HCI Group, GrafTech, Google and Advanced Micro Devices highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 17, 2014 /PRNewswire/ -- Zacks Equity Research highlights HCI Group (NYSE:HCI-Free Report) as the Bull of the Day and GrafTech (NYSE:GTI-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Google, Inc. (Nasdaq:GOOGL-Free Report) and Advanced Micro Devices (NYSE:AMD-Free Report).
Here is a synopsis of all four stocks:
Thanks in part to a quiet hurricane season in Florida, analysts have been raising their estimates for insurer HCI Group (NYSE:HCI-Free Report). It is currently a Zacks Rank #1 (Strong Buy).
HCI Group is a property and casualty insurance holding company. The company's largest subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., provides property and casualty insurance in the state of Florida.
Shares of HCI Group trade at less than 9x forward earnings and yield a solid 2.4%.
HCI Group delivered better-than-expected second quarter results on August 5. Adjusted earnings per share came in at $1.39, crushing the Zacks Consensus Estimate of $1.19.
Net premiums earned (defined as gross premiums earned less premiums ceded to reinsurance companies) increased 9% year-over-year. Net investment income was $1.5 million for the quarter compared with $295,000 in the same period last year. This increase was due to growth in the investment portfolio, which grew from $66.5 million at June 30, 2013 to $179.2 million at June 30, 2014.
The company's loss ratio (losses + loss adjustment expenses / net premiums earned) improved from 30.4% to an excellent 29.3%. However, the expense ratio (underwriting expenses + interest and other operating expenses / net premiums earned) increased from 27.0% to 34.4%.
The combined ratio (loss ratio + expense ratio / net premiums earned) increased from 57.4% to 63.7%.
Earnings estimates have been plummeting for GrafTech (NYSE:GTI-Free Report) lately. The company lowered its full year EBITDA guidance twice within two months, prompting analysts to revise their earnings estimates significantly lower.
This sent the stock to a Zacks Rank #5 (Strong Sell).
While shares of GrafTech have sold off heavily lately, it still doesn't look like much of a value at 20x next year's earnings. Investors should consider avoiding this stock for now.
GrafTech International offers graphite material solutions for a wide range of industries and end markets, including steel manufacturing, advanced energy applications and electronics.
GrafTech delivered disappointing second quarter results back on July 29. Net sales dropped 6% to $284 million, driven by an 11% decline in the 'Industrial Materials' segment due to weaker graphite electrode realized pricing and lower needle coke sales volume.
Additional content:
Google Reports 20% Growth, Stock Sells Off
Internet search king Google, Inc. (Nasdaq:GOOGL-Free Report) reported Q3 earnings after the closing bell Thursday, with typical strong year-over-year revenue growth numbers somewhat evened out by traffic acquisition costs (TAC), leading to a miss on the bottom line. Google brought in $16.52 billion in sales for the September quarter -- up 20% from Q3 2013 and easily topping the Zacks consensus of $13.2 billion -- but earnings of $4.91 (accounting for TAC) missed our expectation of $5.34 per share.
Paid clicks were up 17% year over year and cost per clicks fell to -2% from the year-ago quarter. Google sites were also up 20% from a year ago, though Network site growth only up 9%. Networks also claimed a large majority of TAC in the quarter -- $2.42 billion of the $3.35 billion total.
So while growth remains steadily up and costs per click seemingly under control -- Q3 numbers are not vastly different than they were a quarter ago -- earnings have now missed expectations in each of the last 4 quarters. This likely has to do with non-core Google spending, much of which is still off in the distance for seeing profits. Overall operating expenses not related to the cost of revenues, reached $6.1 billion in the September quarter -- up from $4.58 billion a year ago and accounting for 37% of revenues.
Google shares are selling off 3% in the after-market at this time, though the company's price-to-earnings ratio is now down around 15x, indicating Google may become palatable for investors before long. The company's stock appears to be approaching its year-to-date lows. Google is currently a Zacks Rank #4 (Sell).
Chip-maker Advanced Micro Devices (NYSE:AMD-Free Report) also reported earnings after the bell, missing the Zacks consensus estimates on both top and bottom lines. Sales of $1.43 billion missed our expectation of $1.48 billion, and earnings per share of 3 cents was short of the 4 cents we had anticipated. AMD, a major producer of microprocessors for PCs, is in the throes of a wide-based management shift, including the recent announcement the company now has a new CEO. AMD is a Zacks Rank #4 stock, as well, and is down 4.55% in late-market trading.
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