The Zacks Analyst Blog Highlights: The Dow Chemical Company, News Corporation, Time Warner Inc., National-Oilwell Varco, and Cameron International Corp.

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Feb 04, 2011, 04:10 ET

CHICAGO, Feb. 4, 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: The Dow Chemical Company (DOW), News Corporation (NWSA), Time Warner Inc. (TWX), National-Oilwell Varco (NOV), and Cameron International Corp. (CAM).

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Here are highlights from Friday's Analyst Blog:

DOW Beats Consensus Estimate

Chemical giant The Dow Chemical Company (DOW) earned 37 cents per share in the fourth quarter of 2010, ahead of the Zacks Consensus Estimate of 35 cents as well as last year's 8 cents. However, including one-time charges, the company earned 47 cents compared with 18 cents in the year-ago quarter.

In fiscal 2010, Dow reported earnings of $1.72 per share versus 32 cents in the prior year. Including one-time charges, the company earned $1.97 compared with 63 cents in the prior year.

Quarterly revenues jumped 22% year over year to $13.8 billion and were above the Zacks Consensus Estimate of $12.5 billion. Volume (12%) and pricing (10%) gains across all business segments and geographical regions, particularly North America and Europe, yielded healthy revenue growth. In fiscal 2010, revenues increased 26% to $53.7 billion.

North American revenues grew 16.1% while that of Latin America shot up 15%. Demand increased 6% in Europe, Middle East and Africa, and 6% in Asia Pacific. Latin American volumes were up 5% on stronger demand in the Health and Agricultural Sciences segment. Volume in Asia Pacific decreased 2%.

A stronger top-line growth resulted in an increase of over 30% in EBITDA (adjusted) to $1.9 billion. EBITDA margin was up 200 basis points year over year. Dow's global operating rate was 81%, up 5% year over year but down 5% sequentially.

News Corp. a Penny Ahead

News Corporation (NWSA), a diversified media conglomerate, recently posted better-than-expected second-quarter 2011 results on the heels of improved advertising performance at its Cable Networks and Television Stations.

The second quarter results highlight the increasing worldwide channel business on the back of widening subscriber base, rise in affiliate fees and improved advertising market place. The U.S. broadcasting business, which includes local TV stations and the Fox Broadcasting Company, also continues to recover its lost sheen.

Both Top and Bottom Lines Outpaced

Rupert Murdoch controlled News Corporation's quarterly earnings of 29 cents a share came a penny ahead of the Zacks Consensus Estimate, and rose 16% from 25 cents earned in the year-ago quarter.

On a reported basis, including one-time items, quarterly earnings came in at 24 cents a share, rising more than twofold from 10 cents delivered in the prior-year quarter. Following this, a positive sentiment may be palpable among the analysts covering the stock, and we could witness a rise in the Zacks Consensus Estimates in the coming days.

News Corporation hinted that total revenue rose marginally by 0.9% year over year to $8,761 million driven by strength across Cable Network Programming (up 12.4%), Television (up 9.7%), and Publishing (up 0.8%), offset by Filmed Entertainment (down 4.7%) and Direct Broadcast Satellite Television (down 6.3%). The Other segment's revenue tumbled 28.6%. Total revenue came ahead of the Zacks Consensus Estimate of $8,743 million.

Total segment operating income, excluding one-time items, jumped 6.2% to $1,287 million during the quarter. News Corporation continues to expect fiscal 2011 segment operating income to increase in the low double-digit percentage range.

Another media conglomerate, Time Warner Inc. (TWX), one of the competitors of News Corporation, posted better-than-expected fourth-quarter 2010 results on the heels of an increase in advertising and subscription revenues. The quarterly earnings of 67 cents a share outdid the Zacks Consensus Estimate of 62 cents, and rose 22% from 55 cents earned in the prior-year quarter. Total revenue in the quarter grew 8% to $7,812 million from the previous year-quarter, and handily beat the Zacks Consensus Estimate of $7,477 million.

NOV Beats as Demand Rebounds

Oilfield service company National-Oilwell Varco (NOV) reported better-than-expected fourth quarter results, helped by robust drilling and pressure pumping activity throughout North America, as well as good project execution skills and manufacturing efficiency.

Earnings per share came in at $1.05, comfortably above the Zacks Consensus Estimate of 96 cents and the year-ago profit of 94 cents. Quarterly revenue rose 1.2% year-over-year – from $3.1 billion to $3.2 billion – and was 4.2% above our projection.

Backlog

During the quarter, National-Oilwell Varco added $1.4 billion of orders to its capital equipment backlog, which included higher demand for drilling equipment for newbuild offshore rigs, as well as for well intervention and stimulation equipment. Backlog for capital equipment orders for the company's Rig Technology segment was $5.0 billion at December 31, 2010, up slightly from the previous quarter level.

Balance Sheet

At the end of 2010, the company had cash on hand of $3.3 billion and long-term debt (including the current portions) of $887 million. The debt-to-capitalization ratio stood at approximately 5.3%.

Our Recommendation

National-Oilwell Varco, which ranks ahead of Cameron International Corp. (CAM) as the biggest U.S. maker of oilfield equipment, currently retains a Zacks #3 Rank that translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

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