For Immediate Release
Chicago, IL – May 25, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Wells Fargo & Co. ((WFC - Analyst Report)), Bank of Ireland Group ((IRE)), Moody's Corporation ((MCO - Analyst Report)), General Motors Company ((GM - Analyst Report)) and Ford Motor Co. ((F - Analyst Report)).
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Here are highlights from Thursday’s Analyst Blog:
Wells Fargo Sees Growth Ahead
Wells Fargo & Co. ((WFC - Analyst Report)) is well positioned to grow its business in the years ahead. At its annual investor day event held earlier this week, the company had come out of financial crisis well and achieved nine consecutive quarters of earnings per share growth.
Wells Fargo announced its target of return on assets of 1.3% to 1.6% and return on equity of 12% to 15%, subject to economic and regulatory environment. This is likely to support a shareholder payout ratio of about 50% to 65%.
Wells Fargo’s average return on assets between the first quarter of 2009 and 2012 is 1.12% and average return on equity for the same period is 10.97%.
Moreover, with a strong capability to generate organic capital, Wells Fargo is well positioned for future attractive acquisition opportunities but will adhere to discipline while assessing such deals. Notably, since 2011, the company has completed six transactions which include both loan portfolio purchases as well as business unit acquisitions.
Notable among these were the purchases of BNP Paribas North American Energy Lending, Burdale Financial Holdings Limited from Bank of Ireland Group ((IRE)) and EverKey Global Partners. These deals were completed in 2012. Wells Fargo also made loan portfolio purchases from Irish Bank Resolution Corp., Bank of Ireland and Allied Irish Bank in 2011.
Additionally, the company has agreed to buy San Francisco and New York City-based Merlin Securities LLC, and the deal is pending at this moment. The company plans to expand its operations in international markets and augment its asset management business.
Moody’s Reaffirms GM Credit Rating
Moody’s Investors Service, the credit rating agency of Moody's Corporation ((MCO - Analyst Report)), has reaffirmed the credit rating of General Motors Company ((GM - Analyst Report)) at Ba1, citing the company’s outlook to be positive.
The agency is confident about the company’s competitive business model in North America, better cost structure, improved lineups and strong market position in Asia. As a result, it is looking forward to upgrade GM to investment grade credit rating within a year.
Recently, Moody’s raised the senior unsecured ratings of Ford Motor Co. ((F - Analyst Report)) to Baa3 from Ba2 and of its financial arm Ford Credit to Baa3 from Ba1, as well as dropped its speculative grade liquidity rating on the company. The agency left unchanged its “stable” rating outlook for the company and its financial arm.
The upgrade was driven by the Ford’s strong market position and higher profitability in North America, high cash balance, ability to match production with market demand and sound operating and financial management.
With securing investment grade ratings from two of the three main agencies (Moody’s and Fitch), Ford succeeded in reclaiming its collateral for $23.5 billion loan, including the blue oval logo that is embossed on its vehicles.
GM, a Zacks #3 Rank (Hold) company, reported a $100 million fall in profits to $1.6 billion in the first quarter of 2012 from $1.7 billion in the same quarter of 2011, before special items, due to lower profits from its European operations.
On per share basis, adjusted profits were 93 cents during the quarter, down 2 cents from the first quarter of 2011. However, it exceeded the Zacks Consensus Estimate of 84 cents. Adjusted earnings before interest and taxes (EBIT) dipped to $2.2 billion in the quarter from $2.0 billion in the year-ago quarter.
Revenues in the quarter went up 4% to $37.8 billion on a 3% rise in unit sales to 2.3 million vehicles globally. It was higher than the Zacks Consensus Estimate of $36.4 billion. The automaker occupied a worldwide market share of 11.3% during the quarter, compared with 11.4% a year-ago.
Based on the improved macroeconomic conditions in the U.S. and pent-up demand in the automotive sector, GM expects light vehicle sales in the range of 14.0 million–14.5 million in the U.S. during 2012. This compared with the prior guidance of 13.5 million–14.0 million units. The automaker is gearing up for 20 major vehicle launches in 2012 across the globe in order to drive sales and revenues.
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