Fidelity Launches Mobile Wallet – Analyst Blog
Fidelity National Information Services Inc. (FIS) recently collaborated with mobile payments technology provider, Paydiant, to launch a cloud-based mobile payment solution, namely FIS Mobile Wallet. The solution, which is currently being implemented by a number of clients on a pilot basis, allows customers to use smartphones to make purchases at the point-of-sale (POS) as well as for online shopping.
The cloud-based payment solution is readily accessible through most smartphones and can be easily integrated into retailers’ and financial institutions’ existing mobile applications. Smartphone users are only required to download an application from their financial institution or retailer, attach their payment card information and then use the solution to make purchases.
FIS Mobile Wallet uses quick response barcode (QR code) technology to execute transactions. The technology uses smartphones’s camera as a scanner to read two-dimensional bar codes, storing the payment information for direct billing through the carrier.
The QR technology has gained popularity among both retailers and financial institutions as compared to near-field communication (NFC) technology. NFC has been much criticized due to higher cost of installing the chips in phones and the cost of upgrading merchants' terminals to accept contact-less transactions.
However, the unique feature of FIS Mobile Wallet is that no payment credentials such as Pin numbers are needed to be stored on the smartphone or shared with the POS device at any point of the transaction. This makes the whole transaction process secure and more customer friendly.
According to a recent consumer survey conducted jointly by Javelin Strategy & Research and PaymentOne Corp, the majority of respondents are apprehensive about using their credit cards for online transactions mainly due to privacy and security concerns. However, respondents believe that direct carrier-billed mobile payments are more secure than using credit and debit cards for online digital purchases.
We believe that this shift in consumer behavior bodes well for mobile payments services providers such as Fidelity. Most recently, Fidelity made a strategic investment in mobile banking and payments services provider mFoundry, reflecting its continued focus on this fast growing market.
As more and more financial and banking institutions look to differentiate their services by providing mobile banking, we believe that increasing investment on this technology will boost Fidelity’s client base going forward.
However, we note that Fidelity is a late entrant in the mobile payment market, which is already crowded with big banks and telecom providers with their own products such as ClearXchange, Google’s (GOOG) Wallet, ISIS, Visa (V) and PayPal, thus making it difficult for the company to achieve significant growth in the near term.
We maintain our Neutral recommendation on a long-term basis (for the next 6 to 12 months). Currently, Fidelity has a Zacks #3 Rank, which implies a short-term Hold rating (for the next 1-3 months).
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TOTAL Expands in Asia – Analyst Blog
Integrated oil and gas company TOTAL S.A. (TOT) decided to expand its Asian footprint by making fresh investments in its existing operation in South Korea. TOTAL started an operation in South Korean through a 50/50 joint venture with Samsung in 2003.
The alliance resulted in the creation of Samsung Total Petrochemicals, which looks after the Daesan complex in South Korea. The new investment will be directed towards upgrading as well as creating another aromatics unit and an ethylene-vinyl acetate (EVA) copolymer unit in the complex.
The EVA unit will have a capacity to produce 240,000 metric tons per year of ethylene-vinyl acetate copolymers and the aromatics unit will produce 1 million metric tons of paraxylene and 420,000 metric tons of benzene annually. The project is slated to be completed by September 2014.
The $1.8 billion capital outlay will enable the company to meet increasing demand for these chemicals in Asia. The strategy of the company is to expand its petrochemicals operations in regions where it has a high growth trajectory of demand.
During the third quarter 2011, net income from TOTAL’s Chemical segment declined year over year. The dip in petrochemical margins from Europe and US dragged down results, while it was offset to some extent from the strong performance in Qatar and South Korea units.
TOTAL continues to leverage its solid financial position and expand its operations around the globe. Within a span of a month, the company expanded its presence across three continents. The latest growth spurt is in Asia. Interestingly, the strategy for growth and expansion incorporates all aspects of TOTAL’s business operation.
In US, the company entered into a deal with Chesapeake Energy Corporation (CHK) to mark an entry in the liquids-rich area of the Utica Shale play. In Africa, the company received two exploration licenses, one onshore and the other offshore, from the Mauritanian government to carry out exploration activities in the liquid rich assets. While in Australia, TOTAL teamed up with Japan’s INPEX CORPORATION to invest $34 billion in the Ichthys liquefied natural gas (LNG) project.
TOTAL S.A. currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
France-based TOTAL is one of the largest publicly traded, globally integrated oil and gas companies based on production volumes, proved reserves and market capitalization. The company has exploration and production operations spanning five continents.
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Abercrombie Stays at Neutral – Analyst Blog
We are maintaining our long-term Neutral recommendation on Abercrombie & Fitch Company (ANF) with a target price of $48.00. Moreover, the company has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
Abercrombie, one of the leading specialty retailers of premium casual apparels in the U.S., has a strong portfolio of well-established brands. Each of these brands is focused on the unique characteristics and rapidly changing preferences of its target customers.
In an effort to improve cash flow and enhance management’s focus toward core brands, the company has terminated its entire chain of underperforming RUEHL branded stores and associated direct-to-consumer operations. This is expected to increase its long-term profitability.
Abercrombie is focused on increasing its presence in international markets as a means to drive top-line growth. During fiscal 2011, the company plans to open stores in Paris, Madrid, Dusseldorf, Brussels, Dublin and Singapore under its Abercrombie & Fitch flagship chain. Apart from this, the company intends to open 40 international mall-based Hollister stores, providing a strong upside potential to the company.
However, Abercrombie does not own or operate any manufacturing facility and therefore purchases all its merchandise requirements from outside. The company’s operation may be adversely affected if these manufacturers are not able to ship orders on time or meet its standards.
In addition, Abercrombie’s business is seasonal in nature and generates a high proportion of sales during the fiscal third and fourth quarters, which are characterized by the back-to-school and holiday seasons. Furthermore, the company ramps up its merchandise levels in anticipation of the holiday season, exposing itself to significant risks, if the season fails to deliver encouraging results.
Above all, Abercrombie operates in a highly fragmented market and competes with national as well as regional players. Furthermore, apart from larger retailers such as Gap Inc. (GPS), Abercrombie is facing increasing competition from value-priced specialty retailers such as Aeropostale Inc. (ARO) and Buckle Inc. (BKE).
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Evidence of Estimates, Revisions Moving the Market – Voice of the People
Zacks highlights commentary from People and Picks Member «JohntheWizard».
For more Voice of the People, visit http://at.zacks.com/?id=7872
Featured Post
The evidence for estimates and revisions thereof moving the stock market
Just surf for the words “anomaly and excess returns”.
I keep reading that there is plenty of evidence that forecasted analysts’ expectations over the coming year have long been proven to be a significant anomaly (=abnormality) of giving excess returns; and that there are others concerning EPS forecast, Dividend forecast, and surprise forecast. Zacks emphasizes it is more the revisions of those forecasts (=estimate revisions) that move the share prices.
Most of the evidence dates from before 2000. Despite black Monday in 1987, practically every trading strategy worked in the eighties and nineties. Excessive in this world means some 5% above the benchmark. The benchmark (S&P500) compounded 14%/year during those days, 17%/year including dividends. Excessive returns were thus of the order of 22%/year. Those were the days.
The best 30 of the 85 stocks I selected back in April on the basis of what Mo and JaiH considered as safe stocks compounded 28%/year during those days, truly abnormal and excessive.
During the past four weeks of the MarketWatch fantasy contest, the benchmark rose 4.7%. Abnormally excessive returns should have been of the order of 5%/4wks. The best of the 1250 contestants compounded less than 2%. The best 30 of our 85 stocks did 2.7%/4wks.
If you just make a watch list of stocks that, like Apple, kept year-over-year increasing their Net Earnings during the past eight years and take the best 30 of those 122 stocks, these best 30 compounded 9.7%/4wks. Those are truly abnormal returns during those past 4 weeks.
Such a watch list can be easily made putting that query of 8 years of y-o-y increasing Net Earnings in Research Wizard. During the past 32 years, these weekly rebalanced best 30 stocks compounded 29%/year with a maximum drawdown of -32%.
Now here is the true winner of these past four weeks. If you would have taken the best 30 of the Zacks Rank #1 stocks, you would have made 10.4%, truly abnormally abnormal! With these same selection criteria applied during the past 12 years (the maximum time span that RW allows you to take), these 30 best stocks compounded 50%/year with a maximum drawdown of -51%.
Since the onset of the credit crisis, October 12, 2007, these 30 best made 20%/year, however with that risk of -51%. The 30 best Apples compounded 32%/year with much less risk of -27%. The best 30 of these 85 safe stocks selected here at P&P compounded 23%/year with a risk of -18%.
So take your picks that suit you best. But remember, these are just gaming scenarios. Zacks Ranking works only that well for small caps that only allow for relatively small investments with abnormal risks. Practically no person in this world is ready to take hits of -50%.
And there is pretty solid evidence that any form of stop-loss system during holding periods for your individual picks worsens the risks and performance. In addition, one-day slippage often takes -5%/year of the performance and deteriorates the risks. The 12 picks I show this week at P&P are just the 12 best of the Apples of this world.
I am seriously interested in finding the cause of these abnormally excessive returns. The techniques for identifying causality in historical data using computational finance are controversial at best. Can someone help me on this point?
The most recent picks by «JohntheWizard» are:
A buy rating on Campbell Soup (CPB),
a buy rating on CVS Caremark (CVS) and
a buy rating on Micros Systems (MCRS).
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BofA Hires Small Business Bankers – Analyst Blog
Yesterday, Bank of America Corporation (BAC) declared the hiring of 51 small business bankers in England, including 32 in Massachusetts, 14 in Connecticut and the remaining in Rhode Island to offer guidance and counsel to local small business owners.
This hiring is a part of BofA’s previously announced plan to hire more than 1,000 small business bankers across the country by mid-2012. Initially the hiring started in the Baltimore-Washington DC, the greater Los Angeles and Dallas.
According to the U.S. Small Business Administration, there are about 594,487 small businesses with less than 500 employees in Massachusetts alone. Of the total, 138,846 are employers who account for about 47.8% of private-sector jobs in the state.
Moreover, small businesses including both employers and non-employers totaled to 97.9% of the state’s businesses. Further, in Connecticut and Rhode Island, companies with less than 500 staffs totaled to 400,000.
These small business owners often face unique and complex financial demands. These demands require customized guidance and attention from a small business banker, who can understand their unique needs. Therefore, BofA is hiring small business bankers in order to tap the huge demand for personalized help in the region.
Through a relation with BofA’s small business banker, a small business owner will be able to access local expertise and a dedicated resource who properly understands its exclusive needs. The small business banker will evaluate the business owner’s credit, deposits, payroll and cash management needs besides providing guidance. This, in turn, will enable these businesses to better manage their finances and run their business more efficiently.
In 2011, BofA extended new originations worth $6.4 billion to small businesses, thereby enhancing new credit to these businesses by 20%. Moreover, the company hired more than 500 small business bankers in 2011.
Further, BofA is increasing its spending to buy product and services from these small companies. In June 2010, the company had pledged to purchase $10 billion worth of product and services from small businesses over the next half decade, with a 5% increase in spending every year.
Additionally, in 2011, BofA had also launched small business charge cards, which significantly help small businesses to control their payment and manage expenses. Apart from these, BofA’s efforts to help small businesses also include development of the Advisor Alliance retirement plan platform (serving more than 950,000 people from about 40,000 businesses).
Along the same path with BofA, JPMorgan Chase & Co. (JPM) and Wells Fargo & Company (WFC) are also trying to accelerate economic recovery by lending to small businesses.
Currently, the shares of BofA retain a Zacks #4 Rank, which translates into a short-term Sell rating. Also, considering the company’s fundamental weakness, we have a long-term Underperform recommendation on the stock.
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U. S. Bancorp on Acquisition Spree – Analyst Blog
U.S.Bancorp (USB) is on an acquisition spree. In an effort to expand its trust business, the company’s lead bank, U.S. Bank National Association, has agreed to acquire the Indiana corporate trust business of UMB Bank, a subsidiary of UMB Financial Corporation (UMBF).
The deal is expected to be accomplished on March 2, 2012. However, the terms of the agreement were not disclosed by the company. To ensure a faultless transition, the U.S. Bank Global Corporate Trust Services team will work in collaboration with the Indiana representatives of UMB Bank.
With more than $4 trillion in assets under administration in municipal, corporate, asset-backed and international bonds, U.S. Bank Global Corporate Trust Services is one of the largest providers of trustee services.
Acquisitions
Last Friday, through its lead bank, U.S. Bancorp acquired the banking operations of BankEast, a subsidiary of BankEast Corporation, in a deal assisted by the Federal Deposit Insurance Corporation (FDIC). BankEast is based in Knoxville, Tennessee.
In early 2011, U.S. Bank completed the purchase of Bank of America Corp.’s (BAC) U.S. and Europe-based securitization trust administration businesses. This transaction included $1.1 trillion of assets under administration and provided U.S. Bank with approximately $8 billion of deposits during its closure.
The acquisition strengthened U.S. Bancorp’s position as a leader in the structured finance trust business and posed as a great complement to its corporate and municipal trust business. Moreover, the acquisition provided the bank with a prospect of expanding its presence in the European market with offices in Ireland and London.
In 2011, U.S. Bancorp acquired the banking operations of First Community Bank (New Mexico), a subsidiary of First State Bancorporation, in an FDIC-assisted deal. Given its asset base, First Community Bank was New Mexico’s third-largest bank. The deal added 35 New Mexico and 3 Arizona branches together with over 50,000 new deposit customers.
Our Take
U.S. Bancorp has a well-balanced business model, with non-interest revenue representing nearly half of its total revenue. Its results have been driven by a combination of acquisitions and organic growth. Also, we expect continued investments in core banking and fee-based operations to generate long-term revenue growth.
Going forward, we expect U.S. Bancorp to benefit from its diversified revenue base and strategic acquisitions, thereby posting growth in core earnings going forward. Yet, a sluggish economic recovery and low interest rate environment along with regulatory issues remain our concern.
U.S. Bancorp shares maintain a Zacks #2 Rank, which translates into a short-term Buy recommendation.
BANK OF AMER CP (BAC): Free Stock Analysis Report
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Int’l Paper, TIN Extend Review Time – Analyst Blog
The International Paper (IP) – Temple-Inland (TIN) merger has been delayed as both parties have agreed to extend the U.S. Department of Justice's (DOJ) review period till February 13, 2012. The extended timeline will provide both parties the time to resolve DOJ's concerns regarding the transaction and enter into a definitive agreement on terms that are acceptable to all.
The DOJ approval remains the only hurdle in the creation of a company that would enjoy about 40% share of the North American corrugated packaging materials market. In December last year, the merger had been approved by more than 98% of Temple’s shareholders.
The pursuit of Temple-Inland had begun in June with International Paper making a $3.3 billion or $30.60 per share offer, all in cash, to buy the former. However, Temple-Inland rejected the offer stating it grossly undervalued its business and was, therefore, not in the best interest of its shareholders. Finally, in September, International Paper inked a deal to acquire Temple-Inland for $32.00 per share in cash. The deal also included assumption of $600 million in Temple-Inland's debt, taking the deal value to $4.3 billion.
In November, International Paper priced a sale of $1.5 billion in debt to fund the acquisition. The proceeds along with other debt financing and cash will be used to fund the purchase. The company ended the third quarter with cash and cash equivalents of $2.72 billion and a debt-to-capitalization ratio of 53.3%.
The takeover is International Paper’s largest since its August 2008 acquisition of Weyerhaeuser Co.’s (WY) corrugated-packaging business for $6 billion. The acquisition of Temple-Inland will further strengthen its foothold in the North American containerboard market besides bringing in more efficiency by way of integration, rationalization and optimization.
The alliance is likely to aid in cost cuts at the corrugated-packaging business and increase the overall bottom line in the very first year. The acquisition is also expected to yield synergies of $300 million annually within two years of closing, derived largely from operations, freight, logistics, selling expense and overheads.
The company relies on its merger and acquisition strategy to strengthen its business over the long term. Recently, in a strategic bid to tap India’s growing paper and packaging market, the company completed the acquisition of a majority stake in leading Indian paper company Andhra Pradesh Paper Mills Limited.
Furthermore, through its joint ventures, International Paper has significant projects underway in Russia and China. These will help the company sustain its earnings growth. We expect International Paper to continue utilizing its sound cash flow by investing in capital projects, acquisitions and reducing its total debt.
We retain an Outperform recommendation on International Paper. The quantitative Zacks #3 Rank (short-term Strong Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
Memphis, Tennessee-based International Paper is a global paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia and North Africa. International Paper conducts its businesses through five segments: Printing Papers, Industrial Packaging, Consumer Packaging, Distribution (Xpedx) and Forest Products. International Paper competes with the likes of MeadWestvaco Corporation (MWV) and Weyerhaeuser.
Austin, Texas-based Temple-Inland is a manufacturing company focused on corrugated packaging and building products. The fully integrated corrugated packaging operation consists of 7 mills and 57 converting facilities. The building products operation manufactures a diverse line of building products for new home construction, commercial and repair and remodeling markets.
INTL PAPER (IP): Free Stock Analysis Report
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ITW’s 4Q Outperforms Estimate – Analyst Blog
Illinois Tool Works Inc. (ITW) reported its financial results for the fourth quarter and fiscal year 2011 on January 31. Earnings per share from continuing operations were 90 cents, an increase of 36.4% year over year and two cents above the Zacks Consensus Estimate of 88 cents and in line with the mid-point of management’s guidance range of 86-94 cents.
The reported quarter’s earnings excluded one cent of income from discontinued operations, including which earnings came in for roughly $1.00 per share.
For the fiscal year 2011, earnings per share came in at $4.08, excluding 11 cents of income from the continuing operations. Results surpassed the Zacks Consensus Estimate of $3.73.
Revenue
Operating revenue in the fourth quarter increased 10.4% year over year to $4,319.3 million, but failed to surpass the Zacks Consensus Estimate of $4,357 million.The year-over-year increase in operating revenue symbolized continued improvement in end-market demand. The year-over-year improvement was in line with management’s projected growth range of 9.5%-12.5%.
Of the total revenue, base revenue in the quarter grew 5.9% year over year, registering an 8.7% increase in North American and a 3.0% hike in international revenues. Acquisitions added 4.7% while currency translation negatively impacted revenue growth by 0.4%.
Revenue in the Power Systems and Electronics segment rose increased 16.0% year over year to $714.3 million in the quarter with base revenue increase of 10.2%, due to strong performance in the wielding and consumable business. Revenue in the Transportation segment soared 20.9% year over year to $757.4 million, with a base revenue increase of 8.7%.
Industrial Packaging soared 7.2% to $618.9 million while Food Equipment rose 3.8% to $507.0 million. Construction Products revenue increased 3.3% to $461.5 million; Polymers & Fluids revenue was $316.7 million, up 11.7% year over year; Decorative Surfaces revenue increased 2.9% to $248.1 million; and revenue from All Other sources increased 8.3% to $711.6 million. Intercompany revenue in the quarter was ($16.2) million.
For the fiscal year 2011, operating revenues were $17,786.6 million, an increase of 15.4% year over year. Results, however, lagged behind the Zacks Consensus of $17,877 million.
Margins
Cost of goods sold in the quarter increased 7.4% year over year and represented 64.8% of total revenue; slightly down from 66.6% in the year-ago quarter. Selling, administrative and R&D expenses, as a percentage of total revenue, stood at 18.6%. Operating margin in the quarter was 15.0%, up 270 basis points year over year.
Balance Sheet
Exiting the fourth quarter, Illinois Tool Works’ cash and cash equivalents decreased 10.7% sequentially to approximately $1,177.9 million. Long-term debt, net of current portion decreased to $3,488.2 million from $3,522.1 million in the third quarter of 2011.
Cash Flow
Net cash flow from operating activities in the quarter was $711.7 million, up from $356.2 million in the year-ago quarter. Capital expenditure increased to $94.5 million versus $88.1 million in the year-ago quarter. Free cash flow was approximately $617.2 million versus $268.0 million in the third quarter of 2010.
Outlook
For full-year 2012, management expects earnings in the range of $4.02-$4.26 based on total revenue growth assumption of 5.0%-8.0%. Earnings for the first quarter of 2012 are expected to be within the 89-97 cents range based on total revenue growth assumption of 6.0%-9.0%.
Illinois Tool Works is one of the leading manufacturers of industrial products and equipment. The company’s chief competitors include Cooper Industries plc (CBE), General Electric Co. (GE) and Manitowoc Co. Inc. (MTW).
We currently maintain a Neutral recommendation on the stock.
COOPER INDS PLC (CBE): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
ILL TOOL WORKS (ITW): Free Stock Analysis Report
MANITOWOC INC (MTW): Free Stock Analysis Report
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Earnings Preview: Allergan – Analyst Blog
Allergan, Inc. (AGN) is scheduled to announce its fourth quarter and full year 2011 results on February 2, 2012, before the opening bell. The Zacks Consensus Estimate for the fourth quarter is $1.00 (year-over-year increase of 13.6%) on revenues of $1,408 million (year-over-year increase of 7.6%). This is just above the company’s fourth quarter guidance of 97-99 cents per share.
As per the Zacks Consensus Estimate, for fiscal 2011, earnings are expected to be $3.64 (year-over-year increase of 15.2%) on revenues of $5,420 million (year-over-year increase of 11.0%). The Zacks Consensus Estimate for 2011 is at the high end of the guidance range of $3.62–$3.64 per share provided by the company.
Third Quarter Recap
Allergan reported third quarter 2011 earnings of 92 cents per share, a penny above the Zacks Consensus Estimate and a few cents above the guidance range of 88–90 cents. Earnings increased 17.9% from the year-ago quarter.
Third quarter revenues increased 9.9% to $1,328 million, in line with the Zacks Consensus Estimate. Specialty pharmaceuticals sales increased 10.1% to $1,089.7 million, with eye care pharmaceutical sales increasing 7.5%. Products like Lumigan and Restasis helped drive eye care sales. A detailed discussion of third quarter results is available here.
Agreement and Magnitude of Estimate Revisions
Of the 23 analysts following the stock, 1 analyst revised the fourth quarter estimate upward and 1 trimmed the estimate in the last 30 days. There were no revisions during the last 7 days. For full year 2011, 1 out of 25 analysts slashed the estimate in the past 30 days, with 1 upside revision in the same period. None of the analysts revised their 2011 estimates in the last 7 days.
With no significant movement in estimate revisions, the Zacks Consensus Estimate for the fourth quarter of 2011 as well as the full year remains unchanged at $1.00 and $3.64, respectively.
Surprise History
Allergan has surpassed earnings estimates in three of the last four quarters. The company recorded a minimum surprise of negative 1.12% in the fourth quarter of 2010 to a maximum of 4.05% in the first quarter of 2011. On an average, the earnings surprise stood at 1.55%. Fourth quarter 2011 earnings are expected to come in-line with expectations.
Our Recommendation
We currently have a Neutral recommendation on Allergan, which carries a Zacks #3 Rank (short-term Hold rating).
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Meritage Misses by a Penny – Analyst Blog
Meritage Homes Corporation (MTH) recorded a broader loss of $11.8 million or 36 cents per share in the fourth quarter of 2011 compared with $895 thousand or 3 cents per share in the same quarter of 2010.
Excluding asset impairments and loss on early extinguishment of debt, the company had a profit of $2.1 million or 6 cents per share during the quarter under review, missing the Zacks Consensus Estimate by a penny. This compared with a loss of $295 thousand or 1 cent per share in the fourth quarter of 2010, excluding asset impairments and a tax benefit.
Total closing revenue rose 15% year-over-year to $246.0 million on a total of 894 homes closed in the quarter compared with 837 homes in the fourth quarter of 2010. It compared with the Zacks Consensus Estimate of $243.0 million. Net sales orders grew 5% to 749 units from 713 units in the 2010-quarter.
Home closing revenue increased 14% to $245.7 million driven by a 7% increases in both closing volume and average prices. The average closing price increased to $275 thousand from $256 thousand in the fourth quarter of 2010.
Higher average prices in the quarter reflected a shift in geographic mix, with a greater portion of closings in California, Arizona, Colorado and Florida, where home prices are generally higher, and a smaller portion in Texas, where home prices are generally lower.
Home closing gross profit improved 16% to $39.4 million in the quarter from $34.0 million in the prior-year quarter, driven by greater closing revenue and expanded margins on closings. Home closing gross margins increased to 16.0% from 15.8% in the fourth quarter of 2010, including impairments and to 18.8% from 18.1% in the fourth quarter of 2010, excluding impairments.
For the full year 2011, Meritage reported a loss of $21.1 million or 65 cents per share compared with a profit of $7.2 million or 22 cents per share in 2010. Excluding asset impairments, the company had a loss of $4.9 million or 15 cents per share in the year, which compared with the Zacks Consensus Estimate of a loss of 21 cents per share and the year-ago profit of $12.7 million or 39 cents per share (excluding real estate-related impairment charges, loss on extinguishment of debt and a net tax benefit).
Total closing revenue dipped 8.5% to $861.2 million in 2011, which is higher than the Zacks Consensus Estimate of $860.0 million. The company had 157 active communities as on December 31, 2011 compared with 151 as on December 31, 2010.
Meritage had cash and cash equivalents, restricted cash, investment and securities of $333.2 million as of December 31, 2011 compared with $412.6 million as of December 31, 2010.
Net debt stood at $273.2 million as of December 31, 2011 versus $193.1 million as of December 31, 2010. Net debt to total capital ratio was 35.8% as of December 31, 2011 compared with 27.9% as of December 31, 2010.
Based in Scottsdale, Arizona, Meritage Homes Corporation, which retains a Zacks #3 Rank (short-term Hold rating) stock, builds single-family homes for a broad range of homebuyers. The company also provides residential financial services including mortgage origination services for its homebuyers. Meritage’s key competitors include Lennar Corp. (LEN), KB Home (KBH) and DR Horton Inc. (DHI).
D R HORTON INC (DHI): Free Stock Analysis Report
KB HOME (KBH): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis Report
MERITAGE HOMES (MTH): Free Stock Analysis Report
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