Zacks Analyst Blog Highlights: T. Rowe Price Group, McGraw-Hill, NextEra Energy, Ryder System and Dover Corporation

For Immediate Release

Chicago, IL – July 26, 2010 – Zacks.com Analyst Blog features: T. Rowe Price Group Inc. (TROW - Analyst Report), McGraw-Hill Companies, Inc. (MHP - Analyst Report), NextEra Energy Inc. (NEE - Analyst Report), Ryder System Inc. (R - Analyst Report) and Dover Corporation (DOV).

Here are highlights from Friday’s Analyst Blog:

T. Rowe Price Profit Soars

T. Rowe Price Group Inc.'s (TROW - Analyst Report) second quarter 2010 earnings of 59 cents per share were significantly up from 38 cents per share reported in the prior-year quarter. Higher-than-expected top-line growth, partially offset by marginally lower assets under management (AUM) and higher operating expenses, cumulated in improved performance. However, the quarter’s earnings missed the Zacks Consensus Estimate of 60 cents by a penny.

Net income increased to $158.5 million from $100.0 million in the second quarter of 2009.

Behind the Headlines

Net revenue increased 30.6% to $577.4 million from $442.2 million in the year-ago period and 3.8% from $556.2 million in the prior quarter. The leap was primarily due to an increase in investment advisory fees that soared 37.0% year over year to $492.0 million.

Administrative fees also increased by 4.2% year over year to $84.7 million. However, net revenue was below the Zacks Consensus Estimate of $580.0 million.??Investment advisory revenues earned from the T. Rowe Price mutual funds distributed in the U.S., increased 38.0% year over year to $342.8 million. Investment advisory revenues earned from the other investment portfolios managed by the company increased 34.0% from the year-ago quarter to $149.2 million.

Total operating expenses increased 12.5% year over year to $324.3 million. The increase was primarily attributable to high compensation and related costs (up 7.7% year-over-year), resulting from a higher interim accrual for 2010 annual variable compensation program, employee benefits costs and other employment expenses. At the end of the reported quarter, the company employed 4,862 associates.

McGraw-Hill Beats by a Penny

The McGraw-Hill Companies, Inc. (MHP - Analyst Report), a publisher and provider of financial information and media services, reported better-than-expected second-quarter 2010 results on the heels of robust performance across Standard & Poor’s (S&Ps) indices, the U.S. higher education market and global energy information markets.

The quarterly earnings of 61 cents a share topped the Zacks Consensus Estimate by a penny, and rose 5.2% from 58 cents posted in the prior-year quarter. The prior-year quarter earnings exclude 6 cents a share for net restructuring charges and a loss from a divestiture.

McGraw-Hill’s total revenue of $1,474.1 million fell short of the Zacks Consensus Revenue Estimate of $1,542 million but portrayed a slender increase of 0.6% from the prior-year quarter, helped by growth in Education and Financial Services segments but offset by a decline in its Information and Media segment.

A marginal increase in the top-line coupled with effective cost management enabled McGraw-Hill to register a 4.2% growth in total adjusted operating profit of $305.4 million.

The Education segment recorded a growth of 1.8% in revenue to $565 million, reflecting a revenue growth of 10.8% to $240.1 million at McGraw-Hill Higher Education, Professional and International Group, partially offset by a decline of 4% to $324.9 million witnessed at McGraw-Hill School Education Group.

The higher education and professional market was buoyed by double-digit gains registered in digital products and services, and the increase in demand for online study tools (e.g. McGraw-Hill Connect series) powered by higher enrollment in U.S. academic institutions last fall.

However, management cautioned that without a similar surge in enrollments this year, the U.S. higher education market is expected to rise by 5% to 7% in fiscal year 2010. Furthermore, management now expects the elementary-high school market to rise in the range of 4% to 6%, down from a growth rate of 6% to 7% forecasted earlier, due to sluggish sales of reading materials in California, South Carolina and Indiana markets on account of budget cuts, partially offset by robust performance in the Texas market.

NextEra Energy Bests Estimates

NextEra Energy Inc. (NEE - Analyst Report) announced second-quarter 2010 operating earnings of $1.11 per share compared with 99 cents per share in the year-ago quarter. The results of the company outpaced the Zacks Consensus Estimate, as provided by 13 covering analysts, by 5 cents.

GAAP earnings of NextEra Energy for the second quarter of 2010 were $1.01 per share compared with 91 cents per share recorded in the year-ago period. The difference of 10 cents between operating and GAAP earnings, during the second quarter, was due to mark-to-market effects of non-qualifying hedges and other than temporary impairments on certain investments, both of which relate to NextEra Energy Resources.

Total Revenue

NextEra Energy’s total operating revenue for second-quarter 2010 was $3.6 billion versus $3.8 billion reported in the year-ago period. The year-over-year decline in total revenue was due to lower revenue from Florida Power & Light. The actual results of the company fell short of the Zacks Consensus Estimate of $3.9 billion by $0.3 billion.

Ryder Beats, Raises Outlook

Ryder System Inc. (R - Analyst Report), the world's largest provider of integrated logistics and transportation solutions, reported second-quarter earnings of 58 cents per share, which surpassed the Zacks Consensus Estimate of 49 cents. The company released its second-quarter earnings on July 22, 2010. The company’s earnings shot up 21% from the year-ago quarter’s earnings of 48 cents.

Stronger-than-expected earnings growth in the quarter was driven by higher commercial rental demand and stronger used vehicle sales, partially offset by the ongoing customer fleet downsizing. Net income increased 13% year over year to $30.6 million.

Revenue rose 6% year over year to $1.29 billion, ahead of the Zacks Consensus Estimate of $1.26 billion. The pass-through of higher fuel costs to customers and favorable exchange rate movements led to the solid revenue growth during the quarter. Operating revenue (revenue excluding Fleet Management Solutions fuel and all subcontracted transportation), was $1.04 billion, up 2% year over year.

Dover Corp. Beats on Higher Rev

Dover Corporation (DOV) reported second-quarter 2010 earnings from continuing operations of 91 cents per share, beating the Zacks Consensus Estimate of 78 cents by 13 cents. Results were ahead of the prior-year quarter earnings from continuing operations of 54 cents per share. Net income from continuing operations for the quarter was $171.9 million, up 70% from $100.9 million reported in the second-quarter 2009.

Including a loss from discontinued operations of $2.0 million or 1 cent per share, Dover reported a net income of $169.9 million or 90 cents per share, compared with $97.1 million or 52 cents per share in the second quarter of 2009. Net income in the year-ago quarter included a loss from discontinued operations of $3.8 million or 2 cents per share.

Dover recorded revenues of $1.8 billion in the second quarter of 2010, ahead of the Zacks Consensus Estimate of $1.7 billion. Revenue for the quarter improved 29% year over year. An organic growth of 24%, a 4% increase from acquisitions, and a 1% favorable impact from foreign exchange fueled the revenue growth in the quarter.

Revenue increases across all segments led to the overall revenue climb with refrigeration equipment, electronic technologies, fluid management and product ID leading the charge.

Cost of goods and services in the quarter total $1.1 billion, up 22.5% from $0.9 billion in second quarter 2009. Gross margin increased 300 basis points year-over-year to 38.5% in the quarter under review.

Selling and administrative expenses were $423.8 million compared with $365.0 million in the prior year quarter.

Operating earnings more than doubled from the prior-year quarter to $264.9 million in second-quarter 2010. Operating margin increased 560 basis points year-over-year to 16.9% in the quarter. 

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