For Immediate Release
Chicago, IL – February 7, 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 Barclays PLC (BCS), UBS AG (UBS), Bank of America Corporation (BAC), JPMorgan Chase & Co. (JPM) and 3M Company (MMM).
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Here are highlights from Wednesday’s Analyst Blog:
Barclays Raises Provisions
London-based Barclays PLC (BCS) has kept aside an additional £1.0 billion ($1.6 billion) to meet the litigation expenditure pertaining to the dubious sale of financial products. The banking giant is under tremendous pressure from the British authorities over its scandalous activities.
Out of the amount, nearly £600 million is likely to be used for settling claims related to the sale of payment protection insurance (:PPI), taking the total PPI provision to £2.6 billion. The remaining £400 million is set aside for resolving claims linked to the sale of interest rate swaps, bringing the total provision for swaps to £850 million.
Barclays has been flooded with compensation demands as most of the customers allege that the financial products were sold to them forcefully. For instance, PPI – an insurance product – were sold to customers as a means to keep paying their loans, mortgages, and credit card obligations in case they took ill or were unemployed. However, customers who bought it claim that the insurance was inappropriate and useless.
The doubtful sale of the complex financial products is not the only scandal faced by Barclays. In 2012, the company reached a $453 million settlement with both British and U.S. regulatory bodies over the manipulation of the London Interbank Offered Rate or LIBOR.
Similar to Barclays, another European bank namely UBS AG (UBS) conceded to paying a penalty of CHF 1.4 billion ($1.5 billion) to the U.S., U.K. and Swiss authorities to resolve charges against the bank for its involvement in LIBOR rigging. The regulatory authorities are also investigating Bank of America Corporation (BAC) and JPMorgan Chase & Co. (JPM) among others over their alleged involvement in the rate manipulation.
Barclays is striving hard to come out of the series of financial controversies it had been involved in. The company is likely to announce restructuring initiatives along with its fourth-quarter earnings on Feb 12. It is probable that the company could retrench around 2,000 employees. Moreover, the CEO has let go off his bonus for the past one year.
The Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) for the company is 0.00%. This, coupled with its Zacks Rank #4 (Sell), indicates that the company may miss the Zacks Consensus Estimate for the fourth quarter.
3M Hikes Dividend Payout
Diversified technology conglomerate 3M Company (MMM) has recently increased its dividend payout by 7.6% year over year to a quarterly payment of 63.5 cents per share or $2.54 on an annualized basis. The first quarter 2013 dividend is payable on Mar 12 to shareholders of record as of Feb 15.
The current dividend hike is the 55th consecutive annual dividend increase for the company and the 99th uninterrupted yearly dividend payment. Based on the closing price of $101.49 as of Feb 4, 2013, the proposed dividend affirms a yield of 2.50%.
In addition, 3M also authorized a new share repurchase program, whereby it could repurchase shares worth $7.5 billion over a period of time. At year-end 2012, the company had approximately 687 million shares outstanding.
3M has consistently returned significant cash to its shareholders. The company had reportedly returned $32 billion to its shareholders in the last 10 years through a combination of dividends and share repurchase transactions, accounting for about 89% of the reported net income.
The recent dividend hike follows strong quarterly and annual results that helped the company to reiterate its earlier guidance for full year 2013 with an organic local-currency sales growth of 2%-5%. 3M delivered record fourth quarter 2012 sales with an improved performance by almost all the segments, except Safety, Security and Protection Services segment. For full year 2012, 3M also reported record total sales of $29.9 billion compared to $29.6 billion in 2011.
The company also has a healthy liquidity position. Cash and cash equivalents at year-end 2012 were relatively strong at $2.9 billion, while free cash flow for the three-month period was stable at $1.2 billion.
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