The Zacks Analyst Blog Highlights: Edison International, McGraw-Hill, Quicksilver Resources, Linn Energy and Forest Oil

    The Zacks Analyst Blog Highlights: Edison International, McGraw-Hill,
              Quicksilver Resources, Linn Energy and Forest Oil

PR Newswire

CHICAGO, March 19, 2013

CHICAGO, March 19, 2013 /PRNewswire/ -- 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 Edison International (NYSE:EIX),
McGraw-Hill Companies Inc. (NYSE:MHP), Quicksilver Resources Inc. (NYSE:KWK),
Linn Energy LLC (Nasdaq:LINE) and Forest Oil Corp. (NYSE:FST).

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Here are highlights from Monday's Analyst Blog:

Edison Int'l Retained at Outperform

On Mar 14, we retained our Outperform recommendation on Edison International
(NYSE:EIX) following its fourth-quarter results, where reported numbers
comfortably beat the Zacks Consensus Estimates. This diversified utility
presently carries a Zacks Rank #2 (Buy).

Why the Reiteration?

Edison International's fourth-quarter 2012 adjusted earnings of $1.76 per
share beat both the Zacks Consensus Estimate of $1.06 and year-ago quarterly
earnings of 75 cents per share.

Following the release of the fourth-quarter results, the Zacks Consensus
Estimate for 2013 has gone up 7.3% to $3.51 per share as 4 of 7 estimates
moved north. Moreover, the Zacks Consensus Estimate for 2014 has also
increased 4.7% to $3.59 per share as 4 of 11 estimates were raised.

With its strong portfolio of regulated utility assets and well-managed
merchant energy operations, Edison International presents a lower risk profile
compared to its utility-only peers. With a forward-looking regulatory backup
allowing the utility to file its General Rate Cases for three years, Southern
California Edison has witnessed a sharp rise in its regulated rate base in
recent times. Over the past five years, the regulators allowed rate base of
the utility to grow by a CAGR of approximately 11%.

In Dec 2012, the company raised its annual dividend from $1.30 per share to
$1.35 per share. This comes to a very competitive dividend yield of
approximately 2.87%. Going forward, with the management targeting to dish out
45% 55% of Southern California Edison's earnings as dividend, we see ample
scope for dividend appreciation.

Edison Mission Group's future growth will come from improved performance in
unregulated power generation and energy trading, higher price realizations,
upcoming wind projects and a strong balance sheet with no significant
near-term maturities.

Nat Gas Supplies Now Under 2 TCF

The U.S. Energy Department's weekly inventory release showed a
larger-than-expected decrease in natural gas supplies on account of cold
temperatures across the Midwest and Northeast parts of the country. Despite
this drawdown, gas stocks continue to remain bloated, reflecting low demand
amid robust onshore output.

About the Weekly Natural Gas Storage Report

The Weekly Natural Gas Storage Report – brought out by the Energy Information
Administration (EIA) every Thursday since 2002 – includes updates on natural
gas market prices, the latest storage level estimates, recent weather data and
other market activities or events.

The report provides an overview of the level of reserves and their movements,
thereby helping investors understand the demand/supply dynamics of natural
gas. It is an indicator of current gas prices and volatility that affect
businesses of natural gas-weighted companies and related support plays.

Analysis of the Data

Stockpiles held in underground storage in the lower 48 states fell by 145
billion cubic feet (Bcf) for the week ended Mar 08, 2013, higher than the
guided range (of 133–137 Bcf drawdown) as per the analysts surveyed by Platts,
the energy information arm of McGraw-Hill Companies Inc. (NYSE:MHP).

The decrease represents the 16th withdrawal of the 2012-2013 winter heating
season after stocks hit an all-time high in early November last year.
Moreover, the draw was significantly higher than both the last year's
withdrawal of 66 Bcf and the five-year (2008–2012) average reduction of 74 Bcf
for the reported week.

Following the past week's reduction, the current storage level – at 1.938
trillion cubic feet (Tcf) – is down 440 Bcf (18.5%) from the last year but is
still 198 Bcf (11.4%) above the five-year average.

In fact, natural gas inventories in underground storage have persistently
exceeded the five-year average since late Sep 2011 and ended the usual summer
stock-building season of April through October at a record 3.923 Tcf (as of
Oct 31, 2012).

A supply glut kept the natural gas prices under pressure during the couple of
years or so, as production from dense rock formations (shale) – through novel
techniques of horizontal drilling and hydraulic fracturing – remain robust,
thereby overwhelming demand.

However, with the U.S. winter colder than the unusually warm last one, we are
experiencing some balancing of the commodity's supply/demand disparity on the
back of its more normalized use for space heating by residential/commercial
consumers.

This, in turn, could improve the prices and buoy natural gas producers,
particularly smaller players like Quicksilver Resources Inc. (NYSE:KWK), Linn
Energy LLC (Nasdaq:LINE) and Forest Oil Corp. (NYSE:FST). With an improvement
in the companies' ability to generate positive earnings surprises, they can
then move higher from their current Zacks Rank #3 (Hold).

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