The Zacks Analyst Blog Highlights:Comcast, Time Warner Cable, Verizon Communications, AT&T and Caterpillar
CHICAGO, Feb. 3, 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 Comcast Corp. (Nasdaq:CMCSA-Free Report), Time Warner Cable Inc. (NYSE:TWC-Free Report), Verizon Communications Inc. (NYSE:VZ-Free Report), AT&T Inc. (NYSE:T-Free Report) and Caterpillar Inc. (NYSE:CAT-Free Report).
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Here are highlights from Friday's Analyst Blog:
Big Push from Mobile Backhaul Market
The cable TV industry is substantially benefitting from the small and mid-sized business (SMB) segment. Significant improvement in business data and video traffic is expected to act as a future growth catalyst for the industry.
Furthermore, managing wireless backhaul traffic for mobile towers has also opened up a multi-billion dollar market opportunity. Cable operators are now gradually offering innovative wireless broadband services to business customers in order to maintain this favorable momentum.
According to a recent report by research firm Dell'Oro, the market size of global wireless backhaul equipment will reach $8 billion by 2018. Also within this market, router and switch revenues will grow at a compounded annual growth rate (CAGR) of 5% while transmission equipment revenues will rise at a CAGR of 2% in the next 5 years.
Another research firm, Informa Telecoms & Media, has estimated that the public access small cell market will likely be worth $16 billion by 2016. Significant growth of 4G LTE (Long term Evolution) and growing deployment of small cells are the primary reasons for this encouraging outlook.
Large cable TV operators such as Comcast Corp. (Nasdaq:CMCSA-Free Report) and Time Warner Cable Inc. (NYSE:TWC-Free Report) are immensely exploring the SMB segment as a counter-strategy to protect their loss in the legacy video-offering market as telecom giants like Verizon Communications Inc. (NYSE:VZ-Free Report) and AT&T Inc. (NYSE:T-Free Report) are aggressively offering fiber-based video services.
Various industry researches estimate that the SMB segment is expected to offer a market opportunity worth $20 - $30 billion. In 2013, Comcast and Time Warner Cable generated $3,241 million (up 26.4% year over year) and $2,312 million (21.6% year over year) revenues respectively, from the SMB segment.
Caterpillar to Repurchase $1.7B Shares
Shares of Caterpillar Inc. (NYSE:CAT-Free Report) perked up 2.85% to close at $93.20 on Thursday as the company announced its intention to purchase approximately $1.7 billion of its common stock under an accelerated stock repurchase transaction. With this the company will complete its previous $7.5 billion repurchase authorization.
Caterpillar's board of directors had authorized the repurchase of $7.5 billion worth of its common stock in Feb 2007. Until 2008, Caterpillar had expended $3.8 billion of the authorization and no shares of stock have been repurchased since then. In Dec 2011 this program was extended through Dec 2015. Following its first-quarter 2013 earnings, Caterpillar decided to resume the program, given its balance sheet strength and positive cash flow.
During fiscal 2013, Caterpillar repurchased $2 billion of shares. The current announcement does not come as a surprise as during the fourth-quarter conference call, the company stated its plans to repurchase approximately $1.7 billion of its common stock during the first quarter of 2014 and complete its existing $7.5 billion repurchase authorization. In addition, Caterpillar's board of directors approved a new $10 billion stock repurchase program that will expire on Dec 31, 2018.
The share repurchases reflect a sound balance sheet. Caterpillar ended fiscal 2013 with cash and short-term investments of $6.1 billion, up from $5.5 billion as of fiscal 2012-end. Total debt-to-capital ratio improved to 64% as of Dec 31, 2013, from 70% as of Dec 31, 2012.
The debt-to-capital ratio at Machinery and Power System (M&PS) improved substantially to 29.7% as of Dec 31, 2013, compared with 37.4% as of Dec 31, 2012. This was the lowest debt-to-capital ratio in over 25 years.
Total cash flow from operating activities in 2013 almost doubled to $10.2 billion from $5.2 billion in the prior fiscal. Operating cash flow at M&PS was at a record $9 billion in 2013, up from $4.2 billion in 2012, thanks to the $2.9 billion of inventory reduction during the year.
Caterpillar also hiked its quarterly dividend by 15% to 60 cents per share in 2013, marking the highest percentage increase in dividend since the financial crisis of 2008. These repurchases and dividend hikes affirm its commitment to deliver superior returns to its shareholders.
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