For Immediate Release
Chicago, IL – December 16, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Wells Fargo & Co. (WFC), Bank of America Corp. (BAC), Citigroup Inc. (C), Ford Motor Co (F) and General Mills (GIS).
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Here are highlights from Tuesday’s Analyst Blog:
Wells Fargo to Repay TARP Money
Following aggressive repayment trends, on Monday, Wells Fargo & Co. (WFC) announced its inclination to repay the entire $25 billion of bailout money it received from the government for its participation in the Troubled Asset Relief Program (TARP) in Oct 2008. This will follow the company’s successful completion of a $10.4 billion common stock offering.
This makes Wells Fargo the third big bank to announce its intention to exit the government’s bailout program this month (till date) after Bank of America Corp. (BAC) who recently repaid the full $45 billion it had received in two government bailouts and Citigroup Inc. (C) who has also decided to repay its $20 billion TARP money in order to free itself from pay restrictions. In order to repay the loan amount, the company expects to sell new stock worth $10.4 billion.
Another $1.35 billion is expected to be raised through the issuance of common stock to Wells Fargo benefit plans while also intending to make asset sales of $1.5 billion by the end of 2010 in turn to increase equity and boost its capital position. However, the company awaits the approval on asset sales of the board of governors of the Federal Reserve.
Additionally, the repayment of the government bailout money is expected to help the bank save the annual payment of $1.25 billion in preferred stock dividends to the government. This is projected to be slightly accretive to earnings in 2010. We believe the decision of repayment of the TARP fund was crucial to the company as the Treasury Department and banking regulators had already sanctioned its exit from TARP fund.
Ford's Impressive Europe Sales
Ford Motor Co’s (F) auto sales in Europe’s 19 core markets have leaped 19.8% to 113,100 vehicles in November. This has resulted in a year-to-date market share of 9.1% for the company, the highest since 1999.
The sales included a registration of 99,800 Ford cars, also the highest since Nov. '99. The automaker’s market share in the month went up in 14 out of 19 European markets. However, its market share across the 19 core markets declined by 0.1 percentage points to 8.7% compared to last year.
Year-to-date, Ford sold about 1.3 million cars and trucks in these 19 markets, leading to a decline of 18,400 units or 1.4% from the year-ago level. This compares to the year-to-date industry decline of 6%.
General Mills Raises Dividend
The Board of Directors of General Mills (GIS) declared a 4.3% increase in the quarterly dividend to 49 cents per share. This raises the annual dividend by 12% to $1.92 per share compared to $1.72 earlier.
The dividend will be paid on Feb 1, 2010 to shareholders on record as at Jan 11, 2010. This is the second time the company has raised its dividend during fiscal 2010.
The company’s strong balance sheet and its ability to generate healthy cash flow allow it to increase shareholder value through higher dividends. As on August 30, 2009, General Mills had $712 million in cash and cash equivalents. The debt-to-capitalization ratio stood at 51.0%.
The company’s business model throws off substantial amounts of free cash flow. General Mills generated operating cash flow of $275 million during the first quarter of 2010, which was up 22% compared to the prior-year levels.
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