The Zacks Analyst Blog Highlights: American International Group, MetLife, Prudential Financial, The Washington Post Company and The New York Times Company

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Aug 08, 2011, 09:30 ET

CHICAGO, Aug. 8, 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: American International Group Inc. (NYSE: AIG), MetLife Inc. (NYSE: MET), Prudential Financial Inc. (NYSE: PRU), The Washington Post Company (NYSE: WPO) and The New York Times Company (NYSE: NYT).

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Here are highlights from Friday's Analyst Blog:

AIG Misses, Rebound to Come

American International Group Inc. (NYSE: AIG) reported second quarter operating earnings of 69 cents per share that lagged both the Zacks Consensus Estimate of $1.15 per share and $1.18 per share reported in the year-ago quarter, due to an additional 1.655 billion shares issued to the U.S. Treasury Department on January 14, 2011.

However, operating income of $1.3 billion increased 60.9% from $793 million in the year-ago quarter.

On a GAAP basis, AIG reported a net income of $1.8 million or $1.00 per share as compared with net loss of $2.7 billion or $19.57 per share in the year-ago quarter.

The reported quarter included realized capital gains of $6 million against loss of $360 million the year-ago quarter, along with loss from divested operations of $1.0 million against gain of $36 million in the prior-year period and net income from divested operations of $10 million versus $467 million in the year-ago period.

Additionally net loss from discontinued operations was recorded at $49 million versus $2.62 billion in the year-ago quarter. It also included non-qualifying derivative hedging gains of $28 million compared with loss of $96 million in the year-ago quarter and deferred income tax valuation allowance release of $570 million against related charges of $576 million in the year-ago quarter.

AIG had also recorded amortization charge on the Federal Reserve Bank of New York (FRBNY) credit facility of $353 million in the year-ago quarter.

Results reflected retention of stability through American International Assurance Co. Ltd (AIA) coupled with its insurance operations managed to drive the premiums, pro forma book value per share and ROE during the quarter. These were, however, offset by higher catastrophe losses, underwriting losses and other unrealized losses amid the ongoing business restructuring process.

Peer Take

Last week, MetLife Inc. (NYSE: MET) reported second quarter operating earnings per share of $1.24, surpassing the Zacks Consensus Estimate of $1.11 per share and $1.10 per share in the year-ago quarter. Operating earnings jumped 45% year over year to $1.33 billion from $914 million in the year-ago period, driven by robust growth from ALICO – acquired from AIG last year.

On Wednesday, Prudential Financial Inc. (NYSE: PRU) reported second quarter earnings of $1.71 per share that topped the Zacks Consensus Estimate of $1.55 as well as the prior-year quarter's earnings of 88 cents. Results were aided by solid performance in the company's U.S. annuities and asset management businesses as well as its international insurance operations that drove the top- and bottom-line significantly. As a result, the company has also hiked its dividend by 20%.

Washington Posts Beats Estimate

The Washington Post Company (NYSE: WPO) recently posted second-quarter 2011 results. The quarterly earnings of $5.92 per share marked a substantial decrease from $11.04 delivered in the prior-year quarter due to sluggishness witnessed in the students' enrollment and weak advertising demand.

However, the quarterly earnings surpassed the Zacks Consensus Earnings Estimate of $5.87 per share.

On a reported basis, including one-time items, quarterly earnings came in at $5.74 per share, reflecting a sharp decline from $10 posted in the year-ago quarter.

Revenue for the quarter dropped 10.4% to $1,073 million from the prior-year quarter, reflecting sluggish performance in the Education and Newspaper Publishing division. However, the quarterly revenue came ahead of the Zacks Consensus Revenue Estimate of $1,064 million.

Education division's revenue went down 15.4% to $628.7 million, reflecting 28.6% decrease in Higher Education revenue partially offset by 20.9% rise in Kaplan International revenue and 29.8% rise in Kaplan Ventures revenue. Total operating income for the division plunged 81.8% to $20.5 million.

Due to lower student enrollments total Kaplan Higher Education enrollments plunged 30% to 78,534 as of June 30, 2011, excluding the Kaplan University School of Continuing and Professional Education.

Moving ahead, the company expects the operating income in Higher Education segment to continue to decline significantly in the current fiscal due to lingering lower student enrollments and additional restructuring costs.

Kaplan Higher Education launched a new program called 'Kaplan Commitment', under which, the students of Kaplan University, Kaplan College and other Kaplan Higher Education schools may register to undergo classes to evaluate whether their educational experience commensurate with their needs before incurring a financial obligation. Kaplan will also carry out academic evaluation in order to gauge the probability of the student's success in the chosen field of study.

The company also notified that those students who wish to withdraw from the program during the stipulated period, defined as risk-free period, and students who do not clear the academic assessments will not be required to pay for the coursework.

New student enrolments dropped 47% during the quarter, negatively impacted by number of students that chose to discontinue after the risk-free period along with sluggish demand.

Television Broadcasting revenue inched up 2.9% to $84.9 million during the quarter, whereas operating income increased 9.4% to $32.6 million, reflecting better advertising demand. However, Political advertising revenue also went down $2.5 million during the quarter.

Cable division revenue saw a marginal increase of 0.3% to $191.2 million from $190.6 million in the year-ago quarter, reflecting revenue growth in the Internet and telephone offset by the rise in promotional money offs. The division's operating income was $40.4 million, down 7.8% compared with the previous-year quarter.

Newspaper Publishing revenue came in at $162.8 million, down 5.7% from $172.7 million in the year-ago quarter. Print advertising revenue at The Washington Post declined 11.4% to $66.6 million, reflecting a fall in classified and general advertising.

Revenue from newspaper online publishing activities, principally washingtonpost.com and Slate, came down 13% to $23.4 million, whereas display online advertising revenue decreased 16%. Online classified advertising revenue on washingtonpost.com inched down 2%.

During the first six months, the company marked a 4.5% decrease in daily circulation coupled with a 4.1% decrease in its Sunday circulation year over year.

The Newspaper divisions operating loss stood at $2.9 million, reflecting a sharp improvement from an operating loss of $14.3 million witnessed in the prior-year quarter.

Currently we maintain our long-term 'Neutral' recommendation on the stock. Moreover, The Washington Post, which faces stiff competition from The New York Times Company (NYSE: NYT), holds a Zacks #2 Rank, which translates into a short-term Buy rating.

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