Archive for January, 2011

  • Earnings Season So Far
    , January 31st, 2011 at 4:03 pm

    This earnings season is shaping up to be a good one. Here are some numbers via Zacks:

    *4Q earnings season off to strong start, with 206 of the S&P 500 reports in, median surprise of 4.28% and surprise ratio of 3.73 for EPS, 1.53% and 2.94 for revenues.
    *Reported (206 firms) fourth quarter earnings growth of 31.2%, expected (294 firms) year-over-year growth of 19.5% for the vast majority of firms yet to report. On the Revenue side, 7.88% growth reported, but decline of 1.37% expected for those yet to report.
    *Full-year total earnings for the S&P 500 expected to jump 43.3% in 2010, 14.7% further in 2011. Growth to continue in 2012 with total net income expected to rise 12.0%.
    *Total revenues for the S&P 500 expected to rise 6.09% in 2010, 4.77% in 2011, and 4.89% in 2012. Excluding Financials, revenues expected to be up 8.99% in 2010, 5.97% in 2011 and 5.45% in 2012.
    *Revisions ratio for full S&P 500 at 1.98 for 2011, at 1.82 for 2012 — both very bullish readings. Ratio of firms with rising to falling mean estimates at 2.05 for 2011, 1.66 for 2012, also very positive readings. Total revisions activity expanding rapidly, making the revisions ratios more significant.
    *S&P 500 earned $544.3 billion in 2009, expected to earn $782.9 billion in 2010, $898.1 billion in 2011. In 2012, the 500 are collectively expected to earn $1.0057 Trillion.
    *S&P 500 earned $57.68 in 2009: $82.62 in 2010 and $94.77 in 2011 expected, bottom-up. For 2012, $106.17 expected in early read. Puts P/Es at 15.7x for 2010, and 13.7x for 2011 and 12.2x for 2012.

  • CWS Buy List Earnings Calendar
    , January 31st, 2011 at 1:55 pm

    Here’s an update of our earnings calendar. So far, every stock but one has beaten Wall Street’s earnings forecast.

    Company Symbol Date EPS Est EPS
    JPMorgan Chase JPM 14-Jan $0.99 $1.12
    Gilead Sciences GILD 25-Jan $0.94 $0.95
    Johnson & Johnson JNJ 25-Jan $1.03 $1.03
    Stryker SYK 25-Jan $0.91 $0.93
    Abbott Laboratories ABT 26-Jan $1.29 $1.30
    Deluxe Corp. DLX 27-Jan $0.71 $0.78
    Nicholas Financial NICK 27-Jan n/a $0.38
    Ford Motor F 28-Jan $0.48 $0.30
    Moog MOG-A 31-Jan $0.63 $0.73
    AFLAC AFL 1-Feb $1.35
    Fiserv FISV 3-Feb $1.07
    Reynolds American RAI 3-Feb $0.61
    Sysco SYY 7-Feb $0.47
    Becton, Dickinson BDX 8-Feb $1.29
    Wright Express WXS 10-Feb $0.71

  • The Ford Story
    , January 31st, 2011 at 1:03 pm

    Via the WSJ’s MarketBeat blog, I came across this piece on Ford (F) written by Itay Michaeli of Citigroup.

    No, although the Q4 miss may (at least temporarily) take some of the premium out of the stock. The Ford investment story has revolved around product, market share gains and robust pricing—metrics that were alive and well in Q4. What we learned is that Ford’s margins weren’t immune from seasonal pressures (as consensus implied) and that commodity/structural costs remain clear 2011 headwinds. Ultimately, if Ford continues to execute on its global strategy, Q4’10 won’t be remembered as a turning point. To that, we remain positive on Ford’s 2011 product cadence, but do believe GM gains an advantage in 2012-14—one of the factors behind our Hold rating on Ford.

  • Moog Beat Earnings By 10 Cents
    , January 31st, 2011 at 9:47 am

    We’re getting the week off to a good start. Moog (MOG-A) just announced that it creamed Wall Street’s estimates.

    For the their fiscal Q1, Moog earned 73 cents per share which was 10 cents more than Wall Street’s expectations.

    That’s not all. The company also raised its estimate for 2011. Moog now sees full-year earnings-per-share coming in at $2.75 compared with their earlier forecast of $2.70.

    First-quarter revenue rose 12 percent to $554 million. Aircraft segment sales were up 12 percent at $196 million, helped by commercial aircraft parts.

    OEM (original equipment maker) production revenues were up for Boeing — from a ramp-up in 787 Dreamliner hardware deliveries — and Airbus, its main customers, the company said in a statement.

    Boeing recently delayed the initial delivery of the Dreamliner to the third quarter from the first.

  • Our Miserable Performance on Friday
    , January 31st, 2011 at 9:39 am

    I want to spend a moment on our performance on Friday. What else can I say? The Buy List was absolutely killed. Unlike other folks on the Internet, I refuse to hide my lousy performance.

    The 20 stocks on the Buy List dropped 2.78% compared with a loss of 1.79% for the S&P 500. That 0.99% underperformance is one of our worst showings in a long time.

    The major culprit was Ford (F) which lost 13.41%, but that wasn’t the only big loser. Deluxe (DLX) lost 5.09% and Bed Bath & Beyond (BBBY) lost 4.03%. Every stock except for Medtronic (MDT) closed lower.

    Fortunately, the Buy List is still ahead of the market for the year. We’re now up 2.59% compared with 1.49% for the S&P 500.

  • Morning News: January 31, 2011
    , January 31st, 2011 at 7:41 am

    Moody’s Cuts Egypt Bonds Citing Political Tensions

    Hang Seng Indexes to Launch Hong Kong’s “VIX”

    Crude Oil Gains in New York on Egyptian Protests; Brent Retreats

    European Financials Defy Sovereign Debt Crisis in January Rally

    Growth Stocks May Fizzle in U.S. Rebound as Market Favors Value

    Honda Raises Profit Forecast on U.S. Sales Outlook

    Toshiba Swings To Black In Oct-Dec As Flash Business Counteracts Strong Yen

    Chrysler Reports $199 Million Quarterly Loss as Vehicle Shipments Decline

    Massey Energy Is to Be Sold to Alpha Natural Resources

    Cnooc Adds to Chesapeake Energy Stake

    Hearst to Buy Lagardere’s Magazine Unit for $889 Million

    Leigh Drogen: Singapore Trending

    Joshua Brown: Fun With Global Turmoil: Here Comes Rice!

    Clowns Can Help Women Get Pregnant

  • The King’s Actual Speech
    , January 28th, 2011 at 10:42 pm

    The movie The King’s Speech shows King George VI’s speech at the beginning of World War II. Colin Firth does a great job and will probably win an Oscar.

    Here’s the actual speech:

  • Ugh!
    , January 28th, 2011 at 7:59 pm

    The trading day is over and Ford lost 13.41%. Ugh–today was a total wipeout.

    Mind you, I still like the stock. This is one of those times where laziness the rules of the Buy List will probably help us out. Look for Ford to recover.

  • Why Did Ford Miss So Badly?
    , January 28th, 2011 at 12:17 pm

    Shares of Ford (F) are getting smacked down today in a serious way.

    How could Wall Street have missed so badly? Phil LeBeau, the auto guy at CNBC, writes:

    Ford says there are four factors that may explain why analysts were off. They include:

    * lower volume

    * higher investment costs for manufacturing and advertising a new model launch (Explorer)

    * high commodity costs

    * Ford Europe being unprofitable.

    All fair points.

    But aren’t these factors Wall Street analysts should have caught?

    Conversely, shouldn’t Ford have done a better job guiding Wall Street throughout the quarter about these factors shifting?

    The answer to both is yes. To quote a long time follower of Ford on Wall St., “There’s plenty of blame to go around for this earnings miss. Ford and the analysts were not on the same page, and both are to blame.”

    For the momentum stock investor who has piled into Ford shares recently, this miss hurts. The stock is getting whacked and it’s likely to feel pressure for a while.

    But long term, has much changed at Ford? No. The trajectory at Ford is still very positive, and there are plenty of reasons to remain bullish on Ford. For the first time since 2008, it has more cash than debt, it’s profit per vehicle is strong, and its outlook for 2011 is moving higher. To quote an analyst who tracks Ford, “There’s still a lot to like about where Alan Mulally is taking this company.”

    True. But today investors are paying the price for shares of Ford getting ahead of themselves and a big earnings miss that has many shaking their heads.

  • Q4 GDP Growth = 3.2%
    , January 28th, 2011 at 9:40 am

    The Commerce Department reported this morning that the U.S. economy expanded by 3.2% in real terms for the fourth quarter of 2010. In my opinion, this was another disappointing number. Economists were expecting growth of 3.5%.

    There are, however, some promising details in the report. For example, consumer spending, which represents about 70% of the economy, rose by 4.4%. That’s the fastest rate in five years. Final sales rose by 7.1% which is its fastest rate since 1984.

    For the last five years, real GDP growth has been 2.67%, 1.95%, 0.00%, -2.63% and 2.86%. Real GDP for the fourth quarter of 2010 finally surpassed the peak quarter of real GDP from the fourth quarter of 2007, albeit very narrowly. In three years’ time, the economy has expanded by a grand total of 0.14%.