For Immediate Release
Chicago, IL – March 18, 2010 – 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: Freeport McMoRan (FCX), Petrobras (PBR), EnCana (ECA), ATP Oil and Gas (ATPG) and Discover Financial Services (DFS).
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Here are highlights from Wednesday’s Analyst Blog:
PPI Falls More Than Expected
It is worth noting that this fits with what we saw in the Capacity Utilization report that came out on Monday. In February, crude good production facilities were operating at 86.2% of capacity, which is roughly in line with the long term historic average of 86.5% of capacity.
Plants that produce intermediate goods were running at just 69.6% of capacity, far below the long-term average rates of 81.6%. Factories that produce finished goods were more or less in the same boat as the intermediate facilities, operating at just 70.8% of capacity, which is well below the long-term average rate of 77.5%.
With operating rates so low, the producers of those goods do not have the leverage to be able to pass through the higher crude goods prices. This would seem to indicate that producers of crude goods, like copper miner Freeport McMoRan (FCX) and oil and gas E&P firms, should be better positioned than firms closer to making the final consumer products.
When looking for E&P companies, look for those that are well positioned to increase their production over the next few years. Some of those that look interesting to me include Petrobras (PBR) with its giant offshore fields, EnCana (ECA), which is ramping up natural gas production from the shale plays, and for those of you looking for a smaller cap name that will really be increasing production this year, ATP Oil and Gas (ATPG) is where a new project in the Gulf of Mexico is coming on line and should more than double production this year.
Discover Posts Loss, Will Repay TARP
Discover Financial Services (DFS) reported a fiscal first quarter loss as the company bolstered its loan loss reserves. However, the company has received the regulatory approval to payback the $1.2 billion bailout money.
For the fiscal first quarter (ended Feb 28, 2010), Discover reported a loss of $104 million or 22 cents a share. The figure includes a pre-tax addition to loan loss reserves of $305 million ($185 million after tax). This brings its reserve coverage to approximately a year of losses. This compares with the Zacks Consensus Estimate of earnings of 4 cents.
The company reported a profit of $120 million or 25 cents per share in the prior-year period. However, that result included an approximate $297 million after-tax gain related to the Visa/MasterCard antitrust litigation settlement.
Discover’s banking unit, Discover Bank, will offer $350 million in the form of subordinated debt prior to the redemption of the $1.2 billion of preferred stock it issued to the U.S. Treasury under the TARP Capital Purchase Program. The offering is expected to be completed during the second quarter. The company does not expect to make any equity raise for the repayment.
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