For Immediate Release
Chicago, IL – February 17, 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: JPMorgan Chase & Co. (JPM), Royal Bank of Scotland (RBS), Sempra Energy (SRE), Deutsche Bank (DB) and Genuine Parts Company (GPC).
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Here are highlights from Tuesday’s Analyst Blog:
JPM to Reveal RBS-Sempra Deal
JPMorgan Chase & Co. (JPM) could announce a deal today to buy commodities trading firm RBS-Sempra Commodities for $1.7 billion, reports the Wall Street Journal.
In order to comply with European Union rules, the Royal Bank of Scotland (RBS) is selling its 51% stake in RBS-Sempra, which it jointly owns with Sempra Energy (SRE). This step is a part of RBS’s restructuring efforts, which includes selling its non-core businesses in selected markets to shore up its financial standing.
The current deal excludes RBS-Sempra’s most valuable North American operations, which accounts for 64% of RBS-Sempra’s trading revenue. However, JPMorgan is in discussion with RBS and Sempra Energy to acquire the North American operations of the commodities and energy trader. Macquarie has been named along with JPMorgan and Deutsche Bank (DB) as bidders for RBS-Sempra’s North American operations.
Incorporated in 2008, RBS-Sempra trades commodities ranging from oil and natural gas to metals and agricultural products. Royal Bank of Scotland, one of the largest victims of the global financial crisis, is at present 83% owned by British taxpayers. The bank’s woes stem from a massive number of risky investments in areas such as commercial-property loans, leveraged finance and derivatives. The bad assets it inherited with its 2007 acquisition of a part of the Dutch bank ABN Amro Holding NV has also added to its problems.
JPMorgan’s fourth quarter earnings came in at 74 cents per share, substantially ahead of the Zacks Consensus Estimate of 61 cents. This also compares favorably with earnings of 6 cents in the prior-year quarter.
We view the prospective RBS-Sempra deal as positive for JPMorgan as its strong capital position should enable it to easily manage the business. We anticipate continued synergies from JPMorgan’s diversification and strong capital position, but increasing provisions and rising consumer credit costs will be a drag on upcoming results. However, we are impressed to see some improvement in credit quality during the fourth quarter of 2009.
Genuine Parts Profits Improve
Genuine Parts Company (GPC) reported a 13% rise in profit to $99 million or 62 cents per share in the fourth quarter of 2009 from $88 million or 55 cents in the prior year quarter. With this, the company has beaten the Zacks Consensus Estimate of 51 cents per share. However, sales in the quarter fell 2% to $2.47 billion.
Genuine Parts’ Automotive Parts segment was the only segment to report an improvement in sales. The Industrial Parts and Electrical/Electronic Material segments were the most negatively affected during the quarter. Revenue in the Automotive Parts segment increased 6% to $1.26 billion, Industrial Parts segment dipped 11% to $737 million, Office Products segment slid 4% to $384 million and Electrical Group shrank 12% to $90 million.
In 2009, Genuine Parts has posted a 16% decline in profit to $399.6 million or $2.50 per share, from $475.4 million or $2.92 per share in 2008. The profit was a tad higher than the Zacks Consensus Estimate of $2.38 per share.
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