For Immediate Release
Chicago, IL – November 15, 2010 – Zacks.com Analyst Blog features: Pepco Holdings Inc. (POM), Chevron Corporation (CVX), Computer Sciences Corp. (CSC), Energy Transfer Partners L.P. (ETP) and Kinder Morgan Energy Partners L.P. (KMP).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Friday's Analyst Blog:
Pepco Gets $3.9 Million Contract
Pepco Energy Services Inc., a subsidiary of Pepco Holdings Inc. POM, has been awarded a $3.9 million contract to design and build a plant at the Alpha Ridge Landfill, near Baltimore.
The contract award by Howard County, Maryland, entails the construction of a new 1 MW landfill gas-to-energy generating plant at the Alpha Ridge Landfill.
The new plant will use methane gas as a fuel for a reciprocating engine and generator to produce 1 MW of electric power. The electric power produced at the plant will serve the local utility grid and provide power for electric vehicles used at the landfill.
This landfill gas-to-energy project demonstrates Howard County's vow to optimize its existing assets and to have a positive impact on the environment. It is one of the most important environmental-friendly projects for Howard County. The Howard County continues to look for all possible options to save energy, money and the environment.
The electricity sold at the plant will generate revenues for Howard County that will help offset their landfill costs. Additionally, at full capacity, the plant is expected to reduce roughly 5,400 metric tons of carbon dioxide emissions per year, which would otherwise be produced from traditional fossil fuel power plants.
Howard County indicated that the design and permitting for the project are currently underway. The plant is expected to become operational by early 2012.
Chevron Retains Neutral Rec
We are maintaining our Neutral rating on Chevron Corporation (CVX), reflecting lower-than-expected third quarter 2010 results. Higher costs incurred in association with the Gulf of Mexico (“GoM”) drilling moratorium and lower U.S. volumes have impaired the company's performance.
3Q10 Quarter Recap
Chevron's earnings per share (excluding foreign-currency effects) came in at $2.06, running behind the Zacks Consensus Estimate of $2.15. On a year-over-year basis, earnings moved up 14.4%.
Quarterly revenues hiked 6.6% year over year to $49.7 billion and exceeded our estimates by 3.3% amid stronger oil and gas realizations.
U.S. net oil-equivalent production dipped 7.1% from the prior year, while the international operations observed a 4.6% year over year rise in volumes.
At the end of the quarter, the company had $11.0 billion in cash and total debt of $10.6 billion, with a debt-to-total capitalization ratio of about 9.4%.
Outlook
Defying the jaded volume growth in the domestic sector in the quarter, Chevron comes up with a robust production outlook supported by the number of major deepwater projects scheduled to come online over the next few years. Major start-ups during the last few months include the Tahiti and Perdido in the GoM, Frade offshore Brazil and Tombua-Landana in Angola.
Lately, Chevron announced its plans to invest approximately $7.5 billion to develop two large fields – Jack and St. Malo – in deepwater GoM. The company has also acquired a 70% operated interest in three deepwater concessions in Liberia.
Our Take
Driven by a bundle of development projects all over the globe and the exploration prospects in China, Liberia and Turkey, we believe that Chevron will be able to achieve its long-term production growth target of 4–5% per annum for 2014– 2017.
Management's decision to restart the quarterly buyback of shares not only highlights the company's commitment to create value for shareholders but also underlines its confidence on commodity prices.
We also appreciate Chevron's refurbishment of its asset base through disposition of high-cost low-profit assets. Despite all these positive aspects, Chevron fails to escape the hazards associated with an exploration and production company. The exposure to volatile oil and gas prices and complex market forces continue to remain an overhang over the company's results.
Chevron's business in international markets faces risks such as embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil threat.
Moreover, the company also depends on property acquisitions to expand its resource base. Failure to seal lucrative deals in the future could negatively impact the growth rate.
CSC to License Billing Software
Virginia-based Computer Sciences Corp. (CSC)announced that it has signed a multi-year licensing agreement with leading insurance group, Shelter Mutual Insurance Company of Columbia. Financial terms were not disclosed.
As per the agreement, Computer Sciences will license its Exceed Billing Software to Missouri-based Shelter Mutual Insurance. The software adds new capabilities in the insurance business that make the billing process faster, more cost effective and the settlement of claims easier.
Shelter Mutual Insurance will deploy Exceed software suites for all its insurance businesses (life and personal and commercial property and casualty (P&C) insurance) as well as other businesses. By leveraging the enhanced capabilities of the software for an extended period of 11 years, the insurance company will be able to cut down costs related to billing services, particularly in the Midwestern and Southern states.
Computer Sciences' software will replace the insurance company's existing P&C legacy system. Along with the Exceed software, Shelter Mutual Insurance will also deploy Computer Sciences' multiple policy administration systems, including the CyberLife software specifically targeted at managing life insurance businesses.
In September, Computer Sciences inked a licensing and maintenance deal with a developing insurance company, to license its New Business Accelerator (nbAccelerator) and Insurance Optics Business Analytics solutions.
With the help of these solutions, the insurance carrier will be able to acquire new businesses, simplify its activities relating to submission of forms, processing of various insurance policies and assessment of customer data for analysis.
We remain encouraged by Computer Sciences' insurance deals since they are an indication of the effectiveness of its products. We look forward to a spate of similar deals, going forward.
However, Computer Sciences' unimpressive second quarter 2011 keeps us on sidelines. The quarter's top line missed the Zacks Consensus Estimate, although the bottom line was a penny ahead. Both revenues and earnings per share were down from the year-ago quarter.
Despite the quarter's disappointment, we remain optimistic about the company's outlook for fiscal 2011, based on its strong new business bookings, enhanced product portfolio, growing customer base and the economic recovery. However, contract delays are expected to keep a lid on earnings for the next quarter's earnings.
Currently, Computer Sciences has a short-term Hold recommendation, as is indicated by the Zacks #3 Rank.
ETP's Projects Nearing Completion
Energy Transfer Partners L.P. (ETP), a master limited partnership (“MLP”), announced that two pipeline projects (Fayetteville Express Pipeline and the Tiger Pipeline) that will transport shale gas further downstream, will come online several months ahead of schedule and significantly below budget.
The Fayetteville Express Pipeline (a 185 mile 42-inch interstate pipeline originating in the Fayetteville Shale and extending through Arkansas and into Mississippi) and the Tiger Pipeline (a 175 mile 42-inch interstate pipeline originating near Carthage, Texas and ending near Delhi, Louisiana) are both expected to be in service on December 1, 2010. Additionally, the combined project costs for these two pipelines are expected to total $2.02 billion, $200 million under most recent estimates and $480 million under original estimates.
The Fayetteville Express Pipeline – a 50/50 joint venture with Kinder Morgan Energy Partners L.P. (KMP)serving the Fayetteville Shale producing region in Arkansas with the capacity to move up to 2 billion cubic feet of natural gas per day – was earlier anticipated to be fully operational by the first quarter of 2011 (interim service started in early October).
Energy Transfer further noted that costs for the project are likely to total approximately $1.01 billion, $115 million less than the most recent estimate and down $290 million from the original projection.
On the other hand, the 100% Energy Transfer owned and operated Tiger Pipeline (aimed at serving the Haynesville Shale and Bossier Sands producing regions in Louisiana and East Texas) was originally scheduled to have its initial capacity of 2 billion cubic feet per day in service during mid-2011.
As of now, Energy Transfer expects project costs to be approximately $1.01 billion, down $85 million from the most recent estimate and down $190 million from the original projection.
The earlier-than-expected completion of these large-scale, interstate projects, together with the cost savings the partnership is able to achieve is likely to translate into significant distributable cash flows for Energy Transfer's unitholders in 2011 and the subsequent years.
Energy Transfer units currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com
COMP SCIENCE (CSC): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
ENERGY TRAN PTR (ETP): Free Stock Analysis Report
KINDER MORG ENG (KMP): Free Stock Analysis Report
PEPCO HLDGS (POM): Free Stock Analysis Report
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
