Zacks Analyst Blog Highlights: H&R Block, Evergreen Solar, Alcoa, TransDigm Group and Aluminum Corporation Of China Limited

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Mar 11, 2011, 09:30 ET

CHICAGO, March 11, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features H&R Block (NYSE: HRB), Evergreen Solar Inc. (Nasdaq: ESLR), Alcoa Inc. (NYSE: AA), TransDigm Group Inc. (NYSE: TDG) and Aluminum Corporation Of China Limited (NYSE: ACH).

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Here are highlights from Thursday's Analyst Blog:

H&R Block Beats on Bottom Line

H&R Block's (NYSE: HRB) fiscal third-quarter 2011 adjusted income came in at 14 cents per share, a stark improvement from the Zacks Consensus Estimate of a loss of 1 cent. Result, however compares unfavorably with 16 cents per share earned in the year-ago period. Adjusted income for the quarter was $44 million, down 18% from $54 million reported in third-quarter 2010.

H&R Block deferred $11.9 million of revenue to its fiscal fourth quarter due to an IRS delay in accepting certain forms prior to February 14. The company also had to incur after-tax charges of $36.5 million principally related to goodwill impairment at its RedGear reporting unit, incremental credit losses on its Emerald Advance line of credit, and costs of litigation and net loss from discontinued operations of $8.3 million.

Adjusting for these one-time items, H&R Block reported net loss of $12.7 million or 4 cents a share, compared with income of $50.6 million or 15 cents a share in third quarter of 2010.

Evergreen Solar Misses

Massachusetts-based Evergreen Solar Inc. (Nasdaq: ESLR) reported fourth-quarter 2010 adjusted loss per share of 84 cents, almost half the year-ago quarterly loss of $1.50 per share. However, this is higher than the Zacks Consensus Estimate of a loss of 70 cents.

Operational Results

Evergreen Solar's revenues for the fourth quarter of 2010 were $89.3 million, up 3.2% and 19.7% compared with third-quarter 2010 revenues of $86.5 million and year-ago revenues of $74.5 million. Revenues however were below the Zacks Consensus Estimate of $99 million.

Average selling price for the fourth quarter of 2010 was $1.90 per watt, down approximately 6% from $2.02 per watt recorded in the third quarter of 2010.

Gross margin for the fourth quarter of 2010 was a negative 84% compared to 7.5% in the third quarter of 2010. The decrease in gross margin resulted primarily from the write-down of prepaid inventory and the countervailing duties on the company's imported aluminum frames.

Operating loss for the fourth quarter of 2010 was $399.1 million, compared to $22.7 million for the third quarter of 2010. Operating loss in the fourth quarter of 2010 increased sequentially from the third quarter due mainly to the inventory write-down and the impairment of long-lived assets.

Overall net loss for the fourth quarter of 2010 was $411.0 million compared to $27.2 million in the third quarter of 2010.

Alcoa Acquires Aerospace Business

Alcoa Inc. (NYSE: AA) the world's leading producer of aluminum completed the acquisition of TransDigm Group Inc.'s (NYSE: TDG) aerospace fastener business for $240 million. The transaction is expected to be accretive to the earnings and cash flow in the first year.

TansDigm's aerospace fastener business will become a part of Alcoa Fastening Systems (AFS), a leading worldwide designer and manufacturer of specialty fastening systems, components and installation tools for aerospace and industrial applications.

The transaction is expected to create added value for Alcoa's customers and shareholders. Besides, the company is anticipated to expand its international presence in the growing aerospace fastener market.

TransDigm, a global designer, producer and supplier of highly engineered aircraft components employs approximately 400 people and produces a wide variety of nickel alloy specialty engine fasteners, airframe bolts and slotted entry bearings.

A few days back, Alcoa acquired a minority stake in Electronic Recyclers International (ERI), the largest U.S. recycler of electronics waste. Neither of the two companies disclosed the extent of the stake acquired in ERI. The partnership is a part of Alcoa's efforts to boost the recycling of consumer electronics. Through this venture, Alcoa intends to enter the re-cycling market. On the other hand, ERI will also get requisite funds to expand its US footprint.

Alcoa posted better-than-expected year-over-year results in the fourth quarter of 2010 with net earnings and revenues exceeding the Zacks Consensus Estimates. The company continues to benefit from its cost saving efforts. We believe the cost cuts will make Alcoa more competitive when markets fully recover. The annual global consumption of aluminum products, both upstream and downstream, is expected to double over the next 15 years.

Alcoa faces stiff competition from Aluminum Corporation Of China Limited (NYSE: ACH), privately held Rio Tinto Alcan Inc. and RUSAL.

Currently, Alcoa has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long- term Neutral recommendation.

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