J.P. Morgan Remains Neutral On General Cable Following Strong Earnings
February 09, 2011 8:30 AM
After the close, General Cable (NYSE: BGC) reported very strong normalized Q4 EPS of $0.75 well above J.P. Morgan's $0.47 estimate and prior guidance of $0.40-0.50. J.P. Morgan attributes half the earnings upside to better value add capture than it anticipated and half to favorable below-the-line items including forex and an unusual noncontrolling interest benefit which may not be repeatable.
Price increases do not keep pace with raw materials inflation. Q1-11 revenue guidance of $1.40-1.45B is up 3-7% q/q based on 2% metal volume growth and 1-5% price growth. The average prices of copper and aluminum are up 10% and 5% q/q thus far in Q1 and represent 59% of COGS. J.P. Morgan anticipated strong Q4 demand from electric utilities but not construction. Electric Utility revenue grew 17% q/q reflecting improving T&D project activity. ROW-oriented Construction revenue grew 30% q/q.
J.P. Morgan has a Neutral rating on BGC
BGC closed Tuesday at $40.22
