Barclays Maintains an 'Equalweight' on FBR Capital (FBCM); Small Loss, but Nearer to Sustained Profits
FBCM Hot Sheet
Rating Summary:0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 19 | Down: 16 | New: 82
Barclays maintains an 'Equalweight' on FBR Capital (NASDAQ: FBCM), PT maintained at $5.
Barclays analyst says, "Unlike the experience over the last several years of disappointing earnings, the weak revenue quarter did not result in disproportionately disappointing net income due to a substantially improved compensation ratio at 58% (lowest in nearly four years and even then the comparison period in early 2007 had very strong underwriting revenues) and continued improvement on reducing non-compensation expenses. That said, those cost savings were not sufficient to result in positive earnings or book value growth, which declined by $0.06 to $4.54. Given the modest outlook for capital raising revenue and the institutional brokerage business, we believe that FBCM may continue to waver around zero to slightly positive earnings for some time before putting up an ROE sufficiently high to warrant a 1x P/B multiple. With a fairly clean balance sheet, high in cash content and other relatively low risk assets on the trading book, we believe that the shares may see some support at these levels while a more consistent record of profitability is built. The upside to our thesis would come from further profitable deployment of the $2.40 of cash/share and realization of the $88mm fully reserved deferred tax asset ($1.40/share)."
"We are raising our 2011 EPS estimate from $0.09 to $0.27 and 2012 EPS estimate from $0.40 to $0.50."
For more ratings news on FBR Capital click here and for the rating history of FBR Capital click here.
Shares of FBR Capital closed at $3.60 yesterday, with a 52 week range of $3.13-$4.80.
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Barclays analyst says, "Unlike the experience over the last several years of disappointing earnings, the weak revenue quarter did not result in disproportionately disappointing net income due to a substantially improved compensation ratio at 58% (lowest in nearly four years and even then the comparison period in early 2007 had very strong underwriting revenues) and continued improvement on reducing non-compensation expenses. That said, those cost savings were not sufficient to result in positive earnings or book value growth, which declined by $0.06 to $4.54. Given the modest outlook for capital raising revenue and the institutional brokerage business, we believe that FBCM may continue to waver around zero to slightly positive earnings for some time before putting up an ROE sufficiently high to warrant a 1x P/B multiple. With a fairly clean balance sheet, high in cash content and other relatively low risk assets on the trading book, we believe that the shares may see some support at these levels while a more consistent record of profitability is built. The upside to our thesis would come from further profitable deployment of the $2.40 of cash/share and realization of the $88mm fully reserved deferred tax asset ($1.40/share)."
"We are raising our 2011 EPS estimate from $0.09 to $0.27 and 2012 EPS estimate from $0.40 to $0.50."
For more ratings news on FBR Capital click here and for the rating history of FBR Capital click here.
Shares of FBR Capital closed at $3.60 yesterday, with a 52 week range of $3.13-$4.80.
Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!
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