The Zacks Analyst Blog Highlights: Loews Corporation, CNA Financial Corporation, Diamond Offshore, The Travelers Companies and Patterson-UTI Energy

Aug 02, 2011, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Aug. 2, 2011 /PRNewswire/ -- 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 Loews Corporation (NYSE: L), CNA Financial Corporation (NYSE: CNA), Diamond Offshore (NYSE: DO), The Travelers Companies (NYSE: TRV) and Patterson-UTI Energy Inc. (Nasdaq: PTEN).


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Here are highlights from Monday's Analyst Blog:

Loews Lags Bottom-Line Estimate

Loews Corporation (NYSE: L) reported its second-quarter 2011 adjusted net income of 59 cents per share, lagging the Zacks Consensus Estimate by 16 cents. Results were also below 87 cents earned in the prior-year quarter. Adjusted net income was $240 million, 34% lower than $365 million in second-quarter 2010.

Lower favorable net prior year development at CNA Financial Corporation (NYSE: CNA) coupled with higher catastrophe losses induced the soft performance in the quarter. However, higher earnings at Diamond Offshore (NYSE: DO) reflecting increase in utilization of high specification floaters somewhat dwarfed the negative impacts.

Including net investment gains of $12 million, Loews reported net income of $252 million or 62 cents per share, down from $366 million or 87 cents per share in the year-ago quarter. The prior-year quarter includes net investment gains of $1 million.

Share Repurchases

Loews spent $228 million in the quarter to buy back 5.5 million shares. Subsequent to the second quarter through July, the company bought back another 1.0 million shares for $41 million.

Peer Comparison

The Travelers Companies (NYSE: TRV), which competes with Loews, reported an operating loss of 91 cents per share in the second quarter, wider than the Zacks Consensus Estimate of a loss of 62 cents. Results were far behind earnings of $1.39 in the prior year quarter.

The company suffered hugely due to catastrophe losses. Catastrophe losses in the quarter totaled $1.09 billion or $2.56 per share.

Our Take

CNA Financial's agreement with National Indemnity has helped it shed all its asbestos and environmental liabilities thus, imparting stability. Also, Boardwalk's increased capacity and expansion projects and improved financial market conditions bode well. A strong balance sheet with low leverage and adequate cash are the other positives.

However, lower earnings at the operating subsidiaries, volatile natural gas and oil prices and a challenging economic environment keep us cautious. We maintain our Neutral recommendation on Loews over the long term. The quantitative Zacks #4 Rank (short-tem Sell rating) for the company indicates downward pressure on the shares over the near term.

Patterson-UTI Beats Overall

Onshore contract driller Patterson-UTI Energy Inc. (Nasdaq: PTEN) has reported stellar second quarter 2011 results, reflecting enhanced drilling activities in the fertile oil and liquids plays across the country along with higher pricing for services.

Earnings per share of 52 cents came in fairly ahead of the Zacks Consensus Estimate of 48 cents. The quarter's results also jumped significantly from the year-ago profit of 19 cents.

Quarterly revenue of $600.1 million shot up 95.5% from the year-earlier level of $307.0 million. The revenue also surpassed our projection of $589 million.

Rig Fleet Analysis

The number of rigs operating during the quarter averaged 199 in the U.S. and 3 in Canada, netting 202, up 29.5% year over year.

During the quarter, the company completed 8 new Apex rigs and operated 107 rigs under long-term contracts. Patterson-UTI targets to complete 25 new Apex(TM) rigs in 2011, of which it has already entered into long-term contracts for 10. Additionally, management aims at operating an average of approximately 122 rigs under long-term contracts during the second half of 2011.


We believe that in the near term, Patterson-UTI stands to benefit from the current boom in pressure pumping services given its growing premium land rig fleet and robust financial position (positive free cash flow and a debt-free balance sheet).

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