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Wells Fargo & Company, Host Hotels & Resorts, Stanley Black & Decker, Amphenol Corporation and Comerica Incorporated

^{Published on 2010-07-22 14:10:44 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Wells Fargo & Company (NYSE: [ WFC ]), Host Hotels & Resorts Inc. (NYSE: [ HST ]), Stanley Black & Decker (NYSE: [ SWK ]), Amphenol Corporation (NYSE: [ APH ]) and Comerica Incorporated (NYSE: [ CMA ]).

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Here are highlights from Wednesdaya™s Analyst Blog:

Wells Fargo Beats Estimates

Wells Fargo & Companya™s (NYSE: [ WFC ]) second quarter 2010 operating earnings were 55 cents per share, topping the Zacks Consensus Estimate of 49 cents. Net income applicable to common stock came in at $2.88 billion, compared with $2.58 billion in the prior-year quarter.

During the quarter, Wells Fargo earned $21.4 billion (down 4.9% year over year and flat sequentially). Pre-tax pre-provision profit was $8.6 billion.

Commercial and corporate banking, investment banking, commercial real estate brokerage, asset-based lending, auto dealer services, merchant service and debit cards had double-digit sequential revenue growth. The growth in all businesses signifies growth prospective of the company.

Behind the Headlines

Net interest income for the quarter came in at $11.4 billion, up from $11.1 billion in the prior quarter. Net interest margin (NIM) increased to 4.38% from 4.27% sequentially. Additional purchased credit-impaired (PCI) loan resolution income was attributed to a significant increase in NIM in the reported quarter. However, the decline in loans impacted income and margins, which was offset by continued sturdy growth in consumer and commercial checking and savings accounts.

Total non-interest income came in at $9.9 billion, 3.9% from $10.3 billion in the prior quarter primarily due to lower trading revenue, partially offset by increase in net gains from equity investments. Non-interest expense for the quarter came in at $12.7 billion, up 5% from $12.1 billion in the prior quarter. Expenses augmented due to increased merger-related costs and severance costs related to Wells Fargo Financial restructuring.

Total core deposits of $761.8 billion as of June 30, 2010 were up 0.3% from $759.2 billion as of March 31, 2010. Growth in average mortgage escrow deposits and consumer checking accounts improved the deposit base.

Host Hotels Marginally Beats

Host Hotels & Resorts Inc. (NYSE: [ HST ]), the largest lodging real estate investment trust (REIT) in the U.S., reported second quarter 2010 FFO (funds from operations) of $151 million or 23 cents per share, compared to $68 million or 12 cents per share in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. The second quarter FFO marginally beat the Zacks Consensus estimate by a penny.

Total revenue increased 6% during the quarter to $1.1 billion compared to the year-earlier quarter. Comparable hotel revenue per available room (RevPAR) increased 8.1% during the quarter driven by a rise in occupancy, partially offset by a fall in average daily rates. The increase in RevPAR was primarily due to an 8.1% increase in transient demand along with a 2.8% improvement in average room rate, the first such growth rate witnessed since second quarter 2008.

However, comparable hotel adjusted operating margins during the quarter remained flat as incremental attrition and cancellation fees dipped 100 basis points compared to the same period in 2009. During the quarter, Host Hotels reported an adjusted EBITDA (Earnings before Interest Expense, Income Taxes, Depreciation and Amortization) of $250 million compared to $256 million in the year-ago period.

Total capital expenditures during the quarter were $50 million, which included return on investment (ROI) and repositioning projects of approximately $10 million. For fiscal 2010, Host Hotels expects total capital expenditures in the range of $300 million to $320 million.

SWKa™s Q2 Surpasses Zacks Estimate

Stanley Black & Decker (NYSE: [ SWK ]) has reported financial results for the second quarter of 2010. Earnings per share from continuing operations were $1.24, up 39.3% compared with 89 cents in the comparable quarter of 2009. EPS surpassed the Zacks Consensus Estimate of 77 cents.

Net income from continuing operations soared 191.1% year over year to $206.1 million, compared with $70.8 million in the second quarter of 2009. The increase in net income was due primarily to growth in revenue that more than offset higher expenses.

Consolidated results of the company included full one quarter results of Black & Decker Corporation, which was acquired in the first quarter of 2010.

Revenue

Net revenue in the second quarter 2010 increased 157.4% year over year to $2,365.6 million, compared with $919.2 million in the second quarter of 2009. Growth in net revenue was primarily due to the addition of revenues earned by Black & Decker, higher unit volumes due to supply chain restocking and improving demand, and revenue contribution from other acquisitions, offset partially by negative currency translation impact.

Revenue in the CDIY segment increased 307.9% year over year to $1,322.3 million, while the Security segment reported revenues of $571.4 million, reflecting an increase of 46.3% year over year. Revenue in the Industrial segment was $471.9 million, up 130.9% year over year.

Margins

Cost of sales, as a percentage of revenue soared to 62.3% versus 60.1% in the year-ago quarter. Higher commodity costs offset strong volume growth and led to a 2.2% year over year decline in gross margin to 37.7% in the second quarter of 2010.

Selling, general and administrative expenses registered an increase of 122.7% year over year, but as a percentage of revenue declined from 27.8% to 24.0%. Operating margin in the quarter was 13.7% versus 12.1% in the second quarter of 2009.

Balance Sheet

Exiting the second quarter, Stanley Black & Deckera™s cash and cash equivalents increased 6.2% sequentially to approximately $1,598.4 million, compared with $1,505.4 million in the first quarter of 2010. Long-term debt, net of current portion was $2,318.7 million, down 15.5% from $2,743.4 million in the first quarter of 2010.

Amphenol Tops, Stays at Outperform

Amphenol Corporation (NYSE: [ APH ]) reported earnings per share (EPS) of 74 cents in the second quarter of 2010, including a benefit of $10 million or 6 cents per share relating to a reduction in tax expense for tax reserve adjustments, primarily related to the completion of the audits of certain prior-year tax returns.

Excluding these items, EPS was 68 cents, beating the Zacks Consensus Estimate of 61 cents, as well as the year-ago result of 43 cents.

Sales came in at $885 million, up 29.1% from the year-earlier quarter and up 14.8% sequentially. Currency translation effect negatively impacted sales by approximately 0.4% or $3 million in the second quarter of 2010, compared to the year-earlier quarter.

Based in Connecticut, Amphenol designs, manufactures and markets electronic and fiber optic connectors, cable and interconnect systems.

The growth in sales in the reported quarter was driven by strengthening demand in a diverse range of end-markets, which include Information Technology and Data Communications Equipment, Automotive, Industrial and Wireless Devices. Product wise, Interconnect products generated sales of $817.1 million, up 31.5% year over year. Cable products generated sales of $67.6 million, up 6.1% year over year.

Gross margin improved to 32.7% from 31.2% in the year-earlier quarter and 32.3% in the previous quarter. Operating margin improved to 19.8% in the quarter from 16.8% in the year-ago quarter and 18.8% in the previous quarter.

Comerica Turns to Profit, Beats

Comerica Incorporated (NYSE: [ CMA ]) reported second-quarter 2010 net income of 39 cents per share, easily beating the Zacks Consensus Estimate of 23 cents. Results were far ahead of the prior-year quarter, as second-quarter 2009 had incurred a loss of 11 cents and the prior quarter had incurred a loss of 46 cents.

Net income attributable to common share holders of Comerica totaled $69 million, compared to a net loss of $16 million in the second quarter of 2009 and net loss of $71 million in the first quarter of 2010.

Provision for loan losses of Comerica during the quarter fell a whopping 59.6% to $126 million from $312 million in second-quarter 2009. Lower provision was a result of continued improvement in credit quality as well as the benefit of full redemption of $2.25 billion of preferred stock during the first quarter of 2010. It was also lower than $175 million in first-quarter 2010.

Net interest income improved approximately 5% year over year to $422 million in the second quarter of 2010. It also compares favorably with $415 million recorded in first quarter-2010.

On the flip side, Comerica recorded non interest income declined 34.9% to $194 million compared with the prior-year quarter.

Net interest margin increased 55 basis points year over year to 3.28% in the quarter. Sequentially, it increased 10 basis points, mainly due to the maturing higher-cost wholesale funding and a less costly blend of core deposits.

Non interest expense of Comerica during second quarter 2010 totaled $397 million, down 7.5% from $429 million recorded in the prior year quarter. This also compares favorably with $404 million in first quarter 2010 largely attributable to decreases in the provision for credit losses on lending-related commitments ($7 million) and other real estate expenses ($7 million), partially offset by an increase in salaries ($10 million).

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