Archive for May, 2011

  • Nicholas Financial Earned 40 Cents Per Share
    , May 5th, 2011 at 9:53 am

    NICK did it again. Another great quarter:

    Nicholas Financial, Inc. announced that for the three months ended March 31, 2011 net earnings increased 46% to $4,772,000 as compared to $3,260,000 for the three months ended March 31, 2010. Per share diluted net earnings increased 43% to $0.40 as compared to $0.28 for the three months ended March 31, 2010. Revenue increased 13% to $16,095,000 for the three months ended March 31, 2011 as compared to $14,256,000 for the three months ended March 31, 2010.

    For the year ended March 31, 2011, net earnings increased 55% to $16,805,000 as compared to $10,865,000 for the year ended March 31, 2010. Per share diluted net earnings increased 52% to $1.41 as compared to $0.93 for the year ended March 31, 2010. Revenue increased 11% to $62,774,000 for the year ended March 31, 2011 as compared to $56,472,000 for the year ended March 31, 2010.

    “Our strong growth in earnings per share for the fourth quarter and year ended March 31, 2011 were favorably impacted by the revenue contribution from new branches and a reduction in the net charge-off rate,” stated Peter L. Vosotas, Chairman and CEO. “We reported record revenues and earnings every quarter this year. In addition, we opened six new branch offices in the past year. We entered two new states with a branch in Chicago, Illinois and one in St. Louis, Missouri. We expect to add four to eight new branches during the upcoming year and will also continue to pursue buy-side opportunities as they arise.”

    The March quarter is the end of NICK’s fiscal year. For the year, NICK made $1.41 per share which is an increase over the 93 cents per share they made in the year before.

    Let’s add some perspective, shall we? Based on yesterday’s close, NICK is going for 9.22 times trailing earnings. That’s an earnings yield of 10.85%. Meanwhile, we know that NICK’s portfolio is vastly improving.

    For this past quarter, the provisions for credit losses were just $101,000 or 0.16% as a percentage of average finance receivables, net of unearned interest. One year ago, that was running at 3%. A year before that, it was 6%.

    Low interest rates continue to help NICK. The borrowing rate for this past quarter was just 4.21% (I believe NICK’s credit line is LIBOR plus 300 with some additional charges.)

    Here’s my updated spreadsheet with all the details.

    Optimistically, NICK can earn $1.60 to $1.70 per share for this fiscal year.

  • Nine Stocks Up over 900% Since 9/11
    , May 5th, 2011 at 9:05 am

    Jeff Reeves lists nine stocks that have risen over 900% since 9/11.

    Here’s a summary:

    Apple ($AAPL) +3,930%

    Amazon ($AMZN) +2,120%

    CNOOC ($CEO) +1,140%

    Green Mountain Coffee ($GMCR) +2,840%

    HMS Holdings ($HMSY) +4,670%

    Imax Corp. ($IMAX) +3,390%

    Intuitive Surgical ($ISRG) +1,830%

    F5 Networks ($FFIV) +1,170%

    Priceline ($PCLN) +1,530%

  • Morning News: May 5, 2011
    , May 5th, 2011 at 7:55 am

    BOE Holds Interest Rate at 0.5% on Signs Recovery Is Fading

    Portugal Says 78 Billion Euros Sufficient, Flags Recession

    Banks Hit Stocks, Investors Jumpy Over Rates

    China Yuan Flat Late Ahead Of China-US Meeting, Key Announcements

    Silver Investors Dump Bets on Costs

    Food Prices Rise to Near-Record as Inflation Accelerates

    U.S. Stock Futures Fall, Indicating Fourth Decline for S&P 500

    Fed Presidents Signal Record Stimulus Won’t Be Removed Soon

    Debt Ceiling Has Some Give, Until Roof Falls In

    Wal-Mart Tops Fortune 500 Again

    Costco’s April Same-Store Sales Rise 12%

    Banco Bilbao Vizcaya Argentaria First-Quarter Profit Drops to $1.7 Billion

    ING Reports Rise in Q1 Earnings, Will Repay Dutch State

    ConAgra May Have to Go Hostile After Ralcorp Rejects Offer

    Joshua Brown: RenRen and Skimpy Financials

    Paul Kedrosky: Milken, The Shorter Version

  • Thoughts on the U.K.’s Alternative Vote Referendum
    , May 4th, 2011 at 10:00 pm

    Tomorrow, voters in the U.K. will go to the polls for the second-ever nationwide referendum. The vote is to decide what electoral system is used to select members of the House of Commons.

    The choice is between the present system which is known as First Past the Post (FPTP) and the alternative system known as Alternative Vote (AV).

    FPTP is pretty straightforward. Whoever gets the most votes wins—even if it’s a minority of votes which often happens in a three-or-more party system.

    The Alternative Vote system let’s the voters rank all of the candidates in order of preference. The candidate with the lowest total is eliminated. The votes for that candidate are then given to the next highest-preferred choice. The process continues until one candidate has a majority. In the U.S. this is often known as instant run-off.

    The back story is that in the last general election, the Conservative Party fell 20 seats short of holding a majority in the House of Commons. In order to form a government, the Tories had to form a coalition with the Liberal Democrats. The pound of flesh secured by the Lib Dems was for this national referendum.

    As the U.K.’s third party, the Lib Dems naturally thought AV would help them in future elections. This looks like an historic miscalculation. According to the latest polls, AV is trailing badly. In other words, their major concession turned out to be absolutely worthless.

    I’m more interested in the mathematical strategy behind the two electoral systems. Critics of FPTP say that it unfairly gives out-sized results to the established parties. The numbers certainly back up this criticism. In the last general election, Labour (which came in second) outpolled the Lib Dems, 29% to 23%. Yet, Labour won 258 seats to the Lib Dems’ 57.

    In this week’s Canadian election, the Conservative Party won 39.6% of the vote but they won 54.2% of the seats. In New Brunswick, the Conservatives won 43.9% of the vote but they took eight of the 10 seats. FPTP gives an advantage to top-tier parties that have broad geographic support. AV is generally favored by smaller parties or parties with a strong regional base.

    In the United States, AV is often favored by political progressives but I think they tend to overstate its impact, especially its advantage for them. I’ve often noticed that when progressives are out of power, they criticize procedural issues like voting systems or cloture or campaigns finance. I don’t mean to suggest these issues aren’t worthy of criticism. I’m merely skeptical of how much reforms will truly change things or help the political left.

    In the 2000 Presidential election, I think there were many voters who favored Ralph Nader over Al Gore but voted for Gore anyway out of a fear of throwing their vote away and thereby helping George W. Bush. Of course, this is precisely what happened.

    In that case, AV almost certainly would have helped Gore, especially in Florida. However, other marginal parties would be helped by AV. I think libertarian candidates or paleo-conservative candidates might get a surprisingly high number of first-round votes.

    It’s possible that right-of-center coalitions are inherently larger in a multi-party system and are therefore in a stronger position to win FPTP pluralities. The thinking is that it’s easier to rally disparate groups around the “No” banner than around the “Yes” banner.

    Turning to stats-speak, I think AV would fatten the tails but would probably have little discernable impact on the median.

    Ultimately, I’m a strong supporter of “Elfenbein’s Electoral Law” which states that as long as you have an open society with a free press and a robust culture of political debate, the electoral system doesn’t matter so much inregard to policy outcomes.

    (One counterexample would be the U.S. Senate’s archaic cloture rules which probably kept Jim Crow alive for 20 years longer than a parliamentary system would have allowed. Maybe 30 years. But that’s a chamber’s rule, not an electoral system.)

    The bottom line is that if you want to see your policy choice become law, you should start with having good arguments. Sigmund Freud said “The voice of Reason is small, but very persistent.”

    Finally, here’s tomorrow’s ballot question in Welsh:

    Ar hyn o bryd, mae’r DU yn defnyddio’r system “y cyntaf i’r felin” i ethol ASau i Dŷ’r Cyffredin. A ddylid defnyddio’r system “pleidlais amgen” yn lle hynny?

    Happy voting!

  • The NL Is Out-Batting the AL
    , May 4th, 2011 at 7:55 pm

    Here’s something strange I just noticed: Baseball defense is way up this year. The American League is currently batting 0.250 which is its lowest league average since 1972. Just five years ago, the AL batted 0.275. (Hmmm…it’s almost like there’s mysteriously less muscle in the game.)

    In fact, the AL’s batting is so low that it’s slightly below the DH-less National League which is batting 0.252. That’s never happened since the DH was introduced in 1973.

    Of course, it’s early May and this may be within the range of normal probability. Still, I’m curious if there’s something else going on.

  • How Much Is Google Really Worth?
    , May 4th, 2011 at 3:19 pm

    Google ($GOOG) certainly gets a lot of attention but the stock really hasn’t done that well over the past few years. Three-and-a-half years ago, the stock was around $725 per share. Since then, Google has slightly underperformed the S&P 500 (plus the S&P 500 pays a dividend and Google doesn’t).

    So how much should Google be worth? That’s hard to say. Let’s take a very basic look. Wall Street currently expects Google to earn $33.90 per share this year.

    The S&P 500 is currently trading at 13.85 times this year’s earnings estimate. If Google were carrying that multiple, it would be about $470 per share.

    However, Google is projected to grow its earnings faster than the overall market. Wall Street currently expects Google to earn $39.49 per share in 2012. The S&P 500 is going for 12.2 times next year’s estimate. So if Google carried that multiple, it would be $481 per share.

    In other words, Google’s growth premium adds some value but not a whole lot. The current price of $537 assumes a growth premium that lasts well into the future — and in my opinion — too far of a distance to make a reasonable estimate.

    This is a very rough estimate of Google’s price. What I mean to show you is the amount of future growth investors are placing in Google’s price. Sure, it may pay off, but consider that Google’s much-hoped-for future hasn’t paid off over the last three-and-a-half years.

  • Self-Directed Gen X Investors Outperformed Those With Advisors Last Year
    , May 4th, 2011 at 10:05 am

    From Cogent Research:

    Gen X affluent investors saw their investable assets grow by about 11% on average in 2010, with self-directed affluent Gen X investors seeing 28% asset growth and Gen X investors with an advisor just 3% growth on average during that same time period, according to the report.

    You can read the full report here.

  • The New York Times and Efficient Markets
    , May 4th, 2011 at 9:43 am

    Catherine Rampell has an unusually silly post at the New York Times Economix site. She looks at the giant spike in the price at Intrade’s contract to capture Osama Bin Laden and concludes that markets are inefficient.

    I’m not sure how many times I’ve made this point, but that’s not what efficient markets mean. (And let me state clearly: I don’t believe markets are efficient).

    Just because the price spikes doesn’t mean that a market “failed.” The market adjusts with new information. Efficient Market Hypothesis merely states that markets accurately price new information.

    Sites like Intrade are mistakenly referred to as “predictions markets.” That’s not quite accurate. They’re really odds-setting markets. Those odds can change or a long-shot can pay-off. If you follow enough markets, a long-shot will pay off.

    I don’t take Intrade’s markets very seriously. I think they’re fun to follow but they’re really just a sideshow. I also think Intrade does a poor job with their contracts. The real world futures contracts work best when there’s a lot of public information available on some event.

    I remember when Intrade had contracts on who President Obama would appoint to the Supreme Court. That’s an awful contract because the outcome is based on one person’s decision. A better contract is who will win a party’s presidential nomination because there’s a lot of information available. Even that will mostly be a poll-watching contest.

    Barry Ritholtz has more.

  • Wright Express Beats and Guides Higher
    , May 4th, 2011 at 9:15 am

    Wright Express ($WXS) just released an amazing earnings report. The company had Q1 earnings of 75 cents per share which was six cents more than Wall Street’s estimate. Quarterly revenue jumped 43.3% to $120.1 million which also beat estimates.

    For Q2, Wright sees earnings coming in between 83 cents and 89 cents per share. But I was really impressed by the new guidance. As I’ve said before, few things impress me more than when a company raises its full-year guidance. Wright raised its 2011 guidance by 23 cents per share. The old EPS range was $3.17 to $3.37 and the new range is $3.40 to $3.60.

    Wright said:

    Given the strong results during the first quarter, we are increasingly confident in our ability to deliver solid performance as we head into the second quarter. We are raising our guidance for the full-year 2011 to reflect the strength we saw during the first three months of the year, coupled with higher fuel prices, a lower tax rate and a stronger Australian dollar.

    Not all companies issue quarterly or full-year guidance. I particularly like companies that do. As I see it, guidance is a matter of trust. I like to know where I stand with my stocks. I don’t mind terribly if a company reduces its guidance, as long as we know with enough lead time. Problems always come up. But I really like hearing that guidance is being raised. That’s probably the best news that long-term investors can get.

  • Morning News: May 4, 2011
    , May 4th, 2011 at 7:36 am

    Euro Approaches 18-Month High Versus Dollar Before ECB Decision

    Yuan Near 17-Year High as Central Bank Vows to Curb Inflation

    China’s ‘Basel’, Curbing Carbon Fraud, Dodd-Frank: Compliance

    Report Urges U.S. Open Door to China Investment Flood

    Gold, Silver Prices Search for Support

    US Stocks Close Unchanged; Energy, Materials Down, Telecoms Up

    NYSE Euronext Chief Isn’t Fazed by Hostile Nasdaq Bid

    U.S. Regulators Face Budget Pinch as Mandates Widen

    Credit Suisse: The End Of QE2 Will Lead To A Sell-Off

    Glencore Sets I.P.O. Range, Valuing It at $60 Billion

    Applied Materials Agrees to Buy Varian for $4.9 Billion

    ConAgra Offers $4.9 Billion for Ralcorp

    Time Warner Profit Dips, But Ad Sales Surge

    Siemens Raises Full-Year Profit Forecast as Sales Advance

    French Banking Giant BNP Paribas Profit Up 15% As Loss Provisions Fall

    Joshua Brown: Media: Democracy as Jefferson Intended