The Zacks Analyst Blog Highlights: First Solar, General Motors, Ford Motor, Honda Motor and Toyota Motor
CHICAGO, Jan. 16, 2014 /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 the First Solar, Inc. (Nasdaq:FSLR-Free Report), General Motors Company (NYSE:GM-Free Report), Ford Motor Co. (NYSE:F-Free Report), Honda Motor Co., Ltd. (NYSE:HMC-Free Report) and Toyota Motor Corporation (NYSE:TM-Free Report).
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Here are highlights from Wednesday's Analyst Blog:
Bullish on FirstSolar
On Jan 14, 2014, Zacks Investment Research upgraded First Solar, Inc. (Nasdaq:FSLR-Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
First Solar reported positive earnings surprises in 2 out of the past 4 quarters with an earnings beat of 33.6%. The company's long-term expected earnings growth is pegged at 10%.
In the third quarter of 2013, the company's top and bottom line surpassed the Zacks Consensus Estimate and the year-ago figures, primarily on the back of the Desert Sunlight and ABW projects, a surge in systems business project revenues and higher module sales to third-party customers.
Tempe, Ariz.-based First Solar is a comprehensive photovoltaic ("PV") solar systems provider. The company has operations in several countries in North and South America, Europe, the Middle East, Africa and Asia. With its prominent presence in Japan and France, the company is expanding its operations in the emerging solar markets of India, Indonesia and the Middle East.
Globally, demand for renewable resources is gradually rising mainly due to a growing awareness among the masses about its benefits; thereby influencing utility providers to shift to solar, wind and water. We view this growing demand for solar powered energy as a catalyst for First Solar's future operating as well as financial results.
We note that most of the U.S. states have rolled out renewable portfolio standards for electricity generation or have laid down targets for the future. The utility providers continue to diversify their power generation assets while adding new renewable infrastructure to their portfolio.
We remind investors that First Solar has a strong relationship with the U.S. utility companies and wins orders at regular intervals. On Nov 12, 2013, the company inked a power purchase agreements ("PPA") with member cities of the Southern California Public Power Authority to provide electricity, generated from the 40 megawatt ("MW") AC Kingbird photovoltaic solar power plant in Kern County, California.
Apart from winning orders from the domestic companies, First Solar is continuously receiving orders from the international clients for solar modules and other allied services.
Particularly, the company received numerous orders from the Japanese companies in 2013. In Nov 2013, First Solar started construction of a solar project in Kitakyushu-shi, Japan. In addition, the company signed an agreement with JX Nippon Oil & Energy Corporation to supply its high efficiency solar PV modules in Japan. The complete phase out of the nuclear reactors in Japan following the Fukushima disaster has increased demand for alternate resources to power this highly industrialized nation.
irst Solar's steady effort towards improvement of the product quality and service standards will help it to become an important solar product provider in the U.S. solar industry and in the global sphere. This will subsequently enable the company to receive orders at regular intervals. In addition, winning of the PPA ensures the company a steady cash inflow.
The present valuation also makes First Solar attractive. As of Jan 14, 2014, the company's forward P/E multiple was 14.5x, a discount of 43.4% to the peer group average of 25.6x. The company's return on equity of 12.8% was significantly higher than the peer group average.
GM Reinstates Dividend
General Motors Company (NYSE:GM-Free Report) has finally reinstated its quarterly dividend, which was discontinued in 2008. The company announced a quarterly dividend of 30 cents per share, payable on Mar 28, 2014, to shareholders of record as of Mar 18, 2014.
The quarterly dividend translates into an annual dividend yield of about 3%, based on the closing share price of $40.02 as of Jan 14, 2014. The reintroduction of its dividend was highly awaited by investors, now that General Motors is free from government shareholding and is generating positive cash flows.
The announcement resulted in a 1.5% increase in General Motors' share price to $40.16.
The reinstatement of dividend came on the back of General Motors' strong balance sheet, stable earnings, high cash flows and ample liquidity. The automaker has more or less recovered from the effect of the recession and bankruptcy and has completed 15 consecutive quarters of profitable operations. The fourth quarter of 2013, whose results are scheduled to be announced before the market opens on Feb 6, 2014, is expected to be the 16th profitable quarter.
The cash flows of General Motors have also improved. During the third quarter of 2013, the company had a net cash flow of $3.3 billion from automotive operations, up from $3.1 billion in the year-ago period.
The company now intends to build a strong balance sheet that can provide ample returns to shareholders as well as endure the impact of any economic weakness.
General Motors' peer, Ford Motor Co. (NYSE:F-Free Report), recently increased its dividend for the first quarter of 2014 by 25% to 12.5 cents per share. The new dividend will be paid on Mar 3, 2014 to holders of the outstanding Class B and common stock. The record date for the quarterly dividend is Jan 31, 2014. The increase amounts to a dividend yield of 3.2% per annum, based on the closing share price of $15.84 as of Jan 9, 2014.
General Motors, which carries a Zacks Rank #3 (Hold), is one of the largest automobile producers in the world along with Ford, Honda Motor Co., Ltd. (NYSE:HMC-Free Report) and Toyota Motor Corporation (NYSE:TM-Free Report).
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