The Zacks Analyst Blog Highlights: Exxon Mobil Corporation, BP plc, Eni SpA, Petrobras and The J.M. Smucker Company

Fri Jun 10, 2011 9:30am EDT

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The Zacks Analyst Blog Highlights: Exxon Mobil Corporation, BP plc, Eni SpA, Petrobras and The J.M. Smucker Company

PR Newswire

CHICAGO, June 10, 2011 /PRNewswire/ -- 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: Exxon Mobil Corporation (NYSE: XOM), BP plc (NYSE: BP), Eni SpA (NYSE: E), Petrobras (NYSE: PBR) and The J.M. Smucker Company (NYSE: SJM).

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Here are highlights from Thursday's Analyst Blog:

Exxon Makes Giant GoM Discovery

Exxon Mobil Corporation (NYSE: XOM) announced the discovery of oil and gas in three major blocks in the deepwater Gulf of Mexico, marking the company's first deepwater exploration since the end of the drilling moratorium in the region. The wells are estimated to hold approximately 700 million barrels of oil equivalent in combined reserves.

The U.S. government had halted drilling activities in the Gulf area, following the blowout of Macondo well -- operated by BP plc (NYSE: BP) -- in April, 2010. The suspension was withdrawn in November, 2010.

Located at almost 250 miles to the southwest of New Orleans in water depth of 7,000 feet, the KC919-3 wildcat well confirmed the presence of more than 475 feet of net oil pay plus a minor amount of gas.

Through earlier drilling, Exxon had encountered 550 feet of net oil pay and a minor amount of gas at the Hadrian North field (KC919 and KC918 wells) and about 200 feet of natural gas pay at the Hadrian South prospect.

Exxon acts as the operator of all the wells – situated in the Keathley Canyon – with 50% working interest. The American units of Italy's Eni SpA (NYSE: E) and Brazilian company Petrobras (NYSE: PBR) share the remaining stake equally.

Exxon management remains highly optimistic about the discovery – one of the largest in the Gulf of Mexico in the last decade – and plans to work closely with other companies through joint venture for the maximum development and utilization of the resource.

We are maintaining our long-term Neutral rating on the stock. Exxon currently retains a Zacks #3 Rank, which translates into short-term Hold recommendation.

Smucker Beats Estimates

The J.M. Smucker Company (NYSE: SJM) delivered non-gaap earnings per share (EPS) of $1.00 for its fourth quarter outperforming the Zacks Consensus Estimate of 98 cents but was down 6.5% from the year-ago EPS of $1.07.

For the fourth quarter of fiscal 2011, EPS excluded restructuring and merger and integration costs of 18 cents.

Net sales for the quarter increased 11% year over year to $1,187.3 million as pricing contributed approximately 8% of the overall increase.  Volume increased 2% as gains were realized in the majority of the brands including Pillsbury baking mixes and frostings, Jif peanut butter, Folgers coffee, Crisco oils, Bick's pickles and Smucker's fruit spreads.  The overall impact of sales mix and foreign exchange rates was favorable.

Outlook

Concurrent with the earnings release, the company provided guidance for fiscal 2012. For fiscal 2012, the company intends to remain committed to its strategy of owning and marketing North American food brands which hold the leading market position in their respective categories.  

In 2012, the company expects cost of products sold to increase approximately 25% driven primarily by significantly higher commodity costs, compared to 2011. Price increases have been taken in response to these higher costs.

The full year impact of price increases taken during 2011 and early 2012, along with the recently announced acquisition of the coffee brands and business operations of Rowland Coffee Roasters, Inc. are expected to result in a 2012 net sales increase of approximately 20%, compared to the prior year.  

Non-GAAP income per diluted share is expected to be in the range of $5.00 to $5.15 per share. The guidance excludes special project costs of 55 cents to 60 cents per diluted share. 

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