By Larry Gellar
Despite a poor consumer confidence report, the market was up Tuesday, and several stocks saw important movement. We recently discussed Dollar General, and here are 5 other stocks with interesting stories:
Ryder System Inc. (R) – Ryder had a pretty good day Tuesday due to a report that says the truck company will do well no matter the economy. Being named a great supply chain partner doesn’t hurt either. In fact, Ryder executives attributed this to the company’s consistency, caused by both strong expertise and plentiful resources. (Find more bullish sentiment on the company in this Forbes article.)
Valuation is great when taking into account future earnings. Additionally, the recent earnings report was applauded by investors, with the fleet management and supply chain divisions doing particularly well. Dividend investors will also love this stock for its 2.6% dividend yield. Additionally, price to book value is quite low, currently 1.59.
With Ryder’s biggest competitor, Con-Way (CNW), trading at 47.28 times earnings, Ryder comparatively looks like a steal. Its price-to-earnings ratio is 17.2. Ryder’s margins have also been better than Con-Way’s – gross margin for R is 45.39% and operating margin is 6.19%. Also, year-over-year quarterly revenue growth for R is 17.7%. Price/earnings to growth ratio is better for Con-Way though – that number is 0.85 compared to Ryder’s 0.95. As for cash flows, Ryder brought in $114.53 million during 2010 but lost $82.9 million during the first half of 2011.
Barnes & Noble Inc. (BKS) – A strong earnings report brought BKS up nearly 15% during Tuesday’s trading. (Keep in mind, though, that strong earnings in this case actually means Barnes & Noble simply lost less money than last year at this time.) Regardless, some investors are excited for the company’s prospects as it replaces physical book sales in its brick-and-mortar stores with Nook-related sales. Nook is Barnes & Noble’s e-reader, and the company is making money from selling the actual device as well as e-books for it.
Barnes & Noble executives also think that BKS will have a great holiday season, especially because Borders will be completely done operating by then. Remaining competitors in the books industry are Books-A-Million (BAMM) and of course Amazon (AMZN). Out of BKS, BAMM, and AMZN, AMZN is the only one to turn a profit for the last 12 months. In fact, Amazon’s net income during that time was $1.04 billion. Even more interesting is that Amazon is currently trading for 93.04 times earnings. We know AMZN represents quality, but that kind of premium certainly seems unwarranted, especially in this economy. As for price-to-sales ratios, BKS and BAMM are both under 0.10, while AMZN is at 2.33.
Winn-Dixie Stores Inc. (WINN) – Winn-Dixie was down almost 2% on Tuesday, as many investors were disappointed with the company’s earnings report. Same-store sales did go up, though, and earnings per share were better than analysts forecasted. In fact, the decrease in share price that occurred Tuesday can probably be attributed to overbuying on Monday. (WINN was up 15% in Monday’s trading).
Winn-Dixie also announced that they would be able to avoid income tax in 2012 due to losses the company took in previous quarters. Note that WINN’s new trailing twelve month EPS will be -$.51 once the latest earnings are taking into account. Even before the latest earnings, WINN had some unappealing statistics, as discussed here. EBIT, earnings yield, and ROA were (and still are) all negative. WINN is actually trading at a 0.06 price-to-sales ratio right now. For comparison’s sake, note that Wal-Mart’s (WMT) price-to-sales ratio is 0.43.
Gross margin and operating margin for WINN are 28.22% and -0.25% respectively. That gross margin actually isn’t too bad compared to the rest of the industry. Note that other competitors to WINN, like Publix and Sweetbay, are privately owned. As for cash flows, $21.18 million has actually come in for the 40 weeks ending April 6, 2011.
LDK Solar Co. (LDK) – This stock was down over 3% in Tuesday’s regular trading hours, and fell even further after the bell. As discussed here, profit during Q2 for LDK wasn’t as high as expected, but the company had a bright outlook for the rest of 2011. That wasn’t enough to prevent LDK from receiving two new downgrades: Wells Fargo and Needham & Co. focused on lower prices for the company’s products as well as some unfavorable debt on the balance sheet. Additionally, growth for LDK will be costly going forward. More info about the company’s earnings can be found here.
Declining sales were an important part of why the company struggled a bit, and sales in a variety of divisions were down. In fact, these divisions included wafer, margin, polysilicon, OEM-wafer, and OEM-module. Declining prices as discussed above have also forced the company to devalue some of its inventory.
While policy changes in Europe have hurt demand for LDK’s products, the company expects demand in China to continue to improve. The company’s latest innovations are another factor that shareholders should find exciting. With a price to earnings ratio of 1.94, LDK is trading at a fraction of the multiple seen by competitors like MEMC (WFR) and Yingli (YGE). In fact, WFR’s price-to-earnings ratio is 23.22
1-800-Flowers.com Inc. (FLWS) – FLWS essentially broke even last quarter, which is a slight improvement over that quarter last year. That wasn’t enough to keep investors happy though, as the stock fell nearly 3% Tuesday. Company executives didn’t have a particularly bright outlook either, as FLWS performance depends so much on the economy. The most important factor is how much discretionary spending consumers are willing to do. Regardless, FLWS has made some wise decisions in this tough business climate, and the company is focused on cutting costs and not becoming too bloated for its relatively simple business.
Similar companies include FTD, Harry & David Holdings, and Teleflora, although those are all privately owned. Value metrics for FLWS are quite interesting, with price-to-earnings ratio at 177.33 but price-to-sales at only 0.26. An operating margin of only 1.82% explains part of this disparity. Gross margin is good, though, at 40.65%. (Keep in mind these numbers do not take into account the very latest set of earnings).
For those looking at the Internet retail industry as a whole, a great list of the possible investment choices can be found here. As the chart in that article shows, FLWS isn’t attracting a whole lot of attention from investors right now, although this could be due to the company’s very small size. Note that with a beta of 2.36, this stock is quite market-sensitive.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.