2 million, up substantially year over year.Revenues Decline, Costs FallTotal revenues (net of interest expense) fell 15.2% year over year to $225.49 million due to a decline in both non-interest income and net interest income. Revenues surpassed the Zacks Consensus Estimate of $214.09 million.In 2021, total revenues were down 14% from the prior-year level to $907.1 million. Nonetheless, the top line beat the Zacks Consensus Estimate of $895.4 billion.NII came in at $194.1 million, down 6.5% year over year, induced by a fall in total average loans and LHI yields, partially offset by decreases in average interest-bearing deposits and cost of deposits.NIM contracted 10 basis points (bps) year over year to 2.12%.Non-interest income plummeted 40% to $31.5 million. This decline primarily resulted as net gain/(loss) on sale ofloans held for sale, brokered loan fees and servicing income all decreased as a result of the mortgage servicing rights (MSR) sale and mortgage correspondent aggregation (MCA)  program transition earlier in 2021.Non-interest expenses decreased 3% to $146.7 million from the prior-year quarter’s level. This is mainly led by declines in the servicing-related expenses, resulting from the MSR sale and MCA program transition earlier in 2021, partially offset by an increase in salaries and employee benefits.As of Dec 31, 2021, total loans decreased 4.2% on a sequential basis to $22.8billion, while deposits decreased 5.7% to $28.1 billion.Credit Quality StrengthensNon-performing assets totaled 0.32% of the loan portfolio plus other real estate-owned assets compared with the prior-year quarter’s figure of 0.5%. Total non-performing assets plunged 17% to $72.5 million from the prior-year quarter’s level.Benefit for credit losses aggregated $10 million compared with the year-ago quarter’s provision of $32 million. Texas Capital’s net charge-offs (NCOs) were $1million compared with $65.4 million as of Dec 31, 2020.Capital Ratios ImproveTangible common equity to total tangible assets came in at 8.3% compared with the year-earlier quarter’s 7.2%.Common Equity Tier 1 (CET1) ratio was 11.1%, up from the prior-year quarter’s 9.4%. Leverage ratio was 9% compared with 7.5% as of Dec 31, 2020.Stockholders’ equity was up 11.8% year over year to $3.2 billion as of Dec 31, 2021.Our ViewpointTexas Capital’s controlled expenses and a solid capital position during the December quarter look impressive. This apart, an improving economic situation is anticipated to help TCBI continue to record benefits for credit losses and drive its performance in the days to come. However, lower revenues and margin pressure might erode its near-term profitability.Texas Capital Bancshares, Inc. Price, Consensus and EPS Surprise Texas Capital Bancshares, Inc. price-consensus-eps-surprise-chart | Texas Capital Bancshares, Inc. QuoteCurrently, Texas Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksFirst Republic Bank’s FRC fourth-quarter 2021 earnings per share of $2.02 surpassed the Zacks Consensus Estimate of $1.91. Additionally, the bottom line improved 26.3% from the year-ago quarter’s level.FRC’s quarterly results were supported by a higher net interest income and non-interest income. Moreover, First Republic’s balance-sheet position was strong in the quarter. However, higher expenses and elevated net loan charge-offs were the offsetting factors.Citigroup Inc. C delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 outpaced the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter’s level.Citigroup’s investment banking revenues jumped in the quarter under review, driven by equity underwriting as well as growth in advisory revenues. However, fixed-income revenues were down due to declining rates and spread products.U.S. Bancorp USB reported fourth-quarter 2021 earnings per share of $1.07, which missed the Zacks Consensus Estimate of $1.11. Results, however, compare favorably with the prior-year quarter’s figure of 95 cents.Though lower revenues and escalating expenses were disappointing factors, credit quality was a tailwind. Growth in loan and deposit balance and a strong capital position were encouraging factors. Moreover, U.S. Bancorp closed the acquisition of San Francisco-based fintech firm TravelBank, which offers technology-driven cost and travel management solutions. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Citigroup Inc. (C): Free Stock Analysis Report U.S. Bancorp (USB): Free Stock Analysis Report Texas Capital Bancshares, Inc. (TCBI): Free Stock Analysis Report First Republic Bank (FRC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022