The Zacks Analyst Blog Highlights: National Oilwell Varco, Brinker International, Bank of America, JPMorgan Chase and Wells Fargo

May 16, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, May 16, 2013 /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 National Oilwell Varco Inc. (NYSE: NOV), Brinker International Inc. (NYSE: EAT), Bank of America Corporation (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC).


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Here are highlights from Wednesday's Analyst Blog:

National Oilwell Varco Down to Strong Sell

On May 15, Zacks Investment Research downgraded oilfield services behemoth, National Oilwell Varco Inc. (NYSE: NOV), to a Zacks Rank #5 (Strong Sell).

Why the Downgrade? National Oilwell has witnessed sharp downward estimate revisions after reporting disappointing first-quarter 2013 results.

On Apr 26, 2013, National Oilwell reported first-quarter earnings per share (excluding transaction costs) of $1.29, missing the Zacks Consensus Estimate by 8 cents and the year-ago adjusted earnings by 15 cents. The result was affected by lower operating margin in all its segments.

Following the weaker-than-expected earnings announcement, the Zacks Consensus Estimate for the second quarter of 2013 has moved down by 12 cents (or 8.2%) to $1.34 per share over the last 30 days. For the full year also, most of the estimates (15 out of 17) were revised downward over the same timeframe, pulling down the Zacks Consensus Estimate by 7.8% to $5.65 per share.

Brinker Prices Notes Worth $550M

Brinker International Inc. (NYSE: EAT), a leading casual dining restaurant chain, has recently announced the pricing of notes aggregating $550 million. These notes have been issued in two tranches of different amounts, with varying interest rates and maturities.

The first tranche of $250 million, carrying an interest rate of 2.600%, will mature in 2018, while the second tranche of $300 million, having an interest of 3.875% is due in 2033.

The offering involves a consortium of renowned banks acting as the joint book-running managers. These include Merrill Lynch – a subsidiary of Bank of America Corporation (NYSE: BAC), Pierce, Fenner & Smith Incorporated, and J.P. Morgan Securities LLC – a wing of JPMorgan Chase & Co. (NYSE: JPM). Additionally, Wells Fargo Securities, LLC – a unit of Wells Fargo & Company (NYSE: WFC), Regions Securities LLC and Mitsubishi UFJ Securities (USA), Inc. will serve as co-managers.

Brinker stated that a portion of the transaction proceeds would be used to repurchase its outstanding 5.75% notes due to mature in 2014. However, this note repurchase will result in the reduction of the fourth quarter fiscal 2013 earnings by 14 cents as it will be impacted by the short overlap period during which the new debt has already been taken and the old one not yet repurchased. The rest of the net proceeds will be used for general corporate purposes, share repurchases and repayment of existing debt.

Brinker, with its formidable portfolio, remains one of the most recognized restaurant chains in the casual dining segment. Besides note repurchase, the company has been consistently returning value to its shareholders by share buyback. In addition, the company boasts a solid cash position by regularly paying dividends. In the recently reported third-quarter fiscal 2013, the company spent $14.7 million on dividends and used $60.4 million to repurchase its common stocks.

Brinker reported third-quarter fiscal 2013 adjusted earnings of 72 cents per share, beating the Zacks Consensus Estimate by 4.3%. The earnings were also up 20% from the year-ago quarter, driven by the company's higher margins. Brinker had $677.3 million in long-term debt and cash and cash equivalents of $85.7 million on its balance sheet. Currently, the company's debt-to-total capitalization ratio is 73.4%.

This public offering will enable the company to attain financial flexibility and position Brinker favorably to pursue investment opportunities and acquisitions, which will go a long way toward enhancing its top-line growth. It will also bring down the company's cost of capital, further strengthening its balance sheet and supporting its future growth.

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