Posts Tagged ‘fisv’

  • CWS Market Review – December 7, 2012
    , December 7th, 2012 at 6:07 am

    “If you can look into the seeds of time,
    And say which grain will grow and which will not,
    Speak then to me.”
    – Macbeth, Act 1, Scene 3

    And to me, too, while you’re at it. After a nice recovery since mid-November, the S&P 500 has settled into a narrow trading range. For the last seven days running, the index has closed between 1,407 and 1,417. Chart watchers generally think this is a positive sign because stocks haven’t immediately surrendered their gains and dipped to a new low. My advice for investors is to ignore this silly Fiscal Cliff alarmism and expect a strong rally ahead. I continue to be bullish on the market and think we’ll break 1,500 sometime early in 2013.

    Stay Tuned for the 2013 Buy List

    Before I get into today’s CWS Market Review, I want to announce that I’ll unveil next year’s Buy List two weeks from today, on Friday, December 21, 2012. As usual, the new Buy List will have 20 stocks, and as usual, I’ll take off five stocks and add five new ones. We try to keep our turnover low. I always unveil the new Buy List a few days before the end of the year so no one can claim I’m getting an unfair jump on investors.

    Once the changes are made, the Buy List is locked and sealed for the next 12 months and I’m not allowed to make any changes until next December. I’ll start tracking the new list at the start of trading on January 2nd. My purpose with the Buy List is to show investors that with patience and discipline, any investor can consistently beat the stock market with a user-friendly portfolio. I’m very fortunate that we’ve had great success at Crossing Wall Street. If all goes well, 2012 will be the sixth year in a row that we’ve beaten the S&P 500.

    The 2012 Buy List So Far

    Through Thursday, our 2012 Buy List is up 13.21% for the year (not including dividends), which is slightly more than the S&P 500. I’ll include dividends in the final numbers. The good news is that the second half of the year has been very friendly to us. Remember that you can see exactly how our Buy List is doing at any time during the year at our Buy List page. I try to make investing as transparent as possible. I also have my Buy Below prices there so you’ll know exactly what’s a good entry point.

    Let’s look at some of our recent Buy List standouts. Fiserv ($FISV) just broke $80 per share, which is an all-time high. The stock is a 36% winner for us this year. AFLAC ($AFL) finished the day on Thursday at $53.80, which is its highest close since May 17, 2011. I’m a big fan of the duck stock. Sysco ($SYY), one of the most stable stocks on our Buy List, also finished Thursday at an 18-month high. SYY currently yields 3.51%.

    How about little Nicholas Financial ($NICK)? The stock dropped sharply after what some believed were poor earnings. They weren’t poor at all (perhaps mildly disappointing), and with a little patience, NICK has nearly made back all it lost. Even after the recent rally, NICK yields 3.6%. Nicholas Financial is a great buy up to $15 per share.

    The Great Special Dividend Rush of 2012

    Recently you’ve heard me complain about the careless media alarmism about the impending Fiscal Cliff. One starts to wonder whether CNBC now stands for “Cliff, Nothing But Cliff.” Trust me: you can ignore all that.

    Wall Street has also been distracted by some turbulence in shares of Apple ($AAPL). Truthfully, the recent downturn in Apple isn’t all that surprising. Bespoke Investment Group points out that this is Apple’s 10th 20% correction in the last 10 years. As Josh Brown recently pointed out, the difference this time is that Apple’s correction begins at a very high nominal price.

    One truly important effect of the impending Fiscal Cliff is that companies have been rushing to pay special dividends to shareholders before the end the year, as dividend taxes are expected to rise. This is especially the case for cash-rich companies and firms with high insider ownership. So far, U.S. companies have announced $21 billion in special dividends. Other companies, like Walmart ($WMT), have moved up their dividend-payout dates.

    On our Buy List, Oracle ($ORCL) announced that they will pay out their next three quarterly dividends before the end of the year. To clear up any confusion, Oracle’s fiscal year ends in May, so they’re paying out their second-, third- and fourth-quarter dividends all at once. The quarterly dividends are six cents per share, so the total payment for this month will be 18 cents per share. That works out to a cool $200 million for CEO Larry Ellison.

    Oracle’s fiscal Q2 earnings report is due after the close on Tuesday, December 18th. I’m expecting a good report. During the earnings call in September, Oracle said Q2 earnings should range between 59 and 63 cents per share. That’s a nice increase from the 54 cents per share they made in last year’s Q2. Wall Street’s consensus is at the dead center of the range, at 61 cents per share. Earlier this week, Oracle’s stock got as high as $32.50, which is an 11-week high. Oracle remains a strong buy any time it’s below $35 per share.

    The day after Oracle reports, Bed Bath & Beyond ($BBBY) will report its fiscal Q3 earnings. An important earnings call will follow because BBBY will give their initial planning assumptions for next year. Wall Street currently expects earnings of $5.15 per share for next year, and I suspect that’s too high. Unfortunately, this will be the last we hear from BBBY for awhile. The company’s Q4 is hugely important for them: about one-third of their annual profits come during the holiday quarter. But that report won’t come out until early April. Until then, we won’t hear much of anything from BBBY. This is still a solid company. Bed Bath & Beyond is a good buy up to $62 per share.

    Stryker Raises Dividend By 25%

    In last week’s CWS Market Review, I said I expected Stryker ($SYK) to raise its quarterly dividend soon, and sure enough, I was right.

    I had said that I expected Stryker to increase its payout from 21.25 cents per share to around 23 cents per share. It turns out, I wasn’t optimistic enough. The company just announced that the dividend will rise 25% to 26.5 cents per share. That brings the annual dividend to $1.06 per share. At Thursday’s close, Stryker now yields 1.95%.

    Stryker’s board also approved a $405 million increase in the share buyback program, which brings the total to $1 billion.

    “Given the considerable strength of our balance sheet and strong cash flow generation, we are well positioned to pursue a capital allocation strategy that includes highly focused M&A, an increasingly robust dividend and share buybacks,” said Kevin A. Lobo, President and Chief Executive Officer of Stryker. “We are committed to a strategy that will help drive our sales and earnings growth while simultaneously returning capital to shareholders at meaningful and consistent levels. ”

    Stryker has raised its dividend every year since 1995. The stock is a buy up to $57.

    Not to be outdone, Medtronic ($MDT) also announced an accelerated dividend payment. The company usually pays its fiscal third-quarter dividend in early January. On Thursday, Medtronic said that it will pay out the dividend in December in order to avoid the taxman. If you recall, in June, Medtronic raised its dividend for the 35th year in a row. The company recently had a good earnings report and reiterated full-year guidance. Medtronic is a buy up to $44 per share.

    Before I go, I want to highlight the good sales report from Ford ($F). For November, vehicle sales were up 6%, and sales of the F-series trucks were up 18%. This was the best November for trucks in seven years. Ford also set a record for hybrid sales, but that’s a very small part of their overall business. I was pleased to see the company plans to build 750,000 vehicles in North America for Q1. That’s an 11% increase over last year.

    I think it’s possible we may even see a dividend increase from Ford. The company currently pays a nickel per share, which comes to an annual yield of 1.8%. Ford is on track to earn about $1.35 per share this year, so they can easily afford an increase. Ford is a good buy up to $13 per share.

    That’s all for now. Next week, we’ll get important reports on industrial production and retail sales. Also, the Fed meets on Tuesday and Wednesday. Following the meeting, Bernanke will hold a press conference. 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 – November 2, 2012
    , November 2nd, 2012 at 8:28 am

    “Success or failure in business is caused more by the mental attitude even than by mental capacities.” – Walter Scott

    In last week’s CWS Market Review, I mentioned how I saw the market heading for “rough waters.” Of course, I meant that as a metaphor but it came literally true this week as Hurricane Sandy pounded the New York area. For the first time in more than 120 years, the New York Stock Exchange closed for two days in a row due to weather. I hope everyone survived the storm intact.

    Despite the abbreviated trading this week, our Buy List continues to do well. I told you in last week’s issue to “look for an earnings beat” from Ford ($F), and that’s exactly what we got. The automaker smashed Wall Street’s expectations by 33%. Once trading resumed on Wednesday, the stock gapped up nearly 8%, and it pushed even higher on Thursday to reach its highest close in six months. Also on Thursday, shares of AFLAC ($AFL) closed at their highest level since May 17, 2011.

    However, not all of our earnings reports have been great. Nicholas Financial ($NICK) had a mildly disappointing report, and WEX Inc. ($WXS), the new name for Wright Express, fell six cents shy of estimates. I still want investors to position themselves defensively. We’re not out of the woods just yet, but we are getting close.

    In this week’s issue, I’ll survey our recent Buy List earnings reports; plus I’ll discuss the final batch of earnings reports due next week. But first, let’s look at the remarkable turnaround at Ford Motor.

    Ford Is a Strong Buy Up to $13

    I have to admit that I had been baffled by the steady erosion in Ford’s ($F) share price since the beginning of last year. The company was clearly doing well and all of the problems negatively affecting their business were out of their control. Sure, their European sales were going down the drain, but they’ve been working to cut back production there.

    On Tuesday, we got the results and they were very good. For the third quarter, Ford earned 40 cents per share which was 10 cents more than Wall Street’s consensus. This was despite a 4% drop in overall revenues. I’ve looked over Ford’s numbers and what’s most impressive is that they got their profit margins in North America up to 12%. That’s outstanding.

    The success of this earnings report was laid a few years ago when the company dramatically restructured itself. Ford worked to cut costs and change its operations. That’s basically what Ford is planning to do in Europe today. Looking at the numbers, we can see that Europe was clearly Ford’s weak spot. The company lost $468 million in Europe.

    Ford is doing amazingly well in North America and that drove the strong results. On Wednesday, Ford jumped 7.7% to $11.16. On Thursday, the stock rose another nine cents to $11.25. The last time the stock was this high was on April 30th. Despite the rally, shares of Ford are still attractively priced. I think Ford can earn as much as $1.62 per share next year which means the stock is going for less than seven times next year’s earnings. I’m raising my Buy-Below on Ford to $13 per share.

    Nicholas Financial Earns 42 Cents Per Share

    I had been eagerly waiting for Nicholas Financials’ ($NICK) earnings report but the results were a slight disappointment. For the third quarter, the used-car financier made 42 cents per share. Their results were hurt by higher operational costs and for their interest rate swaps. I don’t want to overstate my disappointment. The company is still doing very well and my long-term view of the company hasn’t changed. With short-term interest rates poised to remain low for the next few years, plus a slowly recovering economy, the future looks bright for NICK. I think the company can continue to earn about 45 cents per share (give or take) for the next several quarters. Don’t let any short-term bumps rattle you, NICK is doing well. The stock continues to be a strong buy up to $15.

    Fiserv ($FISV) has been a great stock for this year (+28.35% YTD). Except for a dip in May, the stock has climbed nearly every month this year. On Tuesday, the company reported third-quarter earnings of $1.27 per share which was inline with Wall Street’s consensus. Fiserv also reiterated its full-year forecast of earnings growth of 11% to 14% which comes to $5.05 to $5.20 per share. Earnings for the first three quarters were up 13% to $3.75 per share so Fiserv should have little trouble hitting their full-year target. In fact, I think they have a shot of slightly beating that. Fiserv remains a very good buy. I’m raising my Buy-Below price to $80 per share.

    For such a quiet stock, Harris ($HRS) has been very volatile recently. The shares got knocked down by 8% over two days in mid-October due to a downgrade. On Monday, the company reported quarterly earnings of $1.14 per share which was two cents more than expectations. The most important news is that Harris is sticking by its full-year guidance of $5.10 to $5.30 per share. If the next three quarters are like the first, Harris will hit that target easily. When trading resumed on Wednesday, the stock dropped, which I found puzzling. Sure enough, the shares rallied back strongly on Thursday to reach a three-week high. Harris remains a good buy up to $50.

    WEX Inc. ($WXS), which used to be known as Wright Express, reported third-quarter earnings of $1.08 per share which was six cents below estimates. Revenues rose 6% to $161 million. WXS sees Q4 earnings ranging between $1.01 and $1.08 per share. The Street had been expecting $1.10 per share. Despite the earnings miss and poor guidance, the shares are holding up well. WXS is a good buy anytime the shares are below $75.

    The Last Batch of Q3 Earnings Reports

    We have three more Buy List earnings reports coming up. Moog ($MOG-A) reports on Friday, November 2. The results are probably out by the time you’re reading this. Unfortunately, Moog’s stock has been a dud this year. It’s the single worst-performing stock on our Buy List.

    The problem is that Moog makes flight control systems for commercial and military aircraft. That whole sector has been…well, a no-fly zone this year. Wall Street expects earnings of 89 cents per share (this will be for Moog’s fiscal Q4). I’ll be curious to see if Moog reiterates their guidance for FY 2013 (which we just started). Earlier Moog had said it expects fiscal year earnings of $3.50 to $3.70 per share. The good news is that the stock’s lagging performance has made it an attractive buy. I rate Moog a strong buy up to $45 per share.

    On Monday, November 5th, Sysco ($SYY) is due to report earnings, and DirecTV ($DTV) follows on Tuesday, November 6th, which is also Election Day. Sysco is expected to earn 50 cents per share which sounds about right. The stock currently yields 3.42% which is a very good deal. Here’s the thing: Sysco has raised its dividend for the last 42 years in a row. Even though their earnings were about the same as last year’s, I think they’ll want to keep the dividend streak alive, so look for a penny-per-share increase in the quarterly dividend very soon. Sysco is a good buy up to $32.

    That’s all for now. Obviously the big news next week will be the election. 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

  • Fiserv Earns $1.27 Per Share
    , October 30th, 2012 at 4:50 pm

    Not a single mutual fund manger has underperformed the S&P 500 in four days! Fortunately, trading will resume tomorrow morning. But the earnings parade continues.

    After the bell, Fiserv ($FISV) reported Q3 earnings of $1.27 per share which matched estimates. The company describes itself as “a leading global technology provider serving the financial services industry, driving innovation in payments, processing services, risk and compliance, customer and channel management, and business insights and optimization.” Fiserv reiterated its full-year forecast of earnings growth of 11% to 14% which comes to $5.05 to $5.20 per share.

    Here are some highlights from the quarter:

    • Adjusted revenue grew 5 percent in the quarter to $1.05 billion and increased 4 percent in the first nine months of 2012 to $3.11 billion, compared to the respective prior year periods.

    • Adjusted internal revenue growth was 4 percent in the quarter, consisting of 2 percent growth in the Payments segment and 5 percent growth in the Financial segment. Adjusted internal revenue growth for the first nine months of 2012 was 3 percent, including 2 percent growth in the Payments segment and 3 percent growth in the Financial segment.

    • Adjusted operating margin was 29.8 percent in the quarter, an increase of 80 basis points compared to the prior year’s quarter, and was up 40 basis points to 29.3 percent for the first nine months of 2012 compared to the prior year.

    • Adjusted earnings per share in the quarter increased 9 percent to $1.27 and increased 13 percent in the first nine months of 2012 to $3.75, compared to the respective prior year periods.

    • Free cash flow was up 18 percent in the quarter and was $501 million for the first nine months of 2012 compared with $507 million in the prior year period.

    • The company repurchased 2.7 million shares of common stock in the third quarter for $189 million and, through the end of the third quarter, has repurchased 8.5 million shares for $577 million. As of September 30, 2012, the company had approximately 6 million shares remaining under its existing share repurchase authorization.

  • Why Is Fiserv Down Today?
    , July 31st, 2012 at 10:51 am

    Just a quick note on Fiserv ($FISV). The company had a good earnings report yesterday. The stock was trading at $75 in yesterday’s after hours market, but it’s down to $68.48 this morning. I have no idea why — perhaps it was downgraded by someone.

    The earnings call was very good. I wanted to reiterate that despite today’s pullback, there’s nothing wrong with Fiserv’s business.

    On the plus, Hudson City is up strongly today thanks to an analyst upgrade. HCBK has been as high as $6.38 this morning although I’ve grown somewhat cool on the stock recently.

  • Fiserv Earns $1.28 Per Share
    , July 30th, 2012 at 4:11 pm

    Fiserv‘s ($FISV) Q2 earnings are out and the company made $1.28 per share for the second three months of the year. This was two cents more than Wall Street’s forecast. All across the board, these were solid results:

    GAAP revenue in the second quarter was $1.10 billion compared with $1.07 billion in the second quarter of 2011. Adjusted revenue was $1.03 billion in the second quarter compared with $1.00 billion in 2011, an increase of 3 percent. For the first six months of 2012, GAAP revenue was $2.21 billion compared with $2.11 billion in 2011, and adjusted revenue was $2.06 billion compared with $1.99 billion in 2011, an increase of 4 percent.

    GAAP earnings per share from continuing operations for the second quarter was $1.18 compared with $0.67 in 2011, which included a loss from early debt extinguishment of $0.26 per share. GAAP earnings per share from continuing operations for the first six months of 2012 was $2.13 compared with $1.45 in 2011, which included a loss from early debt extinguishment of $0.26 per share.

    Adjusted earnings per share from continuing operations in the second quarter increased 13 percent to $1.28 compared with $1.13 in 2011. Adjusted earnings per share from continuing operations for the first six months of 2012 was up 15 percent to $2.48 compared with $2.15 in 2011.

    “We achieved strong earnings and sales performance in the quarter consistent with our full year expectations,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “The continuing strength in the sales of our leading channel, payment and account processing solutions is providing strong forward momentum.”

    As I suspected this morning, Fiserv raised the lower-end of its full-year forecast by four cents per share. The new range is $5.08 to $5.20 per share. At $72, this is a good deal.

  • Up 4% in Three Days
    , July 30th, 2012 at 10:25 am

    The stock market is slightly higher this morning. This is a continuation of the strong rally from Friday which led the S&P 500 to its highest close since May 3rd. The S&P 500 is up 4% over the last three trading sessions. From our Buy List, Fiserv ($FISV) is scheduled to report its earnings after the close. Shares of FISV are down a bit today but they’re very close to their 52-week high. Wall Street expects Q2 earnings of $1.26 per share.

    Previously, Fiserv had told us to expect full-year earnings to range between $5.04 and $5.20 per share. That’s a high bar but I think the company has a very good chance of hitting that. In fact, I wouldn’t be surprised to see FISV raise the lower end of its guidance.

    Even though the stock is near a 52-week high, it’s only going for about 14 times this year’s earnings estimate. That’s still a good deal.

  • Fiserv Earns $1.20 Per Share
    , May 1st, 2012 at 11:06 pm

    After the closing bell, Fiserv ($FISV) reported Q1 earnings of $1.20 per share. That was five cents better than Wall Street’s estimates.

    I like this company a lot. They help financial companies with their back office IT operations. Fiserv earned $1.02 in the same quarter last year so that’s pretty good growth. Adjusted revenue rose 5% to $1.03 billion. I was pleased to see the company grow its operating margins by 40 basis points.

    “We are off to a great start in 2012 with above plan performance for revenue and earnings per share in the quarter,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “There is continuing evidence that our broad range of technology solutions will support the needs of the evolving financial services market.”

    The best news is that Fiserv reaffirmed its full-year guidance of $5.04 to $5.20 per share. That’s a nice increase from the $4.58 per share they made last year. Fiserv also said that it expects revenue to grow by 4% to 6% which is about what the Street was expecting. On the earnings call, the company said it expects free cash flow of $5.70 per share for 2012.

    Fiserv’s stock has been on a tear lately. In October, it dipped below $50 and today it got as high as $71.74. Before today’s earnings report, I had some concerns that Fiserv’s stock may have gotten too pricey. Today’s evidence tells us that’s not the case. Using the low end of its range, the stock is going for 14 times earnings which is a good value.

  • Fastenal’s 38,000% Gain
    , February 24th, 2012 at 1:39 pm

    Last year, I highlighted the remarkable run of Fastenal ($FAST). Never heard of it? Here’s the company description from Hoover’s:

    Some might say it has a screw loose, but things are really pretty snug at Fastenal. The company operates more than 2,360 stores in all 50 US states as well as in Canada, Mexico, Puerto Rico, Asia, and Europe. Its stores stock about 690,000 products in about a dozen categories, including threaded fasteners (such as screws, nuts, and bolts). Other sales come from fluid-transfer parts for hydraulic and pneumatic power; janitorial, electrical, and welding supplies; material handling items; metal-cutting tool blades; and power tools. Its customers are typically construction, manufacturing, and other industrial professionals. Fastenal Company was founded by its chairman Bob Kierlin in 1967 and went public in 1987.

    Roben Farzad of Bloomberg points out that FAST has been the top-performer since the market crash of 1987:

    Fastenal is the biggest gainer among about 400 stocks in the Russell 1000 index that have been trading for at least 25 years, surging 38,565 percent, not including dividends, according to data compiled by Bloomberg. Adjusting for splits, the stock has gone from 13¢ on Oct. 19, 1987, to $50.85. It gained 60 percent over the past year.

    Fastenal edged out UnitedHealth Group (UNH), whose stock gained 37,178 percent and far outstripped Microsoft’s 9,906 percent, Apple’s 5,542 percent, and the Standard & Poor’s 500-stock index’s 506 percent. Not bad for a company that literally sells nuts and bolts.

    I always find it fascinating when “dull” companies achieve such tremendous gains. Everyone is so busy trying to find the next Google ($GOOG) or the next Apple ($AAPL). Instead, we should be on the lookout for the next Fastenal.

  • Fiserv Earns $1.27 Per Share
    , February 2nd, 2012 at 4:09 pm

    More good earnings news. Fiserv ($FISV) just reported Q4 earnings of $1.27 per share which was inline with forecasts. Three months ago, they told us to expect a range between $1.23 per share and $1.29 per share.

    For the year, Fiserv earned $4.58 per share which is a big jump over the $4.05 per share from 2010. The best news, however, is the guidance they gave for 2012. Fiserv sees earnings-per-share ranging between $5.04 and $5.20. That’s growth of 10% to 14% which ain’t bad. The Street has been expecting $5.11 per share.

    “Revenue growth in the quarter was at its highest level in more than three years leading to our 26th consecutive year of double-digit adjusted EPS growth,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “Our market leading solutions have us well positioned to capitalize on important trends in the financial services industry.”

    (…)

    Outlook for 2012

    Fiserv expects 2012 adjusted revenue growth to be in a range of 4 to 6 percent and adjusted internal revenue growth to be in a range of 3.0 to 4.5 percent. The company also expects 2012 adjusted earnings per share to be in a range of $5.04 to $5.20, which represents growth of 10 to 14 percent over $4.58 in 2011.

    “Two consecutive years of strong sales along with the introduction of new, highly valued solutions, have us well positioned to deliver additional client value and enhance growth,” said Yabuki.

    If we take today’s close and the mid-point of the new EPS range, that means $FISV is going for 12.3 times earnings.

  • The Market Is Up on Lower Jobless Claims
    , February 2nd, 2012 at 9:47 am

    The stock market is up a bit this morning. The good news was that jobless claims fell by 12,000 to 367,000. This is the tenth-straight week that jobless claims have been below 400,000. That’s a good number but the real test will come tomorrow morning when the Labor Department releases the jobs report for January.

    The other bit of economic data showed that worker productivity rose by 0.7% (annualized) in the fourth quarter. That’s down from 1.9% in the third quarter. On CNBC, Steve Liesman said that it’s probably best to view this data as the average of the third and fourth quarters. I think he’s right.

    Ben Bernanke will be speaking before Congress later today. We also have two more earnings reports: Fiserv ($FISV) and Nicholas Financial ($NICK). Fiserv will report after the close but NICK will report during the day. The stock has been climbing higher recently. I think we’ll see more good news from them.