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Zacks Analyst Blog Highlights: JP Morgan Chase, U.S. Bancorp, Zions Bancorp, SunTrust Banks and PNC Financial – Press Releases

Zacks Market Commentaries — Tue, 10 Nov 2009 11:45:35 +0000

For Immediate Release

Chicago, IL – November 10, 2009 – 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: JP Morgan Chase (JPM), U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI) and PNC Financial (PNC).

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Here are highlights from Monday’s Analyst Blog:

Bank Failure Tally Reaches 120

The FDIC entered into a purchase and assumption agreement with Ameris Bank, Moultrie, Georgia, to assume all of the deposits of United Security Bank; Liberty Bank and Trust Company, New Orleans, Louisiana, to assume all of the deposits of Home Federal Savings Bank; Alerus Financial, National Association, Grand Forks, North Dakota, to assume all of the deposits of Prosperan Bank; Central Bank of Kansas City to assume all of the deposits of Gateway Bank of St. Louis; and East West Bank, Pasadena, California, to assume all of the deposits of United Commercial Bank.

In order to replenish the declining fund, the FDIC board recently proposed that approximately 8,100 insured U.S. banks and savings institutions should pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government as soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%.  

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $100 billion over the next four years.  

The failure of Washington Mutual last year was the largest in U.S. history. It was acquired by JP Morgan Chase (JPM). Other major acquirers of failed institutions since 2008 include U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC), to name a few.

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Zacks Investment Research

Bank Failure Tally Reaches 120 – Analyst Blog

Zacks Market Commentaries — Mon, 09 Nov 2009 14:00:26 +0000

Regulators shut down 5 more banks in Georgia, Michigan, Minnesota, Missouri and California; tally hits 120 so far this year

U.S. regulators on Friday shuttered five more institutions in Georgia, Michigan, Minnesota, Missouri and California , as the recession continues to take its toll on banks. This takes the total number to 120, compared to 25 in 2008 and 3 in 2007.

As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more failures. However, the regulators are trying to avoid panic by seizing banks slowly. Also, the slow pace of seizing could be a strategy as it is hard to get buyers for so many failed banks.

The failed banks were -- Georgia-based United Security Bank of Sparta with total assets of $157 million and total deposits of approximately $150 million, Michigan-based Home Federal Savings Bank of Detroit with total assets of $14.9 million and total deposits of approximately $12.8 million, Minnesota-based Prosperan Bank of Oakdale with total assets of $199.5 million and total deposits of approximately $175.6 million, Missouri-based Gateway Bank of St. Louis with total assets of $27.7 million and total deposits of approximately $27.9 million and California-based United Commercial Bank of San Francisco with total assets of $11.2 billion and total deposits of approximately $7.5 billion.

Failure of these institutions represents another sizable impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of United Commercial Bank alone is expected to cost the federal deposit insurance fund approximately $1.4 billion. The other failures are expected to cost the deposit insurance fund a combined $132.7 million.  

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of financial institutions failing has significantly stretched the regulator’s deposit insurance fund.

At Jun 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter. However, the FDIC has billions of loss reserves apart from the insurance fund and it can access a Treasury credit line of up to $500 billion.

The FDIC entered into a purchase and assumption agreement with Ameris Bank, Moultrie, Georgia, to assume all of the deposits of United Security Bank; Liberty Bank and Trust Company, New Orleans, Louisiana, to assume all of the deposits of Home Federal Savings Bank; Alerus Financial, National Association, Grand Forks, North Dakota, to assume all of the deposits of Prosperan Bank; Central Bank of Kansas City to assume all of the deposits of Gateway Bank of St. Louis; and East West Bank, Pasadena, California, to assume all of the deposits of United Commercial Bank.

In order to replenish the declining fund, the FDIC board recently proposed that approximately 8,100 insured U.S. banks and savings institutions should pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government as soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%.  

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $100 billion over the next four years.  

The failure of Washington Mutual last year was the largest in U.S. history. It was acquired by JP Morgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC), BB&T Corporation (BBT) and Regions Financial (RF).  

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses due to a significant exposure to collateralized mortgage obligations, commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs.

According to the FDIC, the U.S. banks overall lost $3.7 billion in the second quarter of 2009, compared to a profit of $7.6 billion in the prior quarter. Though there are some signs of economic recovery, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "JPM"
Read the full analyst report on "FITB"
Read the full analyst report on "USB"
Read the full analyst report on "ZION"
Read the full analyst report on "STI"
Read the full analyst report on "PNC"
Read the full analyst report on "BBT"
Read the full analyst report on "RF"
Zacks Investment Research

Celanese Sheds Industrial Specialty – Analyst Blog

Zacks Market Commentaries — Mon, 06 Jul 2009 19:18:47 +0000

The Dallas-based chemical giant Celanese Corp. (CE) recently completed the sale of its polyvinyl alcohol (PVOH) business to Japanese peers Sekisui Chemical Co. The company sold the business for $173 million following an agreement signed in April.

The PVOH business, a part of Celanese's Industrial Specialties segment, produces and sells a broad portfolio of performance chemicals engineered to meet specific customer requirements. The PVOH products are used in paints and coatings, adhesives, building and construction, glass fiber, textiles and paper.

The sale of the PVOH business includes its facilities in Calvert City, Kentucky, Pasadena, Texas, one unit within the complex at Tarragona, Spain, and resources from Celanese's Houston Technology Center. As many as 250 employees located at these operations will be transferred to Sekisui. There will also be long-term supply agreements between both the companies.

The downturn in the global economy and lower demand forced Celanese to reduce its capacities. This is expected to continue through the rest of 2009.

In the first quarter of 2009, Celanese reported a net loss from continuing operations of $20 million or $0.17 per diluted share. Net sales for the quarter declined 38% to $1.15 billion, driven by lower volumes on continued weak global demand and lower pricing for acetyl products.

In light of the above conditions, we continue to recommend CE as Sell with a target price of $16.00.

Read the full analyst report on "CE"
Zacks Investment Research

Real Estate Investment (Dis)Trusts

Contrarian Profits — Thu, 11 Jun 2009 15:18:02 +0000

p class="MsoNormal"I’m confident that the trend for REITs will be down through the end of 2009. That’s why I suggest buying the UltaShort Real Estate ProShares ETF strong(NYSE: /strongstronga href="http://www.google.com/finance?q=NYSE:SRS"SRS/a/strongstrong. Current price $18.52)/strong as a way to profit from weakness in the REIT sector. But fasten your seatbelt! SRS will be volatile!/p p class="MsoNormal"REITs may appear cheap, but they are very dangerous to hold right now. A basic tenet of corporate finance is that a company or a sector is only creating value for shareholders if its return on invested capital (ROIC) exceeds its weighted average cost of capital (WACC). If its WACC exceeds its ROIC, it is destroying value. This describes the situation facing the REIT sector for the next few years./p p class="MsoNormal"Most REITs cannot float#8230;/p

Real Estate Investment (Dis)Trusts

Contrarian Profits — Thu, 11 Jun 2009 15:18:02 +0000

US Recession Sees Return of ‘Flash Mountain’

Contrarian Profits — Wed, 20 May 2009 19:56:19 +0000

p The toxic tentacles of recession seem to extend into every imaginable - and unimaginable - pocket of the economy. As these tentacles release their toxins, the resulting distress affects both individuals and industries alike, often in ways we might not have imagined in advance. But so too do recessions impart the occasional surprising benefit. Our advice: Enjoy the benefits when and where you can because this recession is likely to get much worse before it gets better./p p“Call it an unexpected consequence of the bad economy,” the LA Times remarks. “A recent round of staff reductions at Disneyland could result in the return of embarrassing episodes of public nudity at the Happiest Place on Earth./p p“Back in 1997, a front-page story in#8230;/p

Double and Triple-Profit Ideas For 2009

Contrarian Profits — Fri, 19 Dec 2008 20:35:29 +0000

pstrongQuote of the week/strong: emI stopped believing in Santa Claus when I was six. Mother took me to see him in a department store and he asked for my autograph. – /emShirley Temple/p pHere are eight stocking stuffers to unwrap./p p1) The conversation between Libertarians and the rest of us (who aren#8217;t on some nutty fringe) would go a lot smoother if we would all agree that laws and regulations do not prevent bad behavior./p pRather, they are merely guideposts to measure the quality of deviance in a way that allows the US#8217;s local, state and federal judiciary to hand out retribution./p pIf you need further proof of this, I offer you two words – Bernard Madoff./p pIn an under-regulated world, Ponzi schemes might not#8230;/p

MEMC Elec (NYSE:WFR): Bounce play on RBC upgrade and lowered bar

Notable Calls — Wed, 24 Sep 2008 12:05:00 +0000

RBC Capital upgrades MEMC Elec (NYSE:WFR) to Outperform from Sector Perform with a $53 tgt based on a likely renewal of demand growth in the solar sector led by pending passage of an 8-year extension and expansion of the U.S. solar tax credit program and a compelling valuation which they believe indicates over-pessimism baked into current share prices. Firm notes their upgrade is in conjunction with their macro report upgrading the entire solar sector, as they believe sector stocks are near a bottom. Their caution on WFR this year has been predicated on silicon oversupply risks in 2009 exacerbated by the company's execution issues. But they believe the fundamental headwinds in semi pricing, deterioration of spot poly prices in 2009 and a limited upside to Q3 #s from hurricane Ike impact is more than baked into the shares - trading at ~6x FY09E of $4.84. While FY09 sensitivity analysis is difficult given minimal mgmt biz unit disclosure, the firm believes current multiples reflect no growth, an unlikely prospect given oversupply timeframe likely shifted to 2H09 or 2010 on U.S. subsidy action and potential additional catalysts from even more robust U.S. energy policy with a new administration.

RBC highlights the company's $1.4B cash position, no debt, and ~$150M cash flow per qtr. A 6x forward multiple represents an historically low mark, even looking back to previous semi cycle downturns and large discount below the 9-11x multiple of comps such as Wacker Chemi and Shin-Etsu.

Q3 Outlook: they believe the shutdown of the Pasadena plant for Hurricane Ike soaked up the remaining buffer in mgmt's Q3 guidance. Although the plant was not damaged, raw material deliveries were delayed and the firm believes some labor was impacted as they took care of their families. They are adjusting their Q3 estimates to Rev/EPS of $573M / $1.06 from $603M / $1.13.

Notablecalls: Senate passed alt energy extension 90-2... the house will vote with the senate most likely.. Spain ups susidy to 500MW from 300MW... finally some relief for the solar names.

I spoke to one Solar watcher this morning who noted the only other sector he can compare Solar to is the mobile sector that took off in the 90s... it had its downturn in early 2000s (most names being cut down to 1/3 of their value) but eventually rebounded due to fast growth and M&A.

With WFR guiding today..I think it represents a nice potential bounce play. The bar has been lowered.

Tetra Tech Inc. (TTEK) – Reaching the World

QualityStocks — Thu, 04 Sep 2008 14:05:42 +0000

With over 275 offices worldwide and approximately 8,500 employees, Tetra Tech Inc. is a leading provider of consulting, engineering, and technical services. Founded in 1966, and listed on the NASDAQ, the company operates in three segments: Resource Management, Infrastructure Services, and Communications Services. Their corporate mission is to be the premier global consulting and engineering [...]

Tetra Tech, Inc

Zacks Market Commentaries — Wed, 20 Aug 2008 00:00:00 +0000

Tetra Tech, Inc. (TTEK) has surprised analysts for the fourth time in the past four quarters. The company also built up a record backlog of business and has recently acquired three firms to support the added business.

Company Description

Tetra Tech, Inc. provides environmental engineering and consulting services to several public and private sector clients. The company is based in Pasadena, California, carries a market cap of $1.7 billion, and employs approximately 8,500 people.

Quarterly Results Well Above Guidance

Tetra Tech, Inc announced third-quarter results on July 30th which surpassed guidance in several key areas. Net Revenue was $332.3 million, up 29.6% year-over-year from $256.3 million.

The largest gains were seen in government and commercial business which had year-over-year increases of 34% and 36%, respectively. Heavier workloads by government agencies and several wind power projects were the source of the additional business.

The impressive growth translated to earnings per share of 27 cents, up 28.6% from 21 cents in the same quarter last year. The EPS announcement beat the consensus estimate, which was 24 cents, by 12.5%. This was the fourth earnings surprise in as many quarters, each averaging 10.3%

New Contracts Yield Record Backlog

Since the beginning of the year, Tetra Tech has announce almost a dozen contracts and projects that may value over $5 billion when completed. Most has been awarded from the United States Air Force and Navy.

The company now has a backlog of $1.57 billion a company record and up 29.3% year-over-year.

Tetra Bolsters Services Available Through Acquisition

Tetra Tech completed the acquisition of three firms that will contribute to several areas including the services offered to the US Agency for Internal Development. The consulting and engineering companies have a total annual revenue of approximately $20 million.

The Chart

Shares of TTEK set a new 52-week high of $30.00 per share shortly after the July 30th earnings announcement. The stock has pulled back slightly and is currently trading in a tight channel between just above $29 and just below $28. Take a look at the chart below.

"WATR" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Setback of MEMC Shows Market Inefficiency

William Trent — Tue, 04 Sep 2007 20:27:47 +0000

Studies of market efficiency tend to look at whether the reaction to news is swift, and whether that reaction persists for a few days. The idea is that if news is incorporated into the market price quickly then most people won’t be able to profit from trading on news. With that in mind, consider today’s [...]