Archive for February, 2010

  • Nicholas Financial Earns 23 Cents a Share
    , February 2nd, 2010 at 11:15 am

    This is another very good earnings report from Nicholas Financial (NICK):

    Nicholas Financial, Inc. announced that for the three months ended December 31, 2009, net earnings, excluding change in fair value of interest rate swaps, increased 117% to $2,747,000 as compared to $1,267,000 for the three months ended December 31, 2008. Per share diluted net earnings, excluding change in fair value of interest rate swaps, increased 109% to $0.23 for the three months ended December 31, 2009 as compared to $0.11 for the three months ended December 31, 2008. See reconciliations of the non-GAAP measures (below). Revenue increased 8% to $14,365,000 for the three months ended December 31, 2009 as compared to $13,254,000 for the three months ended December 31, 2008.
    For the nine months ended December 31, 2009, net earnings, excluding change in fair value of interest rate swaps, increased 97% to $7,114,000 as compared to $3,616,000 for the nine months ended December 31, 2008. Per share diluted net earnings, excluding change in fair value of interest rate swaps, increased 91% to $0.61 for the nine months ended December 31, 2009 as compared to $0.32 for the nine months ended December 31, 2008. See reconciliations of the non-GAAP measures (below). Revenue increased 6% to $42,216,000 for the nine months ended December 31, 2009 as compared to $39,878,000 for the nine months ended December 31, 2008.
    According to Peter L. Vosotas, Chairman and CEO, “We are pleased with our third quarter results. These results were favorably impacted by an increase in revenues of 8%, a reduction in the net charge-off rate of 25% and a 20% reduction in the cost of borrowed funds. During the third quarter we opened our 50th branch location in Gastonia, North Carolina. We expect to open a second branch location in Nashville, Tennessee and a branch location in Grand Rapids, Michigan, during our fourth quarter ending March 31, 2010. The Company continues to evaluate additional markets for future branch locations, and subject to market conditions, could open additional branch locations during the year. The Company remains open to acquisitions should an opportunity present itself,” added Vosotas.

    This is what I wrote last month:

    Let’s make some assumptions for the next earnings report. If the pre-tax yield for the last quarter hit 7% on receivables of $230 million that comes to about $4 million pre-tax for the quarter. With the new shares post stock dividend, that’s 35 cents a share. After taxes, that’s about 22 cents a share.
    For the first six months of the fiscal year (ends March 31), NICK made 40 cents a share. So we’re probably talking about stock on its way to making around 80 cents a share for the year during an awful recession. As I see it, this company is almost like an 11% or 12% bond and the credit quality is improving.

    I was close. The pre-tax yield was actually 8% but receivables only rose $226 million. That’s an increase of 1.6% from last quarter. Even though the portfolio isn’t growing, the quality is improving. The average cost of borrowed funds dropped down to 3.92%. Best of all, the provision for credit losses fell again. It’s now at 5.34%. This is the fifth straight quarter it’s fallen.
    Overall, this is a very good report. Assuming the trends continue, then NICK should be able to earn $1 a share for this calendar year. I still believe these shares are very underpriced.

  • More Buy List Earnings
    , February 1st, 2010 at 12:15 pm

    The Buy List is recovering today along with the rest of the stock market. Sysco (SYY), which has been a frustrating stock recently, is up today thanks to a good earnings report. For the third straight quarter, the company beat expectations. Sysco earned 45 cents a share which was three cents more than the Street expected. Sales fell for the fifth straight quarter. Reuters writes: “Operating expenses fell 7 percent to $1.23 billion. Sysco has been cutting costs by reducing headcount, bonuses and commissions to offset weak demand.”
    Moog (MOG-A) also reported earnings today. This stock gained nearly 50% from its October low to its January high. The company earned 47 cents a share which matched Wall Street’s estimate. This is a big drop from last year.

    Moog’s profits slid to $21.6 million, or 47 cents per share, during the quarter that ended on Jan. 2, down from $30.3 million, or 70 cents per share, a year earlier.
    The company’s sales rose to $495.2 million from $446.1 million, aided by Moog’s acquisitions last year of a British flight controls business and the Fernau navigation aids unit.
    Much of the drop in earnings came from the company’s space and defense business, one of Moog’s strongest performers last year, where operating profits fell by 45 percent to $7.5 million on a 3 percent drop in sales.
    Earnings also declined at Moog’s components group, where profits were down 19 percent to $12.1 million, despite a 4 percent increase in revenues to $84.9 million.
    Operating profits jumped by 30 percent to $17.6 million at the company’s aircraft controls business, where sales grew by 7 percent to $175 million. Earnings at Moog’s industrial systems business were nearly flat at $11.2 million, despite a 24 percent increase in sales at $136.4 million. The firm’s medical device business, which lost $2.2 million a year ago, returned to profitability with a $139,000 operating profit as sales jumped by 47 percent to $29.4 million.

  • Absurb Story of the Day
    , February 1st, 2010 at 11:45 am

    Score one for the British media. The Times somehow floats the idea that Goldman’s CEO Lloyd Blankfein is going to get a $100 million bonus. Not only is this nuts, there’s absolutely zero evidence for it. Still, the Times runs with their story which is the potential backlash against a fairy tale.

    Goldman Sachs, the world’s richest investment bank, is facing a potential political storm over how much it pays its chief executive, Lloyd Blankfein.
    Bankers in Davos for the World Economic Forum (WEF) told The Times they understood that Mr Blankfein and other top Goldman bankers outside Britain were set to receive some of the bank’s biggest-ever payouts, in defiance of President Obama’s attempt to shame banks into cutting bonuses. “This is Lloyd thumbing his nose at Obama,” said a banker at one of Goldman’s rivals. (That’s the kind of quote journalists kill for.)
    Mr Blankfein took home his biggest bonus so far in 2007, when he was paid $67.9 million. Goldman’s profits last year were $1.8 billion higher than in 2007. This leaves the bank with a justification to pay him even more although payouts will be made in shares rather than cash to make them more politically palatable. Some rival bankers claim Mr Blankfein could receive up to $100 million, though even a much lower figure could prove politically explosive. (Who the hell is “some rival banker”? How on earth did they get that number?)
    Lucas van Praag, Goldman’s spokesman, said:”Although the Board has yet to detemine executive compensation, given everything we have said and done on the subject, the idea that the directors would award Lloyd Blankfein $100 million, or anything close to it, beggars belief.”

    In other news, the editors of the Times could potentially drown a bag of cats this afternoon. According to their unnamed business rivals, this would hurt the Times‘ image.