Zacks Analyst Blog Highlights: Exelon Corporation, Altera, Wyndham Worldwide, Starwood Hotels & Resorts Worldwide and Marriott International

CHICAGO, April 28, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: Exelon Corporation (NYSE: EXC), Altera Corporation (Nasdaq: ALTR), Wyndham Worldwide Corporation (NYSE: WYN), Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) and Marriott International Inc. (NYSE: MAR).

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Here are highlights from Wednesday's Analyst Blog:

Exelon Tops, Backs Outlook

Exelon Corporation (NYSE: EXC) announced first-quarter 2011 operating earnings of $1.17 per share versus $1.00 per share in the year-ago quarter. The results of the company surpassed the Zacks Consensus Estimate of $1.06 by 11 cents.

The year-over-year growth in earnings was attributable to new electric and gas distribution rates at PECO effective January 2011, increase in nuclear volume due to fewer nuclear outages and higher realized energy prices in the Mid-Atlantic region due to the expiration of the power purchase agreement.

GAAP earnings of Exelon during the quarter were $1.01, compared with $1.13 in the year-ago period. The difference between operating and GAAP earnings during the quarter was owing to the following one-time items: an impact of 14 cents for mark-to-market losses, 2 cents for the cost associated with the retirement of assets, 4 cent for the cost of Illinois electric rate settlement, while the company gained 4 cents related to nuclear decommissioning trust (NDT) fund investments.

Total Revenue

Exelon's total operating revenue for first-quarter 2011 was $5.05 billion versus $4.46 billion reported in the year-ago period, reflecting a growth of 13.2%.

Reported quarter revenue surpassed the Zacks Consensus Estimate of $4.95 billion.

Our View

Exelon reported strong results for the quarter beating both our top-line and earnings estimates. The high volumes generated from its nuclear power fleet are a primary contributing factor for the impressive performance.

Given the skepticism rife in nuclear power generation following the accident in the Fukushima Daiichi plant in Japan, the approval by the U.S. Nuclear Regulatory Commission to Generation's request to increase the generating capacity of both units of the Limerick Generating Station by 16 MW each is testament to the ability of the company to safely increase its nuclear power yield.

We reiterate that the majority of the power generated by Exelon came from its nuclear power fleet, in the reported quarter, with the capacity factor 2.5% higher than the year-earlier level.

Altera Tops Earnings Ests

Chipmaker Altera Corporation (Nasdaq: ALTR) reported sales of $535.8 million in the first quarter of 2011, down 4% sequentially and down 33% year over year, but short of the Zacks Consensus Estimate of $537 million.

As anticipated by management, revenue from several of the company's large telecom & wireless customers declined. Wireless was down significantly due to the end of the fourth round of TD-SCDMA deployment in China and weakness in India, partially offset by growth in WCDMA and LTE. Huawei represented 13% of revenues in the quarter. This decline was partially offset by strength in the automotive, industrial and military verticals.

New product sales increased 13% sequentially. Revenue from 40-nanometer devices increased 8% sequentially and represented 18% of revenues in the quarter. Revenue from 65-nanometer devices declined in the quarter.

Gross margin came in at 72.6%, up from 71.0% in the previous quarter and 71.4% in the year-ago quarter driven by favorable vertical mix. Operating margin came in at 45.8%, down from 47.4% in the previous quarter and down from 40.0% in the year-ago quarter.

Altera reported a net income of $224.1 million, $0.68 per diluted share in the first quarter of 2011 compared with a net income of $231.6 million, $0.72 per diluted share in the fourth quarter of 2010 and a net income of $153.2 million or $0.50 per diluted share in the first quarter of 2010. The reported easily beat the Zacks Consensus Estimate of $0.65.

Wyndham Beats EPS, Outlook Up

Wyndham Worldwide Corporation's (NYSE: WYN) first quarter 2011 adjusted earnings of 44 cents per share outpaced both the Zacks Consensus Estimate of 39 cents and the year-earlier quarter earnings of 34 cents per share. On a reported basis, Wyndham delivered earnings of 41 cents per share versus 27 cents in the prior-year quarter.

The increase was mainly driven by higher revenue per available room (RevPAR) in the Lodging business, strong operational performance by the Vacation Ownership and Vacation Exchange and Rentals business.

Net revenue spiked 7.4% year over year to $952 million in the reported quarter, reflecting a modest adjusted sales momentum across Wyndham's three business units and substantial contributions from acquisitions. However, revenues failed to beat the Zacks Consensus Estimate of $962 million.

Inside the Headline Numbers

The company's Lodging segment reported revenues of $149 million, up 3% year over year, driven by a 7.4% rise in RevPAR and other franchise fees. Incremental revenue from the recently acquired Tryp hotel brand also contributed to the growth.

Revenues from the Vacation Exchange and Rentals segment climbed 19% year over year to $356 million. Vacation rental revenues escalated 20% from the prior-year period to $150 million, buoyed by the acquisitions including James Villa Holidays. Exchange revenues were $194 million, up 3% year over year.

Vacation Ownership segment at Wyndham inched up 1.4% to $450 million on the back of an increase in gross Vacation Ownership Interest sales, a lower provision for loan losses and incremental sales under the Wyndham Asset Affiliation Model.

Outlook

For full-year 2011, management raised its earnings per share guidance from $2.05 to $2.15 to $2.15 to $2.25 range.  However, the company maintained its 2011 revenue guidance of approximately $4.0–$4.2 billion and adjusted EBITDA of approximately $925–$955 million.

Our Take

We expect Wyndham to benefit from its repositioning to a more fee-for-service-based business, free cash flow generation and a series of acquisitions including James Villa Holidays and ResortQuest, and thus remain optimistic on the stock. Moreover, the company is strengthening its presence in Europe and Latin America as well as Asian markets like China and India.

However, considering the intense competition from its peers including  Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) and Marriott International Inc. (NYSE: MAR) and slow revival in the US lodging industry, we remain on the sidelines. Wyndham currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock.

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