The Zacks Analyst Blog Highlights: ConocoPhillips, CNOOC, Chevron, Marathon Oil and Brown-Forman

CHICAGO, Sept. 1, 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: ConocoPhillips (NYSE: COP), CNOOC Ltd. (NYSE: CEO), Chevron Corporation (NYSE: CVX), Marathon Oil Corporation (NYSE: MRO) and Brown-Forman Corp. (NYSE: BF.B).

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Here are highlights from Wednesday's Analyst Blog:

More Spills, More Trouble for Conoco

U.S. oil giant ConocoPhillips (NYSE: COP), already in the grip of growing public condemnation and law suits for its earlier oil spills off China's northern coast near Platform C of the 19-3 Oilfield in the Bohai Bay, has admitted to about seven new leaks to State Oceanic Administration (SOA).

The case of enormous oil spill in Penglai 19-3 oilfield is not yet over. The Chinese unit of ConocoPhillips confessed to the SOA that it had showed inefficiency by not detecting the possible leakage points ahead of the spill.

SOA is rigorously collecting facts and examining the field so as to measure the extent of marine loss and pollution caused due to contamination of the oceanic environment. Under SOA's supervision, ConocoPhillips has collected 387 cubic meters of spilled oil accounting for about 96.87% of the total oil spill from the platform.

Since the leaks were first reported in June, it is estimated that a total of 5,500 square kilometers of the bay's surface has been polluted, with 870 square kilometers adversely infected.

Allegations have been levelled against Conco for losses incurred in local tourism and aquatic industries; while oil spills have reached the beaches in Hebei and Liaoning province.

Situated 375 kilometers from Beijing, Penglai 19-3 is China's largest offshore oilfield. ConocoPhillips is the operator of the field with a 49% interest while the state-owned CNOOC Ltd. (NYSE: CEO) owns the remaining 51% interest.

For the long term, we maintain a Neutral recommendation on ConocoPhillips and expect it to perform in line with the broader market indices. The company faces tough competition from Chevron Corporation (NYSE: CVX) and Marathon Oil Corporation (NYSE: MRO).

Brown-Forman Misses Estimates

Brown-Forman Corp. (NYSE: BF.B) recorded fiscal 2012 first-quarter earnings of 81 cents a share compared with 76 cents a share in the year-ago quarter. However, earnings missed the Zacks Consensus Estimate of 83 cents a share. The robust increase in quarterly earnings was primarily driven by strong top-line growth and strong volume growth.

Quarterly Details

Brown-Forman's net sales recorded a growth of 13.0% to $840.3 million from $744.9 million in the prior-year quarter. The growth was primarily attributable to solid performance in Germany, Turkey, the U.K., Russia, and Brazil more than offset declines in Poland, Spain, and Australia. Total Revenue beat the Zacks Consensus Estimate of $769 million.

During the quarter, Brown-Forman's gross profit grew 11.0% from the prior-year quarter to $378.8 million, while gross margin decreased 90 basis points (bps) year over year to 50.0%. Advertising expense fell 19.0% year over year to $76.3 million.

Selling, general and administrative expenses inched up 5.0% year over year to $139.0 million. Conversely, Brown-Forman's operating profit surged 8% from the prior-year quarter to $185.9 million, while operating margin contracted 100 times to 22.0% from the prior-year period.

Balance Sheet & Cash Flow

Brown-Forman ended the quarter with cash and cash equivalents of $552.5 million and long-term debt of $505.1 million compared with $567.1 million and $504.5 million in the prior-year quarter, respectively.

In the quarter, Brown-Forman generated $64 million of cash from operations and deployed $46.4 million for dividend payout, and $6.2 million on capital expenditures. The company repurchased up to $15.0 million of Class A and Class B shares, out of $250.0 million share repurchase program which expires on November 30, 2011.

Dividend

During the quarter, Brown-Forman paid a regular quarterly cash dividend of 32 cents a share on Class A and Class B common stock.

Guidance and Zacks Consensus

Moving forward, Brown-Forman anticipates moderate improvement in global economic conditions and customer trends in fiscal 2012. Accordingly, the company has delivered its earnings guidance in the range of $3.45 to $3.85 per share.

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