CHICAGO, March 10, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: Brown-Forman Corp. (NYSE: BF.B), Diageo
plc (NYSE: DEO), Suntech Power Holdings Company Ltd.
(NYSE: STP), LDK Solar Co. Ltd. (NYSE: LDK) and
JinkoSolar Holding Company Ltd. (NYSE: JKS).
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Here are highlights from Wednesday's Analyst Blog:
Brown-Forman Tops on Int'l Sales
Brown-Forman Corp. (NYSE: BF.B), a leading global
producer and distributor of premium alcoholic beverages, recorded
fiscal 2011 third-quarter earnings of $140.7
million or 96 cents a share,
compared with $107.9 million or
73 cents a share in the year-ago
quarter. Quarterly results outpaced the Zacks Consensus Estimate of
86 cents a share.
Quarterly Details
Brown-Forman's net sales recorded a growth of 12.0% to
$962.4 million from $861.7 million in the prior-year quarter. The
growth was primarily attributable to solid performance in
Australia, the U.K., Mexico, Turkey, Germany, France, and Brazil partly offset by weakness in the U.S.
and Russia.
During the quarter, Brown-Forman's gross profit grew 13.0% year
over year to $463.5 million, while
gross margin increased 50 basis points (bps) year over year to
48.2%. Advertising expense inched up by 5.0% year over year to
$92.0 million, primarily due to
higher spending to support brands.
Selling, general and administrative expenses rose 8.0% year over
year to $142.3 million, mainly due to
charges related to changes to the company's route-to-market in
Germany, Brazil, Canada, and Russia. Conversely, Brown-Forman's operating
profit increased 30.0% year over year to $225.5 million, while operating margin expanded
320 bps to 23.4%.
Balance Sheet & Cash Flow
Brown-Forman ended the quarter with cash and cash equivalents of
$278.6 million and long-term debt of
$756.7 million.
Year to date, Brown-Forman generated $399.5 million of cash from operations and
deployed $59.0 million toward debt
repayment, $279.5 million for
dividend payout, and $12.1 million on
capital expenditures. The company repurchased up to $117 million of Class A and Class B shares as
part of its authorization, which expired on December 1, 2010.
Dividend
During the quarter, Brown-Forman paid a regular quarterly cash
dividend of 32 cents a share on Class
A and Class B common stock and an additional special cash dividend
of $1.00 per share on Class A and
Class B common stock.
On January 27, 2011,
Brown-Forman's board of directors approved a regular quarterly cash
dividend of 32 cents per share on
Class A and Class B common stock, which will be paid on
April 1, 2011, to stockholders of
record as on March 9, 2011.
Fetzer Vineyards Sale
Brown-Forman has agreed to sell its Hopland, California based wine asset, Fetzer
Vineyards, to Vina Concha y Toro
S.A., a Chilean wine producer for $238.0
million.
The sale includes its bottling facility, Fetzer wine, Fetzer
brand and other California-based
wines but excludes its super-premium Sonoma-Cutrer brand. Under the
financial advisory of Rabo Securities USA Inc. management expects
to close the deal by April 2011.
The deal will help Brown-Forman to concentrate on its best
growth prospects. The company intends to focus on markets offering
better prospects and higher returns.
Guidance and Zacks Consensus
Moving forward, Brown-Forman anticipates moderate improvement in
global economic conditions and customer trends in fiscal 2011.
Accordingly, the company increased its earnings guidance to a range
of $3.35 to $3.45 per share from
$3.18 and $3.42 per share for fiscal 2011. The Zacks
Consensus Estimate for the year is currently pegged at $3.31 per share.
The company faces intense competition from other
well-established players in the industry, including Diageo
plc (NYSE: DEO).
We maintain our Outperform recommendation on Brown-Forman. The
quantitative Zacks #3 Rank (short-term Hold rating) for the company
indicates no definite directional pressure on the shares over the
near term.
Suntech Powered by High Profits
Suntech Power Holdings Company Ltd. (NYSE: STP) posted
fourth quarter adjusted earnings of 32
cents per American Depositary Share (ADS), surpassing both
the Zacks Consensus Estimate of 30
cents and year-ago adjusted earnings of 27 cents.
Fiscal 2010 adjusted earnings came in at 64 cents per share, exceeding the Zacks Consensus
Estimate of 62 cents. Also, fiscal
2010 adjusted earnings per share surpassed fiscal 2009 adjusted
earnings of 42 cents per share.
Operational Results
Suntech registered total net revenues of $945.1 million, an increase of 27.1% from
$743.7 million in the third quarter
of 2010 and an increase of 61.9% from $583.6
million in the fourth quarter of 2009. Total photovoltaic
(PV) products shipment increased 19.8% over the third quarter of
2010 and 87.3% year over year.
Revenues in the reported quarter also comfortably beat the Zacks
Consensus Estimate of $846 million.
In the reported quarter, Suntech's gross profit was $153.4 million and gross margin was 16.2%.
Overall, the company recorded a net income of $383.4 million versus $44.0 million in the year-ago period.
Fiscal 2010 revenue came in at $2.9
billion surpassing the Zacks Consensus Estimate of
$2.7 billion and fiscal 2009 revenue
of $1.7 billion. The year-over-year
increase was primarily due to a 124.5% increase in shipments of PV
products. This was partially offset by a decline in the average
selling price of PV products.
Fiscal 2010 gross profit was $503.8
million and gross margin was 17.4% compared to consolidated
gross profit of $338.8 million and
gross margin of 20.0% for fiscal 2009. The decrease in gross margin
was primarily a result of the reduction in the average selling
price of PV products. Overall fiscal 2010 net income increased to
$262.3 million versus net income of
$85.6 million in fiscal 2009.
Financial Condition
At fiscal 2010-end, Suntech reported cash and cash equivalents
of $872.5 million, compared with
$946.2 million as of September 30, 2010. During fiscal 2010, capital
expenditures, which were primarily related to the construction of
production facilities in Shanghai
and other infrastructure projects to support expansion of capacity,
totaled $335.6 million.
The company at the end of the reported quarter had outstanding
long-term bank borrowings of $163.3
million and convertible notes worth $551.2
million.
Outlook
Wuxi, China-based Suntech is a
leading solar energy company. The company designs, develops,
manufactures and markets photovoltaic (PV) cells and modules.
Looking forward in the first quarter of 2011, Suntech expects PV
shipments to be relatively flat compared with the fourth quarter of
2010. Gross margin in the first quarter of 2011 is expected to be
approximately 20%.
For fiscal 2011, Suntech expects to ship at least 2.2GW of solar
products and generate revenues of $3.4
billion to $3.6 billion. Gross margin for fiscal 2011 is
expected to be approximately 20% to 22%.
Suntech Power is one of the largest producers of PV solar
modules under its proprietary Pluto technology with a
geographically-diversified customer base. The company by the end of
2011 expects to achieve an annualized production capacity of 2.4GW
for cell and module; and 1.2GW for wafer. Full year 2011 capital
expenditure is expected to be in the range of $250 million–$270 million.
Other positive factors for Suntech include ongoing expansion
programs, higher conversion efficiency through its Pluto
technology-enabled modules, subsidy program in China, and improving operating efficiencies.
However apprehensions over rising competition, subsidy cuts in
Europe, and financial stability of
its customers overshadow the positives.
In the near term we believe the Zacks #1 Rank (Strong Buy) peers
like LDK Solar Co. Ltd. (NYSE: LDK) and JinkoSolar
Holding Company Ltd. (NYSE: JKS) are more promising compared to
the Zacks #3 Rank (Hold) Suntech Power. In the longer run, our
Outperform recommendation on the stock indicates that it should
perform above the broader market.
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