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The Zacks Analyst Blog Highlights: Cincinnati Financial, Dril-Quip, BP, Stone Energy and Linn Energy

Zacks Equity Research

For Immediate Release
Chicago, IL – October 24, 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 the Cincinnati Financial Corp. ( CINF- Free Report), Dril-Quip Inc. ( DRQ- Free Report), BP plc ( BP- Free Report), Stone Energy Corp. ( SGY- Free Report) and Linn Energy LLC ( LINE- Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .

Here are highlights from Wednesday’s Analyst Blog:

Can Cincinnati Financial Keep Its Streak Alive?
We expect property and casualty insurer Cincinnati Financial Corp. ( CINF- Free Report) to beat expectations when it reports third quarter 2013 results on Oct 24.
Why a Likely Positive Surprise? 
Our proven model shows that Cincinnati Financial is likely to beat earnings because it has the right combination of two key ingredients. 
Positive Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 10.91%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank #1 (Strong Buy): Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  
The combination of Cincinnati Financial’s Zacks Rank # 1 (Strong Buy) and 10.91% ESP makes us very confident in looking for a positive earnings beat on Oct 24th. 
What is Driving the Better Than Expected Earnings?
Numerous strategic growth initiatives undertaken by Cincinnati Financial in the commercial as well as excess and surplus line of business along with a gradually improving insurance market is expected to aid earnings 
Management is appointing agencies and expanding product offerings to compensate the decline in businesses. 
Cincinnati Financial delivered positive surprises in the last four quarters with the highest surprise coming at 122% in the fourth quarter of 2012. The positive earnings surprise was driven by increase in premium and new agency appointments. 
Dril-Quip, BP in 5-Year Pact
Dril-Quip Inc. ( DRQ- Free Report) has awarded a five-year global frame agreement to BP International Limited, a subsidiary of BP plc ( BP- Free Report).

The pact between the two parties relates to the supply of subsea wellhead equipment and related services by BP.  The contract states the terms and conditions for worldwide call-off orders placed by BP for Dril-Quip's Big Bore II-H series subsea wellhead systems.  Orders already placed by BP this year will also be administered by the terms stipulated in this contract.

Under the contract, subsequent orders will be treated as part of Dril-Quip's backlog. BP holds an option on the basis of which the contract can be extended for five years.

Dril-Quip manufactures highly engineered offshore drilling and production equipment for deepwater severe-service applications and harsh environmental conditions. The company designs and manufactures subsea and surface wellheads, subsea and surface production trees, mudline hanger systems, specialty connectors, and associated pipe, drilling and production riser systems, wellhead connectors and diverters, which are used in offshore rig equipment.

The company’s products are used by major integrated, large independent and foreign national oil and gas companies in offshore areas throughout the world. Dril-Quip also provides installation and reconditioning services and rents tools for use in the installation and retrieval of its products.

A sequential increase in Dril-Quip’s backlog and its debt-free balance sheet position it favorably. We also expect large orders in 2013 from the Gulf of Mexico and Brazil, with rising demand and activity levels in these regions. This gives it the financial flexibility to take advantage of growth opportunities while returning capital to shareholders.

Dril-Quip carries a Zacks Rank #3 (Hold). However, Zacks Ranked #1 (Strong Buy) stocks – Stone Energy Corp. ( SGY- Free Report) and Linn Energy LLC ( LINE- Free Report) – are good buying options for the short term.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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