Lockheed Martin (LMT) +6.31%
LMT said fourth quarter earnings increased three percent thanks to expanded sales of computer service and support to federal government agencies.
The company raised their 2009 sales forecast, which reflects decreasing expectations for cuts to the defense budget. However, Lockheed lowered its earnings guidance (first given last October) to reflect increased pension costs after declining stock markets eroded plan assets.
Information technology sales, which gained 16 percent last quarter, helped offset sluggish aeronautics revenue, which declined 4.6 percent. LMT expanded sales of computer service and support to federal government agencies.
UnitedHealth Group (UNH) +8.54%
UnitedHealth posted fourth quarter earnings that were in line with expectations and maintained full-year profit guidance. The company generated about $3.4 billion of free cash flow for shareholders in 2008, $2.7 billion of which was used for share repurchases.
Enrollment levels remained relatively stable, but commercial enrollment losses are likely to accelerate in 2009 as members who lost their jobs earlier in 2008 begin to run out of COBRA benefits. However, the company’s diversification paid off, with Medicaid and Medicare enrollment gains more than making up for the losses in the commercial business.
UnitedHealth expects meaningful growth in government-sponsored business in 2009. The company said there is strong interest in its Medicare market offerings and continued expansion from its state and public health program relationships.
The consolidated medical care ratio increased 90 basis points year-over-year to 80.8 percent. This ratio indicates the percentage of premium revenue that gets paid out in medical claims. For the full year, the medical cost ratio was 82 percent compared with 80.6 percent in 2007.
Realized investment losses remained minor, at $0.03 per share in the fourth quarter, which was primarily because of the write-down of a venture capital investment.
Raymond James Financial (RJF) +2.41%
Raymond James reported fiscal first quarter earnings that came in above analysts’ estimates. Although the outlook was grim for most of 2009, the company has been building its bank operations (Raymond James Bank). While many of its peers are cutting expenses, Raymond James has been looking to boost its market share by snagging brokers, traders and bankers from troubled firms.
CEO Thomas James attributed the bank’s improved earnings to interest rate spreads that increased as a result of federal market intervention, a real estate and corporate loan portfolio that is outperforming industry benchmarks and a loan portfolio that was 36 percent larger at the end of December than a year earlier.
In November, the company applied to participate in the U.S. Treasury’s Troubled Asset Relief Program. Still, the company has yet to report write-downs related to subprime mortgages, a sign the company’s balance sheet is relatively strong.
Noble Corporation (NE) -0.82%
Noble’s earnings exceeded expectations with profits growing 20 percent in the fourth quarter thanks to long-term service contracts.
Despite oil declining 35 percent in the fourth quarter, Noble had contracts in place for some time. We are unlikely to see a decline in earnings for a few quarters simply because they have everything locked up near-term. Nevertheless, there are several uncertainties surrounding drillers in 2009 including low commodity prices, weakness in the capital markets, high contract turnover and the expected deliveries of several uncontracted newbuild jack-ups.
CEO David Williams said in the statement, “While we believe the long-term fundamentals of our industry are sound, the condition of the global economic environment is clearly a cause of concern and a reason for caution.”
Spending by companies around the world on oil and natural-gas exploration is expected to drop 12 percent in 2009 to $400 billion, according to a Dec. 19 report by Barclays analysts.
Quick Hits
Peter Lazaroff, Junior Analyst
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