Interactive Brokers Group, Regions Financial, Microsoft, Ryanair Holdings and AerCap Holdings highlighted as Zacks Bull and Bear of the Day - Press Releases
For Immediate Release
Chicago, IL – January 27, 2015– Zacks Equity Research highlights Interactive Brokers Group Inc. (IBKR-Free Report) as the Bull of the Day and Regions Financial Corporation (RF-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Microsoft (MSFT-Free Report), Ryanair Holdings plc (RYAAY-Free Report) and AerCap Holdings N.V. (AER-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Higher market volatility seen this year bodes well for investment brokers’ market making business. Further Interactive Brokers has been witnessing strong growth in its brokerage business with its better-than-peer positioning and adoption of latest technology.
The management believes that they will be able to attract more accounts in the aftermath of Swiss National Bank’s action as customers realize the importance of being with a well-capitalized broker. Their customers’ suffered losses (in excess of deposits) were about $120 million, or 2.3% of their total equity capital.
Headquartered in Greenwich, CT, Interactive Brokers Group Inc. (IBKR-Free Report) is currently the largest electronic broker in the U.S., as measured by revenue trades. They provide electronic access to stocks, options, futures, forex, bonds, funds, ETFs and CFDs from a single IB Universal Account.
They started as a market maker in 1977 and launched their brokerage business in 1993. Currently brokerage accounts for about 97% of the group’s revenue. With a highly automated business model, they are able to provide access to more than 100 markets in 24 countries and generate about $1.2 million in revenue per employee. Their commissions and financing rates are among the lowest in the group of major brokers.
The company reported its fourth quarter results on January 20. Overall operating metrics showed improvement across all major product types versus the previous year quarter. Average overall daily trade volume was 1.25 million trades per day, up 22% from the fourth quarter of 2013.
Electronic brokerage recorded solid increases in the number of customer accounts and customer equity. Total and cleared customer daily average revenue trades were both up from the year ago quarter and sequentially.
Adjusted earnings per share of $0.12 per share were much ahead of the Zacks Consensus Estimate of $0.05 per share, thanks to lower expenses. The results, which were 71% higher than the year-ago quarter, benefited from a substantial decline in operating expenses, partially offset by lower revenues.
Bear of the Day:
Based in Birmingham, AL, Regions Financial Corporation (RF-Free Report) is a financial holding company that provides retail and commercial banking, trust, securities brokerage, mortgage and insurance products and services. The bank missed its fourth quarter earnings estimates recently and negative earnings momentum sent the stock to Zacks Rank #5 (Strong Sell).
The bank reported its Q4 2014 results on January 20. Earnings from continuing operations came in at $0.14 per share, missing the Zacks Consensus Estimate by 7 cents.
Lower revenues and higher non-interest expenses contributed to the miss. Lack of improvement in the mortgage market remained a concern for the bank. Growth in loans and deposits were the positives for the quarter. Income from continuing operations available to common shareholders was $198 million in the quarter, down from $233 million reported in the year ago quarter.
Non-interest income was down to $448 million during the quarter from $526 million in fourth quarter of 2013 due to lower mortgage and capital markets income. However, credit metrics recorded a significant improvement during the quarter with non-performing assets as a percentage of loans, declining to 1.28% from 1.74% in the prior-year quarter.
Provision for loan losses was $8 million, down 89.9% year over year. The bank’s energy related exposure was 4.3% of total loans at the end of the quarter. If oil prices stay low, this portfolio may result in losses and require more provisioning.
Analysts have been cutting their estimates for the company after disappointing guidance. Zacks Consensus Estimates for the current and the next year are now $0.81 per share and $0.89 per share respectively, down from $0.86 per share and 0.94 per share, 30 days ago.
Additional content:
Microsoft Beats on Q2 Earnings, Sales
Another top-notch earnings report for Microsoft (MSFT-Free Report) came out after the bell Monday. The world's largest software firm brought in 71 cents per share on revenues of $26.5 billion, topping the estimates of 70 cents and $26.05 billion, respectively. The earnings per share also accounts for a two-cent per share hit on the bottom line on integration and restructuring expenses.
The big story for Microsoft in its fiscal Q2 of 2015 was in its Devices and Consumer segment, the same as the main story in the company's previous quarter: Devices and Consumer revenue grew 8 percent to $12.9 billion for the quarter. Surface Pro 3 sales and those of its accessories rose 24 percent to $1.1 billion. Search advertising was another big grower, up 23 percent in the quarter.
Over the previous four quarters, Microsoft has posted an average positive earnings beat of 7.8 percent, and this success continues on into the company's Q2, even after taking the restructuring charge. CEO Satya Nadella has managed to oversee a nicely prosperous time period for Microsoft, at least thus far at the helm of the company.
Commercial cloud revenue gained 114 percent, resting largely on Office 365 sales, as well as Azure and Dynamic CRM contributions. Its average annual run rate is $5.5 billion.
Analysts had been mixed in their expectations for Microsoft overall for the quarter and for fiscal 2015, helping the company earn a Zacks Rank #3 (Hold). These views stemmed partly from questions arising about Microsoft allowing for free upgrades to Windows 10.
In after-hours trading, Microsoft shares are down roughly 3 percent. The company's conference call is supplying the forecast and outlook for Q3 and beyond. Not including after-market trading, MSFT shares have gained nearly 28 percent year over year.
2 Airline Stocks to Fly on QE in the ECB
The European Central Bank’s (ECB) long-awaited announcement on Thursday to enact bond-purchasing program in order to boost Eurozone’s economy lifted markets. ECB said it will buy bonds worth 60 billion euros a month through a quantitative easing program, starting in March.
The QE program will continue til Sep 2016. The ECB plans to increase money supply by more than 1 trillion euros ($1.16 trillion) by the end of Sep 2016. However, the bank kept interest rates unchanged at 0.05%.
ECB’s monetary stimulus comes at a time when both the World Bank and International Monetary Fund (IMF) have cut their global growth forecasts. The ECB aims at raising Eurozone’s inflation to the targeted 2% by boosting demand for goods and services in the area through increased money supply. According to ECB President Mario Draghi, the QE program “should strengthen demand, increase capacity utilization and support money and credit growth.”
Doubts on Effectiveness
However, it was reported that the central banks of Germany, Netherlands, Austria and Estonia had opposed this bond repurchasing program. These central banks said that they had enough doubts regarding the effectiveness of the program. It has been speculated that while the QE program will boost demand for goods and services in the Eurozone, it will also have a negative impact on the exchange rate of euro against other European currencies.
Denmark’s rate cut for the second time in a week and the Swiss National Bank’s (SNB) decision to withdraw its three-year old policy of pegging Swiss franc against euro signaled jitters about weaker euro.
Moreover, it was mentioned by Draghi that the ECB will carry out only 20% of the bond purchasing. This implies central banks from each member nations will have to take the major burden of the QE program. This raised more doubts about the effectiveness as countries with greater debt will suffer more due to this additional burden.
However, regarding the effectiveness of the bond purchasing, Draghi said: “For growth to pick up... you need structural reforms… It's now up to the governments to implement these structural reforms. The more they do, the more effective will be our monetary policy.”
2 European Airline Stocks to Buy
If the ECB succeeds in increasing demand through this program in the Eurozone, airline services is one of major sectors that may be benefited from this increasing money supply. Moreover, low oil prices will attract more spending from consumers.
Based on the favorable Zacks Rank and strong fundamentals, here are 2 European airline stocks that may benefit from the ECB’s initiative:
Ryanair Holdings plc (RYAAY-Free Report) is engaged in providing airline services in Ireland, the United Kingdom, continental Europe and Morocco. This Zacks Rank #1 (Strong Buy) company, through its website, also provides services including markets accommodation services and travel insurance. The company has it’s headquarter in Swords, Ireland.
Ryanair has solid current quarter EPS growth estimate of 64.7%. The company also has an impressive forward price-to-earnings ratio (PE) of 19.31. The Zacks Consensus Estimate for the current year EPS has been revised 8.5% upward over the last three months.
AerCap Holdings N.V. (AER-Free Report) is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. This Zacks Rank #2 (Buy) company is also involved in providing services such as aircraft management services and performs aircraft and engine maintenance. The company has it’s headquarter in Schiphol, the Netherlands.
Ryanair has strong current quarter EPS growth estimate of more than 100%. The company also has a forward PE ratio of 8.84. The Zacks Consensus Estimate for the current year EPS has been revised 37.5% upward over the last three months.
Bottom Line
Though there is enough doubt regarding the effectiveness of the ECB’s QE program, it is good to see that the central bank at last took a step forward to revive the Eurozone’s economy. As explained above, the airline industry is in a favorable position to take advantage of increasing money supply. Thus one may find it profitable by investing in these stocks.
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