For Immediate Release
Chicago, IL – February 19, 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: Windstream Corp (WIN), Verizon (VZ), AT&T (T), Invesco (IVZ) and ConAgra Foods, Inc. (CAG).
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Here are highlights from Thursday’s Analyst Blog:
Windstream Beats, Profit Slips
Windstream Corp (WIN), a leading rural telecom carrier, reported operating results for the fourth quarter with adjusted earnings per share (EPS) of 25 cents, exceeding the Zacks Consensus Estimate of 20 cents while matching the year-ago adjusted EPS.
Adjusted EPS excludes one-time items such as restructuring charges, merger and integration costs and a non-cash pension expense. For full-year 2009, adjusted EPS of 95 cents also beat the Zacks Consensus Estimate of 83 cents.
Reported net income of $75.5 million (17 cents a share) represents a 7% year-over-year decline on account of lower revenues, which declined 3% year-over-year to $754.4 million. However, revenue for the quarter came above the Zacks Consensus Estimate of $739 million. For full year 2009, revenue decreased 6% year-over-year to $3 billion while reported net income of $335 million (76 cents a share) represents a 19% decline.
Service revenues for the quarter fell 0.2% year-over-year to $732.6 million, while product revenues dipped 50% to $21.8 million. Average monthly service revenue per customer increased 3% year-over-year to $83.21. Operating income declined 15% year-over-year to $235 million.
Windstream continues to experience steady decline in its fixed-line business given the rapid customer migration to cellular services from Tier-1 carriers such as Verizon (VZ) and AT&T (T). Total access lines declined by roughly 35,000 lines in the quarter to reach approximately 3.03 million lines, down 1% year-over-year.
This was, however, partly offset by a net addition of more than 27,000 high-speed Internet customers, bringing the total broadband customer base to approximately 1.13 million (up 10% year-over-year). Momentum for digital TV business continues with roughly 10,000 new customers added during the quarter. Windstream’s video subscriber base reached roughly 369,000, representing 20% penetration of primary residential lines.
Invesco Downed to Underperform
We are downgrading our recommendation on Invesco (IVZ) to Underperform from Neutral.
Invesco’s fourth-quarter earnings came in at 25 cents per share, 3 cents short of the Zacks Consensus Estimate of 28 cents. However, this compares favorably with the earnings of 8 cents in the prior-year quarter. The year-over-year increase in Invesco’s earnings was due primarily to a 17.9% increase in operating revenues, partially offset by a 6.8% increase in operating expenses.
Though the economy is showing signs of recovery, the turmoil in the financial markets is expected to continue, a situation that may cap the upward potential of the share price in the near-to-medium term. We saw some effects of the turmoil during the last few quarters as redemptions increased. Though the equity markets are showing signs of improvement, the recent volatility in the market is expected to mar investors’ confidence. So we don’t expect any significant improvement in net flows in the near future.
Also, while management is optimistic about the future of Invesco’s stable value business, we think the company could again experience a significant outflow of stable value. Also, a significant portion of the company’s business and total assets under management (AUM) are based outside the U.S. The volatility of the U.S. dollar against other transacted currencies had a negative impact on the financials. For Invesco, the currency impact is expected to vary from period to period.
ConAgra’s Outlook Improves
Recently, ConAgra Foods, Inc. (CAG) discussed its key strategic priorities and also announced its current financial outlook.
ConAgra expects fiscal 2010 EPS to be $1.73, compared to an EPS of $1.42 in fiscal 2009. Annual sales growth is expected in the range of 3% to 4% over the long term and annual EPS growth is expected in the range of 8% to 10%. Return on Invested Capital is expected between 13% and 14% over the long term.
ConAgra also approved a $500 million share repurchase authorization with no expiration date. This reflects the company’s strong cash position and positive cash flow outlook. ConAgra plans to repurchase its shares periodically, depending on market conditions and other factors, and may do so in the open market or through privately negotiated transactions. The company expects this to be a multi-year program.
The company has significant potential, based on the improvements in its supply chain, sales execution, marketing, and innovation capabilities.
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