24/7 Wall St. » TXT

Top Analyst Upgrades & Downgrades (CCL, CHK, LNG, CQP, CREE, EXPE, FTE, GOOG, JNS, KR, MGM, ODP, OMX, PVH, RL, TEF, TXT)

Administrator — Wed, 18 Jan 2012 13:28:25 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Wednesday morning.

Carnival Corp. (NYSE: CCL) Maintained Hold but cut estimates at Argus.
Chesapeake Energy Corporation (NYSE: CHK) Cut to Hold at Brean Murray.
Cheniere Energy Inc. (NYSE: LNG) Started as Outperform with $13.50 target at Credit Suisse
Cheniere Energy Partners, LP (NYSE: CQP) Started as Neutral with $20 target at Credit Suisse.
Cree Inc. (NASDAQ: CREE) maintained Buy with $33 target at Canaccord Genuity; Raised to Buy at ThinkEquity; Cut to Neutral at Ticonderoga.
Expedia, Inc. (NASDAQ: EXPE) Started as Underweight at JPMorgan.
France Telecom S.A. (NYSE: FTE) Cut to Sell at Deutsche Bank.
Google Inc. (NASDAQ: GOOG) Cut to Market Perform from Outperform at Wells Fargo.
Janus Capital Group, Inc. (NYSE: JNS) Cut to Sell at Citigroup.
The Kroger Co. (NYSE: KR) Cut to Market Perform at BMO Capital.
MGM Resorts International (NYSE: MGM) Raised to Neutral at Credit Suisse.
Office Depot, Inc. (NYSE: ODP) Raised to Equal-weight at Barclays.
OfficeMax Inc. (NYSE: OMX) Raised to Equal-weight at Barclays.
PVH Corporation (NYSE: PVH) Started as Neutral with $72 target at Credit Suisse.
Ralph Lauren Corporation (NYSE: RL) Started as Outperform with $168 target at Credit Suisse.
Telefonica SA (NYSE: TEF) Cut to Sell at UBS.
Textron Inc. (NYSE: TXT) Cut to Neutral at JPMorgan.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: Analyst Calls Tagged: CCL, CHK, CQP, CREE, EXPE, FTE, GOOG, JNS, KR, LNG, MGM, ODP, OMX, PVH, RL, TEF, TXT

Conglomerate M&A Rumors: Loose Lips Sink Ships (UTX, TYC, HON, TXT, GE, DBD, ITT)

Administrator — Fri, 16 Sep 2011 15:31:13 +0000

There is value in the world of conglomerates. The news flow is further evidence of that, but we have to throw up the caveat the driving force today should likely be considered a rumor rather than news until more details emerge. Reuters has the conglomerate sector up in arms today on its report that United Technologies Corporation (NYSE: UTX) is out putting together a financing that could be more than $20 billion to fund a large acquisition. It is those ‘people familiar with the matter’ that is the basis for all of today’s excitement.

This of course has speculation that Tyco Corporation (NYSE: TYC) could fall into the prey category, and we would caution that this is not the first time that Tyco has been in the M&A rumor mill. Honeywell International (NYSE: HON) or Textron Inc. (NYSE: TXT) could also be in the target group if you consider their size and markets. Keep in mind that General Electric Co. (NYSE: GE) once tried to acquire Honeywell but that deal was blocked in the European Union.

Keep in mind that Diebold, Incorporated (NYSE: DBD) was given a $2.6 billion ($3 billion enterprise value) hostile buyout offer from United Tech, but that was withdrawn in late-2008 after Diebold fended the buyout off. Its shares are now higher than when the buyout offer was first made, but the stock is still well down from its highs. Diebold was also worth more than $50 a share back in 2007. United Tech also paid $1.8 billion to acquire GE’s security operations in 2009, which closed in 2010.

Another situation that comes to mind is the break-up of ITT Corporation (NYSE: ITT). The market cap is ‘only’ about $8 billion and the $44.50 price compares to a 52-week trading range of $42.08 to $64.00.

Rockwell Collins Inc. (NYSE: COL) is another name which might fit in and the 6% gain to $55.33 today should actually be noted that the stock was under $48.00 as recently as this last Tuesday.

Again, the implication is that there is value in the conglomerate sector. Taking out a loan for M&A (or for a huge buyback) is currently cheaper than it has almost ever been. Imagine a ten-year debt financing for under 3% or 4% in annual borrowing costs for a corporation… Then add in other accretive acquisition opportunities. The strong companies can prey on the weaker companies right now.

Our value analysis take is that GE still remains the best value in the conglomerate sector, but that is a different matter entirely.

United Technologies is not even down 1% at $74.88 on the news, and its 52-week range is $67.12 to $91.83. The summer market drop was particularly harsh on this company. We recently opined that United Tech could be one of the next megacap stocks (over $100 billion in stock value) and that it might it acquire its way there. Maybe it isn’t too far off base after all.

JON C. OGG

Filed under: Banking, Conglomerates, Mergers and Buy Outs, Rumors, Value Investing Tagged: DBD, GE, HON, ITT, TXT, TYC, UTX

The Best Value Stock in Conglomerates, Dividend Lovers (GE, UTX, BRK-A, HON, MMM, TXT, TYC, ITT, IYJ)

Administrator — Fri, 09 Sep 2011 12:10:41 +0000

The latest carnage in the market has left some companies at valuations that are getting hard to ignore, even knowing about the harder economic times. Value investors invest before recessions, through recessions, and after recessions. They are not looking for tomorrow’s price in most cases. The bearish trend of the summer, particularly that of July’s end into August, was even brutal on the diversified conglomerate sector, despite the notion that it is the conglomerate structure that is supposed to offer some shelter during hard times.

We have reviewed and identified the following conglomerates for our value review: General Electric (NYSE: GE), United Technologies (NYSE: UTX), Berkshire Hathaway (NYSE: BRK-A), Honeywell International (NYSE: HON), and 3M (NYSE: MMM). Also included were reviews of Textron (NYSE: TXT) and Tyco International (NYSE: TYC). ITT Corp. (NYSE: ITT) was not reviewed because of its ongoing restructuring ahead, although there may be a significant special situation still developing there. The top valuation winner will be shown after reviewing all of them.

We used a Finviz.com screening tool for year ahead estimates (next year), price-to-book ratios, and for the return on equity. We also reviewed the consensus price target objectives from Thomson Reuters to see what sort of implied upside remains if the analysts are still accurate. In most cases, we would have a fair value under most research targets today due to the headline shock factors that spook the markets each week now. We have taken a review of dividend yields and looked at many ongoing challenges in the sector today. September is said to be a cursed market month, and searching for value alone does not ever imply that the lowest dollar price on the stock has been seen.

Filed under: Buffett, Conglomerates, Dividend, Economy, Editor's Picks, Value Investing Tagged: BRK-A, GE, HON, IYJ, MMM, TXT, TYC, UTX

Valuing The Best Conglomerate For The Second Half of 2011 (GE, UTX, BRK-A, HON, MMM, TXT, TYC)

Administrator — Tue, 12 Jul 2011 11:20:52 +0000

24/7 Wall St. has been using valuation analysis for value investors for a couple of weeks and we wanted to review the conglomerates in a search for the best value for long-term investors as of this summer. The current woes in Europe and the debt ceiling debate in the U.S. are two key issues to consider, but the goal is try to get past the news and noise of today and this summer.

We evaluated General Electric Co. (NYSE: GE); United Technologies Corp. (NYSE: UTX); Berkshire Hathaway Inc. (NYSE: BRK-A); Honeywell International Inc. (NYSE: HON); and 3M Co. (NYSE: MMM). Also included were reviews of Textron Inc. (NYSE: TXT) and Tyco International Ltd. (NYSE: TYC).

In our analysis, we considered prices, forward P/E ratios, dividend yields, and return on equity. We also then considered the fundamentals of each and included an implied upside to the Thomson Reuters consensus price targets. Conglomerates are in a different position that they were in 2010 and now the field is mixed. Some stand out above and beyond peers, and some look tired in the current market.

General Electric Co. (NYSE: GE) pays a 3.2% dividend. The company sells at a price to book ratio of about 1.6 to 1. Its forward price earnings multiple is 11.4 and its return on equity is 11.25%. GE’s shares recently traded at $18.63. The 52-week price range is $13.83 to $21.33. Thomson Reuters has a consensus price target of $23.87, implying roughly 28% upside. General Electric is also in the midst of solar investing as well as other new financings, but that is the norm for a company the size of GE. This price-to-book value seems rather low, and we would be the first ones to admit that trying to accurately place a book value on G.E. at any given time would not be an easy feat. With much still tied to consumer and customer financings, investors have to also understand that G.E. remains more of a bank compared to other conglomerates. It also has the highest market capitalization of all conglomerates again at $197 billion.

United Technologies Corp. (NYSE: UTX) pays a 2.13% dividend. The company sells at a price to book ratio of 3.7 to 1. Its forward price earnings multiple is 14.6 and its return on equity is 21.5%. United Technologies recently traded at $90.35. The 52-week price range is $63.53 to $91.83. Thomson Reuters has an average price target of $97.83, implying that it has almost 10% upside. United Tech is one that we recently noted could become one of the next mega-caps with a $100 billion market capitalization, which is really not too much higher than the consensus price target objective when you consider a $82 billion market cap. That will not happen if the economic worries morph into something worse.

Berkshire Hathaway Inc. (NYSE: BRK-A) sells at a price to book ratio of about 1.2 to 1, but it pays no dividend to its shareholders. Its forward price earnings multiple is 15.2 and its return on equity is 7.06%. This Warren Buffet progeny has not yet announced a dividend, though many industry observers believe it’s about time they did. Berkshire Hathaway recently traded at $113,000.00. The 52-week price range is $109,925.00 to $131,463.00. Without an official price target, the upside depends upon your interpretation of what sort of premium this one should trade at against book value. The biggest trick about Berkshire Hathaway is to remember that net income on any given quarter is not the metric to use because Warren Buffett has said it could be almost whatever they wanted due to mark-to-market and due to quarterly fluctuations in all of its units. That is fortunate considering that the company’s insurance losses cut its earnings in half at the last earnings report. There are two words that the media has not used in a month or more and the company has to be happy about it: David Sokol. This pending acquisition of Lubrizol has not yet closed, although it is not a huge transaction despite the $8.6 billion market cap.

Filed under: Buffett, Conglomerates, Editor's Picks, Value Investing Tagged: BRK-A, GE, HON, MMM, TXT, TYC, UTX

Dividend Watch: Textron Fails Dividend Test of Conglomerates (TXT, GE, UTX, MMM)

Administrator — Wed, 27 Apr 2011 15:16:30 +0000

Textron Inc. (NYSE: TXT) is one of those companies that is categorized as a conglomerate by most financial analysis sector groupings. It is not quite diversified enough by our count to be a true conglomerate as it is in aircraft, defense, industrial, and finance businesses with brands such as Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems. The company announced its dividend this morning that would remain at the same low payout rate of $0.02 per share per quarter.

We took a look at the other “conglomerates” and it only reinforces our belief. It is time to change. General Electric Co. (NYSE: GE) yields 2.8% now if its payout remains static, but that payout could actually be raised yet again in the next year. United Technologies Corp. (NYSE: UTX) has a yield of about 2.2% today and 3M Co. (NYSE: MMM) pays closer to a 2.3% yield to its holders.

Another thing that Textron has working against it is a market cap of about $8.2 billion. That is just too small to be a true conglomerate, at least short of being perhaps a “General Eclectic” in it operational description. Textron’s current dividend yield is only 0.3%. If Textron wants to be thought of as a real conglomerate then its payout needs to come back in-line with history.

It was back in early 2009 at the peak of the panic that Textron was winding down finance exposure and it then decided to cut its quarterly common stock dividend for the first time ever as the recessionary woes forced the company into cash preservation mode. The March 11, 2009 payout was a $0.02 Dividend against a December 10, 2008 payout of a $0.23 Dividend. That $0.02 dividend has remained the same since, including the announcement this morning. Sorry, but that time has come and gone, we are in a different world now.

The company’s reported earnings per share was $0.81 EPS in 2010, and Thomson Reuters has estimates of $1.13 EPS for 2011 and $1.83 EPS for 2012. A payout of $0.02 comes to only $0.08 per year. The recession is over, even if Textron has a rougher road ahead being tied closer to aerospace and defense orders.

Textron said that this $0.02 dividend will be paid on July 1, 2011, to holders of record at the close of business on June 10, 2011. Really, who cares? Shares are down 0.4% at $25.68 versus a 52-week trading range of $15.88 to $28.87. This was a $70 stock back at the end of 2007. If Textron is a real conglomerate, it needs to start acting like one with a real dividend.

JON C. OGG

Filed under: Aerospace, Conglomerates, Corporate Governance, Defense, Dividend, Shareholder Issues Tagged: GE, MMM, TXT, UTX

Top Analyst Upgrades & Downgrades (CPN, KEX, MMM, MCP, NOK, NVTL, OVTI, TXT, WFMI, WMB)

Administrator — Tue, 22 Feb 2011 13:10:07 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning.

Calpine Corp. (NYSE: CPN) Raised to Overweight at Barclays.
Kirby Corporation (NYSE: KEX) Raised to Buy and $60 target at BofA/ML.
3M Co. (NYSE: MMM) Raised to Neutral at BofA/ML.
Molycorp, Inc. (NYSE: MCP) Raised to Overweight at JPMorgan.
Nokia Corporation (NYSE: NOK) Cut to Sell at RBS.
Novatel Wireless, Inc. (NASDAQ: NVTL) Cut to Underperform as Bear of the Day at Zacks. Omnivision Technologies Inc. (NASDAQ: OVTI) Maintained Buy and $39 target at Gleacher & Co.
Textron Inc. (NYSE: TXT) Raised to Buy at UBS.
Whole Foods Market, Inc. (NASDAQ: WFMI) noted as Bull of the Day with Outperform and $65 target at Zacks.
Williams Companies, Inc. (NYSE: WMB) Raised to Conviction Buy List at Goldman Sachs.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: CPN, KEX, MCP, MMM, NOK, NVTL, OVTI, TXT, WFMI, WMB

Are More Big Spin-Offs and Break-Ups Imminent? (ITT, MRO, FO, GE, MMM, UTX, HON, DHR, DOV, TXT, OTTR, BRK-B)

Administrator — Thu, 13 Jan 2011 15:55:45 +0000

The reaction to the news of a conglomerate break-up in a three-way separation was incredible for ITT Corporation (NYSE: ITT) yesterday. Shares closed up 16.5% rather than over 20% and the closing price was $61.50. We thought that maybe all of the good news was being priced in even having received the analyst notes from Gabelli & Co. with a “buy” rating and an $89.00 target (with new $90 value this morning).

Now we have a break-up into two happening from Marathon Oil Corporation (NYSE: MRO). Marathon is far from a conglomerate, but its split into two for its exploration activities and its refining activities follows the same path as ITT. Fortune Brands Inc. (NYSE: FO) gained 15% after its late-2010 break-up announcement. We can’t help but wonder if other conglomerates and quasi-conglomerates might consider similar strategies. That leads to reviews of General Electric Co. (NYSE: GE), United Technologies Corp. (NYSE: UTX), 3M Co. (NYSE: MMM), Honeywell International Inc. (NYSE: HON), Danaher Corp. (NYSE: DHR), Dover Corp. (NYSE: DOV), Textron Inc. (NYSE: TXT), and even a small company called Otter Tail Corporation (NASDAQ: OTTR). Lastly, what about Berkshire Hathaway Inc. (NYSE: BRK-B)?

Filed under: Activist Investor, Banking, Brokerage Firms, Buffett, business and finance, Business Services, Conglomerates, Consumer Goods, Corporate Governance, Editor's Picks, Financial Stocks, IPOs, Large Cap Stocks, Mergers and Buy Outs, Private Equity, Shareholder Issues, Value Investing Tagged: BRK-B, DHR, DOV, FO, GE, HON, ITT, MMM, MRO, OTTR, TXT, UTX

Top Analyst Upgrades and Downgrades (AGU, AMZN, BJ, COMV, ETFC, GRNB, MPEL, MCP, NGG, NFLX, STX, TSO, TXT)

Administrator — Thu, 21 Oct 2010 12:05:07 +0000

These are some of this Thursday’s key analyst upgrades, downgrades, and initiations seen in Wall Street research calls.

Agrium Inc. (NYSE: AGU) Raised to Buy at Stifel Nicolaus.
Amazon.com Inc. (NASDAQ: AMZN) Raised to Buy at BofA/Merrill Lynch.
BJ’s Wholesale Club (NYSE: BJ) Raised to Buy at Janney.
Comverge, Inc. (NASDAQ: COMV) Started as Overweight at JPMorgan.
E*TRADE Financial Corporation (NASDAQ: ETFC) Reiterated as Outperform at FBR.
Green Bankshares, Inc. (NASDAQ: GRNB) Cut to Underperform at KBW; Cut to Sell at Wunderlich.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Raised to Outperform at Credit Suisse.
Molycorp, Inc. (NYSE: MCP) Started as Buy at Gabelli (late Wednesday call).
National Grid plc (NYSE: NGG) Raised to Outperform at Credit Suisse.
Netflix Inc. (NASDAQ: NFLX) Raised to Neutral from Sell at Janney; Raised to Outperform at Oppenheimer.
Seagate Technology PLC (NASDAQ: STX) Cut to Neutral at Baird.
Tesoro Corp. (NYSE: TSO) Cut to Sector Perform at RBC.
Textron Inc. (NYSE: TXT) Cut to Hold at S&P Equity Research (late Wednesday call).

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: AGU, AMZN, BJ, COMV, ETFC, GRNB, MCP, MPEL, NFLX, NGG, STX, TSO, TXT

Top Analyst Upgrades and Downgrades (AFL, AAPL, AIZ, BBT, BUCY, DWA, HANS, BEE, TK, TXT, USB)

Administrator — Tue, 18 May 2010 12:26:26 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning:

Aflac Inc. (NYSE: AFL) Raised to Overweight at JPMorgan.
Apple Inc. (NASDAQ: AAPL) Started as Buy at Stern Agee (late Monday call).
Assurant Inc. (NYSE: AIZ) Cut to Neutral at JPMorgan.
BB&T Corp. (NYSE: BBT) Cut to Hold at Deutsche Bank.
Bucyrus International (NASDAQ: BUCY) Maintained Buy but removed from Conviction Buy List at Goldman Sachs.
DreamWorks Animation SKG (NYSE: DWA) Cut to Market Weight at Thomas Weisel.
Hansen Natural Corporation (NYSE: HANS) Raised to Buy at Goldman Sachs.
Strategic Hotels & Resorts (NYSE: BEE) Raised to Outperform at KBW.
Teekay Corp. (NYSE: TK) Raised to Overweight at JPMorgan.
Textron Inc. (NYSE: TXT) Raised to Conviction Buy List at Goldman Sachs.
US Bancorp (NYSE: USB) Cut to Hold at Deutsche Bank.

JON C. OGG

Sponsor: 26 Cheap Stocks to Sell – Cheap stocks have been on a tear recently, but nine out of ten stocks are circling the drain!

Filed under: Analyst Calls Tagged: AAPL, AFL, AIZ, BBT, BEE, BUCY, DWA, HANS, TK, TXT, USB

Are CBS (CBS) And Sprint (S) At Risk For Bankruptcy?

247wallst — Fri, 18 Sep 2009 18:34:25 +0000

Audit Integrity, a research firm, has come out with a list of the large American companies which are most likely to go bankrupt in the next year. The data behind the figures seem valid, but some of the companies on the list which include CBS (CBS), Sprint (S), AMD (AMD), and Sirius XM (SIRi) seem improbable candidates.

The corporate communications staffs of these companies and their outside public relation firms will tell their managements to keep quiet and not react. A reaction, they will argue, just makes it look like Audit Integrity knows what it is doing and that there is some validity to their analysis. Audit Integrity is probably counting on that. It will get a lot of exposure for the study and little ,if any, legitimate criticism.

Audit Integrity says its research services support risk management practices that help investors, insurers and others lower risk and improve performance with objective ratings and reports.

The basis by which it determines which companies are in trouble is to look at three methods for examining firms tha may be in trouble. Audit Integrity says“Each of these three approaches – accounting-based, market-based, fraud-based –is moderately effective on a stand-alone basis in predicting bankruptcies. Since the models are not highly correlated, each model has the potential to add incremental value to the other models. Audit Integrity combined the three approaches to determine whether the accuracy ratio of an aggregate model would surpass that of any single approach.”

The list does include some companies that are probably in deep financial trouble including Rite Aid (RAD) and Macy’s (M).

Also listed are American Air (AMR), which just raised $2.9 billion, which the analysis probably does not take into account. Transportation companies Continental Air (CAL) and Hertz (HTZ) are on the list.

Some of the better known public companies that have been targeted by Audit Integrity include advertising giant Interpublic (IPG) and US tire company Goodyear (GT). Not surprisingly, Las Vegas Sands (LVS), a casino firm that has battled for its life for months is included.

The balance of the list is Federal Mogul (FDML), Textron (TXT), Liberty Media Capital (LCAPA), Mylan (MYL), Apartment Investment and Management (AIV), Redwood Trust (RWT), Oshkosh (OSK) and Amkor (AMKR).

Douglas A. McIntyre

Posted in Research Tagged: AIV, AMD, AMKR, AMR, CAL, CBS, FDML, GT, HTZ, IPG, LCAPA, LVS, MYL, OSK, RWT, S, SIRI, TXT