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Bank of America Corp. (BAC)
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services.
It opened today at $10.07 and has dipped below $10 today, currently trading at $10.01. This marks a new 52-week low for BAC, which was previously at $10.06. Its current price is the lowest the stock has seen since May 2009 when it was caught in the midst of the financial crisis.
According to its recent quarterly statements, revenue increased by $4.5 billion quarter-over-quarter to $27 billion, but year-over-year revenue actually decreased by $5 billion. Expenses increased quarter-over-quarter and year-over-year to $20 billion. Net income for the quarter is $2 billion, a quarter-over-quarter increase of $3 billion but a $1 billion decrease year-over-year.
Tangible book value per share increased to $13.21, a 1.7% increase from last quarter and a 13% increase from last year. The ratio of nonperforming loans, leases, and foreclosed properties to outstanding loans, leases, and foreclosed properties decreased to 3.4%, improving on the previous quarter and the previous year. Along their different business segments, Global Banking and Markets showed the strongest quarterly growth, tripling to $2.1 billion in net income, though this is lower than last year's $3.2 billion.
Earnings per share decreased from $.28 to $.17 year-over-year. Return on equity decreased from 5.50 to 3.50 year-over-year. BAC began the day trading with a P/E ratio of 13.4 and a P/S ratio of 0.8. Its last quarter's free cash flow is a loss of $928 million.
CEO of Bank of America Brian T. Moynihan has been rebuilding capital and has vowed to reduce risk in Bank of America's holdings. Risk-weighted assets have declined by $23 billion and global excess liquidity increased by $50 billion since the last quarter, according to their quarterly statements. There are still mounting costs on the company to cover bad mortgages and faulty foreclosures stemming from its purchase of Countrywide Financial. Other factors include concerns over Europe's debt crisis potentially spilling over to U.S. Banks.
On 7/15/2011, it was reported that Bank of America put up for sale roughly $250 million of private equity funds held on its balance sheet as part of an effort to reduce exposure to the asset class.
Cisco Systems Inc. (CSCO)
Cisco Systems, Inc. is the worldwide leader in networking for the Internet. Cisco's Internet Protocol-based networking solutions are the foundation of the Internet and most corporate, education, and government networks around the world, providing solutions for transporting data, voice, and video. It opened today at $15.46 and dipped slightly to $15.45, nearing its 52-week low of 14.78. The stock is currently traded at roughly $15.60, down 40% from its 52-week high of $26.00.
According to its recent quarterly statements, revenue increased by 4.4% over last quarter and by 4.8% over last year to $10.8 billion. Net income was at $1.8 billion, a 17.6% decrease year-on-year, causing earnings per share to fall from $0.37 last year to $.33 this year. Free cash flow continues to increase, up $420 million to $2.7 billion. The company has now produced positive free cash flow in each of the last five quarters and has had positive free cash flow every year for the past decade. It began the day trading with a P/E ratio of 10.8 and a P/S ratio of 2.1. Quarterly sales per share have recovered from a dip in 2009 and are continuing the ten-year trend of steady growth, now nearly at $2.0 per share.
During the last quarter, Cisco repurchased 54 million shares of common stock at an average price of $18.39 per share as part of its stock repurchase program. It also completed the acquisitions of newScale Inc., a software provider; Inlet Technologies, Inc., a leading provider of Adaptive Bit Rate digital media processing platforms; and Pari Networks, Inc., a leading provider of network configuration and change management.
Cisco's CEO John Chambers has recently promised to streamline the company's operations to speed up decision-making in an effort to get new products to market faster. The reorganization will cut the number of groups involved in developing new products, combining multiple groups into one. The company will also streamline sales organization.
On 7/12/2011, it was reported Cisco plans to cut between 5,000-10,000 jobs this, a workforce reduction of 7-14%, in an attempt to revive profit growth.
Hewlett-Packard Co. (HPQ)
Hewlett-Packard is one of the leading global providers of computing and imaging solutions and services for business and home. The company is focused on capitalizing on the opportunities of the Internet and the proliferation of electronic services. Its major businesses include Imaging and Printing Systems, Computing Systems, and Information Technology Services. It opened the day trading at $35.28 and was as low as $34.97, close to its 52-week low of $33.95. It is now priced at roughly $35.09, down 29% from its 52-week high of $49.39.
According to their latest quarterly statements, revenues increased year-over-year by $800 million to $31.6 billion but are down from last quarter's $32.3 billion. Net income also increased year-over-year to $2.3 billion, but are down from last quarter's $2.6 billion. Earnings per share dropped from $1.19 to $1.06. Software sales revenue grew 17% year-over-year, driven by growth in licenses and services. Financial services revenue also grew 17% year-over-year, led by double-digit growth in lease volume and strong returns on their portfolio. HP also generated $2.9 billion in free cash flow, continuing its trend of positive free cash flow and the most it's produced in the past five quarters. The stock began the day trading with a P/E ratio of 6.9, very near its 10-year historical low, and its P/S ratio of 0.6. is also near its historical low. Quarterly sales per share have been growing over the past 8 years, now at a high of $14.62 per share.
Recent sales numbers rank Hewlett-Packard as the leading PC vendor with a 18.1% market share. However, PC and laptop numbers have taken a hit lately as a result of tablet sales.
On 06/13/2011, HP announced organizational changes that will more closely align its corporate structure with its strategy to lead in global connectivity. The changes will "increase transparency, sharpen the executive team's focus on customer-facing businesses, and position HP for the opportunities it sees in the market."
This is part of GuruFocus Real Time Picks report, which reports the stock trades of Gurus within the last few days. For more information, go to Real Time Picks.
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