Q3 2008 Earnings Call

F3Q08 Earnings Call

Each day, Wall Street is flooded with stock research offering a multitude of conflicting investment opinions. As such, TickerMine is not in the business of providing more opinions. We believe that accurate raw data points can be used to gain insight in to the stock selection and valuation process.

Customers Spend Low at Pizza Inn (PZZI)

Nearly half of US online adults (45%) plan to spend less money on gifts this holiday season than last because of the state of the economy, and one in five plan to spend significantly less, according to a Harris Interactive survey commissioned by RetailMeNot.com.

Fully 89% of online adults think coupons are a great way to save money, and about a third (35%) of those who will be spending less money on gifts this holiday season will use coupons, the study found.

Jamba Juice (JMBA) announced last week that it has adopted a “poison pill” in the form of a Stock Purchase Rights Plan [1].  However, the rights plan I would like to see would have nothing to do with takeover defenses.  Instead, it would address a more fundamental issue: the company’s need for cash.  The depressed valuation that motivated the poison pill reflects investors’ fear that the company is headed for bankruptcy.  

Jamba needs an immediate balance sheet fix, to restore investor confidence and ensure the company’s long-term survival.  This should be funded by equity, not by debt, and not by selling stores for pennies on the dollar to franchisees that are smart enough to recognize a bargain.  A rights offering would be the fairest and most effective way to achieve this.

There was a time when getting a coffee at Starbucks Corp. (SBUX) – whether a basic “tall bold” or a souped-up venti concoction – was considered a relatively cheap treat, though those of us with a daily Starbucks habit might think otherwise.

However, a report from RBC Capital Markets analyst Larry Miller indicates that even that daily cup of store-bought java is one of the victims of the credit crunch. Mr. Miller lowered his 2009 earnings estimates – to $0.90 from $0.95, and said:

Most beverage companies will be able to sustain current cash-flow levels by continuing to cut costs and by increasing retail prices over the next year, despite the economic downturn, says Moody’s Investors Service. Constraining the industry’s outlook is commodity-price inflation which Moody’s expects will remain above historical levels and hurt profitability.

“However, packaged beverages are affordable to most people around the world, making the business relatively resistant to economic slowdowns. Companies that sell brand-name beverages and that have operations in fast-growing emerging markets will have the strongest pricing power.”

F3Q08 Earnings Call

I am a hard core Chipotle (CMG) fan, let's get that straight right off the bat. I was eating at its first store on Evans Ave. here in Denver within their first year of opening (my girlfriend-now wife turned me on to the place). In fact I blame them for adding about 2 inches to my waistline! I took a lot of my friends there, they liked it and likewise have been hooked on those fabulous burritos.

I watched the chain grow by leaps and bounds and followed closely as it partnered with McDonalds (MCD) and later went public. I bought within in the first week of trading and subsequently added to my position in the next few weeks. I rode that stock to an incredible profit. However when I saw food costs rising and the subsequent price increases at their restaurants, I got out. Chipotle used to offer a great value with those $5 burritos, but when the prices started to head above $6 I sensed it'd lose a bit of momentum.

Talk about getting squeezed! Businesses of all sizes are feeling the pinch of rising commodity costs - from fuel and energy to flour and eggs. Leading retail, CPG, and restaurant companies are employing a variety of different approaches to cope in today’s market, including focusing on supply chain and productivity initiatives, offering drastic price cuts and, conversely, passing costs onto consumers.

Food manufacturer Heinz implemented a “Global Supply Chain Task Force” in 2007 to assist the company in countering commodity cost increases. The task force seeks to “enhance the Company’s competitive advantage by improving coordination and reporting systems across the supply chain, and to harmonize global processes and benefit from Heinz’s scale among suppliers.” Heinz is tracking towards $175M in global supply chain savings as part of the overall task force goals.

Each day, Wall Street is flooded with stock research offering a multitude of conflicting investment opinions. As such, TickerMine is not in the business of providing more opinions. We believe that accurate raw data points can be used to gain insight in to the stock selection and valuation process.

31% of Red Robin Gourmet Burgers (RRGB) Say Business Is Stronger Than Last Year

Trade was one of Minnesota's earliest industries. A lot has changed since the days when fur trading was the main business of this economy. Today Minnesota is home to a vibrant economy. The state is a top producer of wind power and ethanol fuel.

Some interesting facts about the state are:

Nebraska prides itself for being one of the states with the lowest cost of living in the country, having some of the cleanest air and water, and being centrally located. An above average health care system is also in place in Nebraska. A hospital stay costs 30 percent less than the average national cost. Some other interesting facts about Nebraska are:

1. Nebraska has no property tax.
2. Income tax liability is calculated based on sales only.
3. Nebraska is the only state to offer a 100% public power system.
4. Agriculture and manufacturing are Nebraska’s primary source of revenue.
5. Nebraska’s top agricultural commodities are: cattle and calves, corn, and soybeans.
6. The Ogallala Aquifer, one of the major natural underground water available is under Nebraska’s soil.
7. Nebraska is the only state with a unicameral legislature.
8. Nebraska is geographically located in the center of the United States, half way between Boston and San Francisco.
9. The state of Nebraska offers several incentives for businesses relocating to the state. including, investment credits, sales tax refunds, and inventory tax exemptions.
10. Nebraska’s largest export is processed food.

The following companies are headquartered in Nebraska. They have a market cap of over $600 million:

F2Q09 Earnings Call

Consumers are buying up industrial-sized bags of coffee and other bulk household items in recessionary times and that is great news for Costco Wholesale Corp. (COST), according to analysts at Goldman Sachs.

Goldman's Adrianne Shapira said in a note to clients:

Think back to those halcyon days of summer, when we thought Bear Stearns was going to be the worst thing to happen in the credit crisis, before Fannie (NYSE:FNM) and Freddie (NYSE:FRE) moved back in with dad, before "Lehman" became a word whispered in the hushed tones reserved for the dear departed, back when our biggest concern was oil prices. Five-dollar gas doesn’t seem so scary now that the Dow is crumbling, AIG belongs to the government and $700 billion dumped into the financial system did little to halt the downward progress of every stock you own. Those were nice days.

But in June, when we still believed the credit crisis was just going to mean a couple of years of unpleasant quarterly reports from the financial sector, The Hershey Company (NYSE:HSY) was hitting a 52-week low. The company bottomed at $32.31 as analysts (and the rest of us, too) speculated on the company’s profit margins, what with the rising cost of commodities like cocoa, sugar and soy lecithin.

As economic woes seep out of the financial sector and gas prices shake consumer confidence, American shoppers are learning how to be bargain hunters. However, for Wal-Mart (WMT) and Target (TGT), two of America’s most popular discount retailers, September sales fell short of expectations in a Back-to-School season that usually lifts the books. In the online world, last month was certainly a dismal one for growth as these retail giants maneuver for consumer attention. Target’s visitor traffic shrank by 6% and Wal-Mart’s 8% from August; and last September, Wal-Mart and Target were up 14% and 25% annually, while this year each crept upward a mere 5%. Since each site sees about the same amount of traffic, the competition happens at the on-site category-level.

For both, the Electronics category ranks atop the rest, but Wal-Mart electronics attracts a full two-thirds more people than Target. Scanning down the top-visited channels for Wal-Mart, it appears their emphasis is placed in technological gadgets, with TVs and video game departments two of the most popular. On the other hand, Target maintains an Apparel focus as Women, Baby and Children sections see the most visitors. At the same time, a battle for user engagement is championed by Wal-Mart, with nearly twice as many minutes spent per visitor than Target in every Top 10 category. Its TV section alone clocked in just under 4 minutes per user – apparently, people want to watch news of the latest economic downturn on a brand-new screen.

I’ll never understand why, back in August and September, so many people were buying the home improvement retailers. They bought enough shares to pump the price up into the mid-20s. As far as I can see, the retail business is going to be very difficult over the coming few years, and of all the retailers, the home improvement giants, Lowe's (LOW) and Home Depot (HD), will be among the most severely stressed. 

The discount do-it-yourself home improvement stores saw a booming business during the housing bubble. People were buying homes, for themselves and for investment, and they needed all sorts of things to equip those homes.