For Immediate Release
Chicago, IL – October 8, 2010 – Zacks.com Analyst Blog features:Alcoa (AA), Wells Fargo & Co. (WFC), Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C).
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Here are highlights from Thursday’s Analyst Blog:
Alcoa Leads Off with Improvement
Alcoa (AA), the perennial lead-off company for earnings season, reported third-quarter earnings per share and revenue that improved from last year, while also raising its aluminum consumption forecast for the year.
The company earned 9 cents per share, excluding a negative impact of 3 cents, which was ahead of the Zacks Consensus Estimate by 3 cents and better than last year’s 4 cents. Revenues reached $5.3 billion, or a 15% improvement from $4.6 billion in the third quarter of 2009 and 2% better than the second quarter of 2010.
But Alcoa is closely tied to the price and consumption of aluminum, so the best news of the report may be that the company raised its aluminum consumption forecast for 2010 to 13% from 12%, citing strengthening markets.
It should come as no surprise that the developing markets are eating up this light and strong metal. Among the hot spots are China, Brazil, India and Russia.
After hours shares have moved up by approximately 3%.
Wells Fargo Not Halting Foreclosures
Wells Fargo & Co. (WFC) has opted not to put a stop to its foreclosure activities. The company has expressed confidence in its foreclosure filings, based on the affidavit procedures and the auditing of its process that it conducts on a daily basis.
This decision of Wells Fargo is in contrast to its rivals Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM), who decided last week to halt their foreclosure activities.
Last Friday, BofA announced a temporary cessation in its foreclosure activities in 23 states in order to investigate whether some of its former executives rushed through the scrutiny of the documents of homeowners before verifying their authenticity of information. Besides BofA, JPMorgan Chase and General Motors Acceptance Corporation Mortgage LCC (GMAC) have opted for similar measures.
BofA has decided to revise all the affidavits related to the foreclosure cases where the court has not yet given its verdict. On the other hand, JPMorgan and GMAC Mortgage said that they would revise only those documents that they thought had been improperly done. Against such lapses by biggies, Citigroup Inc. (C) has affirmed that it continuously reviews its document verification processes and provides proper training to its staff, so it is in little danger of having to freeze its foreclosure program.
Though this decision of Wells Fargo should not result in a significant benefit to its earnings, such confidence in its operating efficiencies may trigger positive sentiments for investors. The company’s credit challenges seem to lessen and capital ratios remain strong. With its diverse geographic and business mix, it is well positioned compared to its peers.
The Wachovia acquisition and the demise of some smaller players has helped Wells Fargo garner a larger share in the mortgage markets. However, we believe that the recent financial regulations will have a negative impact on the both the top line and the bottom line of the company. Also, weak consumer trends will impact earnings in the upcoming quarters.
Wells Fargo currently retains its Zacks #3 Rank (short-term Hold rating), implying that the stock is expected to perform in line with the broader U.S. equity market in the near term.
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ALCOA INC (AA): Free Stock Analysis Report
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CITIGROUP INC (C): Free Stock Analysis Report
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WELLS FARGO-NEW (WFC): Free Stock Analysis Report
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