Aflac Reaffirms Guidance
Posted by Eddy Elfenbein on May 19th, 2010 at 10:29 am

I’ve mentioned before that one of the great overlooked aspects of investing is when a company reaffirms its guidance. Most people shrug it off and think “big deal, no news.”
But I like to see companies, especially ones I like, tell the investing public how they’re doing even if it’s simply to reaffirm previous guidance.
Barron’s reports:

Aflac management reaffirmed a forecast for $5.24 to $5.56 in earnings per share this year, Briefing.com reports, in line with Street estimates of $5.42, but said that range could shrink a bit at current exchange rates.
Aflac also said its exposure to sovereign debt of the PIIGS — Portugal, Italy, Ireland, Greece and Spain — is $4.2 billion, which is higher than the $1.8 billion that Bloomberg reported as the company’s exposure back on April 28.
Under current exchange rates, the company’s forecast range of $5.24 to $5.56 would narrow to $5.29 to $5.43, the company said.
Within its sovereign risk exposure, the firm holds $286 million of Greek debt, and another $1 billion in exposure to Greek financial institutions.

This is another good example of why I favor high-quality stocks. I can’t be sure of what’s in AFL’s portfolio so I need to place some trust in senior management. I never completely trust any company, but I have a much higher degree of faith in Aflac than I do most other stocks.

The stock is now down to $44 a share which is absurdly low based on their earnings guidance (around eight times earnings).

Eaton Vance’s Earnings Report
Posted by Eddy Elfenbein on May 19th, 2010 at 9:41 am

This morning, Eaton Vance (EV) reported second-quarter earnings of 29 cents per share:

Asset manager Eaton Vance Corp reported on Wednesday higher quarterly profit after customers added billions of dollars to its portfolios, helping boost assets under management by 39 percent.
Net income climbed to $45.9 million, or 29 cents a share, during its fiscal second quarter ended April 30, up from $26.9 million or 21 cents a share a year earlier.
The Boston-based company, known for its relatively conservative fund portfolios and a big issuer of closed-end funds, said revenue climbed to $273.0 million from $198.4 million.
Investors added $5.3 billion into the company’s long-term funds and separate accounts, which helped boost total assets under management to $176.2 billion at the end of April.

While the earnings report was good, it came in far below Wall Street’s expectations of 40 cents per share. The stock is down at the start of trading. Fortunately, Eaton Vance isn’t one of those stocks that lives or dies based on its quarterly numbers. I still like EV a lot.

Wednesday Morning News
Posted by Eddy Elfenbein on May 19th, 2010 at 9:22 am

Allen Stanford wants out of prison. He claims he’s been “savagely beaten.” Look dude, you’d get pretty much the same on the outside.
Protesters Set Fire to Thai Stock Exchange

Consumer Prices Fell 0.1% Last Month
Deere Earnings Jump 16%, Raises Forecast
SEC Proposes 10% Circuit Breaker for Every Stock. If you want to reduce volatility, then encourage larger dividend payments.
House Passes Beer Resolution

Another Defeat for Efficient Markets
Posted by Eddy Elfenbein on May 18th, 2010 at 3:19 pm

It’s happening again. Bloomberg has a great article today about an ugly kick-back scheme involving CDR Financial Products.
As a result, shares of the ticker symbol CDR are off sharply today. There’s one widdle problem. CDR is the ticker symbol for Cedar Shopping Centers which is a super-market REIT that has nothing at all to do with the Bloomberg article.
(HT: TBI)

Thought for the Day
Posted by Eddy Elfenbein on May 18th, 2010 at 1:48 pm

From John Tierney’s review of “The Rational Optimist” by Matt Ridley:

“Forget wars, religions, famines and poems for the moment,” Dr. Ridley writes. “This is history’s greatest theme: the metastasis of exchange, specialization and the invention it has called forth, the ‘creation’ of time.”

(HT: Kedrosky)

First in Business Worldwide
Posted by Eddy Elfenbein on May 18th, 2010 at 11:30 am

Please Join Us for Today’s Strategy Session
Posted by Eddy Elfenbein on May 18th, 2010 at 10:17 am

Charles Kirk, who runs the invaluable Kirk Report, has graciously invited me to participate in today’s online Strategy Session.
Beginning at noon, Charles and I will have an online stock chat for about 20 minutes or so. Then we’ll open up the forum to take questions from you. You can access today’s Strategy Session at this site.
The action starts at noon ET. Hope to see you there!

Home Depot Beats By Five Cents a Share
Posted by Eddy Elfenbein on May 18th, 2010 at 9:12 am

Today it was Home Depot’s (HD) turn to report earnings and the company did very well:

Home Depot reported a profit of $725 million, or 43 cents a share for the May 2nd-ended quarter, up from $514 million, or 30 cents, a year earlier. Excluding items, earnings rose to 45 cents from 35 cents.
Revenue jumped 4.3% to $16.86 billion, or 5.7% excluding the impact of Expo stores, which Home Depot shut down last year, from the year-earlier results. Same-store sales rose 4.8%, the second consecutive quarterly increase after 14 quarters of declines.
Analysts polled by Thomson Reuters had most recently forecast earnings of 40 cents on $16.37 billion in revenue.

That’s an impressive earnings beat. Compared with Lowe’s (LOW), Home Depot has been able to hold the line on margins. The big number in retail is same-store sales. At Lowe’s, same-store sales rose by 2.4% while they were up 3.3% at Home Depot.
Home Depot also raised its full-year EPS guidance to $1.88. The stock is a bit pricey here. I think the market expects to see more big earnings surprises this year.

Buffett Rebalances His Portfolio
Posted by Eddy Elfenbein on May 18th, 2010 at 8:58 am

From Bloomberg:

Berkshire eliminated its stake in health insurers WellPoint Inc. and UnitedHealth Group Inc., lender SunTrust Banks Inc. and property-casualty carrier Travelers Cos., the Omaha, Nebraska- based company said yesterday in a regulatory filing disclosing U.S. equity investments at the end of the first quarter. Buffett’s firm reduced holdings in Kraft Foods Inc., Johnson & Johnson and Procter & Gamble Co.
Buffett, 79, has tapped Berkshire’s U.S. equity portfolio to fund the $27 billion acquisition of railroad Burlington Northern Santa Fe and arrange investments in securities that don’t trade on public exchanges. He invested abroad in the first quarter, making Berkshire the biggest shareholder of German reinsurer Munich Re, and told investors this month to expect “modest” returns from stocks.

The Bears Are Growling
Posted by Eddy Elfenbein on May 17th, 2010 at 5:42 pm

CNBC has a poll up asking if the Dow will reach 5,000 this year (by the way, it’s mid-May). An amazing 40% said it will.
This is obviously highly unscientific, but sometimes I wonder…are there that many extreme bears out there?