Tyson Foods, Citigroup, PNC Financial Services Group, Autodesk and Bank of America

Published in House and Home on Tuesday, August 10th 2010 at 14:11 GMT by Market Wire
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CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Tyson Foods Inc. (NYSE: [ TSN ]), Citigroup Inc. (NYSE: [ C ]), PNC Financial Services Group Inc. (NYSE: [ PNC ]), Autodesk Inc.(Nasdaq: [ ADSK ]) and Bank of America Corp. (NYSE: [ BAC ]).

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Here are highlights from Mondaya�s Analyst Blog:

Tyson Tops, Optimistic Outlook

Tyson Foods Inc. (NYSE: [ TSN ]) delivered third-quarter 2010 earnings of 65 cents a share, exceeding the Zacks Consensus Estimate of 59 cents by 10.2% and the year-ago earnings of 35 cents by 85.7%.

Revenue and Margins

Net sales recorded a growth of 11.6% to $7,438 million from $6,662 million in the year-ago quarter, but slightly missed the Zacks Consensus Estimate of $7,306 million. The upswing came as an outcome of sales growth across all its segments.

Tysona�s operating income shot up 83.7% to $507 million in the quarter compared with $276 million in the prior-year quarter. Quarterly operating margin expanded 270 basis points to 6.8%, portraying solid margin in all its reporting segments.

Segment Details

Sales grew 4.6% in the Chicken segment to $2,527 million compared with $2,417 million in the year-ago quarter, on the back of strong volumes, higher average sales prices, gain from its recent acquisitions and prudent inventory management. Operating margin advanced to 7.4% in the Chicken compared with 5.9% in the year-ago quarter.

On a year-ago basis, sales rose 13.4% in the Beef segment to $3,149 million compared with $2,777 million, attributed to higher average price partially offset 5.1% decline in volume. Segment operating margin progressed to 5.6% compared with 2.4% in the year-ago quarter.

The Pork segment revenue spiked 31.8% to $1,249 million compared with $948 million in the year-ago quarter, powered by 31.6% jump in price and an essentially flat volume. Operating margin jumped to 10.0% in the Pork segments compared with 3.0% in the year-ago quarter.

The Prepared Foods sales surged 11.9% to $753 million compared with $673 million in the year-ago quarter. However, the segment continues to face higher input costs, though fully offset by an increase in selling price. Segment operating margin plunged to 2.9% compared with 5.9% in the year-ago quarter.

Citi Lifts Long-Term Debt Estimates

Citigroup Inc. (NYSE: [ C ]) has raised its estimates of long-term debts for full year 2010, according to a recent second quarter 2010 results filing with the Securities and Exchange Commission. This comes as part of Citia�s efforts to strengthen its structural liquidity and extend the duration of liabilities that support its businesses.

For full year 2010, Citi currently expects to issue approximately $18 billion to $21 billion in long-term debt. This is $3 billion to $6 billion above the prior expectations.

The projected issuance of $18 billion to $21 billion is lower than the $35 billion of expected maturities during the year. The remaining balance would have to be financed through the companya�s strategic capital management initiatives.

However, Citi will continue to review and adjust its funding and liquidity requirements for the remaining year, considering a number of factors including its market environment and the regulatory needs.

Last week, Citi sold $3 billion of notes. The company conducted the sale in two parts. The first tranche was $2.25 billion of new notes due August 9, 2020, with a coupon rate of 5.375%. The second tranche was of $750 million, consisting of the reopening of notes due May 19, 2015, and carrying a coupon rate of 4.75%. This second tranche exceeded the initial planned size of $500 million. Citi would use the proceeds for general corporate purposes.

In addition to Citi, PNC Financial Services Group Inc.a�s (NYSE: [ PNC ]) subsidiary, PNC Funding Corp., has also raised $750 million by selling senior notes last week.

Citi is focused on strengthening its balance sheet and has implemented several restructuring measures. However, we also believe that the shrinking of its business through assets sales and the CARD Act will pose challenges. Yet its core business, Citicorp, remains attractive. Its International consumer business also has good growth momentum. An economic rebound would help it to witness a further improvement in credit quality.

Earnings Preview: Autodesk

Autodesk Inc.(Nasdaq: [ ADSK ]) will release it second quarter 2011 earnings on August 12, 2010. On June 24, 2010, at its Investor Day, Autodesk raised the low end of its second quarter 2011 earnings and revenue guidance, primarily due to strong global end market demand. The company had also provided its long-term business outlook.

Excluding one-time charges but including stock based compensation expense, earnings per share are expected to be in the range of 19 cents to 22 cents. The current Zacks Consensus Estimate for earnings is pegged at 20 cents per share, excluding one-time charges but including stock based compensation. This is a 33% increase from the reported earnings of 15 cents per share in the year-ago quarter. This is in line with the companya�s guidance.

Second quarter 2011 total revenue is expected between $445.0 million and $460.0 million, compared with the previous guidance of $435.0 million to $460.0 million. The Zacks Consensus Estimate is at $457.0 million.

For full year 2011, management did not provide any specific guidance. However, the company expects GAAP operating margin to increase significantly compared with 2010. Non-GAAP operating margin is expected to increase by approximately 300 bps in 2011. Management remains somewhat cautious due to de valuation of the euro and the general instability of the European economy. However, they anticipate a strong global demand environment going forward.

BofA Projects $1.4B in Legal Charges

Bank of America Corp. (NYSE: [ BAC ]) estimated pending litigation losses to soar up to $1.4 billion, according to its recent filing of second quarter 2010 results with the Securities and Exchange Commission (SEC).

Since the beginning of the financial crisis in 2008, BofA has been dragged into a number of lawsuits. The company approximates outstanding litigation charges to range from $250 million to $1.4 billion.

Predicting the outcome of litigation and regulatory matters is mostly difficult; the eventual outcome of the pending matters, the timing of their resolution, or the eventual loss, fines or penalties related to each pending matter cannot be accurately foretold.

BofA also disclosed that it is required to raise an additional $1.1 billion by the end of 2010 to meet the requirements of the Federal Reserve related to bailout aid repayment. The company has already repaid $45 billion in December 2009 and has to return an additional $3 billion by the end of 2010.

To accumulate these funds, BofA was shedding assets and selling investments. The bank sold $10 billion in assets that generated $1.9 billion in net after-tax proceeds. If it fails to organize the remaining funds by the end of December 2010, BofA might have to resort to an equity raise.

In the upcoming quarters, BofA expects the banking environment and other markets to be affected by the uneven and weak global economic recovery, financial turmoil and recent reforms including the Financial Reform Act. The European Union financial crisis may worsen and hurt both global and U.S. capital markets. In this troubled environment, the imposition of new U.S. and global financial regulations might directly affect the banking industry, dragging the pace of economic recovery.

BofA shares are maintaining a Zacks #4 Rank, which translates into a short-term Sell recommendation. However, considering the companya�s business model and fundamentals, we have a long-term Neutral recommendation on the stock.

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Tyson Foods, Citigroup, PNC Financial Services Group, Autodesk and Bank of America