CHICAGO, Aug. 3, 2011 /PRNewswire/ -- 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 NYSE Euronext Inc. (NYSE: NYX),
Bank of America Corp. (NYSE: BAC), UBS AG (NYSE:
UBS), Nasdaq OMX Group Inc. (Nasdaq: NDAQ) and
IntercontinentalExchange Inc. (NYSE: ICE).
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Here are highlights from Tuesday's Analyst Blog:
NYSE Beats but Plunges YoY
NYSE Euronext Inc.'s (NYSE: NYX) second quarter operating
earnings per share of 61 cents came
in a penny higher than the Zacks Consensus Estimate of 60 cents but lagged the 64
cents recorded in the year-ago quarter. Consequently,
operating net income dipped 4% year over year to $160 million from $167
million in the year-ago quarter.
NYSE reported GAAP net income of $154
million or 59 cents per share
as compared with $184 million or
70 cents per share in the prior-year
quarter. These include the impact of pre-tax merger expenses and
exit costs of $18 million versus
$32 million reported in the year-ago
quarter.
The quarter had also recorded net gain on disposal activities of
$54 million. Besides, the merger
expenses in the reported quarter included $12 million related to the proposed merger with
Deutsche Boerse.
Gross revenues declined 12.0% year over year to $1.09 billion in the reported quarter. However,
net revenues (defined as gross revenues less direct transaction
costs consisting of Section 31 fees, liquidity payments and routing
and clearing fees) were $661 million,
inching up 1.0% from $654 million in
the prior-year quarter and also exceeded the Zacks Consensus
Estimate of $651 million.
The underperformance was primarily based on flattish market data
revenue, transaction and clearing fees that plunged 20% year over
year to $742 million. Whereas,
revenue from derivatives that decreased 5.8% year over year to
$213 million due to substantial
decline in European average daily volumes.
Besides, revenue growth was injected by information service and
technology solutions (up 14.0% year over year to $122 million), and cash trading and listings (up
1.9% year over year to $327 million)
that were supported by favourable currency fluctuations and higher
pricing although daily trading volumes dipped over prior-year
quarter.
However, fixed operating expenses inched down 0.5% to
$437 million from $439 million in the prior-year quarter. As of
June 30, 2011, total headcount at
NYSE was 2,988, marginally down from June
30, 2010 and down 1% from March 31,
2011. The effective tax rate was 26%, compared to 27% in the
year-ago quarter and in line with the management's guidance for
2011.
Financial Update
As of June 30, 2011, NYSE's total
debt declined $0.2 million from 2010
end to $2.2 billion, whereby the
company also eliminated $0.2 billion
of its short-term debt in commercial paper, leaving behind only
long-term debt. At the end of the reported quarter, cash and cash
equivalents, investments and other securities were $0.4 billion while net debt was $1.8 billion.
Total capital expenditure declined to $31
million from $70 million in
the year-ago quarter. The company expended $67 million in the first half of 2011, which is
in line with its guidance. As a result of strong growth in adjusted
EBITDA, lower capital expenditures and continued deleveraging,
NYSE's debt-to-EBITDA ratio improved to 1.7x from 2.2x recorded at
the end of 2010, lowest level since the inception of NYSE in
April 2007.
Outlook
For 2011, NYSE management had previously projected fixed
operating expenses to be less than $1,650
million on a constant dollar and fixed portfolio basis,
compared to expenses of $1,678
million in 2010. Presently, total capital expenditure is
expected to be less than $200
million. The effective tax rate is expected to be 26% in
2011.
Business Update
During the reported quarter, NYSE completed the sale of a 52.8%
equity interest in NYSE Amex Options to several leading order flow
providers and market making firms: Bank of America Corp.
(NYSE: BAC) and UBS AG (NYSE: UBS), among others. However,
NYSE will still remain the largest single shareholder in the
entity.
Dividend Update
Concurrently, the board of NYSE declared a regular quarterly
dividend of 30 cents per share, which
is payable on September 30, 2011, to
the shareholders of record as on September
15, 2011.
Further, on June 30, 2011, NYSE
paid a quarterly cash dividend of 30
cents to shareholders of record as on June 16, 2011.
Peer Take
NYSE's arch-rival Nasdaq OMX Group Inc.'s (Nasdaq: NDAQ)
second quarter operating earnings per share of 62 cents came in a couple higher than the Zacks
Consensus Estimate of 60 cents but
modestly ahead of 52 cents in the
prior-year quarter.
Besides, IntercontinentalExchange Inc. (NYSE: ICE) is
scheduled to release its second quarter results before the market
opens tomorrow.
Our Take
Results reflect reduced volumes in European and the U.S. cash
and derivative trading and muted growth in market data although
technology services supported the top line. Besides, both NYPC and
NYSE Liffe U.S. are yet to pick up the required growth pace.
However, NYSE is benefiting from lower capital expenditure and
various cost containment initiative that reduced NYSE's cost base
by over $600 million since the merger
with Euronext in 2007. These efforts have been translating into
reduction in expenses, modest EBITDA growth and strong free cash
flows.
They also aided efficiency with new initiatives taken to start
new data centers as part of its long-term strategy. The IPO
pipeline also remains strong through 2011.
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