The Zacks Analyst Blog Highlights: Calgon Carbon, NVR, Lennar, PulteGroup and D.R. Horton
For Immediate Release
Chicago, IL – August 1, 2013– 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 Calgon Carbon Corporation (CCC-Free Report), NVR, Inc. (NVR-Free Report), Lennar Corporation (LEN-Free Report), PulteGroup Inc. (PHM-Free Report), and D.R. Horton, Inc. (DHI-Free Report).
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Here are highlights from Wednesday’s Analyst Blog:
Calgon Carbon (CCC) Upped to Strong Buy
On Jul 30, Zacks Investment Research upgraded pollution control company Calgon Carbon Corporation (CCC-Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Calgon Carbon delivered impressive first-quarter 2013 results on May 6. The company has delivered positive earnings surprises in the last 2 of the 4 quarters with an average beat of 0.18%.
Calgon Carbon reported first quarter earnings of $0.18 per share, up roughly 29% from $0.14 per share in the year-ago quarter, exceeding the Zacks Consensus Estimate of $0.15.
Calgon Carbon remains confident in its ability to balance the need for future investment with responsibility to provide short-term returns. The company continues to focus on ballast water treatment, reactivation services and mercury removal as its basis for sustainable growth. It remains actively focused on improving margins across all regions.
Calgon Carbon continues to make research and development expenditures related to its advanced products aimed at significantly reducing the amount of powdered activated carbon (PAC) required for mercury removal from coal-fired power plant flue gas as compared to competing products.
Calgon carbon plans to continue increasing its presence throughout the world. The company completed the acquisition of Calgon Carbon Japan KK in 2011, thereby strengthening its position in the second largest carbon consuming market globally. The company is also beginning to expand its operations in both Mexico and South America.
Calgon Carbon has embarked on aggressive cost reduction initiatives to boost margins. The company’s cost improvement program, which includes consolidation of operations and headcount reductions, is expected to offer savings in raw material costs, warehousing, transportation and personnel expenses, among others. The company has already completed the first phase of this process and will continue to implement the second phase of its cost reduction program which specifically targets margin improvements.
NVR Enhances Shareholder Value
The share buyback program helps the company reduce outstanding share count, thereby increasing earnings per share and return on equity. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price and reflect the company’s confidence in its fundamentals.
The company, which builds homes under trade names such as Ryan Homes and Fox Ridge Homes, posted earnings growth of 13% to $10.11 per share in the second quarter of 2013. The earnings upside was backed by top-line growth, which was fueled by the favorable situation in the housing market. However, earnings missed the Zacks Consensus Estimate of $12.38 per share.
Consolidated revenues increased 31% to $1 billion in the quarter driven by homebuilding revenues. It also beat the Zacks Consensus Estimate of $988 million. The company witnessed solid growth in new orders and backlog of homes sold in the second quarter. Though the cancellation rate of 13.8% improved from 16.3% last year, it performed poorly from 13.2% in the first quarter of 2013.
The rising demand for new homes has led to a favorable situation in the housing market, where inventory levels are dropping and prices are moving up. Ryland, like other homebuilders such as Lennar Corporation (LEN-Free Report), PulteGroup Inc. (PHM-Free Report), and D.R. Horton, Inc. (DHI-Free Report), has been gaining momentum from the strong recovery of the U.S. housing market. Recent comments by Federal Reserve Chairman Ben Bernanke to keep interest rates low for some time provided further momentum to the stock and the housing industry, in general.
It is also seen that the demand for luxury homes is very high. Therefore adequate product introduction is necessary in order to maintain the required level of inventory to meet the growing demand for homes. We like NVR’s initiative to constantly introduce new products. With frequent introduction of products, NVR will be able to capitalize on the improving housing market. However, we would prefer to stay on the sidelines as the housing market is still in the recovery stage and the rest of the macroeconomic parameters are on a slow growth trajectory. NVR holds a Zacks Rank #3 (Hold).
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