The Zacks Analyst Blog Highlights: National Oilwell Varco, Brinker
International, Bank of America, JPMorgan Chase and Wells Fargo
CHICAGO, May 16, 2013
CHICAGO, May 16, 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 National Oilwell Varco Inc.
(NYSE:NOV), Brinker International Inc. (NYSE:EAT), Bank of America Corporation
(NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Company
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Here are highlights from Wednesday's Analyst Blog:
National Oilwell Varco Down to Strong Sell
On May 15, Zacks Investment Research downgraded oilfield services behemoth,
National Oilwell Varco Inc. (NYSE:NOV), to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
National Oilwell has witnessed sharp downward estimate revisions after
reporting disappointing first-quarter 2013 results.
On Apr 26, 2013, National Oilwell reported first-quarter earnings per share
(excluding transaction costs) of $1.29, missing the Zacks Consensus Estimate
by 8 cents and the year-ago adjusted earnings by 15 cents. The result was
affected by lower operating margin in all its segments.
Following the weaker-than-expected earnings announcement, the Zacks Consensus
Estimate for the second quarter of 2013 has moved down by 12 cents (or 8.2%)
to $1.34 per share over the last 30 days. For the full year also, most of the
estimates (15 out of 17) were revised downward over the same timeframe,
pulling down the Zacks Consensus Estimate by 7.8% to $5.65 per share.
Brinker Prices Notes Worth $550M
Brinker International Inc. (NYSE:EAT), a leading casual dining restaurant
chain, has recently announced the pricing of notes aggregating $550 million.
These notes have been issued in two tranches of different amounts, with
varying interest rates and maturities.
The first tranche of $250 million, carrying an interest rate of 2.600%, will
mature in 2018, while the second tranche of $300 million, having an interest
of 3.875% is due in 2033.
The offering involves a consortium of renowned banks acting as the joint
book-running managers. These include Merrill Lynch – a subsidiary of Bank of
America Corporation (NYSE:BAC), Pierce, Fenner & Smith Incorporated, and J.P.
Morgan Securities LLC – a wing of JPMorgan Chase & Co. (NYSE:JPM).
Additionally, Wells Fargo Securities, LLC – a unit of Wells Fargo & Company
(NYSE:WFC), Regions Securities LLC and Mitsubishi UFJ Securities (USA), Inc.
will serve as co-managers.
Brinker stated that a portion of the transaction proceeds would be used to
repurchase its outstanding 5.75% notes due to mature in 2014. However, this
note repurchase will result in the reduction of the fourth quarter fiscal 2013
earnings by 14 cents as it will be impacted by the short overlap period during
which the new debt has already been taken and the old one not yet repurchased.
The rest of the net proceeds will be used for general corporate purposes,
share repurchases and repayment of existing debt.
Brinker, with its formidable portfolio, remains one of the most recognized
restaurant chains in the casual dining segment. Besides note repurchase, the
company has been consistently returning value to its shareholders by share
buyback. In addition, the company boasts a solid cash position by regularly
paying dividends. In the recently reported third-quarter fiscal 2013, the
company spent $14.7 million on dividends and used $60.4 million to repurchase
its common stocks.
Brinker reported third-quarter fiscal 2013 adjusted earnings of 72 cents per
share, beating the Zacks Consensus Estimate by 4.3%. The earnings were also up
20% from the year-ago quarter, driven by the company's higher margins. Brinker
had $677.3 million in long-term debt and cash and cash equivalents of $85.7
million on its balance sheet. Currently, the company's debt-to-total
capitalization ratio is 73.4%.
This public offering will enable the company to attain financial flexibility
and position Brinker favorably to pursue investment opportunities and
acquisitions, which will go a long way toward enhancing its top-line growth.
It will also bring down the company's cost of capital, further strengthening
its balance sheet and supporting its future growth.
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