Archive for December, 2010

  • Bed Bath & Beyond Crushes Earnings
    , December 22nd, 2010 at 6:32 pm

    Bed Bath & Beyond (BBBY) just reported earnings of 74 cents per share, nine cents more than Wall Street was expecting.

    The company also raised its full-year forecast (fiscal year ending February 2011) to as much as $2.90 per share from the previous high-end forecast of $2.76 per share. The stock is up nearly 6% after-hours.

    The chain’s increased forecast comes as retail sales improve across the U.S. On Dec. 14, the National Retail Federation boosted its holiday retail sales forecast by 1 percentage point, to an increase of 3.3 percent.

    Bed Bath & Beyond will repurchase shares worth $2 billion, according to the statement.

    The retailer rose $2.83, or 5.9 percent, to $50.50 at 4:48 p.m. in after-hours trading on the Nasdaq Stock Market. Shares have climbed 23 percent this year.

    Bed Bath & Beyond, which operates more than 1,000 stores in North America and sells home products, giftware and health and beauty care items, said sales at stores open more than a year rose 7 percent in the third quarter.

    It also reported third-quarter earnings of 74 cents a share, a 28 percent increase from a year ago. Analysts had projected earnings of 65 cents, according to an average of estimates compiled by Bloomberg.

    Quarter Sales Gross Profit Operating Profit Net Profit EPS
    May-99 $356,633 $146,214 $28,015 $17,883 $0.06
    Aug-99 $451,715 $185,570 $53,580 $33,247 $0.12
    Nov-00 $480,145 $196,784 $50,607 $31,707 $0.11
    Feb-00 $569,012 $238,233 $77,138 $48,392 $0.17
    May-00 $459,163 $187,293 $36,339 $23,364 $0.08
    Aug-00 $589,381 $241,284 $70,009 $43,578 $0.15
    Nov-01 $602,004 $246,080 $64,592 $40,665 $0.14
    Feb-01 $746,107 $311,802 $101,898 $64,315 $0.22
    May-01 $575,833 $234,959 $45,602 $30,007 $0.10
    Aug-01 $713,636 $291,342 $84,672 $53,954 $0.18
    Nov-02 $759,438 $311,030 $83,749 $52,964 $0.18
    Feb-02 $879,055 $370,235 $132,077 $82,674 $0.28
    May-02 $776,798 $318,362 $72,701 $46,299 $0.15
    Aug-02 $903,044 $370,335 $119,687 $75,459 $0.25
    Nov-03 $936,030 $386,224 $119,228 $75,112 $0.25
    Feb-03 $1,049,292 $443,626 $168,441 $105,309 $0.35
    May-03 $893,868 $367,180 $90,450 $57,508 $0.19
    Aug-03 $1,111,445 $459,145 $155,867 $97,208 $0.32
    Nov-04 $1,174,740 $486,987 $161,459 $100,506 $0.33
    Feb-04 $1,297,928 $563,352 $231,567 $144,248 $0.47
    May-04 $1,100,917 $456,774 $128,707 $82,049 $0.27
    Aug-04 $1,273,960 $530,829 $189,108 $120,008 $0.39
    Nov-05 $1,305,155 $548,152 $190,978 $121,927 $0.40
    Feb-05 $1,467,646 $650,546 $283,621 $180,980 $0.59
    May-05 $1,244,421 $520,781 $150,884 $98,903 $0.33
    Aug-05 $1,431,182 $601,784 $217,877 $141,402 $0.47
    Nov-06 $1,448,680 $615,363 $205,493 $134,620 $0.45
    Feb-06 $1,685,279 $747,820 $304,917 $197,922 $0.67
    May-06 $1,395,963 $590,098 $148,750 $100,431 $0.35
    Aug-06 $1,607,239 $678,249 $219,622 $145,535 $0.51
    Nov-07 $1,619,240 $704,073 $211,134 $142,436 $0.50
    Feb-07 $1,994,987 $862,982 $309,895 $205,842 $0.72
    May-07 $1,553,293 $646,109 $154,391 $104,647 $0.38
    Aug-07 $1,767,716 $732,158 $211,037 $147,008 $0.55
    Nov-08 $1,794,747 $747,866 $203,152 $138,232 $0.52
    Feb-08 $1,933,186 $799,098 $259,442 $172,921 $0.66
    May-08 $1,648,491 $656,000 $118,819 $76,777 $0.30
    Aug-08 $1,853,892 $739,321 $187,421 $119,268 $0.46
    Nov-08 $1,782,683 $692,857 $136,374 $87,700 $0.34
    Feb-09 $1,923,274 $785,058 $231,282 $141,378 $0.55
    May-09 $1,694,340 $666,818 $142,304 $87,172 $0.34
    Aug-09 $1,914,909 $773,393 $222,031 $135,531 $0.52
    Nov-09 $1,975,465 $812,412 $245,611 $151,288 $0.58
    Feb-10 $2,244,079 $955,496 $370,741 $226,042 $0.86
    May-10 $1,923,051 $775,036 $225,394 $137,553 $0.52
    Aug-10 $2,136,730 $874,918 $296,902 $181,755 $0.70
    Nov-10 $2,193,755 $896,508 $305,110 $188,574 $0.74

  • Home Depot Vs. Lowe’s
    , December 22nd, 2010 at 4:28 pm

    I was curious to see what the long-term trend looks like between Home Depot (HD) and Lowe’s (LOW). Below is HD’s stock price divided by LOW’s stock price (adjusted for many, many splits).

    Let me preface this by saying that this is hardly sophisticated analysis. I’m basically just playing with data. However, I do think it’s interesting to see how the long-term relationship has played out.

    While HD crushed LOW through through the early 1990s, LOW came back in a big way. LOW had a nice run from 1992 to 1994 and again from 2000 to 2003.

    Over the last eight years, both stocks have been roughly parallel. HD has slightly outperformed LOW since October 2008 which may indicate that LOW has been hurt more by the recession. Perhaps HD does better with budget-conscious consumers.

  • Q3 GDP Revised to 2.6%
    , December 22nd, 2010 at 12:53 pm

    The government revised its estimate for the third-quarter to 2.6%. The initial report was 2%. Then last month, it was revised to up to 2.5%. The only hitch with today’s revision is that Wall Street was expecting a revision to 2.8%.

    Growing incomes, the continuation of Bush-era tax cuts and an improving labor market may encourage Americans to boost their spending, which accounts for about 70 percent of the world’s largest economy. Today’s figures showed a measure of inflation rose at the slowest pace in more than 50 years, underscoring the Federal Reserve’s strategy of extending record monetary stimulus.

    Today’s data set the stage for “a stable pace of growth” in 2011, said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. The lack of “inflation does remain the biggest downside risk to the U.S. economy” and GDP expansion at this rate “is not enough to move unemployment meaningfully,” he said.

    (…)

    Inventory Growth

    A bigger gain in inventories added more to growth than the Commerce Department estimated last month.

    The need to restock inventories, a major driver of the economic recovery, may diminish in coming months as companies try to keep stockpiles more in line with demand. The value of unsold goods rose $121.4 billion in the third quarter, up from a previously reported $111.5 billion.

    The trade gap was revised to $505 billion from $506.7 billion, today’s report showed. The deficit subtracted 1.7 percentage points from growth.

    Excluding trade and inventories, a measure of underlying demand, the economy would have grown at a 2.6 percent annual rate after expanding 4.3 percent in the second quarter. The Commerce Department last month estimated a 2.9 percent pace of so-called final sales to domestic purchasers in the third quarter.

    Corporate Investment

    Corporate spending on new equipment as well as export demand will support production. Business purchases of equipment and software rose at a 15.4 percent pace last quarter, revised from 16.8 percent and following a 24.8 percent jump for the second quarter that was the biggest in 27 years. Spending on structures including office buildings and factories fell 3.5 percent.

    “We have seen now an extended period of time of recovery in the components business,” Paul Reilly, chief financial officer of Arrow Electronics Inc., said earlier this month at a conference in New York. Melville, New York-based Arrow is a distributor of electronic components and computer products to industrial customers.

    Corporate profits increased 1.6 percent, revised from the 2.8 percent gain estimated last month, today’s report showed. They were up 26 percent from the same period a year earlier.

  • Morning News: December 22, 2010
    , December 22nd, 2010 at 8:17 am

    Bank Borrowing from ECB still Heavy into 2011

    Euro Helped by Report China Will Buy Portugal’s Debt

    U.S. Stock-Index Futures Fluctuate; Nike, Xilinx Retreat as Tibco Climbs

    Banks Best Basel as Regulators Dilute or Delay Capital Rules

    Will The January Effect and The Presidential Cycle Combine for a Big January in Stocks?

    Do We Need Google To Measure Inflation?

    Copper Steadies Within Reach of Record High

    U.S. Stocks Erasing Loss Since Lehman Failure Fuels 2011 Bulls

    A Tough Sell at Sears

    Rio Tinto Near Deal on $3.8 Billion Riversdale Bid

    Suitably Dressed

    FCC Passes Net Neutrality Rules (Kind Of)

  • 13 Out of 15
    , December 21st, 2010 at 11:37 pm

    The S&P 500 has now risen for 13 of the last 15 sessions. Granted, most of these increases have been tiny, but the market has still gone up.

    Today, in fact, the S&P 500 closed at 1,254.60 which is the highest close since September 8, 2008. In other words, it’s the highest close since Lehman Brothers went kablam-o.

  • U.S. Population = 308,745,538
    , December 21st, 2010 at 11:49 am

    It’s official. The Census Bureau has reported that the U.S. population stands (or stood on April 1) at 308,745,538.

    Since I know you’re curious, the prime factors are 2 X 37 X 47 X 88771 = 308,745,538.

    We can also use this occasion revisit my idea for the 28th Amendment (otherwise known as the Elfenbein Amendment) which would target the size of the House of Representatives to the pi root of the population.

    Based on the new count, this would mean the House would now hold 504 members.

  • Q3 Earnings Were Pretty Darn Good
    , December 21st, 2010 at 11:26 am

    All summer we were being told that the economy was about to head into a Double Dip. Now the numbers are in for the third-quarter earnings season, and the earnings were quite good.

    The median EPS surprise was 5%.

    For the S&P 500, there were 359 positive surprises and just 95 disappointments.

    There was positive year-over-year growth for 379 stocks, and it fell for 117 stocks.

    56.6% of all firms did better than expected on their top line. Revenue growth was healthy at 8.12%.

    Net margins were 9.01%, the same as Q2 but way above the 7.78% from one year ago.

    Excluding financials, net margins rose to 8.05% from 7.90% for Q2 and from 6.99% a year ago.

    Full-year total earnings for the S&P 500 are expected to jump 43.1% in 2010 and 11.4% further in 2011.

    Revenues for the S&P 500 are expected to rise 4.93% in 2010 and 5.78% in 2011.

    The revisions ratio for the full S&P 500 is at 1.75 for 2010 and at 1.48 for 2011, both bullish readings.

  • Morning News: December 21, 2010
    , December 21st, 2010 at 8:34 am

    Stocks Start Week With Mixed Finish

    Stocks, Euro, Commodities Gain as Korea Tensions Ease

    Portuguese, Irish Bonds Fall; Moody’s Move Adds to Debt Concern

    China Eases Rules on Government Contract Bidding, EU Says

    Crude Up on Cold Weather as January Nears Expiration

    Prospect of WikiLeaks Dump Poses Problems for Regulators

    Adobe Outlook Beats Forecasts

    TD Bank to Buy Chrysler Financial for $6.3 Billion

    News Corp. Bid for BSkyB Gets Nod From E.U.

    AT&T Will Buy More Spectrum

    ConAgra Posts Lower Quarterly Profit

    The Corporate Warchest

  • The Santa Claus Rally
    , December 20th, 2010 at 2:53 pm

    We’re about to enter the strongest time of the year for the stock market.

    The following chart is based on the Dow’s historic daily changes from 1896 to 2007. The Dow has an average gain for every day from December 22 to January 7 (except for the two holidays of Christmas and New Year’s Day). Over this 17-day period, the Dow has an average gain of 3.39%. That’s more than 40% of the Dow’s annual gain.

    (I should add that when looking at this chart, bear in mind how narrow the range is for the Y-Axis.)

  • When Will the Fed Raise Rates?
    , December 20th, 2010 at 2:29 pm

    Paul Krugman posts this chart from the Cleveland Fed looking at the futures market’s take on when the Fed will increase interest rates.

    The market seems to expect a rate increase by this summer. Krugman, naturally, doesn’t see a need for the Fed to raise rates through 2012. I think it’s very likely that the Fed will raise rates before many people expect they will. Once a rate increase comes, my view of the market will change. Until that happens, stocks are a very good place to be.