Q2 2009 Earnings Call

August 26, 2009 8:30 am ET

• BofA looks to repay TARP this year. After raising $13.5B in a share sale this week, Bank of America (BAC) plans to pay back its $45B in TARP loans by year-end, much earlier than many expected. BofA has already raised more than half of the $34B capital shortfall it needs to cover before the Treasury will allow it to exit TARP; it plans to raise the rest through sales of non-core assets and by converting preferred shares.
• S&P demotes U.K. S&P downgraded the U.K. economy to Negative from Stable, a move that embarrassed the British Treasury and sent sterling reeling. S&P worries the government debt burden could approach 100% of GDP and remain there for some time. Yesterday, IMF concluded its week-long stay in the U.K. by issuing its own blistering report, saying more banks may still be nationalized as "further shocks will lead to an erosion of capital buffers."
• Feds to inject another $7B+ into GMAC. The Treasury is poised to inject another $7B into GMAC, and may invest another $7B over time, a move which could give the government a majority stake in the car lender and its half-parent GM (GM). Earlier this month, stress-test results pegged GMAC's capital shortfall at $11.5B. What began last December as a $20B batch of emergency loans to the auto industry now looks likely to balloon well beyond $50B, and could approach $100B by the end of 2009.
• Fed mulled larger debt buyback. Some officials favored increasing the Fed's $300B program to buy U.S. Treasurys in order to keep interest rates low and capital markets well oiled, minutes from the FOMC's April 28-29 meeting released yesterday showed. The Fed also lowered its outlook for this year (-1.3% to -2% vs. -0.5% to -1.3%) and next, saying GDP would contract more sharply (9.2% to 9.6% vs. 8.5% to 8.8%) and unemployment would be worse than its January projections. The thought of increasing the Treasury buyback plan - which Pimco's Bill Gross thinks is inevitable - sent Treasury futures sharply higher, with yields on the 10-year dropping to 2.5% from 3% earlier in the day.
• Greenspan bearish on banks. Despite the recent drop in borrowing costs, Former Fed chief Alan Greenspan says we're not out in the clear, and worries a lack of capital at banks may choke any economic recovery. Greenspan thinks recent stress tests underestimated banks' capital needs: "There is still a very large unfunded capital requirement in the commercial banking system in the United States and that's got to be funded," he said yesterday, and noted the mortgage crisis will not abate until home prices bottom.
• Geithner sees healing. Testifying before the Senate Banking Committee yesterday, Treasury chief Tim Geithner outlined to lawmakers how TARP money has been allocated and how much is left (see table), and said banks have raised about $56B following the stress tests. But some economists are worried TARP repayments are not the beginning of the end of government crutches, but rather the end of the beginning. Geithner says he sees signs of healing in the financial system, but warned it's still too early to be thinking about an exit. In the Q&A, Democrats called out the Treasury for not being firm enough with aid recipients, while Republicans argued recent steps have become too intrusive. (read Geithner's prepared comments)
• Sony slashes suppliers. In another ominous sign things may not be as rosy as hoped for the tech sector, Sony (SNE) said it will halve its parts suppliers to slash buying costs by $5.3B, or about 20%. Sony will reduce equipment suppliers to about 1,200. On Tuesday, Hewlett-Packard (HPQ) surprised analysts with hefty layoffs and a downbeat outlook.
• Google Times, not. Google (GOOG) did toy with the idea of buying newspapers, and of using its charitable arm to prop up papers seeking non-profit status, but ultimately decided against both, CEO Eric Schmidt says, responding to speculation Google might look to save New York Times (NYT) or others. In an interview with the FT, Schmidt says Google is "trying to avoid crossing the line" between technology and content, but that it's working with Washington Post (WPO) and others to help them improve their online offerings.

Earnings: Before Open

• Barnes & Noble (BKS): Q1 EPS of -$0.04 beats by $0.11. Revenue of $1.1B (-4.4%) in-line. Sees Q2 EPS of $0.05-0.15 vs. $0.03 consensus. Sees full-year EPS of $1.10-1.40 vs. $1.07. (PR)
• Bon-Ton Stores (BONT): Q1 EPS of -$2.67 beats by $0.77. Revenue of $644M (-8%) vs. $1.05B. Reaffirms full-year guidance. (PR)
• Brocade Communications Systems (BRCD): FQ2 EPS of $0.11 beats by $0.02. Revenue of $506M (+42.7%) vs. $476M. (PR)
• Buckle (BKE): Q1 EPS of $0.58 beats by $0.08. Revenue of $200M (+24.6%) vs. $195M. (PR)
• Children's Place (PLCE): Q1 EPS of $0.80 beats by $0.05. Revenue of $402M (+0.4%) in-line. Comps +1%. (PR)
• GameStop (GME): Q1 EPS of $0.42 in-line. Revenue of $1.98B (+9.2%) in-line. Sees Q2 EPS of $0.28-0.33 vs. $0.40 consensus. New software sales -2.8%; used products +31.9%, "illustrating that value is becoming more important to our customers." Shares -9.9% premarket. (PR)
• Hormel Foods (HRL): Q1 EPS of $0.59 beats by $0.09. Revenue of $1.6B vs. $1.68B. Sees full-year EPS at upper end of $2.15-2.25 vs. consensus of $0.24. Says consumers seek value in retail channels while foodservice sales remain soft. (PR)
• MF Global (MF): FQ4 EPS of $0.04 misses by $0.04. Revenue of $257M (-37.1%) vs. $302M. (PR)
• Navios Maritime (NM): Q1 EPS of $0.12 beats by $0.03. Revenue of $147M (+56.5%) vs. $139M. (PR)
• New York & Company (NWY): Q1 EPS of -$0.08 in-line. Revenue of $233M (-13.8%) vs. $240M. Comps -15%. Sees comps down similarly in Q2. (PR)
• Ross Stores (ROST): Q1 EPS of $0.72 in-line. Revenue of $1.69B (+8.7%) in-line. Sees Q2 EPS of $0.60-$0.63 vs. $0.54 consensus, and full-year EPS of $2.62-$2.72 vs. $2.54. Shares +3.9% premarket. (PR)
• Stage Stores (SSI): Q1 EPS of $0.02 beats by $0.01. Revenue of $334M (+5.6%) in-line. Sees Q2 EPS of $0.20-0.27 vs. $0.09. (PR)
• Stein Mart (SMRT): Q1 EPS of $0.38 beats by $0.22. Revenue of $320M (-9.2%) vs. $316M. "Despite a very difficult sales environment, first quarter earnings improved due to tightly controlled inventories that enhanced merchandise margins, and significant expense reductions." (PR)
• Suntech Power (STP): Q1 EPS of $0.01 vs. consensus of -$0.06. Revenue of $316M (-27.4%) vs. $351M. (PR)
• Tech Data (TECD): Q1 EPS of $0.63 beats by $0.29. Revenue of $4.99B (-17.7%) in-line. Gross margin 5.28% vs. 4.86% a year ago. Sees sales down in Q2 due to decline in IT spending and strength of dollar. (PR)
• Toro Company (TTC): FQ2 EPS of $1.00 beats by $0.10. Revenue of $500M (-21.7%) vs. $508M. Sees full-year EPS in line, and revenue down 18%. Shares +0.75% premarket. (PR)

Earnings: Wednesday After Close

• Advance Auto Parts (AAP): Q1 EPS of $1.02 beats by $0.10. Revenue of $1.7B (+10.3%) vs. $1.6B. (PR)
• Computer Sciences (CSC): FQ4 EPS of $1.53 beats by $0.06. Revenue of $4.1B (-8.3%) vs. $4.2B. (PR)
• Gymboree (GYMB): Q1 EPS of $0.74 beats by $0.03. Revenue of $228M (-4.6%) vs. $233M. (PR)
• Hot Topic (HOTT): Q1 EPS of $0.03 beats by $0.01. Revenue of $175M (+10.1%) in-line. (PR)
• Intuit (INTU): FQ3 EPS of $1.68 beats by $0.07. Revenue of $1.4B (+9.2%) in-line. Issues in-line guidance for FY '09, sees EPS of $1.78-1.82, revenue of $3.155-3.185B. (PR)
• Limited Brands (LTD): Q1 EPS of $0.01 beats by $0.04. Revenue of $1.7B (-10.4%) in-line. Issues in-line guidance for Q2, sees EPS of $0.11-0.16. Sees FY '10 EPS of $0.67-0.87 vs $0.74 consensus. (PR)
• NetApp (NTAP): FQ4 EPS of $0.31 beats by $0.08. Revenue of $880M (-6.2%) vs. $856M. (PR)
• PetSmart (PETM): Q1 EPS of $0.37 beats by $0.07. Revenue of $1.3B (+9.4%) in-line. (PR)
• Synopsys (SNPS): FQ2 EPS of $0.45 beats by $0.05. Revenue of $337M (+3.8%) vs. $336M. (PR)

Today's Markets

Overseas markets moved lower Thursday after U.S. stocks sold off at the end of Wednesday's session. Futures have followed suit.

Q4 2008 Earnings Call Transcript

March 19, 2009 9:00 am ET

Q3 2008 Earnings Call Transcript

November 20, 2008, 8:00 am ET

I don't follow Charlotte Russe Holding (CHIC) very closely, but I noticed today that it received an unsolicited bid from two private investment firms well in excess of its closing price yesterday.  You can read about it in the press release issued by its suitors. 

Like CHIC, several of my small-cap retail investments are trading below tangible book value.  I wrote recently about a group of attractively priced retailers that included CHIC. Of course, Crocs (CROX) made the list too!

I remember a wildly successful strategy in 2003 that could get a reprise in 2009: Buying stocks from a beaten down sector below book value. While in 2003, the sector in question was Technology, this time it is Consumer Discretionary.

In the table below (click to enlarge), I include 15 companies generated from a screen I ran on StockVal. The goal was to identify companies with strong balance sheets that were expected to make money next year and that weren't loaded up with intangible assets.  Specifically, here are the parameters I employed:

Q2 2008 Earnings Call

August 15, 2008 9:00 am ET

• JPMorgan, Morgan Stanley take back $7B in ARS. JPMorgan (JPM) and Morgan Stanley (MS) settled with regulators Thursday, agreeing to buy back at part more than $7B in illiquid auction-rate securities that were marketed as near-cash equivalents. They will also will pay damages to retail clients who sold their holdings for a loss. "The industry is taking responsibility for correcting a problem they helped create and that's a good thing," NY AG Andrew Cuomo said. "The fundamental goal has been to return money into the hands of investors and that's what these deals do." JPM rose 3%; MS +1%.
• Economists expect GSE bailout. A WSJ survey of economists finds chances are better than 50/50 (59%) that the Treasury will ultimately prop up Fannie Mae (FNM) and Freddie Mac (FRE) with taxpayer money, despite Secretary Hank Paulson's insistence to the contrary. "Blank checks almost always get filled in and cashed," one says wryly. One-third think the GSEs should be nationalized now. FNM +7%; FRE +8%.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
• Bank funds still draw. Funds that invest in banks are attracting more money, even as they post their biggest losses in almost five decades. Financial ETFs raised $8.6B since January - while banks in the S&P 500 lost 54% from their 2007 records. Robert Leiphart of Birinyi Associates explains "When people say, 'It's the worst it's ever been,' it's usually the bottom and the time to start to buy." Not everyone is so bullish: some are investing in bank funds to hedge short positions on financial stocks.
• Oil speculators: Slippery target. New data show oil market speculators are playing a more prominent role than previously understood. A recent reclassification of large market players bumped speculators' share of trade to 49% from 38%, a development that will bolster calls to increase regulation - and will force authorities to gain a better understanding of who's in the market and why they're there.
• Pickens still an oil bull. Despite oil's recent pullback, T. Boone Pickens says crude will not drop below $100 due to America's heavy dependence on foreign oil. Yesterday the NY Post reported Pickens' hedge fund, BP Capital, which manages about $7B in assets, plunged 35% in July.
• BP suffers Russia blow. A Moscow labor court banned TNK-BP (BP) CEO Robert Dudley from holding executive office in Russia for two years. BP's Russian JV partners "are getting away with nothing short of murder... they can terrorize BP, making any excuse to wrestle control of their joint venture," Oppenheimer analyst Fadel Gheit said. "You cannot run a company long distance like that." If TNK-BP is forced to take on a new CEO, Russian stakeholders will be in the driver's seat to make the choice.
• Google-powered smartphone by Christmas. A Google-powered (GOOG) phone is finally here, almost. T-Mobile (DT) will be the first carrier to offer a mobile phone powered by Google's Android software, and the phone is expected to go on sale in the U.S. before Christmas - possibly as early as October. The high-end phone is expected to compete with Apple's (AAPL) iPhone and other smartphones from Palm (PALM), RIM (RIMM), Microsoft (MSFT), and Nokia (NOK). The phone will have a touch screen, like the iPhone, and will also have a full five-row keyboard that slides out.
• Soros Fund buys big stake in Petrobras. Soros Fund Management bought an $811M stake in Petroleo Brasileiro [Petrobras](PBR) in Q2, making the Brazilian oil company its largest holding at 22% of the fund. Soros has been increasing his mining and commodities holdings, and in November Petrobras announced the discovery of a new oil field, the largest such find in the Americas in over thirty years. Share of Petrobras, however, have fallen 28% since June 30, marking a $235M loss in value for the fund.
• More newspaper downsizing. Gannett (GGI) said it is cutting jobs 1,000 jobs at its Community Publishing division. McClatchy (MNI) said it will freeze wages for all employees for one year. GGI +10.6%. MNI +2.6%.
• GM rises 10.6% on downsizing, Volt plans. GM (GM), struggling to turn profitable as demand falls for its cars and trucks, said Thursday it will cut capacity by 500,000 vehicles between now and 2010, moving production away from trucks, with minimal capital investments. It also said it will finalize the design of the all-electric Chevy Volt by mid-September, and hopes to have 50 prototypes by the end of 2008.
• Global picture gets gloomier. Four of the world's five top economies (U.S., euro-zone, Japan, U.K. Not: China) are now flirting with recession, a trend that will pressure multinational corporations and stock market investors who until recently thought the global marketplace had decoupled from the U.S. "The global economy is sputtering amidst a widening in the slowdown from the United States to Western Europe and Japan," JPMorgan economist David Hensley says, noting emerging economies are also beginning to feel the squeeze. Most recent data points: 0.2% GDP contraction in the euro-zone; 5.6% inflation in the U.S.
• CPI jumped to 5.6% Y/Y, way higher than the 5.1% consensus. Core CPI also exceeded expectations; +0.3% vs. +0.2%. Prices increased 0.8% from June, double economist consensus of 0.4%. Economist Keith Hembre says we've probably seen the peak of the inflation readings, at least in the near-term. Some anomalous readings are likely to reverse out in coming months.
• Weekly jobless claims were 450,000, down 10K from last week (revised to 460K from 455K), but 15K above consensus. The four-week moving average jumped by 19,500 to 440,500.
• Existing Home Sales fell 16% to 4.91M in Q2, the NAR says. Prices fell by 7.6% to $206,500 as surging foreclosures drove bargains. Foreclosures and short sales (homes sold for less than the unpaid mortgage balance) accounted for 1/3 of all Q2 sales.
• China's factory and property spending growth accelerates, with urban fixed-asset investment jumping 26.8% in H1 (vs. an expected 26.6%). The latest of several indicators underscoring the strength of the world's fastest-growing major economy.

Earnings: Before Friday's Open

• Abercrombie & Fitch (ANF): Q2 EPS of $0.88 beats by $0.02. Revenue of $846M (+5.1%) vs. $851M. Sees 2009 EPS of $4.95-5.00 vs. $5.36. [PR]
• New York & Company (NWY): Q2 EPS of $0.14 beats by $0.05. Revenue of $296M (+3.8%) vs. $284M. [PR]

Earnings: After Thursday's Close

• Agilent Technologies (A): FQ3 EPS of $0.57 beats by $0.03. Revenue of $1.44B (+5.1%) in-line. Sees FQ4 EPS of $0.58-0.62 vs. $0.64. Shares +0.4%. [PR]
• Autodesk (ADSK): Q2 EPS of $0.56 beats by $0.04. Revenue of $619.5M (+17.8%) vs. $606M. Shares +8.9%. [PR]
• Kohl's (KSS): Q2 EPS of $0.77 beats by $0.04. Revenue of $3.73B (+3.8%) in-line. Sees Q3 EPS of $0.51-0.56 vs. $0.57. Shares +4%. [PR]
• Nordstrom (JWN): Q2 EPS of $0.65 beats by $0.01. Revenue of $2.29B (-4.3%) vs. $2.31B. Sees Q3 EPS of $0.49-0.54 vs. $0.56. Shares -2.1%. [PR]

Today's Markets

• Asia Friday: Nikkei +0.48% to 13,019. Hang Seng -1.09% to 21,161. Shanghai +0.56% to 2,451. BSE Sensex -2.44% to 14,724.
• Europe markets are higher at midday. London +0.1%. Paris +0.6%. Frankfurt +0.3%.
• U.S. futures: Dow +0.32%. S&P +0.31%. Nasdaq +0.29%. Crude -1.57% to $113.21. Gold -3.23% to $788.20. Silver -9.9% to $12.82.

Friday's Economic Calendar

• 8:30 Empire State Mfg Survey
  9:00 Treasury International Capital
  9:15 Industrial Production
  10:00 UofM Consumer Confidence
• Notable earnings before Friday's open: ANF, JCP

Seeking Alpha editor Rachael Granby contributed to this post.

F1Q08 Earnings Call

May 22, 2008 8:00 am ET

With the market finally getting into the zone that I have been expecting since early March (Get Ready for the Last Rally), I have to confess that I am quite nervous about my prediction that this thrust out of the trading range will prove to be temporary. I do still believe that the market will stall and retreat before moving past 1455 on the S&P 500 (and thus not ever going “green” on the YTD), though I am quickly losing confidence in my prediction for a new low later this year. I guess I am admitting that I am not as confident in my calls as I have been over the past several months.

No matter what direction the market takes, I do believe that there are some seriously undervalued retailers that would seemingly have limited downside but the potential to double over the next two to three years. I mentioned a few leading home furnishings related companies (Three Potential Retail “Home” Runs) at the end of March. At this time, I would like to focus on clothing retailers. Investing is always about knowing what’s in the price and what’s not, and the $600 stimulus checks present an analytical dilemma. On the one hand, many of the stocks have run up in front of the checks being mailed. On the other hand, a reasonable person would conclude that the checks are not likely to prove to be that significant of a long-term driver (and perhaps not even have much of a short-term impact). So, that leaves me feeling like I might be a sucker for buying now as opposed to waiting. The bull case for retailers, though, is really based upon next year, not this year. The road might be a little bumpy, but the following group of retailers appears very attractive to me based upon where I think that they could trade a year from now.

F4Q08 Earnings Call

March 20, 2008 9:00 am ET

New York & Company Inc. (NWY)

Q3 2007 Earnings Call

Retailers reported mixed June same-store sales on Thursday. Collectively, retailers beat analyst expectations by 0.1%. On average, same-store sales growth in June was 2.1% weaker than May's stronger numbers. Notable beats include Wal-Mart's decisive 2.4% growth, way outdoing analyst forecasts of only 0.8% and Macy's weaker-than-expected 2.7% decline (vs. -1.9% estimates). Retail sales growth from February through June 2007 has been at about half of 2006's pace over the same period. Susquehanna analyst Thomas Filandro said on July 9 mall traffic "remained sluggish," while another analyst said retailers are "just trying to minimize their losses."

Just slightly more than 70 companies are expected to report earnings next week, 11 which are members of the S&P 500. Oracle (ORCL) and Fedex (FDX) might have influence on market direction. The remainder, such as Nike (NKE) and Darden Restaurants (DRI), will grab some headline attention, but probably won’t have much impact outside of their respective sectors.

NWY operates over 560 stores in 45 states and is still growing from the first store opened in 1918. Targeting women from the ages of 25 to 45, the company strives to provide high quality, fashionable clothing at a price that is affordable to most. NWY was spun-off from Limited Brands and has now established itself as a dynamic public corporation.

The company engages in the design, marketing and sales of wear-to-work and casual apparel. NWY primarily creates and sells pants, jackets, knit tops, blouses, sweaters, denim, t-shirts, activewear, handbags and jewelry. By positioning themselves as a high end brand, the company is able to offer seemingly exclusive clothing at prices that are competitive with department stores with less brand equity. This has proven a reliable formula for success and growth in the company.

Autodesk Inc. (ADSK) - AMC
FQ2 2007 Revenue Estimate: $445.79M
FQ2 2007 EPS Estimate: $0.35
FQ3 2007 Revenue Estimate: $456.77M
FQ3 2007 EPS Estimate: $0.38
Last Quarter FQ1 2007 reported on 05/18/06 AMC
EPS Estimate: $0.31 ¦ EPS Actual: $0.21
05/18/06 Close: $38.01 Change($): ($0.25) Change(%): -0.7%
05/19/06 Close: $37.49 Change($): ($0.52) Change(%): -1.4%
Conference Call Transcript

Exchange-Traded Funds (ETFs):