(BSC) - chalk up another positive earnings surprise

When The Bear Stearns Companies, Inc. (BSC) was first featured as a Value stock back on Mar 21, 2006, the company was a Zacks #1 Rank. The company has maintained this coveted status and its history of topping the Street's estimate is intact. BSC exceeded the consensus earnings estimate for 16 consecutive quarters. Furthermore, analysts remain optimistic about the company's future prospects. The company has a price-to-book ratio of 1.5. Full Analysis The Bear Stearns Companies, Inc. is the parent company of Bear, Stearns & Co. Inc., a leading global investment banking, securities trading and brokerage firm. The company operates in three segments: capital markets, global clearing services and wealth management. When BSC was first highlighted as a Value stock on Mar 21, 2006, the company had exceeded analysts' earnings expectations for an impressive 16 straight quarters. Well, chalk up another positive earnings surprise. The company beat the Street by 20.0% on Jun 15, 2006, when it reported second-quarter fiscal 2006 profits of $3.72 per share. When compared to the second quarter of fiscal 2005, earnings were up 45.3%. EPS grew 26.4% over the past five years and are forecasted to grow 10.7% over the next 3-5 years. Net revenues for the second quarter amounted to a record $2.5 billion, up 31.6% from the $1.9 billion achieved in the prior-year period. Broken down by business segment, revenues in the Capital Markets and Global Clearing Services groups jumped 40% and 5%, respectively, while Wealth Management lost 3%, versus the second quarter of fiscal 2005. Analysts continue to be increasingly optimistic about BSC. The consensus earnings estimate for this quarter and next quarter increased 3.5% and 4.9%, respectively, when compared to the consensus of 90 days ago. Seven analysts upped their estimates for this quarter and next quarter. Profit forecasts for this year and next year have risen 4.8% and 3.8%, respectively, over the past three months. Eights analysts submitted upward revisions for 2006 and seven did so for 2007. The company is currently trading at a valuation of 10.2x trailing 12-month earnings and at 10.3x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 16.4x trailing 12-month earnings and at 15.2x its current fiscal-year estimated earnings. BSC has a price-to-book ratio of only 1.5, compared to 3.9 for the market. The company has a PEG ratio of 0.96. BSC has a current dividend yield of 0.85% and a return on equity of 18%. The industry's ROE is 14%, illustrating BSC's higher level of profitability. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. The ranks are updated every Monday morning on Zacks.com. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions. Blog Home