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  • The Rest of the Earnings Story: VM, SSP, STRL, TAXI, HOGS 0 comments
    Aug 11, 2009 2:35 PM | about stocks: HOGS, MFIN, STRL, SSP, VM

    What's the story behind the story for earnings from Virgin Mobile USA, The E. W. Scripps Company, Sterling Construction, Medallion Financial, and Zhongpin?
    Earnings are important, but they aren't the whole story. Here's the hard quarterly data plus a little extra something to think about from Virgin Mobile USA Inc (VM), The E. W. Scripps Company (NYSE:SSP), Sterling Construction Co. Inc. (NASDAQ:STRL), Medallion Financial Corp. (TAXI), and Zhongpin, Inc. (NASDAQ:HOGS).

    Virgin Mobile USA Inc (VM) suffered the same problem we've seen with most wireless companies last quarter....lower sales but higher profits. We applaud the latter, while the market seems fixated on the former. Virgin Mobile earned 23 cents per share, up from 7 cents per share in the same quarter a year ago. Revenue fell from $319.9 million to $307.6 million (-4%) as the company lost a net 269K subscribers.

    Though not a problem to be ignored, the revenue decline was par for the course... most of its peers performed the same lowers sales/higher profit act, which we described last Thursday.

    The E. W. Scripps Company (SSP) managed to turn a profit last quarter, of 4 cents per share... much better than the loss of $11.20 per share taken a year ago. The market was expecting a loss of 11 cents per share this time around. Investor carried SSP to a multi-month high of $7.76 later in yesterday's session.

    What the market seems to have overlooked is that the industry is hardly in recovery mode - revenue was down 23%. The company just cut the daylights out of expenses (lowered by 23%).... which isn't a long-term solution for any organization seeking growth. Shares are firmly lower today though - perhaps the market has time to think it over.
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    Despite the company doing all it could to reign in any and all enthusiasm about current or future results, Sterling Construction Co. Inc. (STRL) put up some very encouraging numbers last quarter. On a q-o-q basis, revenue was up 13%, and net income was higher by 81%. Per-share earnings flew from $0.31 to $0.68.

    The structure of Medallion Financial Corp. (TAXI) makes 'revenue' and 'earnings' a little meaningless. But, to put the company's results in those terms, earnings fell from $0.25 per share to $0.11 per share.

    Though a little alarming - especially considering it's the second quarter we've seen this sized dip in income - it's not a reason for panic. Medallion's attraction is its dividend yield, which is still a healthy 9.5%.  A couple more quarters of these declines, however., and then the dividend could be jeopardized.

    And finally, Zhongpin, Inc. (HOGS) - one of China's biggest food processing companies - fostered a 17.7% improvement in last quarter's revenues. Income was up 25.9%, from $0.29 per share to $0.36 per share. The increase came despite a steep plunge in pork prices early in the quarter.

    As if that weren't impressive enough, the quarter's numbers didn't have the full benefit of the company's new fruit processing plant. Another pork processing plant is on the way as well (construction began in April).

    With a forward-looking price multiple of 6.4, Zhongpin just looks like a smart and safe way to play China's growth.

    If you'd like to know of any changes in our opinion of these five stocks (or if we officially recommend them as trades), be sure to sign up for free newsletter today. It's delivered 2 to 3 times per week.

    Stocks: HOGS, MFIN, STRL, SSP, VM
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