For Immediate Release
Chicago, IL – August 08, 2016 – Zacks Equity Research highlightsAmkor Technologies (AMKR) as the Bull of the Day and Frank’s International (FI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on JPMorgan Chase & Co (NYSE:JPM). (JPM), Wells Fargo & Company (NYSE:WFC) ( WFC) and KeyCorp (NYSE:KEY) (KEY).
Here is a synopsis of all five stocks:
Technology is amazing, complicated, and at times requires several different components to function in tandem to produce the desired effect. Take your smart phone, there are many technologies that work together to enable these phones to do amazing things; batteries, semiconductor chips, and touch screens to name a few of the parts. One such company that does chip packaging and testing for large companies is Amkor Technologies (AMKR), and they are the Zacks Bull of the Day.
This Zacks Ranked #1 (Strong Buy) company is the world's largest independent provider of semiconductor packaging and test services. Also, the company is one of the leading developers of advanced semiconductor packaging and test technology. The company offers one of the industry's broadest integrated sets of packaging and test services, which are the final procedures necessary to prepare semiconductor devices for further use. Its customers outsource the packaging and testing of semiconductor chips to the company in order to benefit from the expertise in the development and implementation.
Recent Earnings
Management recently announced Q2 16 earnings where they easily beat both the Zacks Consensus Earnings and Revenue estimates. The company posted year over year gains in Net sales +24.4%, and EBITDA +5%. AMKR also faced $13 million in recovery costs from earthquakes in Japan (factory in Kumamoto). According to Joanne Solomon, EVP and CFO, “ We incurred approximately $13 million of incremental earthquake costs that reduced gross margin by 150 basis points and earnings per diluted share by $0.04. Taking into account insurance payments anticipated later this year, we expect the net impact of the Japan earthquakes on our full year 2016 results to be minimal ."
Management’s Take
According to Steve Kelley, President and CEO, “ Second quarter results were above the high end of our guidance. Strong Android smartphone demand and a quicker recovery at our earthquake-damaged Kumamoto factory were the key drivers of our financial performance for the quarter. Our growth in sequential sales also drove an 8.1% improvement in EBITDA .”
Mr. Kelley, touched on Q3 expectations as well, stating, “ Looking ahead to Q3, we expect that revenues will increase around 15% sequentially, driven by the launch of mobile devices across multiple tiers. We expect robust growth in advanced SiP, Greater China and automotive .”
In the service industry, if a big section of your clients suddenly don’t need as much servicing, it negatively impacts the bottom line. In the case of our Bear of the Day, Frank’s International ( FI), they saw 22 out of 25 deep-water rig clients suspend operations, or even cancelled their drilling operations all together during the second quarter of 2016. Further, the remaining and suspended rigs are now looking for pricing discounts. The combination of both situations has the company expecting to see second half 2016 revenues down 20% from the first half of 2016.
This Zacks Rank #5 (Strong Sell) is a provider of engineered tubular services to the oil and gas industry. Its tubular services include the handling and installation of multiple joints of pipe to establish a cased wellbore; and the installation of smaller diameter pipe inside a cased wellbore to provide a conduit for produced oil and gas to reach the surface. The Company provides its services to exploration and production companies in both offshore and onshore environments, with a focus on complex and technically demanding wells.
Recent Earnings
Management recently reported Q2 16 results where they missed both the Zacks Consensus Earnings and Revenue estimates by a wide margin. On a year over year basis, the company saw declines in overall revenues -52% with International Services revenues down -53%, U.S. Services down -53%, and Tubular Sales falling -50%. Further, the company posted a net loss of $45 million, and adjusted EBITDA fell by $14 million in the second quarter 2016. Due to the poor performance in the quarter, and the difficult road ahead, management cut their quarterly dividend by 50% in order to lower costs and improve cash flow, according to management.
Management’s Take
According to Gary Luquette, President and CEO, “ Although global offshore rig count was down slightly during the quarter, our offshore tubular running services business was adversely impacted as a majority of rigs that exited the market were serviced by Frank’s and located in our two primary regions of West Africa and the U.S. Gulf of Mexico.
As we continue to navigate this difficult macro environment the Company remains focused on growing share in underrepresented markets, continuing its lean journey through Frank’s Business System and evaluating opportunities to diversify our product and service offerings. We believe these efforts will position Frank’s well for the eventual upcycle. ”
Additional content:
Bank Stock Roundup: Focus Shifts from Earnings to Restructuring
Over the last five trading days, major banks depicted a mixed trend. Though investors’ confidence received a boost as the overall second-quarter earnings performance of the industry has not been as bad as the market expected, concerns related to global macro issues remained an overhang.
Mortgage rates which were on an upswing mostly in July declined this week, hitting 3.43%. In spite of the plunge, investors are apprehensive about parking funds in the housing market, thanks to the volatility in the financial world. However, homeowners seeking lower rates for refinancing are definitely big-time gainers. According to the Mortgage Bankers Association, refinancing activity jumped 55% year over year.
New data reflects that the U.S. economy is growing at a much slower pace than expected. Also, consumers are availing cheap borrowing but business spending has slowed down, impacting economic growth. Further, the low interest rate environment and the troubled energy sector, though improving, remain concerns.
Overall, the focus has shifted from earnings to banks' strategies in boosting profitability through restructuring and acquisitions in the last five trading days.
BANKS-MAJOR REGIONAL Industry Price Index
(Read: Bank Stock Roundup for the week ending Jul 29, 2016 )
Important Developments of the Week
1. Major Wall Street banks continued with their restructuring and streamlining operations. Recently, JPMorgan Chase & Co. ( JPM) entered into a strategic partnership with a leading electronic market maker – Virtu Financial, Inc. -- to gain access and trade in the U.S Treasuries market. According to the agreement, which will span at least for three years, JPMorgan will use Virtu’s technology to trade a small part of its fixed income business – dealer to dealer markets in U.S. Treasuries.
High-frequency trading firm, Virtu makes markets in 36 countries by offering quotations to buyers and sellers in over 12,000 financial instruments on more than 235 exchanges. Notably, Virtu is also the designated market maker for JPMorgan's stock on the floor of the New York Stock Exchange (read more: JPMorgan Partners with Virtu to Trade in U.S. Treasuries ).
2. With an objective to increase market share in commercial lending markets, Wells Fargo & Company (WFC) completed the acquisition of General Electric’s Commercial Distribution Finance (CDF) business in Australia and New Zealand. Notably, Wells Fargo sealed the deal with GE Capital, an arm of the Connecticut-based company last October.
The acquisition comprised CDF assets and 123 team members at 5 sites in Australian markets, and CDF assets and 7 team members at 2 sites in New Zealand. Notably, the Europe, Middle East and Africa (EMEA) segment’s closure is expected to take place later this year (read more: Wells Fargo Acquires GE Capital's CDF business ).
3. KeyCorp (KEY) announced the closure of the deal to acquire First Niagara Financial Group, Inc. Notably, systems and client conversions are expected to be completed by the fourth quarter of 2016, subject to approval by the U.S. Comptroller of the Currency. The acquisition was announced in Oct 2015. Post-merger, KeyBank will have a network of more than 1,200 branches and 1,500 ATMs, located in 15 states.
The merger will also add approximately $29 billion in deposits and total assets of $40 billion to KeyCorp, based on Jun 30, 2016 balances. At the time of announcement of the deal, KeyCorp had projected that it would dilute earnings per share by 1–2% in 2016, and thereafter be accretive to earnings in 2017, excluding merger and integration costs of approximately $550 million. Further, the company anticipated $400 million worth of savings in annual expenses.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
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 analyst 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. Click here to subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; 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.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
AMKOR TECH INC (AMKR): Free Stock Analysis Report
FRANKS INTL NV (FI): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
KEYCORP NEW (KEY): Free Stock Analysis Report
Original post