CHICAGO, April 1, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: BBVA Banco Frances (NYSE: BFR),
Telefonica (NYSE: TEF), Royal KPN (OTC: KKPNY),
Telus (NYSE: TU) and DryShips Inc. (Nasdaq:
DRYS).
(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 Thursday's Analyst Blog:
Look Abroad to Protect from Inflation
If you are only looking for one or two names to add to a
portfolio, rather than create a whole diversified portfolio of
income names, the first ones you should look at are the ones that
are Zacks #1 Ranks (Strong Buy) or Zacks #2 Ranks (Buy). Since
dividend yields do tend to be somewhat mean-reverting over time, I
would also tend to be more interested in the firms where the
current dividend yield is more than the five-year average dividend
yield.
What the screen reveals is that is it possible to have a
well-diversified portfolio of firms with high and rising dividends,
but that you might have to look abroad to find some of your firms.
I happen to be bearish on the dollar (bullish on most other
currencies), so the fact that a company is based abroad and thus
probably makes most of its money overseas is a feature, not a bug.
If the Dollar weakens, then those Euros or Yen they are earning
will be worth more dollars.
A Closer Look at Screening Results
Let's take a little bit of a closer look at the number #1 and
#2-ranked firms on the list. It just so happens that three of the
four are in the same industry, so you will not get a diversified
portfolio by buying all of them -- at least not diversified by
industry -- but very well diversified geographically.
BBVA Banco Frances (NYSE: BFR) is one of the largest
banks in Argentina, with 271
branch offices and $6.9 billion in
assets. It is highly profitable, sporting a trailing return on
assets of 4.17% and a trailing return on equity of 34.8%. It is
also very modestly valued with a P/E based on expected 2012
earnings of under 8x.
The current dividend yield is more than twice its five-year
average yield. It holds the coveted Zacks #1 Rank, which means it
is a good bet for a short-term pop in addition to the long-term
income and income growth story. The downside is that it is based in
Argentina, which does not exactly
have the best history of economic or political stability over the
last century or so.
Telefonica (NYSE: TEF) is based in Spain, but is a major telecommunications
provider throughout Europe and
Latin America. That includes
Internet access and wireless as well as land-line services.
Telecommunications are often a good way to play emerging markets,
and the Latin American portfolio gives you a lot of that, along
with the relative stability of Europe. Investors are probably somewhat
spooked by its connection to Spain, which is of course the S in PIIGS.
The dividend is well above its five-year average, and with a
payout ratio of just 38% there is plenty of room for it to continue
raising its payout. TEF also holds the coveted Zacks #1 Rank.
Valuation is more than reasonable, trading at 9.4x 2012 earnings
expectations.
Royal KPN (OTC: KKPNY) -- if investing in Argentine Banks
or Latin American telecoms are too dicey for you, how about a
telecom company that serves Holland, Belgium and Germany? Royal KPN provides wireless services
to 33.4 million customers, wireline voice services to 4.7 million
customers, broadband Internet services to 2.5 million customers,
and TV services to 1 million customers. It does not have quite the
growth potential of Latin America,
but Holland and Germany are pretty stable places.
As with the others, the current yield is higher than the
five-year average, but not as dramatically so. Valuation is very
reasonable at under 9x next years earnings. With a Zacks #2 Rank,
you might get a nice short-term pop in addition to a steady and
growing flow of dividends.
Telus (NYSE: TU) is sort of a similar story to Royal KPN,
only based in Western Canada, not
Western Europe. It serves about 7
million subscribers with wireless and land-line service, including
3G and 4G wireless services.
Its current yield is also above the long-term average, and the
P/E is very reasonable at 11.6x next year's earnings. Canada, particularly Western Canada with its natural resource-based
economy is growing nicely, and I like the prospects for the
Canadian Dollar (Loonie) even more than I like the prospects for
the Euro over the intermediate term. Its payout ratio is a bit
higher than the others at 63%, but is still well within the safe
dividend zone.
As always, remember that a screen should be the starting point
for your investing investigation, not the end point. However, if
you want both current income and some protection against potential
inflation, the list below is as good a place as any to start
looking, and don't forget to look abroad as well as at home.
DryShips Falls Short of Estimates
Yesterday after market close, DryShips Inc. (Nasdaq:
DRYS) declared financial results for the fourth quarter of 2010
that lagged behind the Zacks Consensus Estimates. The core drybulk
voyage segment continues its downtrend. However, renewed oil rig
contracts boosted year-over-year profit. In after-market trading on
the NASDAQ, stock price of DryShips was up 5
cents (1.01%) to $4.98.
Quarterly GAAP net income was $99.7
million or 29 cents per share
compared with a net income of $9.6
million or 2 cents per share
in the prior-year quarter. However, in the reported quarter,
DryShips gained $16.7 million as
one-time special items. Excluding these items, fourth quarter of
2010 adjusted EPS came in at 24
cents, well below the Zacks Consensus Estimate of
26 cents.
Quarterly total revenue was slightly above $215.8 million, up 9.9% year over year but failed
to meet the Zacks Consensus Estimate of $222
million. Quarterly Voyage revenue was $113.5 million, down 4.9% year over year. Revenue
from Drilling contracts was over $102.3
million, up 32.7% year over year. Quarterly Time charter
equivalent revenue (Voyage revenue less Voyage expense) was
$106.7 million, down 4.8% year over
year.
Quarterly total operating expenses were $137.2 million, down 15.2% year over year. This
was mainly attributable to lower voyage expense, vessel operating
expense and depreciation and amortization charges, partially offset
by higher drilling rig operating expense. Operating income, in the
fourth quarter of 2010, was $78.6
million, up 127.2% year over year.
In the fourth quarter of 2010, adjusted EBITDA (which excludes
gain/loss from interest rate swaps) was $129.3 million, a considerable improvement over
the prior-year quarter adjusted EBITDA of $76.7 million.
At the end of fiscal 2010, DryShips had $391.5 million of cash & cash equivalents and
$2,719.7 million of outstanding debt
on its balance sheet compared with $693.2
million of cash & cash equivalents and $2,684.7 million of outstanding debt at the end
of fiscal 2009. At the end of fiscal 2010, debt-to-capitalization
ratio was 0.34 compared with 0.26 at the end of fiscal 2009.
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.
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook:
http://www.facebook.com/ZacksInvestmentResearch
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.
Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com
SOURCE Zacks Investment Research, Inc.
