The Zacks Analyst Blog Highlights: American International Group, Baker Hughes,
Transocean, Diamond Offshore Drilling and Ensco
CHICAGO, May 9, 2013
CHICAGO, May 9, 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 American International Group Inc.
(NYSE:AIG), Baker Hughes Inc. (NYSE:BHI), Transocean Ltd. (NYSE:RIG), Diamond
Offshore Drilling Inc. (NYSE:DO) and Ensco plc (NYSE:ESV).
Get the most recent insight from Zacks Equity Research with the free Profit
from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Wednesday's Analyst Blog:
S&P Lifts AIG's P&C Unit
Standard & Poor's Ratings Services (S&P) has upgraded the financial strength
of American International Group Inc.'s (NYSE:AIG) property & casualty (P&C)
segment, formerly known as Chartis Group. The elevation acknowledges the
segment's improved operating leverage.
Accordingly, S&P has lifted the long-term counterparty credit rating and
financial-strength rating (FSR) of AIG P&C from "A" to "A+", which is the 5^th
highest position on the rating table. This marks the first upgrade since 2008.
Additionally, the ratings agency affirmed its "A+" rating on AIG life and
retirement services' segment. AIG's senior debt remains pegged at "A-". All
the ratings carry a stable outlook.
AIG has come a long way post its financial crisis, according to S&P. The full
repayment of the government bailout loan has injected financial flexibility
into the company and helped management concentrate completely on generating
higher operating leverage. Meanwhile, asset disposals in the last few years
have left AIG with a focused core-business portfolio, thereby strengthening
its competitive leverage.
Core operations' growth on track
AIG's life insurance and retirement service operations have been improving on
account of stability in surrender activity along with recoupment of higher
investment returns, aided by improved base yields due to the recovery in the
financial market over the past couple of years. Although the low rate
environment limits the desired upside, this segment has the potential to
generate higher earnings.The segment's pre-tax earnings escalated about 82%
year over year to $1.57 billion in the first quarter of 2013, while it rose
28% to $3.78 billion in 2012 from $2.96 billion in 2011.
Further, the ratings agency remains confident of AIG's P&C business based on
its strong brand name, underwriting capability and global expansion of a
multilateral product portfolio. The company repositioned its P&C portfolio to
strengthen its underwriting capacities, whereas the ongoing restructuring and
re-pricing initiatives will likely drive earnings growth in the near future.
The pre-tax income further surged about 76% year over year to $1.6 billion in
the first quarter of 2013, generating $231 million in underwriting income
against a loss of $180 million in the year-ago quarter along with an improved
Nat Gas Rig Count at 18-Year Low
In its weekly release, Houston-based oilfield services company Baker Hughes
Inc. (NYSE:BHI) reported a rise in the U.S. rig count (number of rigs
searching for oil and gas in the country). This upside can be mainly
attributed to an increase in the tally of oil-directed rigs, partially offset
by lower natural gas rig count that fell to its lowest level in nearly 18
The Baker Hughes' data, issued since 1944, acts as an important yardstick for
drilling contractors like Transocean Ltd. (NYSE:RIG), Diamond Offshore
Drilling Inc. (NYSE:DO), Ensco plc (NYSE:ESV), etc. in gauging the overall
business environment of the oil and gas industry.
Analysis of the Data
Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled
1,764 for the week ended May 3, 2013. This was up by 10 from the previous
week's rig count and indicates the first increase in 3 weeks.
The current nationwide rig count is more than double the lowest level reached
in recent years (876 in the week ended Jun 12, 2009), though it is way below
the prior-year level of 1,965. It rose to a 22-year high in 2008, peaking at
2,031 in the weeks ending Aug 29 and Sep 12.
Rigs engaged in land operations ascended by 9 to 1,690, offshore drilling was
up by 2 to 51 rigs, while inland waters activity decreased by 1 to 23 units.
Natural Gas Rig Count: Natural gas rig count decreased for the second time in
as many weeks to 354 (a drop of 12 rigs from the previous week). As per the
most recent report, the number of natural gas-directed rigs is at their lowest
level since Jun 16, 1995 and is down 56% from its 2012 peak of 811.
The current natural gas rig count remains 78% below its all-time high of 1,606
reached in late summer 2008. In the year-ago period, there were 606 active
natural gas rigs.
Oil Rig Count: The oil rig count – that rocketed to a 25-year high of 1,432 in
Aug last year – jumped by 22 to 1,403. The current tally is well above the
previous year's rig count of 1,355. It has recovered strongly from a low of
179 in Jun 2009, rising 7.8 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for
geothermal energy) at 7 remained unchanged from the previous week.
Rig Count by Type: The number of vertical drilling rigs rose by 4 to 475,
while the horizontal/directional rig count (encompassing new drilling
technology that has the ability to drill and extract gas from dense rock
formations, also known as shale formations) was up by 6 to 1,289. In
particular, horizontal rig units – that reached an all-time high of 1,193 in
May 2012 – rose by 8 from the last week's level to 1,092.
Zacks Rank: As of now, Transocean, Diamond Offshore and Ensco are all Zacks
Rank #3 (Hold) stocks, implying that these are expected to perform in line
with the broader U.S. equity market over the next one to three months.
Want more from Zacks Equity Research? Subscribe to the free Profit from the
Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative
analysis to help investors know what stocks to buy and which to sell for the
Continuous coverage is provided for a universe of 1,150 publicly traded
stocks. Our analysts are organized by industry which gives them keen insights
to developments that affect company profits and stock performance.
Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the
latest analysis from Zacks Equity Research. Subscribe to this free newsletter
Zacks.com is a property of Zacks Investment Research, Inc., which was formed
in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in
stock market data that would lead to superior investment results. Amongst his
many accomplishments was the formation of his proprietary stock picking
system; the Zacks Rank, which continues to outperform the market by nearly a 3
to 1 margin. The best way to unlock the profitable stock recommendations and
market insights of Zacks Investment Research is through our free daily email
newsletter; Profit from the Pros. In short, it's your steady flow of
Profitable ideas GUARANTEED to be worth your time! Register for your free
subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance
numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook:
Disclaimer: Past performance does not guarantee future results. Investors
should always research companies and securities before making any investments.
Nothing herein should be construed as an offer or solicitation to buy or sell
Zacks Investment Research
800-767-3771 ext. 9339
SOURCE Zacks Investment Research, Inc.
Press spacebar to pause and continue. Press esc to stop.