Posts Tagged ‘BCR’

• CWS Market Review – October 24, 2014
  Eddy Elfenbein, October 24th, 2014 at 7:12 am

  “Buy not on optimism, but on arithmetic.” – Benjamin Graham

  In last week’s CWS Market Review, I said I thought the market’s panic had reached a peak last Wednesday, and so far, that seems to be the case. The S&P 500 has now rallied for five of the past six days. The only downer was the day of the awful shooting in Ottawa. On Tuesday, the S&P 500 had its best day in more than a year, and the index rose back above its 200-day moving average. By the end of the day on Thursday, the S&P 500 stood 130 points above last Wednesday’s low. That’s quite a turnaround.

  Probably a better gauge of the change of sentiment is the Volatility Index ($VIX). The VIX basically doubled in a week, then was halved the following week. I thought it was interesting that stocks fell briefly late Thursday on the news of a possible Ebola case in New York City. The case has since been confirmed. I can’t prove this, but I think that same story would have caused far more damage to the market if it had occurred sometime last week.

  

  Let me caution you that I don’t think we’re out of the woods just yet. The new Ebola case certainly won’t help, but the worst of the market’s nervousness is probably behind us. The market likes to “retest” its lower bound after it goes through a stretch of turbulence. I think there’s a good chance that could happen again.

  For now, investors should be focused on third-quarter earnings. The early numbers are quite good. So far, 79% of companies in the S&P 500 have beaten their earnings expectations, while 60% have beaten their revenue estimates. For our Buy List, we had a mixed bag this week. We had good earnings from Microsoft and CR Bard, but poor earnings from IBM. I’ll run down the results in a bit. I’ll also focus on more Buy List earnings for next week. Plus, I’ll update you on Ross Stores and DirecTV. But first, let’s look at the disappointing news from IBM.

  Buy List Earnings: Some Good, Some Not So Good

  On Sunday evening, IBM ($IBM) had a surprise announcement. The company said it was releasing its Q3 earnings on Monday morning instead of after the bell, as originally planned. Mysteriously, the company also said they had a major business announcement.

  The business announcement turned out to be that they’re paying Globalfoundries Inc. $1.5 billion to take their money-losing chip-making business off their hands. Sorry IBM, but that’s not so major.

  Then came the earnings report, which was very poor. For Q3, Big Blue earned $3.68 per share, which was 63 cents below expectations. Ugh! IBM also ditched their 2015 earnings target of $20 per share. That goal had been set five years ago by the previous CEO. There was no way they were going to make it.

  I don’t know a better way to phrase it, but last quarter was ugly. This was IBM’s tenth-straight quarter showing a decline in revenues. Quarterly revenues came in at $22.4 billion, which was nearly $1 billion below expectations.

  The stock dropped 7% on Monday. The plunge cost Warren Buffett nearly $1 billion. I’m very disappointed with IBM, and I doubt they’ll be back on next year’s Buy List. I didn’t realize the problems ran so deep. I’m lowering my Buy Below on IBM to $177 per share.

  Unimpressive Results from McDonald’s

  IBM wasn’t the only bad earnings report. McDonald’s ($MCD) had a dud, too. On Tuesday, Mickey D’s said that quarterly earnings plunged 30%. Revenue fell 5% to $6.99 billion, which was $20 million below expectations.

  Excluding a bunch of charges, the burger giant earned $1.51 per share, which was 14 cents better than expectations. That’s about the only sliver of good news, but the details of MCD’s report aren’t good. Same-store sales fell by 3.3%, which was more than expected. Compare that to Chipotle ($CMG), where same-store sales grew by 19.8%.

  In Europe, McDonald’s same-store sales were down 1.4%, and in China, they dropped by 22.7%. There was a scandal in China involving a supplier changing expiration dates (when it rains, it pours…).

  McDonald’s realizes they’re in trouble and need to turn themselves around. Their situation isn’t quite as dire as IBM’s, but they need to change course quickly. The stock didn’t get punished too badly, since it was already down so much. The big dividend helps. MCD now yields 3.7%. I’m lowering my Buy Below on MCD to $96 per share.

  Good Earnings from CA Technologies, CR Bard and Microsoft

  CA Technologies ($CA) reported fiscal Q2 earnings of 65 cents per share. That was three cents better than estimates. Technically, the company raised its earnings guidance, but the currency adjustment nullified that. CA now sees full-year earnings ranging between $2.40 and $2.47 per share. The previous range was $2.42 to $2.49 per share

  CA has been a disappointment this year, but the company is still basically hitting its goals. They expect cash flow from continuing operations to rise by 5% to 12%. That’s not bad. I also like the rich dividend yield. CA Technologies is a buy up to $30 per share.

  CR Bard ($BCR) had another strong quarter and raised guidance. The medical-equipment company told us to expect Q3 earnings between $2.07 and $2.11 per share. In July, I said they “shouldn’t have trouble hitting that.” It turns out they earned $2.15 per share, and net sales rose 9% to $830 million. Wall Street had been expecting earnings of $2.10 per share and revenue of $818 million.

  

  For Q4, Bard sees earnings ranging between $2.22 and $2.26 per share. Previously Bard said to expect full-year earnings between $8.25 and $8.35 per share. Now they say earnings will range between $8.34 and $8.38 per share, and that includes 10 cents per share lost to forex. The shares gapped up 4.2% on Thursday and hit a fresh 52-week high. CR Bard remains a solid buy up to $160 per share.

  After the bell on Thursday, Microsoft ($MSFT) reported fiscal Q1 earnings of 54 cents per share. That topped expectations of 49 cents per share. Revenue came in at $23.2 billion, which was over $1 billion more than expectations.

  The results are pretty impressive. Microsoft is doing well across the board. Their cloud business is going especially well (revenues +128%). Shares jumped more than 3% in the after-hours market. I’m raising my Buy Below on Microsoft to $50 per share.

  We also have Ford Motor ($F) reporting later today. I’ll have details on the blog.

  Four Buy List Earnings Reports Next Week

  We have four more earnings reports coming our way next week; three of them are on Tuesday. Here’s an Earnings Calendar of our Buy List stocks for this earnings season.

  On Tuesday, AFLAC ($AFL) is due to report third-quarter earnings. The duck stock has been in a difficult position this year because their operations are humming along just fine. AFLAC is hitting its targets and making a steady profit. The problem has been the weak yen. AFLAC does a ton of business in Japan, and the government there has been trying to bring down its currency relative to the U.S. dollar. That means that AFLAC’s profits get stung when the money is translated from yen into dollars.

  Last quarter, AFLAC only lost three cents per share due to forex—that’s a lot less than they lost in previous quarters. For Q3, the CEO said he expects operating earnings of $1.38 to $1.47 per share, assuming the yen is between 100 and 105. The exchange rate stayed close to 102 from February to August but gapped as high as 110 a few weeks ago. AFLAC currently expects full-year earnings to range between $6.16 and $6.30 per share, which means the stock is going for less than 10 times this year’s earnings.

  One more point: AFLAC has increased its dividend for the last 31 years in a row. You can see why I’m such a fan. Last year, they announced their dividend increase along with their third-quarter earnings report. I doubt AFL will forego a dividend increase this year, but it may be very modest, as in one penny per share. AFLAC currently pays a 37-cent quarterly dividend, which now yields 2.5%.

  Express Scripts ($ESRX) was our big winner last earnings season. The pharmacy-benefits manager beat earnings by a penny per share and narrowed their full-year guidance. That was enough to spark a two-day gain of more than 7%. I think some traders had been expecting much worse results, so it was a classic relief rally. Analysts expect Q3 earnings of $1.20 per share. My numbers say it will be a bit higher.

  Fiserv ($FISV) is one of my favorite long-term holdings. The company consistently churns out steady profits. In July, Fiserv said they expect full-year earnings to range between $3.31 and $3.37 per share. That’s a nice increase from $2.99 per share last year. Wall Street expects 84 cents per share for Q3. That sounds about right.

  Moog ($MOG-A) usually reports its earnings on Friday just after I send you the newsletter, but I don’t want you to feel I’m neglecting this stock. Shares of Moog have been especially hot lately, and they’re not far from hitting a new all-time high. This next report will be for their fiscal Q4. The company said they expect full-year earnings of $3.65 per share. Since Moog already made $2.59 per share for the first three quarters, that means they expect $1.06 per share for Q4. Moog expects earnings growth of another 16% for the current fiscal year. There aren’t many stocks doing that.

  Updates on DirecTV and Ross Stores

  AT&T ($T) had a poor earnings report and lower guidance, which knocked the stock down. Unfortunately, that also impacts DirecTV ($DTV). According to the merger deal, AT&T will pay $95 per share for each share of DTV. The deal is for cash and AT&T stock, but there’s a collar in place to protect both parties.

  Here’s how it works: If AT&T is below $34.90 per share when the deal closes—and we still don’t know when that will be but I assume it will be sometime in 2015—then DTV shareholders get $28.50 in cash plus 1.905 shares of AT&T. With the lower AT&T share price share, that comes to $92.62, going by Thursday’s close.

  That’s the problem with using stock in a buyout; you’re tied to the fortunes of the other guy. I won’t venture to guess how low AT&T can fall, but I’ll note that at this lower price, the stock yields nearly 5.5%.

  Don’t worry about DirecTV. It’s still doing well. I’m lowering our Buy Below to $90 per share to better reflect the current market. DTV reports earnings on November 6.

  Remember all the trouble we had with Ross Stores ($ROST) earlier this year? In July, the stock got as low as $61.83 per share. Fortunately, the earnings report in August was very good, and the deep discounter raised guidance. The shares have been doing very well ever since, and this week, ROST broke above $81 per share. This is why we follow the fundamentals instead of panicking at every blip. This week, I’m raising my Buy Below on Ross Stores to $83 per share. Fiscal Q4 earnings are due in another month.

  That’s all for now. The Federal Reserve meets again next week, and they’ll very likely announce the end of QE. Stay turned. The Fed’s decision will come on Wednesday at 2 p.m. On Thursday, we’ll get the initial report of Q3 GDP growth. There’s another durable-goods report on Tuesday, plus many more earnings reports. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – June 13, 2014
  Eddy Elfenbein, June 13th, 2014 at 7:04 am

  “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” – Jack Bogle

  After rallying 11 times in 13 days, the S&P 500 has now pulled back for three days in a row. Despite Wall Street’s give and take, the truly interesting aspects of this market have been the low volatility and very low trading volume. Consider this: Thursday was the market’s worst day in four weeks, and even that was a measly 0.74% loss. It’s been more than two months since the S&P 500 dropped more than 1% in a single day (see chart below). Overall, this has been a very placid spring.

  Now some folks are worried about—wait for it—the market’s complacency! Sheesh, some folks aren’t happy unless they’re worried about something. Personally, I’m not too worried about other people worrying about the lack of worrying. They say that bull markets crawl a wall of worry, and that’s certainly true. As usual, we look past our emotions and concentrate on the facts. We’re nearly halfway though the year, and the outlook continues to be moderately favorable for stocks. Sure, the market got a little spooked this week by the troubling events in Iraq, and the price of oil surged higher, but the fundamentals of this market remain quite good. I’ll go into more details in a bit.

  

  I also want to cover the news of the latest jobs report and tell you what it means for us and our portfolios. My take: It’s mostly good news. The economy is improving, but at a tepid rate. The Fed is still on our side, and I’ll let you know what Buy List stocks look especially good here.

  This week, we also had a small dividend increase from CR Bard, and I’ll discuss the latest from a former Buy List favorite, Nicholas Financial. The used-car loan company has officially pulled out of its merger deal with Prospect Capital. (Frankly, I didn’t like that deal from Day One.) I’ll also highlight the upcoming earnings reports from Oracle. But first, let’s look at the (mostly) good news from last Friday’s jobs report.

  The Economy Added 217,000 Jobs Last Month

  Shortly after I sent out last week’s CWS Market Review, the government released the big May jobs report. According to the Labor Department, the U.S. economy created 217,000 jobs last month. (That’s net, of course. The economy is always creating and destroying jobs at the same time.) That’s a decent number, but I’d like to see monthly jobs gains close to 300,000. The unemployment rate was unchanged at 6.3%.

  These jobs numbers certainly aren’t great, but they are an improvement. In fact, this latest jobs report marked an important milestone: The number of nonfarm payrolls finally surpassed the pre-recession peak. Of course, the population has grown over that time as well.

  This raises the other concern about the jobs market, which is the dramatic decline in workforce participation. To put it bluntly, more and more people have simply left the workforce. The workforce participation rate is at a 35-year low. According to the government’s numbers, when you stop looking for a job, you’re not even counted as unemployed.

  An important stat I like to watch is the number of people working compared with the total population. (Note: For population, econo-nerds like to track the civilian non-institutional population over the age of 16.) The ratio of people working to the population has barely budged since the recovery started (check out the chart see below). Part of this can be explained by demographics. Baby Boomers have started to retire, and that’s not going to stop anytime soon. But demographics don’t explain all of the lower participation.

  

  I should add an important caveat to the government’s jobs report. It’s just an estimate, and by the government’s admission, it carries a high error range. They also revise the figures, sometimes considerably, each month. We should pay more attention to the overall trend rather than obsess over an individual statistic.

  How is the jobs report important to us as investors? There are two main reasons it’s important. For one, it gives us a good read of where the economy is at the moment. Believe it or not, at the end of this month, the U.S. economy’s recovery officially turns five years old. But many Americans haven’t experienced a recovery at all.

  In response to the recession, U.S. companies cut back on their overheads, and that means lower labor costs. The good news is that profit margins soared. While that is good news because it means companies became leaner and meaner, the problem is that profit margins can’t keep rising forever. At some point, you need to get more folks coming through the front door. More consumers come from more employed folks, and that’s how a recovery becomes a positive cycle, each turn reinforcing the next.

  Corporate profits and dividends are still growing, although the rate of growth has slowly come down. The latest numbers from S&P 500 show that Wall Street expects index-adjusted earnings from the S&P 500 of $119.65 for this year and $137.30 for 2015. I strongly suspect the latter figure is too high, but let’s work with it for now. If we put a multiple of 16 to it, that gives us a S&P 500 of nearly 2,200 at the end of next year. That’s a gain of 13.8% in a little over 18 months. Please don’t mistake this for a target price for the market. Instead, I want to see if the current valuation is reasonable, and I think it clearly is. For now, any bubble talk is nonsense (although there are some tech values I´m suspicious of).

  The other reason why the jobs report is important to us is due to inflation. Once the jobs market gets tight, employment costs start to rise, and that leads to a rise in consumer prices. According to last week’s jobs report, hourly earnings are up 2.1% over the last year. The problem with the lower workforce participation is that we don’t really know how much slack there is in the labor force. The old rules no longer seem to apply.

  A lot of commentators have predicted that increased inflation, even hyperinflation, is just around the corner. Please. Every single one of those predictions has fallen flat on its face. Now, however, there are some quiet signs of a little more inflation. Or more accurately, the decline of inflation (disinflation) has come to an end. This is what Janet Yellen and her friends inside the Fed are watching. Remember that inflation is the vital enemy of all central bankers, and the Fed doesn’t want us to go back to the 1970s. Chairwoman Yellen has indicated the Fed will start raising interest rates about one year from now, give or take. Last Friday’s jobs report was another sign that the free-money party will be coming to an end. The Fed meets again next week, and we can expect to hear another taper announcement.

  As long as the Fed is on our side, stocks are a good place to be. Some of the best bargains on our Buy List include AFLAC ($AFL), Bed Bath & Beyond ($BBBY), Ford ($F), Oracle ($ORCL), Ross Stores ($ROST) and eBay ($EBAY). Be disciplined with your buying, and don’t chase stocks. Pay attention to my Buy Below prices.

  CR Bard’s Amazing Dividend Streak

  At the end of last week’s issue, I said to expect a dividend increase very soon from CR Bard ($BCR). That’s exactly what happened a few days later. I wish I could say that this was due to my most amazing powers of prognostication. Sadly, it’s not. Bard has increased its dividend every year since 1972, and they kept that streak going one more year.

  Actually, that sums up our investing strategy. We predict the perfectly obvious and wait until the payoff is good. Whenever I hear that someone predicted this or forecast that, I’m immediately suspicious. Bard said they’re raising their quarterly payout from 21 to 22 cents per share. That’s an increase of 4.76%, which isn’t much, but I’ll take it. The dividend is payable on August 1 to shareholders of record at the close of business on July 21.

  Shares of Bard have gotten dinged recently. Given the new dividend, the medical-equipment company now yields 0.62%. CR Bard remains a good buy up to $151 per share.

  Earnings Preview for Oracle

  Oracle ($ORCL) has been one of the hotter stocks on our Buy List. The shares are up nearly 10% for the year, and they just hit another 14-year high. We’re closing in on Oracle’s all-time high of $46.47 from September 1, 2000. Oracle is due to release its fiscal fourth-quarter earnings report after the closing bell on Thursday, June 19. The stock has perked up lately, which is nice to see because there are a lot of Oracle haters.

  

  In March, Oracle reported earnings of 68 cents per share, which was two cents below consensus. Interestingly, Oracle got pounded in after-hours trading. Fortunately, we don’t get involved in the short-term trading game. Instead, we sat back and waited. Sure enough, sense returned to the market, and Oracle is up significantly since then.

  On the March earnings call, Oracle said that Q4 earnings should range between 92 and 99 cents per share. That’s a decent forecast. The Street had been expecting 96 cents per share. Oracle also said Q4 sales should rise between 3% and 7%. The company gave a range of 0% to 10% for hardware sales, new software-license revenue and cloud sales. Last quarter was the first increase in hardware sales since Oracle bought Sun Microsystems four years ago.

  A lot of techies will be looking out for the guidance Oracle offers for Q1. Wall Street currently expects earnings of 64 cents per share. I suspect that might be at the high end of Oracle’s range, but I’m not yet sure. For FY 2015 (ending next May), we can expect earnings of about $3.20 per share, which means the stock is still going for a good value. Tech writer Ashlee Vance pointed out what “Oracle has done perhaps better than any other major business software maker, which is make the transition from the old to the new in a highly profitable way.” Oracle remains a solid buy up to $44 per share.

  The Prospect Capital/Nicholas Financial Deal Is Dead

  I wanted to give you an update on one of our old Buy List stocks, Nicholas Financial ($NICK). I took NICK off this year’s Buy List after the company got a buyout offer from Prospect Capital ($PSEC). I wasn’t thrilled with the deal, as I thought NICK was selling itself for too little.

  According to the terms of the deal, if it wasn’t closed by June 12, then NICK had the right to walk away. As soon as the deal was announced, there were problems. The SEC wanted PSEC to restate their financials, and that caused the deal to drag on and on.

  Finally, on June 11, the SEC reversed itself and said PSEC didn’t have to restate their financials. But that wasn’t enough to placate Nicholas Financial. NICK’s board met and decided to terminate the deal. That’s a difficult call, but I think it was the right decision.

  I honestly don’t know where this leaves NICK. The stock dropped down to $14.68 by Thursday’s close. I think the most likely outcome is that another bidder will come along to snatch them up, but who knows when or at what price? I think a private equity firm could get a very good deal, but the bottom line is that I don’t believe NICK is an attractive buy here.

  The lesson for us is that merger deals can be tricky things. Never expect some white knight to come along to solve all your problems. This same lesson can be applied to the AT&T/DirecTV deal. While I think that deal will eventually close, we have to keep in mind that it, too, has risks. Anything from shareholder objections to government regulations can trip up the deal. No deal is a sure thing.

  That’s all for now. The Federal Reserve meets again next week. Expect to hear another $10 billion taper announcement on Wednesday afternoon. We’ll also get the Industrial Production report on Monday and the Consumer Price Inflation report on Tuesday. The last two CPI reports have shown emerging signs of inflation. It will be interesting to see if this trend continues. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – July 26, 2013
  Eddy Elfenbein, July 26th, 2013 at 7:38 am

  “The investor of today does not profit from yesterday’s growth.” – Warren Buffett

  Second-quarter earnings season has been a big winner for us so far (although we had one major dud with Microsoft). In last week’s CWS Market Review, I told you that Ford Motor would easily beat its earnings estimate, and sure enough, that’s exactly what happened. Thanks to the great earnings report, Ford’s stock gapped up to another 52-week high, and it’s nearly doubled for us in the last year.

  

  We also had strong earnings reports this week from CR Bard ($BCR) and CA Technologies ($CA). In this week’s CWS Market Review, I’ll highlight our recent Buy List earnings news, and I’ll preview what’s ahead next week (be sure to check out our Earnings Calendar). We have some important reports coming our way from Buy List stalwarts like AFLAC ($AFL), WEX Inc. ($WEX) and Fiserv ($FISV). Also next week, the Federal Reserve has a meeting, the government will provide its initial estimate of Q2 GDP on Wednesday and the big jobs report is on Friday. But first, let’s look at Ford’s blow-out earnings report.

  Ford Smashes the Street—Again

  In last week’s newsletter, I wrote:

  Of all the companies reporting next week, I’m the most optimistic about Ford Motor (F). In April, the automaker earned 41 cents per share, which was four cents more than consensus. This time around, Wall Street again expects 37 cents per share. I think Ford will easily beat that.

  I was right. Ford ($F) earned 45 cents per share, which was eight cents more than Wall Street’s consensus, and the stock surged as high as $17.68 per share. I’d like to say that this was due to magical predictive powers on my part. Alas, that’s not the case. Truthfully, it was nothing more than simple math. Yet it’s surprising how often that skill set is a major advantage in investing.

  The facts are clear. Ford’s business is strong, and most of it is due to truck buyers in North America. Fusion has also been a key area of strength. Let’s run through some of the numbers. Ford’s net earnings surged 19% last quarter to $1.2 billion. Their revenues rose 15% to $38.1 billion. This was Ford’s 16th-straight profitable quarter. Furthermore, unlike some other American car companies I could name, Ford was not bailed out by Uncle Sam.

  Ford made a cool $2.3 billion in North America. Sales of their F-Series trucks rose 26% to 198,643. I think this is closely tied to a lot of the emerging manufacturing rebound we’ve seen in some economic statistics. (By the way, the durable-goods report on Thursday was quite strong).

  The problem child is still Europe. Ford had a pre-tax loss of $348 million in the Old World. Of course, a loss was expected. We know that Europe has been a drag on Ford, but they’re quickly working to economize their European operations. I think we’re going to see much better results in Europe in future quarters.

  I was very pleased to hear that Ford offered improved guidance for the rest of the year. They now see pre-tax earnings clearing $8 billion for 2013. Before, they said they had expected to hit $8 billion. So far, they’ve made $4.7 billion in the first half of the year, so the new guidance seems quite reasonable. In Europe, Ford said they expect to lose $1.8 billion instead of the earlier projected $2 billion. That’s ugly, but not as ugly.

  Ford also had a blow-out quarter in Asia. The company makes a big deal about this, but Asia is a very small part of their business. That could change. Ford plans to introduce 15 new vehicles in China by 2015. I’d like to see Ford raise its dividend by 20% to 25%. They can easily afford it. Ford remains an excellent buy up to $18 per share.

  Strong Earnings from CR Bard and CA Technologies

  After the closing bell on Tuesday, CR Bard ($BCR) announced Q2 earnings of $1.42 per share for Q2 which was four cents more than expectations. The medical-equipment company saw revenues rise by 2.3% to $759.9 million, beating expectations by $9.8 million. I was impressed by the turnaround in their oncology and surgery divisions.

  Bard’s CEO said, “Our operating results this quarter exceeded our expectations. We continue to focus on the execution of our investment plan, which we believe will shift the mix of our portfolio to faster-growing products and geographies and contribute to long-term sustainable leadership positions in our markets.”

  For Q3, Bard sees earnings between $1.37 and $1.41 per share. This is a quiet, steady winner. Bard may not make the headlines, but they do deliver results. Bard remains a solid buy up to $115 per share.

  After the bell on Wednesday, CA Technologies ($CA) reported Q2 earnings of 78 cents per share, which was also four cents better than Wall Street’s consensus. I was really impressed by this report. CA’s results are a nice improvement from the 63 cents per share they earned a year ago (technically, the June quarter is their fiscal first quarter).

  CA’s CEO said, “We did better than expected on the revenue line and were able to capitalize on organizational efficiencies, expense management and a tax benefit to drive earnings growth. Our cash flow from operations was down, but that was expected and we are confident in meeting our full-year outlook in all areas.”

  For the full year, CA expects earnings to range between $2.90 and $3.00 per share. Wall Street had been expecting $2.99 per share. On Thursday, the stock got as high as $30.30 per share, which is a new 52-week high. CA is now a 35% winner on the year for us. CA Technologies is a very good buy up to $31 per share.

  More Earnings Coming Next Week

  We have five more earnings reports due next week. We may have a sixth in Nicholas Financial ($NICK), but I haven’t heard back from them yet. Last year, NICK’s earnings report came on August 2nd, so I expect it around then this year.

  NICK’s last earnings report was a bit low, but I’m not at all worried. I’m expecting earnings to range somewhere between 40 and 45 cents per share. If there’s any news about the buyout offer, I expect that it’s been rejected. In August, NICK will hold its annual meeting, and I think there’s a good chance we’ll get another dividend increase. I think the board can go as high as 15 cents per share, which would most likely give the stock a nice shot in the arm. Nicholas Financial is a great buy up to $16 per share.

  On Tuesday, AFLAC ($AFL), Fiserv ($FISV) and Harris ($HRS) are due to report. AFLAC has been heating up recently. The stock broke $61 per share. The last earnings report was very good. AFLAC earned $1.69 per share, which was seven cents better than estimates. The stock has rallied more than 17% since then. For Q2, AFLAC said it expect earnings to range between $1.41 and $1.56 per share. While the falling yen has cramped some of AFLAC’s earnings, much of the yen’s damage has receded. The company may update its full-year guidance as well. AFLAC is still going for less than 10 times this year’s expected earnings. AFLAC remains a very good buy up to $63 per share.

  Fiserv’s ($FISV) earnings are like clockwork. In fact, the last earnings report was a big surprise because they missed expectations by a single penny per share. The stock gapped since the news was so unexpected. Nevertheless, Fiserv made up everything it lost and this week hit a new 52-week high. Fiserv’s most recent full-year guidance was for EPS growth of 15% to 19%, which translates to a range between $5.84 and $6.03. FISV is a buy up to $95 per share.

  Business at Harris ($HRS) has been impacted by the government sequester, but overall business is still strong. The Street expects $1.15 for Q2. In April, Harris said to expect full-year earnings between $4.60 and $4.70 per share. Harris is boring, which is why I like it. HRS is a good buy up to $53. The stock has trended above my Buy Below price recently, so don’t chase it.

  On Wednesday, WEX Inc. ($WEX) is due to report. Three months ago, WEX beat estimates by two cents per share, but the full-year guidance was well below the Street. The stock got clobbered for a 10% loss that day. The lower guidance caught me off guard, but not as much as what happened next—WEX went on a furious rally! Measuring from the post-earnings crush to Thursday’s close, WEX has jumped more than 30%. Three months ago, the company said to expect 98 cents to $1.04 per share for Q2. Don’t chase WEX. It’s a good buy up to $86 per share.

  On Thursday, DirecTV ($DTV) will report. The satellite-TV company had great reports for Q1 and Q4 before that, and the stock has responded very well. I’m not expecting a huge beat like before, but I think DTV can top Wall Street’s current estimate of $1.33 per share. The secret here is that Latam business. DirecTV is a buy anytime you see it below $67 per share.

  Before I go, I want to lower my Buy Below price on Microsoft ($MSFT) to $35 per share. I still like MSFT, but we have to face facts that last week’s earnings report was a major dud. But remember how quickly high-quality stocks can bounce back. We’ve seen that many times with our Buy List stocks, most recently Cognizant Technology ($CTSH) and WEX Inc. ($WEX) I also think we’ll see a nice dividend increase from Microsoft later this year.

  That’s all for now. Next week will be a very busy news week. Of course, there are still more earnings coming our way. Also, the Fed meets again, and the policy statement will come out Wednesday afternoon. That morning, the government will give us their first estimate of Q2 GDP growth. Plus, the government plans to completely revise all the historical GDP numbers. If that’s not enough, Friday is the big jobs report. Expect jittery traders to be even more jittery. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• Bard’s Earnings
  Eddy Elfenbein, April 22nd, 2013 at 1:37 pm

  I have a quick correction on the earnings report from CR Bard ($BCR). According to their website, the earnings webcast will be tomorrow at 5 pm. My apologies for any confusion.

• 2013 Is Off to a Strong Start
  Eddy Elfenbein, January 2nd, 2013 at 10:52 am

  For the last few weeks I’ve cautioned investors to ignore the hype about the Fiscal Cliff. Eventually, I believed, some deal would be reached, and late last night, that’s exactly what happened. Here are the details.

  It wasn’t pretty and not everybody got what they wanted, but compromise is the cornerstone of democracy. Plus, there will be more battles ahead on the debt ceiling.

  The good news is that the markets are responding very well this morning. The S&P 500 has been as high as 1,457.53 this morning. That’s a 2.2% jump and it brings the index just eight points shy of its highest close since 2007. On our Buy List, Oracle ($ORCL) is up to an 18-month high this morning.

  

  Today’s rally is what’s called a high-beta rally which means that the leaders are small-cap stocks plus industries like tech (like Oracle), finance and cyclicals. High-beta rallies usually (but not always) tend to pull along lower-quality stocks with them. There are lots of sketchy names among small-cap tech stocks. Since our Buy List is concentrated among high-quality stocks, we tend to lag the broader markets on days like this. The Russell 2000, which is a popular index of the small-cap sector, is up to an all-time high this morning.

  Still, our Buy List is beginning 2013 on a strong note. Every stock but Ross Stores ($ROST) is higher today. I was pleased to see that CR Bard ($BCR) was upgraded by JPMorgan today. (The Buy List is so new I haven’t had time to enter in comments for the new additions. I’d better get on that.)

  On the economic front, the ISM Index for December rose to 50.7. If you recall, the number for November was 49.5 which was a dud. Any reading above 50 means the manufacturing sector is expanding. Below 50 means it’s shrinking. The worry zone doesn’t really kick in until the ISM drops to 45 or so. The next big report will be Friday’s jobs report.

• CR Bard Earns $1.64 Per Share
  Eddy Elfenbein, October 23rd, 2012 at 4:12 pm

  One of the few stocks that was up today, CR Bard ($BCR) just reported Q3 earnings of $1.64 per share. That beat the Street’s forecast by one penny per share. Three months ago, Bard told us to expect earnings to range between $1.60 and $1.64 per share.

  C. R. Bard, Inc. today reported 2012 third quarter financial results. Third quarter 2012 net sales were $722.9 million, an increase of 1 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, third quarter 2012 net sales increased 3 percent over the prior-year period.

  For the third quarter 2012, net sales in the U.S. were $483.4 million, a decrease of 1 percent from the prior-year period. Net sales outside the U.S. were $239.5 million, an increase of 3 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, third quarter 2012 net sales outside the U.S. increased 11 percent over the prior-year period.

  For the third quarter 2012, net income was $129.3 million and diluted earnings per share available to common shareholders were $1.50, a decrease of 1 percent and an increase of 3 percent, respectively, as compared to third quarter 2011 results. Adjusting for items that affect comparability between periods as detailed in the tables below, third quarter 2012 net income was $141.4 million and diluted earnings per share available to common shareholders were $1.64, a decrease of 2 percent and an increase of 1 percent, respectively, as compared to third quarter 2011 results.

  Timothy M. Ring, chairman and chief executive officer, commented, “We delivered adjusted earnings per share at the top end of our guidance range this quarter, despite significant headwinds in the United States. Our international investments are shifting the mix of our portfolio to faster growing markets, which remains a key focus for us as we continue to improve our growth profile by investing in geographic and product markets with superior growth opportunities.”

• CR Bard Earns $1.62 Per Share
  Eddy Elfenbein, July 25th, 2012 at 6:14 pm

  After the closing bell, CR Bard ($BCR) reported second-quarter earnings of $1.62 per share. The market isn’t pleased as the stock is down about 5% after hours, but I think it’s a decent number. The company had given a range of $1.61 to $1.65 per share and Wall Street was expecting $1.64 per share, so Bard was in the ballpark.

  As with other companies this earnings season, Bard is running its business well. The problem is the economy in other parts of the world, especially Europe. Bard’s CEO said:

  The economic climate remains challenging, especially in the United States and Europe. Navigating the short term while positioning for the long term is how we have remained strong and successful for over a century. As we have said, we believe the medical device companies who thrive in the future will provide clinically effective products at a value that benefits the entire healthcare system. Our teams are well positioned to identify unmet needs and provide successful solutions for our customers, and we see significant long-term opportunity as we continue to execute on our strategy.

  I didn’t see any change in the forecast for this year, or any guidance for Q3. The company had previously said that it sees earnings growing by 3% to 4% for this year. That works out to a range of $6.59 to $6.66 per share for this year. For the first half of the year, Bard has earned $3.23 per share so they’re basically on track to hit those numbers.

• CR Bard Raises Dividend
  Eddy Elfenbein, June 13th, 2012 at 10:26 pm

  CR Bard ($BCR) announced that they raised their quarterly dividend from 19 cents to 20 cents per share.

  Bard has now raised their dividend every year for the last 40 years. At Wednesday’s closing price, BCR yields 0.80%. They also announced a $500 million share repurchase program (well, “up to” $500 million).

• Bard Offers Q2 Guidance of $1.61 to $1.65 Per Share
  Eddy Elfenbein, April 25th, 2012 at 12:58 am

  On the earnings call, CR Bard ($BCR) offered second-quarter earnings guidance of $1.61 to $1.65 per share. Wall Street had been expecting $1.65.

  Bard added that it’s sticking with the full-year earnings forecast they gave in December which was for growth of 3% to 4%. They earned $6.40 per share in 2011 so that translates to 2012 earnings of $6.59 to $6.66 per share. I think that’s probably too conservative. At $98, the stock is a good value.

• CR Bard Earns $1.61 Per Share for Q1
  Eddy Elfenbein, April 24th, 2012 at 6:16 pm

  We’ve had more good earnings news for our Buy List. This time, it came from CR Bard ($BCR). The company had told us to expect Q1 earnings to range between $1.53 and $1.57 per share. As it turns out, they netted $1.61 per share which was four cents more than Wall Street’s consensus.

  Sales came in at $730 million which is a 4% increase over last year. Interestingly, sales outside the U.S. were up by 10% while inside the U.S. they were up by just 2%.

  Bard’s CEO said, “The results this quarter reflect a good start to the year. While we haven’t seen much change in the U.S. environment, our increased focus and investments in international markets have provided rapid returns and strengthened our growth profile. We remain focused on daily execution of our product leadership strategy to take advantage of current opportunities while positioning ourselves for stronger growth in the future.”

  The stock has tried to break $100 per share in the past month but hasn’t been able to. Perhaps today’s earnings report will be the catalyst. This is an excellent stock. I rate it a buy anytime the price is below $102 per share.