For Immediate Release
Chicago, IL – November 8, 2013 – Zacks Equity Research highlights Aspen Insurance Holdings (AHL-Free Report) as the Bull of the Day and Altera Corporation (ALTR-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Priceline.com (PCLN-Free Report), Groupon (GRPN-Free Report) and Vulcan Material Company (VMC-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
With excellent underwriting results and solid investment portfolio returns, this P&C insurer and reinsurer has been consistently delivering positive earnings surprises.
Founded in 2002 and based in Hamilton, Bermuda, Aspen Insurance Holdings (AHL-Free Report) is a global insurance and reinsurance company. It operates through wholly-owned subsidiaries and offices in Bermuda, France, Germany, Ireland, Singapore, Switzerland, the United Kingdom and the United States.
The company is rated ‘A (Strong)’ by S&P, ‘A (Excellent)’ by AM Best and ‘A2 (Good)’ by Moody’s.
Aspen reported its Q3 results on October 30, 2013. Net operating income for the quarter came in at $1.05 per share, handily beating the Zacks Consensus Estimate of $0.80 per share by 31.2%. However, the results fell short of the year-ago quarter number by 21.6%.
Insurance segment had an excellent performance with gross written premiums of $362.1 million, up 21.1% from the third quarter of 2012.
During the quarter, the insurer grew diluted book value per share by 4% to $40.43 and delivered an annualized operating return on equity of 10.8%. The management continues to expect to achieve an operating ROE of 10% in 2014.
As a result of continued solid performance, the Zacks Consensus Estimate for 2013 has increased has increased to $3.38 per share, from $2.98 per share, 60 days ago.
Bear of the Day:
Altera Corporation (ALTR-Free Report) designs, manufactures, and markets a broad range of high-performance, high-density Programmable Logic Devices (PLDs) and associated development tools.
Headquartered in San Jose, California, Altera combines the programmable logic technology (originally invented in 1983) with software tools and intellectual property to provide high-value programmable solutions to over 13,000 customers through direct sales force and distributors.
The company has been publicly traded since 1988 and employs approximately 2,600 employees worldwide.
Altera’s customers are large multi-national corporations as well as small companies in communications, computer and storage, industrial, and consumer market segments.
The company reported its third quarter results on October 23, 2013. Sales for the quarter came in at $445.9 million, up 6% from the second quarter of 2013 but down 10% from the third quarter of 2012.
Net income for the quarter was $119.4 million, $0.37 per share, compared $0.31 per share, in the previous quarter and $0.49 per share, in the same quarter of 2012.
Big Beat for Priceline, Mixed at Groupon
Two major ecommerce players released Q3 earnings results after the closing bell Thursday: Priceline.com (PCLN-Free Report) posted a big beat on both top and bottom lines, whereas Groupon (GRPN-Free Report) topped earnings estimates but came well short of sales expectations. In after-market trading, Priceline shares are up 1.5% thus far while Groupon is tanking, down 10%.
Priceline had actually seen a big sell-off in the regular Thursday market, down 3.3% ahead of the earnings announcement. Whether there was anticipation of a big miss is hard to tell, but considering Priceline had posted positive earnings surprises in now at least five straight quarters, it's difficult to imagine this would be a natural assumption. Priceline's stock had risen roughly 70% year-to-date before Thursday's bear run, so perhaps pocketing profits became the thing to do.
Groupon, on the other hand, is down big after its revenue miss in its Q3. This is typical of the online discount deals provider -- when the company beats expectations you see a big swing up in the after-market, but when it misses -- as it has now in two of the past four quarters -- you always see a pretty significant sell-off.
On a GAAP basis, Groupon posted earnings per share of $0.00, beating the Zacks Consensus Estimate of -$0.02. But the company only managed $595 million in sales for the quarter, significantly down from the $614 million expected. With strong efforts being made into the inroads of the mobile app business -- which makes perfect sense for Groupon; many of its customers use the service upon impulse when on the go -- analysts had thought more revenues would have been generated from this growing aspect of its business. Guidance was pretty much in line with the Zacks consensus, though the low end is $20 million under what we were expecting as of today.
Priceline gave earnings guidance a bit higher than what its 8 analysts had been predicting, another sign of good news for the premier online travel booker. In fact, the company has been a model of consistency over the past several quarters, with an average earnings beat of 4.5% over the last 4 quarters. At this time in the after-market, Priceline has already made back its regular day losses.
Success in the ecommerce business is a moving target; it's an exciting place to be, but the trading volume for stocks like Groupon and Priceline can put you on a rollercoaster ride. Currently, both stocks have a Zacks Rank #3 (Hold). We'll look for revisions in the coming days.
Strong Buy on Vulcan
Zacks Investment Research upgraded Vulcan Material Company (VMC-Free Report) to a Zacks Rank #1 (Strong Buy) on Nov 6 on the back of strong third quarter 2013 results.
Why the Upgrade?
On Nov 4, Vulcan Material posted third quarter fiscal 2013 results, beating the Zacks Consensus Estimate on both counts. Adjusted earnings of 32 cents improved significantly from the prior-year quarter earnings of 12 cents on the back of a solid revenue increase in most of the segments. Revenues increased double-digits owing to pricing gains and volume growth.
Improved product demand owing to broad-based recovery in private construction activity, especially residential boosted the top-line performance. Improved demand also favored pricing across most of its markets. Additionally, most of the volume and pricing increase was noted in the aggregates segment.
Gross profit grew 25.3% in the quarter due to solid revenue increase. Adjusted EBITDA increased 17.3% from the prior-year quarter.
With the housing market gaining momentum, demand for Vulcan’s products, both aggregates as well as non-aggregates, is improving. The company expects earnings to improve in the fourth quarter as well on the back of pricing growth, funding stability, aggressive cost control and volume increase.
Most homebuilders believe the housing momentum will continue into 2014. Thus, improving outlook of homebuilders will also benefit companies like Vulcan.
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