Zacks Analyst Blog Highlights: Monsanto Company, Cooper Industries, ABB Ltd., General Electric and Stanley Black & Decker

News provided by

Jan 04, 2011, 10:23 ET

CHICAGO, Jan. 4, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: Monsanto Company (NYSE: MON), Cooper Industries plc (NYSE: CBE), ABB Ltd. (NYSE: ABB), General Electric Co. (NYSE: GE) and Stanley Black & Decker Inc. (NYSE: SWK).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579

Here are highlights from Monday's Analyst Blog:

Earnings Preview: Monsanto

Missouri-based agricultural company, Monsanto Company (NYSE: MON) is scheduled to report its first quarter results on January 6, 2010. The current Zacks Consensus Estimate for the first quarter is a penny per share.

Fourth Quarter & Fiscal 2010 Summary

On October 6, Monsanto announced weak results for the fourth quarter and fiscal 2010. During the quarter, net loss was $143 million compared with a loss of $233 million in the corresponding quarter of 2009. Loss per share (excluding a restructuring expense) was 9 cents compared with an EPS (earnings per share) of 2 cents in the year-ago quarter.

Monsanto reported below the Zacks Consensus Estimate of a loss of 6 cents per share, but was at the lower end of the company's guidance range of $(0.09)-$0.11. The decrease was attributable to a fall in gross margin and simultaneously an increase in costs and expenses.

Revenues inched up 3.9% to $1,953 million from $1,879 million during the same period in the previous year. The growth was attributable to the 6.8% increase in revenues from Seeds and Genomics segment, which contributes approximately 50% of total revenue.

During the year, net income decreased to $1,109 million from $2,109 million in fiscal 2009. Earnings per share (excluding a restructuring expense) almost halved to $2.41 from $4.41 in 2009. However, it was well within the company's guidance range of $2.40-$2.60. Revenues declined 10.4% to $10,502 million from $11,724 million in the previous year.

First Quarter 2011 Outlook

Management did not provide guidance for the first quarter of fiscal 2011, but the Zacks Consensus Estimate remained at one cent per share in the last 30 days.

The Zacks Consensus Estimate for fiscal 2011 also remained stagnant at $2.79 per share. However, fiscal 2012 estimate increased by a penny to $3.30 in the last 7 days.

For fiscal 2011, management expects EPS in the range of $2.72-$2.82 and anticipates free cash flows in the range of $800-$900 million.

With respect to earnings surprises, Monsanto had a mixed track record in the preceding four quarters with an average negative earnings surprise of 86.59%. This signifies that the Zacks Consensus Estimate surpassed Monsanto by that measure.

Our Recommendation

We are optimistic on the improved visibility on the yield performance of SmartStax corn seed and RR2Y (Roundup Ready 2 Yield) soybean seed in the coming years.

Cooper Completes Hernis Acquisition

Cooper Industries plc (NYSE: CBE) completed the acquisition of the Norwegian closed circuit television (CCTV) systems manufacturer Hernis Scan Systems AS, a group company of Vislink plc. The acquisition had been subjected to regulatory clearances and consent of the shareholders of Vislink plc.

Hernis specializes in making CCTV systems, designed specially for onshore and offshore oil and gas, marine and petrochemical markets worldwide. The transaction was initially announced in mid-November 2010 and following the completion Hernis was expected to become a part of Cooper's Safety division.

CCTV systems manufactured by Hernis are explosion-proof and capable of operating in difficult working conditions. Cooper is focused on enhancing its product portfolio suitable for explosion-proof harsh and hazardous environments. The worldwide CCTV market covered by Hernis will help Cooper to expand its global presence, especially in Europe and Asia.

Hernis is the fifth acquisition made by Cooper in 2010 and is the third one in harsh and hazardous environments platform. In November 2010, Cooper had acquired two UK-based companies, Mount Engineering plc and Apex Lighting Controls Ltd. Mount Engineering manufactured specialty threaded adaptors and reducers for harsh and hazardous environments and Apex manufactured Energy Management lighting controls.

Cooper's strong balance sheet and a good acquisition strategy provide it with substantial growth opportunity. Though pressures in commercial markets are expected to be a drag on earnings, numerous items such as lighting retrofit, government spending, energy efficiency projects and stimulus will help to buffer the underlying pressure.

Residential markets appear to have bottomed out and should experience a modest growth. The company is well positioned to capitalize on the potential for renewed spending on transmission and distribution products as utilities begin to open up their spending again.

However, heightened global competition, given that Cooper expands its international exposure, can act as a negative catalyst for the company. Major competitors of the company are ABB Ltd. (NYSE: ABB), General Electric Co. (NYSE: GE) and Stanley Black & Decker Inc. (NYSE: SWK).

Operations and supply sources located outside the United States, particularly the emerging markets, are subject to increased risks. Operating entities outside the USA contributes significantly to the company's revenue and earnings.

Incorporated in Ireland, headquartered in Houston, Texas, Cooper Industries plc is a diversified manufacturer, marketer, and distributor of electrical products, tools, and hardware. General industrial manufacturers, such as those in the aerospace and automobile industries, are the main users of Cooper's power tools and assembly systems. Its brands include Buss, Edison, Crouse Hinds, Weller, DGD, Buckeye, Cooper, and Master Power.

We continue to maintain a Neutral rating on Cooper Industries for the long term. The company has a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5514.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5516

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.