The Zacks Analyst Blog Highlights: General Electric Company, Comcast, Dover, Honeywell International and Reynolds American

CHICAGO, July 25, 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: General Electric Company (NYSE: GE), Comcast Corp. (Nasdaq: CMCSA), Dover Corp. (NYSE: DOV), Honeywell International Inc. (NYSE: HON) and Reynolds American Inc. (NYSE: RAI).

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Here are highlights from Friday's Analyst Blog:

General Electric Beats Estimates

General Electric Company (NYSE: GE) released its second quarter 2011 earnings results before the opening bell today, reporting earnings per share from continuing operation of 34 cents. This was above the Zacks Consensus Estimate of 32 cents and up 17% year over year.

This was the fifth consecutive quarter in which the company witnessed double-digit growth in earnings. Profits were primarily driven by strong demand internationally for heavy equipment including jet engines and electric turbines.

Revenue

Total revenue for the quarter declined 4% year-over-year to $35.6 billion, primarily due to the sale of a majority stake in its NBC Universal business to Comcast Corp. (Nasdaq: CMCSA). However, excluding this impact revenue grew 7% year over year. Revenues were above the Zacks Consensus Estimate of $34.6 million.

Total orders in the quarter increased by 24% year over year, with the total backlog reaching a record level of $189 billion. Orders for equipments increased a robust 33% and services orders were up 16%.

Balance Sheet

At the end of the quarter, GE had cash worth $91 billion. Year-to-date, the company has executed $1 billion of stock buybacks and $2.7 billion of stock buybacks.

Year to date, cash generated from Industrial operating activities totaled $4.4 billion.

General Electric currently holds a Zacks #3 Rank, which implies short term Hold recommendation.

Dover Outperforms, Guides Higher

Dover Corp. (NYSE: DOV) reported its second quarter earnings posting an EPS of $1.31, up from 91 cents in the year-earlier quarter. Excluding the charge of 12 cents pertaining to tax benefits, adjusted EPS increased 31.0% year over year to $1.19, outperforming the Zacks Consensus Estimate of $1.13.

Total revenue as Dover reported was $2.16 billion versus $1.79 billion in the year-earlier quarter, striding ahead of the Zacks Consensus Estimate of $2.08 billion. Increase in revenue was mainly due to strong energy markets and recovery in some of the infrastructure markets.

Costs and Margins

Dover reported cost of sales of $1.34 billion versus $1.10 billion in the year-ago quarter. Gross profit of the company increased to $815.9 million versus $688.7 million in the prior-year quarter. This led to a gross margin contraction of 70 basis points year over year to 37.8%.

Selling and administrative expenses also increased to $474.1 million in the reported quarter versus $423.8 million in the year-ago quarter. Operating profit soared to $341.7 million in the quarter versus $264.9 million in the prior-year quarter, thereby expanding operating margins 100 basis points year over year to 15.8%.

Outlook

Prior to the acquisition of Knowles Sound Solutions, the company now expects full year revenue growth in the range of 18% - 20%, representing an organic revenue growth of 12% - 14% and 6% growth from acquisitions. This is based on the assumption of higher volume, tax benefit and a slightly lower effective tax rate. The company also guides EPS in the range of $4.50 - $4.60.

Our Take

Dover continues to pursue strategic acquisitions in a bid to improve its product offerings and complement its organic growth strategy. The acquisition of Sound Solutions, the world's leading manufacturer of dynamic speakers and receivers for cell phones and other consumer electronics, will place Dover as the leading provider of acoustic products serving the fast growing cellular handset market.

Dover foresees strong growth in the global cell phone market as cell phones become increasingly indispensable for consumers. Dover also acquired pump manufacturer Harbison-Fischer Inc.

Dover expects the acquisition to facilitate the company's reach in the attractive international oil and gas markets. We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.

Honeywell Beats, Raises Guidance

Honeywell International Inc.'s (NYSE: HON) reported second-quarter 2011 earnings per share from continuing operations of $1.02, above the Zacks Consensus Estimate of 98 cents and prior-year earnings of 73 cents.

Total Revenue

Total revenue was $9.1 billion, below the Zacks Consensus Estimate of $9.2 billion for the quarter. Organically, total revenue was up 8% year over year, led by growth driven by new products, emerging-region growth and strong end-markets. Honeywell witnesses continued momentum across its portfolio.

The company reported a revenue increase in all its segments.

Outlook

The company's quarterly results for the quarter were quite impressive, supported by an improvement in global market environment. Driven by strong first half of 2011 performance and improving market condition, Honeywell increased its 2011 sales outlook from $36.0 billion–$36.6 billion to $36.1 billion to $36.7 billion.

Earnings per share outlook was raised from $3.80–$3.95 to $3.85 to $4.00. Free cash flow guidance was maintained at $3.5 billion–$3.37 billion and cash flow from operations in the range of $3.3 billion–$3.5 billion. Free cash flow expectation excludes US pension contribution, which is included in cash flow from operation outlook.

Honeywell currently holds a Zacks #1 Rank, which implies a Strong Buy recommendation.

Reynolds American Misses

Reynolds American Inc. (NYSE: RAI) reported fourth quarter 2011 results on July 22, 2011.

The company posted adjusted quarterly earnings of 67 cents per share, which was below the Zacks Consensus Estimate of 70 cents but inched up 1.5% compared to the prior-year quarter.

According to the management, profits were driven by excellent results reported by Santa Fe Natural Tobacco Company, Inc. (Reynolds American's subsidiary) in the second quarter on the back of strong volume, share and earnings growth.

The North Carolina-based manufacturer and distributor of cigarette and other tobacco products narrowed fiscal 2011 earnings to the range of $2.60 to $2.70 per share. The current Zacks Consensus Estimate of $2.67 is at the higher end of the guidance range.

Revenues and Operating Margin

Reynolds' net sales in the reported quarter were almost flat year over year, increasing marginally by 1.0% to $2,267 million from $2,245 million in the year-ago quarter. Sales estimates surpassed Zacks consensus estimate of $2,251 million in the quarter.

Adjusted operating income came in at $683 million, a growth of 1.2% over $675 million recorded in the prior-year quarter.

Financial Update and Dividend Increase

Reynolds American ended the year with cash and cash equivalents of $1.3 billion, long-term debt of $3,218 million and shareholders equity of $6.5 billion.

Reynolds American targets a dividend payout ratio of 80 percent. The company increased total dividend payment by nearly 18 percent over the past year.

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