Zacks Analyst Blog Highlights: NCR, J.P. Morgan Chase, Barclays Bank, Exelon Corporation and Deere & Company

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Jan 27, 2011, 09:52 ET

CHICAGO, Jan. 27, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: NCR Corp. (NYSE: NCR), J.P. Morgan Chase & Co. (NYSE: JPM), Barclays Bank plc (NYSE: BCS), Exelon Corporation (NYSE: EXC) and Deere & Company (NYSE: DE).

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Here are highlights from Wednesday's Analyst Blog:

NCR-Chase ATM Deal

Technology and solutions provider NCR Corp. (NYSE: NCR) kick-started the year with a big move. Yesterday, Chase, the U.S. consumer and commercial banking business of J.P. Morgan Chase & Co. (NYSE: JPM), announced that it would deploy more ATMs incorporating NCR Corp.'s latest Scalable Deposit Module (SDM) technology.

With this technology, NCR Corp.'s self-service ATMs will significantly reduce the time taken to deposit cash or checks. Generally, customers have the habit of making multiple deposits at ATM counters. The SDM technology can reduce the time for depositing five bank notes and two checks to less than a minute. Apart from reducing transaction time, SDM-enabled ATMs truncate and store checks safely, doing away with the need for an obligatory daily pick up.

NCR Corp.'s self-service ATMs were introduced in 2008. Since then, the tech firm has continued to build new hardware, software and services to make the future of self-service fast, convenient and seamless. The SDM technology will help financial institutions improve customer experience and manageability of their ATM channels. The technology will not only help Chase to attract more banking customers, but also ramp NCR Corp.'s product adoption.

According to a study published by Retail Banking Research, NCR has been the world's largest supplier of multi-vendor ATM middleware and applications for 23 consecutive years.

Apart from this recent deal, we remain encouraged by NCR Corp.'s association with leading banks, such as Barclays Bank plc (NYSE: BCS) and UniCredit Bank, which have upgraded their ATMs using the NCR solution. We are also encouraged by the company's market leadership, successful acquisitions, new product introductions and continued customer wins. However, we believe that near-term visibility is limited due to uncertainty regarding its DVD-kiosk business.

Currently, NCR Corp. has a Zacks #3 Rank, which translates in to a short-term Hold recommendation.

Exelon Tops, Looks to 2011

Exelon Corporation (NYSE: EXC) announced fourth-quarter 2010 operating earnings of 96 cents per share compared with 92 cents per share in the year-ago quarter. The results of the company surpassed the Zacks Consensus Estimate of 91 cents by 5 cents.

GAAP earnings of Exelon during the quarter were 79 cents, compared with 88 cents in the year-ago period.

The difference between operating and GAAP earnings was owing to the following one-time items: an impact of 17 cents for mark-to-market losses, 3 cents for the cost associated with the retirement of assets, 1 cent for the cost of Illinois electric rate settlement, and 1 cent for the external cost of acquisition.

The company gained 4 cents related to nuclear decommissioning trust (NDT) fund investments and 1 cent for decrease in cost relating to asset retirements.

Exelon's operating earnings of 2010 were $4.06 per share compared with $4.12 per share reported in 2009. The results of the company outpaced the Zacks Consensus Estimate, provided by 19 covering analysts, by 6 cents.

Quarterly Highlights

Though total revenue grew 8.5% during the quarter, operating expenses, as a percentage of total revenue, also saw a marginal rise year over year. Consequently, operating income rose a more modest 3%.

Interest expenses during the quarter decreased by $7 million to $183 million versus $176 million in the year-ago quarter.

Annual Highlights

The rise in total revenue for the fiscal year was more than offset by escalating operating expenses that increased at a higher trajectory compared to revenue, resulting in a slip in operating income by 3.5% year over year.

Exelon-operated nuclear plants achieved an average capacity factor of 93.9% in 2010 versus 93.6% in 2009.

Interest expenses of the company at the end of the year were $714 million versus $719 million at the end of 2009. The interest level of the company is expected to go higher in 2011 as Exelon issued debts during 2010 to acquire new assets.

The year also saw Exelon foraying into the wind power generation business via acquisition of wind assets from Deere & Company (NYSE: DE) for $900 million. The initial value of the acquisition was $860 million, while Exelon will pay another $40 million to Deere when the construction work begins in some approved projects.

2011 Insights

Exelon expects to generate 165,900 gigawatts (GWh) of power assuming that its nuclear plants will achieve an average capacity factor of 93.0% in 2011.

The company expects to generate $4.3 billion from cash from operations in 2011. Exelon expects to issue new debts of $1 billion during 2011 and retire $600 million in debt during the year.

The capital expenditure of the company in 2011 is expected to be $2.3 billion, which includes utility growth capital expenditure of $450 million. In 2011 the company expects to return $1.4 billion cash to its shareholders through payment of dividend.

Exelon guided operating earnings for 2011 in a range of $3.90 – $4.20 per share, while the first quarter 2011 earnings per share are pegged in the range of $1.00- $1.20. The guidance assumes normal weather for the balance of the year.

Our View

We appreciate Exelon's endeavors, during 2010, to make investments worth $5 billion in different cost-effective and clean energy projects to reduce carbon emissions. The capital outlay, spanning the years 2010 and 2015, will result in new material and equipment orders, engineering and construction contracts, and professional and technical service agreements.

Exelon Corporation currently retains a Zacks #3 Rank (short-term Hold rating). We maintain a longer-term Neutral recommendation on Exelon.

Based in Chicago, Illinois, Exelon Corporation, a utility services holding company, engages in the generation, transmission, distribution and sale of electricity to residential, commercial, industrial and wholesale customers.

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