For Immediate Release
Chicago, IL – December 18, 2012 – Zacks Equity Research highlights Badger Meter (BMI) as the Bull of the Day and Cliffs Natural Resources (CLF) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Liberty Global Inc. (LBTYA), Virgin Media Inc. (VMED) and BT Group plc. (BT).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Badger Meter (BMI) reported earnings of $0.62 in the third quarter of 2012 and revenues of $87 million, up 35% and 25%, respectively. Both outpaced the respective Zacks Consensus Estimates. The acquisitions of Racine Federation, Cox Flow Measurement and Remag are expected to boost the company's flow measurement business globally.
The acquisitions broadened the company's product range and customer base for Badger Meter. The company will continue to benefit from the customers preference for the cost effective AMR technology as well as growing interest in AMA. Furthermore, buoyed by its strong balance sheet and healthy cash flows, Badger Meter can invest in growth opportunities, develop new products and return cash to shareholders.
Based on these positives, we have upgraded our recommendation from Neutral to Outperform on Badger Meter with a target price of $55.00. This target price, 27.1x our 2012 EPS estimate, reflects our view.
We are downgrading our rating on Cliffs Natural Resources (CLF) to Underperform following its lackluster third-quarter 2012 results. Earnings fell well short of the Zacks Consensus Estimate while profit slid roughly 86% on account of lower iron ore pricing and higher costs. Revenues declined at a double-digit clip and missed the Zacks Consensus Estimate.
The company cut its U.S. iron ore and North American coal sales volume forecasts for 2012 factoring in the volatile pricing environment. Cliffs remains hamstrung by lower iron ore pricing, partly due to the slowdown in Chinese demand and oversupply in the industry.
The prices for commodities are expected to remain under pressure due to the uncertain economic environment. The company also contends with higher labor and mining costs.
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Liberty Global to Buyback Shares
In an attempt to enhance shareholder return, Liberty Global Inc. (LBTYA), one of the largest triple play cable operators in the international market, has declared the authorization of a share repurchase program worth $1 billion. The company intends to spend the proceeds in different periods of 2013.
At the end of the third quarter of 2012, Liberty Global had $4,294.5 million of cash and marketable securities on its balance sheet. However, the company had $26,461.5 million of outstanding debt, which translates into higher interest payments, thereby reducing the bottom line and earnings per share. The share repurchase activity will not only fuel the company’s earnings per share but will also boost its share price.
Under the new $1-billion share buyback plan, the Englewood, Colorado-based company plans to buy back its different class of shares, which includes Series A, Series C or a combination of both type during 2013.
The stock repurchase program may be done through open market transaction or through privately-negotiated deals, which may include derivative transactions. Nevertheless, the share buyback timing will depend on market condition.
During 2012, Liberty Global repurchased shares worth $925 million, bringing the total amount of share brought to $9 billion since the commencement of the program in 2005. This reflects the company’s consistent effort to boost the return to its shareholders.
Though the company has declared weak third-quarter 2012 financial results, its losses narrowed considerably compared to prior-year quarter. Moreover, deployment of high-speed DOCSIS 3.0 network has facilitated the company to compete with Virgin Media Inc. (VMED) and BT Group plc. (BT), and has also led to an increase in revenue. We believe these factors along with a strong liquidity position have stimulated the buyback decision.
We maintain our long-term Neutral recommendation on Liberty Global. Currently, it has a Zacks #3 Rank, implying a short term Hold rating.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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