SPLS - News and Analysis from Seeking Alpha 'SPLS' Tag RSS Syndication from SeekingAlpha.com SeekingAlpha.com http://seekingalpha.com/symbol/spls Advocates to Repeal Sarbanes-Oxley Forget Its Origins http://seekingalpha.com/article/172061-advocates-to-repeal-sarbanes-oxley-forget-its-origins?source=feed 172061 A message to any Democrat, Republican, or Independent lawmaker who is thinking of abolishing or weakening the Sarbanes-Oxley Act of 2002. As a convicted felon, who committed his crimes in cold blood and with callous disregard for my victims, I will publicly endorse each and every one of you as a champion of the white collar criminal class that are a cancer on the integrity of our great capitalist economic system. If you abolish or weaken Sarbanes-Oxley, you will make it much easier for corporate white collar criminals to cook their books and defraud investors.

According to Floyd Norris's column in the New York Times column:

]]> Mon, 09 Nov 2009 01:29:30 -0500 Sam E. Antar Sam E. Antar submits:

A message to any Democrat, Republican, or Independent lawmaker who is thinking of abolishing or weakening the Sarbanes-Oxley Act of 2002. As a convicted felon, who committed his crimes in cold blood and with callous disregard for my victims, I will publicly endorse each and every one of you as a champion of the white collar criminal class that are a cancer on the integrity of our great capitalist economic system. If you abolish or weaken Sarbanes-Oxley, you will make it much easier for corporate white collar criminals to cook their books and defraud investors.

According to Floyd Norris's column in the New York Times column:


Complete Story »]]> SPLS Sam E. Antar Staples, Office Depot Benefit from Improved Back to School in September http://seekingalpha.com/article/166457-staples-office-depot-benefit-from-improved-back-to-school-in-september?source=feed 166457 2009 is BIG for Back to School: Staples and Office Depot See YOY Growth in Q3

September marked the beginning of the school year and the end of the Back to School Season for office supply retailers. Q3 sales figures have yet to be released, but if site volume is any indicator, online office supply retailers saw a year over year boom. Industry leaders, staples.com (SPLS) and officedepot.com (ODP), each saw huge gains – staples.com up 59% YOY to 23.7MM unique visitors (UVs) and officedepot.com up 21% YOY to 13.3MM UVs in Q3.

]]> Wed, 14 Oct 2009 10:19:51 -0400 Compete Compete submits:

2009 is BIG for Back to School: Staples and Office Depot See YOY Growth in Q3

September marked the beginning of the school year and the end of the Back to School Season for office supply retailers. Q3 sales figures have yet to be released, but if site volume is any indicator, online office supply retailers saw a year over year boom. Industry leaders, staples.com (SPLS) and officedepot.com (ODP), each saw huge gains – staples.com up 59% YOY to 23.7MM unique visitors (UVs) and officedepot.com up 21% YOY to 13.3MM UVs in Q3.


Complete Story »]]> ODP SPLS Compete Ten Retailers Made Stronger by Recession http://seekingalpha.com/article/164939-ten-retailers-made-stronger-by-recession?source=feed 164939 A trip through the mall tells the story: The recession of the past two years has devastated the retail industry, as overspent consumers have put away their credit cards, started paying off years of debt, and put the kibosh on shopping.

[Slide Show: 10 Retailers Gaining Strength From the Recession.]

]]> Tue, 06 Oct 2009 03:27:06 -0400 Rick Newman Rick Newman submits:

A trip through the mall tells the story: The recession of the past two years has devastated the retail industry, as overspent consumers have put away their credit cards, started paying off years of debt, and put the kibosh on shopping.

[Slide Show: 10 Retailers Gaining Strength From the Recession.]


Complete Story »]]> AAN AEO AMZN ANF ARO BKE DLTR GME PCLN SPLS ULTA Rick Newman Staples: Who Said It Was Easy? http://seekingalpha.com/article/162167-staples-who-said-it-was-easy?source=feed 162167 Staples (SPLS) has a legacy of making the buying of office supplies easy for their customers. But the last couple of years have been anything but easy for the company. On the other hand, compared to their major competitors, they indeed make running an office supply company look easy.
Competition
Over time, shareholders of a public company will be rewarded proportionately to how well the business performs. In the long run, earnings determine market price. This is what Ben Graham meant by his long-term “The market is a weighing machine” metaphor.
In Figure 1 below, we correlate Staples' monthly closing stock price to their rate of change of earnings growth of 23.7% since 1991. Earnings growth is the clear driver of stock price in the long run. Shareholder returns are included under the graph.
Fig. 1. SPLS 20yr EPS and Price Correlation (see short video)
Fig. 1. SPLS 20yr EPS and Price Performance Correlation
Office Depot (ODP) has historically been Staples' most formidable competitor. In Figure 2 below, we correlate Office Depot’s monthly closing stock price to its rate of change of earnings growth which has been nil since 1991. However, note that Office Depot’s earnings per share growth was very strong through calendar year 2006 (red arrow), before collapsing in 2007-2008 and into 2009. Also note how stock price follows earnings once again. Shareholder returns are included under the graph.
Fig. 2. ODP 20yr EPS and Price Correlation (see short video)
Fig. 2. ODP 20yr EPS and Price Performance Correlation
Another archrival of Staples is OfficeMax (OMX). In Figure 3 below we correlate OfficeMax’s monthly closing stock price to its rate of change of earnings growth which, like Office Depot, has been nil as well. OfficeMax has the worst and most inconsistent earnings record of the three. If you look at the top of the graph, OfficeMax’s stock price has been range bound most years. (Only every other year is listed on 20-year graphs due to space constraints.) Once again, shareholder returns are included under the graph.
Fig. 3. OMX 20yr EPS and Price Correlation (see short video)
Fig. 3. OMX 20yr EPS and Price Performance Correlation
From the three figures above, it is crystal clear that Staples is the best-of-breed company in the office supply superstore format. Both their operating success and the shareholder returns generated have been superior to their competition in the long run. Staples’ true competitive superiority is even more evident over the shorter time frame of 2005 to current.
As Figures 4-6 below clearly illustrate, although Staples’ earnings growth rate shrank to a mere 3.5% due to the recession, they remained strongly profitable in fiscal 2008 and so far into 2009. Office Depot saw earnings fall to a loss, and OfficeMax remained just barely profitable as earnings collapsed precipitously. As a result, Staples’ shareholders eked out a tiny return just above break even, while both Office Depot and OfficeMax shareholders suffered double digit compounded losses per annum. (Note that Office Depot and OfficeMax have calendar fiscal years ending in December. Staples' fiscal year-end is January 31.)
Fig. 4. SPLS 5yr EPS and Price Correlation (see short video)
Fig. 4. SPLS 5yr EPS and Price Performance Correlation

Fig. 5. ODP 5yr EPS and Price Correlation (see short video)
Fig. 5. ODP 5yr EPS and Price Performance Correlation

Fig. 6. OMX 5yr EPS and Price Perf. Correlation (see short video)
Fig. 6. OMX 5yr EPS and Price Performance Correlation
The office supply market is extremely competitive. In addition to the above direct competitors, Staples faces various levels of competition from many retailers. From Walgreens (WAG) to Wal-Mart (WMT), Vistaprint (VPRT) to eBay (EBAY) it seems that everyone sells office supplies at some level or another. However, Staples is clearly the best pure play with a strong marketing campaign. The red easy button has become a worldwide recognized icon.
Background
After opening the first office supply superstore in the outskirts of Boston, Massachusetts on May 1, 1986, Staples has grown into a $16.5 billion market cap company. Today, as the world’s largest office products company, Staples serves businesses of all sizes and consumers in 27 countries throughout the world. With the acquisition of Corporate Express, one of the world’s leading suppliers of office products to businesses and institutions in July of 2008, Staples now generates $27 billion in sales.
Management
We believe that Staples owes most of their success to their highly competent management team led by Ron Sargent, a staple at Staples since 1989. Under his leadership, Staples has navigated the treacherous and highly competitive office supply marketplace by focusing on just three things:
  1. Great customer service.
  2. Carefully managing expenses.
  3. Continuing to invest in growth.
Balance Sheet
Therefore, as competition has struggled in the current environment, Staples has been able to make a major acquisition while remaining strongly profitable. Consequently, we believe they will come out of the recessionary climate in a much improved competitive position. Thanks to strong cash flow generation, their balance sheet is very healthy and management is committed to improving it. At the end of the second quarter (8/01/09) Staples delivered robust operating cash flow of $262 million and record free cash flow of $184 million. Year-to-date they generated $568 million in free cash flow versus $19 million during the same period last year. Since acquiring Corporate Express they have already been able to de-lever their balance sheet by reducing debt by $1.5 billion dollars. See Figure 7 with operating cash flow below.
Fig. 7. SPLS 15yr EPS with OCF (see short video)
Fig. 7. SPLS 15yr EPS with OCF
The day before yesterday (9/15/09) Staples announced a regular third quarter dividend providing a dividend yield of 1.6%. Since initiating a dividend in 2004, it has grown by over 25% annually. We are confident that the dividend is well protected. However, management has indicated that they will not repurchase shares to compensate for equity compensation until their debt to equity levels return to pre-Corporate Express acquisition levels.
Business Segments
Staples has three primary business segments:
  1. North American Retail (41% of revenues) – operates over 1,800 retail outlets in U.S. and Canada.
  2. North American Delivery (39% of revenues) – includes Staples contract, Staples Business Delivery® and Quill®.
  3. Staples International (20% of revenues) – conducts business throughout Asia, Europe and South America.
Valuation
After a strong recovery since February 2009, Staples is fairly valued at close to its normal historical PE ratio of approximately 20. (See Figure 1 above) Therefore, in the short run, both Office Depot and OfficeMax, as seen yesterday, may be better short-term trades. On Wednesday, September 16, 2009, Office Depot was up 6.97%, OfficeMax was up 3.74% and Staples only a mere 0.31%.
However, Staples with strong earnings and cash flow generation and industry leading returns on equity, is in our view, best positioned for the long run. In Figure 8 below, the consensus 5-year forecast growth rate of 14.5% as reported by 18 analysts reporting to First Call indicate an attractive growth potential with a solid 1.6% potentially growing dividend yield.
Fig. 8. SPLS 5yr EPS Forecast (see short video)
Fig. 8. SPLS 5yr EPS Forecast
We believe the total long-term return from here is attractive, although not necessarily compelling. Therefore, we rate Staples as a solid long-term hold that we would add to on any short-term price weakness.
Full Disclosure: Long SPLS, WAG, EBAY at time of writing.
]]> Fri, 18 Sep 2009 04:13:21 -0400 Chuck Carnevale Chuck Carnevale submits:
Staples (SPLS) has a legacy of making the buying of office supplies easy for their customers. But the last couple of years have been anything but easy for the company. On the other hand, compared to their major competitors, they indeed make running an office supply company look easy.
Competition
Over time, shareholders of a public company will be rewarded proportionately to how well the business performs. In the long run, earnings determine market price. This is what Ben Graham meant by his long-term “The market is a weighing machine” metaphor.
In Figure 1 below, we correlate Staples' monthly closing stock price to their rate of change of earnings growth of 23.7% since 1991. Earnings growth is the clear driver of stock price in the long run. Shareholder returns are included under the graph.
Fig. 1. SPLS 20yr EPS and Price Correlation (see short video)
Fig. 1. SPLS 20yr EPS and Price Performance Correlation
Office Depot (ODP) has historically been Staples' most formidable competitor. In Figure 2 below, we correlate Office Depot’s monthly closing stock price to its rate of change of earnings growth which has been nil since 1991. However, note that Office Depot’s earnings per share growth was very strong through calendar year 2006 (red arrow), before collapsing in 2007-2008 and into 2009. Also note how stock price follows earnings once again. Shareholder returns are included under the graph.
Fig. 2. ODP 20yr EPS and Price Correlation (see short video)
Fig. 2. ODP 20yr EPS and Price Performance Correlation
Another archrival of Staples is OfficeMax (OMX). In Figure 3 below we correlate OfficeMax’s monthly closing stock price to its rate of change of earnings growth which, like Office Depot, has been nil as well. OfficeMax has the worst and most inconsistent earnings record of the three. If you look at the top of the graph, OfficeMax’s stock price has been range bound most years. (Only every other year is listed on 20-year graphs due to space constraints.) Once again, shareholder returns are included under the graph.
Fig. 3. OMX 20yr EPS and Price Correlation (see short video)
Fig. 3. OMX 20yr EPS and Price Performance Correlation
From the three figures above, it is crystal clear that Staples is the best-of-breed company in the office supply superstore format. Both their operating success and the shareholder returns generated have been superior to their competition in the long run. Staples’ true competitive superiority is even more evident over the shorter time frame of 2005 to current.
As Figures 4-6 below clearly illustrate, although Staples’ earnings growth rate shrank to a mere 3.5% due to the recession, they remained strongly profitable in fiscal 2008 and so far into 2009. Office Depot saw earnings fall to a loss, and OfficeMax remained just barely profitable as earnings collapsed precipitously. As a result, Staples’ shareholders eked out a tiny return just above break even, while both Office Depot and OfficeMax shareholders suffered double digit compounded losses per annum. (Note that Office Depot and OfficeMax have calendar fiscal years ending in December. Staples' fiscal year-end is January 31.)
Fig. 4. SPLS 5yr EPS and Price Correlation (see short video)
Fig. 4. SPLS 5yr EPS and Price Performance Correlation

Fig. 5. ODP 5yr EPS and Price Correlation (see short video)
Fig. 5. ODP 5yr EPS and Price Performance Correlation

Fig. 6. OMX 5yr EPS and Price Perf. Correlation (see short video)
Fig. 6. OMX 5yr EPS and Price Performance Correlation
The office supply market is extremely competitive. In addition to the above direct competitors, Staples faces various levels of competition from many retailers. From Walgreens (WAG) to Wal-Mart (WMT), Vistaprint (VPRT) to eBay (EBAY) it seems that everyone sells office supplies at some level or another. However, Staples is clearly the best pure play with a strong marketing campaign. The red easy button has become a worldwide recognized icon.
Background
After opening the first office supply superstore in the outskirts of Boston, Massachusetts on May 1, 1986, Staples has grown into a $16.5 billion market cap company. Today, as the world’s largest office products company, Staples serves businesses of all sizes and consumers in 27 countries throughout the world. With the acquisition of Corporate Express, one of the world’s leading suppliers of office products to businesses and institutions in July of 2008, Staples now generates $27 billion in sales.
Management
We believe that Staples owes most of their success to their highly competent management team led by Ron Sargent, a staple at Staples since 1989. Under his leadership, Staples has navigated the treacherous and highly competitive office supply marketplace by focusing on just three things:
  1. Great customer service.
  2. Carefully managing expenses.
  3. Continuing to invest in growth.
Balance Sheet
Therefore, as competition has struggled in the current environment, Staples has been able to make a major acquisition while remaining strongly profitable. Consequently, we believe they will come out of the recessionary climate in a much improved competitive position. Thanks to strong cash flow generation, their balance sheet is very healthy and management is committed to improving it. At the end of the second quarter (8/01/09) Staples delivered robust operating cash flow of $262 million and record free cash flow of $184 million. Year-to-date they generated $568 million in free cash flow versus $19 million during the same period last year. Since acquiring Corporate Express they have already been able to de-lever their balance sheet by reducing debt by $1.5 billion dollars. See Figure 7 with operating cash flow below.
Fig. 7. SPLS 15yr EPS with OCF (see short video)
Fig. 7. SPLS 15yr EPS with OCF
The day before yesterday (9/15/09) Staples announced a regular third quarter dividend providing a dividend yield of 1.6%. Since initiating a dividend in 2004, it has grown by over 25% annually. We are confident that the dividend is well protected. However, management has indicated that they will not repurchase shares to compensate for equity compensation until their debt to equity levels return to pre-Corporate Express acquisition levels.
Business Segments
Staples has three primary business segments:
  1. North American Retail (41% of revenues) – operates over 1,800 retail outlets in U.S. and Canada.
  2. North American Delivery (39% of revenues) – includes Staples contract, Staples Business Delivery® and Quill®.
  3. Staples International (20% of revenues) – conducts business throughout Asia, Europe and South America.
Valuation
After a strong recovery since February 2009, Staples is fairly valued at close to its normal historical PE ratio of approximately 20. (See Figure 1 above) Therefore, in the short run, both Office Depot and OfficeMax, as seen yesterday, may be better short-term trades. On Wednesday, September 16, 2009, Office Depot was up 6.97%, OfficeMax was up 3.74% and Staples only a mere 0.31%.
However, Staples with strong earnings and cash flow generation and industry leading returns on equity, is in our view, best positioned for the long run. In Figure 8 below, the consensus 5-year forecast growth rate of 14.5% as reported by 18 analysts reporting to First Call indicate an attractive growth potential with a solid 1.6% potentially growing dividend yield.
Fig. 8. SPLS 5yr EPS Forecast (see short video)
Fig. 8. SPLS 5yr EPS Forecast
We believe the total long-term return from here is attractive, although not necessarily compelling. Therefore, we rate Staples as a solid long-term hold that we would add to on any short-term price weakness.
Full Disclosure: Long SPLS, WAG, EBAY at time of writing.

Complete Story »]]> EBAY ODP OMX SPLS VPRT WAG WMT Chuck Carnevale Which Are the Top Retail Sites? http://seekingalpha.com/article/162067-which-are-the-top-retail-sites?source=feed 162067 Each month, Compete takes a look at the top 25 most-trafficked web sites within one of industry categories. Back-to-school shopping played a role in shaping the top 25 retail web sites for July.

Amazon Stays at Number One
Budget-conscious consumers seem to be finding a safe haven with the discount retailers, and this, in part, helped Amazon.com (AMZN) retain its number-one spot on the top 25 list. The site attracted 67.2 million unique visitors (UVs) in July, more than double the traffic of the next closest retailer Walmart (WMT). Amazon has benefited from consumer’s flight to value online, as well as growing consumer interest in its popular line of Kindle eBook readers. Compete’s analysis of Amazon’s Kindle success continues here.

]]> Thu, 17 Sep 2009 15:14:31 -0400 Compete Compete submits:

Each month, Compete takes a look at the top 25 most-trafficked web sites within one of industry categories. Back-to-school shopping played a role in shaping the top 25 retail web sites for July.

Amazon Stays at Number One
Budget-conscious consumers seem to be finding a safe haven with the discount retailers, and this, in part, helped Amazon.com (AMZN) retain its number-one spot on the top 25 list. The site attracted 67.2 million unique visitors (UVs) in July, more than double the traffic of the next closest retailer Walmart (WMT). Amazon has benefited from consumer’s flight to value online, as well as growing consumer interest in its popular line of Kindle eBook readers. Compete’s analysis of Amazon’s Kindle success continues here.


Complete Story »]]> AMZN BBBY CVS SPLS TGT WAG WMT Compete Maverick Capital: Buying Up Computer Hardware, Drug Companies and Banks http://seekingalpha.com/article/160974-maverick-capital-buying-up-computer-hardware-drug-companies-and-banks?source=feed 160974 Maverick Capital's most recent portfolio holdings reveal that the long/short orientated hedge fund bought up Computer Hardware, Drug and Banking companies over the 2nd Quarter of 2009, while dumping Telecom, Big Box Retailer and Communication Equipment companies.

Maverick's exposure to US traded equities rose by $915mm over the quarter, ending at $6,444mm. The firm, one of the US’s largest and most revered hedge fund managers, was founded in 1990 by Lee S. Ainslie and Evan, Sam, and Charles Wyly. Before starting Maverick Capital, Mr. Ainslie was a managing director at Julian Robertson’s Tiger Management Corporation. When evaluating companies, the firm typically looks for a combination of value and growth characteristics.

]]> Fri, 11 Sep 2009 04:44:52 -0400 Todd Walker Todd Walker submits:

Maverick Capital's most recent portfolio holdings reveal that the long/short orientated hedge fund bought up Computer Hardware, Drug and Banking companies over the 2nd Quarter of 2009, while dumping Telecom, Big Box Retailer and Communication Equipment companies.

Maverick's exposure to US traded equities rose by $915mm over the quarter, ending at $6,444mm. The firm, one of the US’s largest and most revered hedge fund managers, was founded in 1990 by Lee S. Ainslie and Evan, Sam, and Charles Wyly. Before starting Maverick Capital, Mr. Ainslie was a managing director at Julian Robertson’s Tiger Management Corporation. When evaluating companies, the firm typically looks for a combination of value and growth characteristics.


Complete Story »]]> AAPL AMT AMX BBY CELG CHS CTSH DGI FINL FITB GILD GPS HPQ INFN JPM LEAP LO NIHD NTAP PEP PGR PNC QCOM RIMM SHLD SPLS STT WAG Todd Walker Hardinge vs. Hurco: Price vs. Value? http://seekingalpha.com/article/158268-hardinge-vs-hurco-price-vs-value?source=feed 158268 Hardinge (HDNG) and Hurco (HURC) both design and manufacture computerized machine tools. During downturns, one of the most common decisions undertaken by companies looking to preserve capital is cutting capital expenditures. As such, both of these companies operate in very cyclical industries and therefore do not carry much debt. While these companies have some important differences between them, their approximate returns on invested capital are compared below to illustrate a point:

]]> Tue, 25 Aug 2009 17:40:17 -0400 Saj Karsan Saj Karsan submits:

Hardinge (HDNG) and Hurco (HURC) both design and manufacture computerized machine tools. During downturns, one of the most common decisions undertaken by companies looking to preserve capital is cutting capital expenditures. As such, both of these companies operate in very cyclical industries and therefore do not carry much debt. While these companies have some important differences between them, their approximate returns on invested capital are compared below to illustrate a point:


Complete Story »]]> HDNG HURC ODP SPLS Saj Karsan Staples, Inc. Q2 2009 (Qtr End 08/01/09) Earnings Call Transcript http://seekingalpha.com/article/158221-staples-inc-q2-2009-qtr-end-08-01-09-earnings-call-transcript?source=feed 158221 Staples, Inc. (SPLS)

Q2 2009 Earnings Call

August 25, 2009 8:00 am ET

]]> Tue, 25 Aug 2009 15:04:21 -0400 Staples, Inc. (SPLS)

Q2 2009 Earnings Call

August 25, 2009 8:00 am ET


Complete Story »]]> SPLS Bernanke's Reappointment Already Priced In http://seekingalpha.com/article/158172-bernanke-s-reappointment-already-priced-in?source=feed 158172 By Bryan McCormick

U.S. stock index futures are up slightly after trading lower last night. The proximate cause of weakness had been the very sharp decline in Asian markets, notably in mainland China.

]]> Tue, 25 Aug 2009 10:19:58 -0400 optionMONSTER optionMONSTER submits:

By Bryan McCormick

U.S. stock index futures are up slightly after trading lower last night. The proximate cause of weakness had been the very sharp decline in Asian markets, notably in mainland China.


Complete Story »]]> COST EWJ FXI LOW MA SHW SPLS SPX optionMONSTER Bulls Target Staples Ahead of Earnings Report Tuesday http://seekingalpha.com/article/158119-bulls-target-staples-ahead-of-earnings-report-tuesday?source=feed 158119 by David Russell

Staples (SPLS) is scheduled to release earnings before the opening bell Tuesday, and the bulls are positioning for a move higher.

]]> Tue, 25 Aug 2009 07:18:51 -0400 optionMONSTER optionMONSTER submits:

by David Russell

Staples (SPLS) is scheduled to release earnings before the opening bell Tuesday, and the bulls are positioning for a move higher.


Complete Story »]]> SPLS optionMONSTER Wall Street Breakfast: Must-Know News http://seekingalpha.com/article/158108-wall-street-breakfast-must-know-news?source=feed 158108

  • Helicopter Ben gets second term. Federal Reserve Chairman Ben Bernanke will be renominated for a second four-year term. Obama will make the announcement this morning and the nomination must then be approved by the Senate. Bernanke's current four-year term ends January 31, 2010.
  • Fed must release lending records. The Federal Reserve lost a key court battle and must release private records of its emergency lending to financial firms. The Fed, which has refused to reveal the names of the borrowers, the amount of the loans or the assets presented as collateral, argued disclosing that information would harm the borrowers' competitive positions. However, a federal judge was unconvinced and ruled the Fed must make its records public within five days under the Freedom of Information Act.
  • BoA, SEC try for court approval of settlement. Bank of America (BAC) and the SEC tried once again to convince a judge to approve a $33M settlement over bonuses paid at Merrill Lynch. In a court filing yesterday, Bank of America said it didn't mislead shareholders as it was "widely understood" that billions of dollars would be paid out in Merrill bonuses. The SEC said Bank of America was wrong to withhold information from shareholders, but called the $33M settlement a fair balance between deterrence and not punishing shareholders any further. BAC +0.9% premarket (7:00 ET).
  • SEC casts an eye on Goldman's huddles. After reports surfaced about Goldman Sachs' (GS) "trading huddles," weekly meetings in which preferred clients sometimes received short-term stock tips different from the long-term recommendations given to regular clients, sources say regulators are preparing to investigate the matter. Officials at the SEC and the Financial Industry Regulatory Authority [FINRA] want to examine several aspects of the huddles, including whether they violated securities laws that require Goldman to engage in "fair dealing with customers" and that prevent analysts from issuing opinions at odds with their true beliefs about a stock.
  • Chinese exports edging Germany's. China's exports in H1 narrowly surpassed Germany's during the same period, underscoring China's rapid ascendance during the recent crisis and putting Germany's position as world's largest exporter at risk. China exported $521.7B worth of goods in the first half of the year vs. $521.6B from Germany.
  • Opel still hanging in the balance. As German officials wait impatiently for an Opel bidder to be declared winner, General Motors' board is reportedly considering keeping the unit. Union leaders in Germany are increasing pressure on GM to make a choice, while Obama has promised to stay out of GM's decisions on the matter.
  • Fannie, Freddie soar on no news. Fannie Mae (FNM) climbed nearly 42% in trading yesterday and Freddie Mac (FRE) gained 18.5%, adding to the rally both stocks have seen this month. No major news was released yesterday to warrant the gains, which may (or may not) have been connected to Friday's report that the Federal Reserve bought a record $5.6B in housing-agency debt to help push mortgage rates down. Trading in the two companies accounted for nearly 20% of the trading on the New York Stock Exchange yesterday. FNM +2.9%, FRE +5.8% premarket (7:00 ET).
  • Santander ready to buy back MBS. Banco Santander (STD) offered to buy back €16.5B ($23.65B) in mortgage-backed and asset-backed securities at discounts of 4.5-39%, marking the largest repurchase offer of its kind in Europe. Analysts said the move could help get the secondary market going again after a nearly two-year freeze. (Read Santander's offer (.pdf))
  • Charlotte Russe to go private. Mall retailer Charlotte Russe (CHIC), which has been exploring a possible sale since January, agreed to be acquired by Advent International for $17.50/share in cash, or around $380M. The valuation is significantly higher than the unsolicited $9.00-9.50 per share offer the company received, and rejected, last November from KarpReilly and H.I.G. Capital. (Read Charlotte Russe's press release)
  • Taylor Bean succumbs to bankruptcy. Mortgage lender Taylor, Bean & Whitaker formally filed for bankruptcy protection. The move comes as no surprise, coming less than three weeks after it was suspended from making FHA loans and its warning that bankruptcy is imminent. The company has over $1B in both assets and liabilities, and 1,000-5,000 creditors.
  • Israel leads the way with rate hike. The Bank of Israel became the first central bank during the current crisis to raise its interest rate, and results of the hike will potentially impact the timing of rate increases elsewhere. The bank raised its key rate to 0.75% from 0.5% on signs the global economy may be recovering.
  • Yahoo upgrades online offerings. Yahoo (YHOO) unveiled a series of changes to its email, instant messaging and search services, aiming to make its web offerings more attractive to users and boost falling ad sales. The company is also trying to better integrate social networking tools in light of the growing popularity of sites like Facebook. Shares +1% premarket (7:00 ET).
  • Data mixed on consumer credit woes. The rate at which consumers fell behind on their credit card payments was worse in Q2 2009 (at 1.17%) than in Q2 2008 (1.04%), but there was a marked improvement from the high delinquency levels seen in Q1 2009 (1.32%), indicating consumers are handling their credit better despite mounting job losses. On the other hand, homeowners who fall behind on their mortgage payments are becoming increasingly less likely to catch up again.
  • Chicago Fed index improves. The Chicago Federal Reserve's National Activity Index improved in July, climbing to -0.74 from -1.82 in June. All four indicators improved, though three remained in negative territory.

Earnings: Tuesday Before Open

  • Big Lots (BIG): Q2 EPS of $0.35 beats by $0.05. Revenue of $1.1B (-2%) in-line. (PR)
  • Burger King (BKC): FQ4 EPS of $0.43 beats by $0.10. Revenue of $630M (-2%) vs. $632M. (Burger King's SEC filing (.pdf))
  • Chico's FAS (CHS): Q2 EPS of $0.10 in-line. Revenue of $420M (+4%) vs. $417M. Shares +5.1% premarket (7:40 ET). (PR)
  • Corinthian Colleges (COCO): FQ4 EPS of $0.31 beats by $0.07. Revenue of $353.5M (+29%) vs. $343M. Issues upside guidance: sees Q1 EPS of $0.26-0.29 vs. $0.17 consensus, Q1 revenue of $375-385M vs. $348.8M consensus, FY '10 EPS of $1.30-1.36 vs. $1.14 consensus, FY '10 revenue of $1.58-1.6B vs. $1.51B consensus. Shares +15% premarket (8:00 ET). (PR)
  • Medtronic (MDT): FQ1 EPS of $0.79 in-line. Revenue of $3.9B (+6%) vs. $3.8B. (PR)
  • Staples (SPLS): Q2 EPS of $0.16 in-line. Revenue of $5.5B (+9%) in-line. (PR)

Today's Markets

Asian markets drifted lower, and European markets are following a similar pattern. U.S. futures are in positive territory, but just barely.

]]> Tue, 25 Aug 2009 07:17:44 -0400 SA Editor Rachael Granby

  • Helicopter Ben gets second term. Federal Reserve Chairman Ben Bernanke will be renominated for a second four-year term. Obama will make the announcement this morning and the nomination must then be approved by the Senate. Bernanke's current four-year term ends January 31, 2010.
  • Fed must release lending records. The Federal Reserve lost a key court battle and must release private records of its emergency lending to financial firms. The Fed, which has refused to reveal the names of the borrowers, the amount of the loans or the assets presented as collateral, argued disclosing that information would harm the borrowers' competitive positions. However, a federal judge was unconvinced and ruled the Fed must make its records public within five days under the Freedom of Information Act.
  • BoA, SEC try for court approval of settlement. Bank of America (BAC) and the SEC tried once again to convince a judge to approve a $33M settlement over bonuses paid at Merrill Lynch. In a court filing yesterday, Bank of America said it didn't mislead shareholders as it was "widely understood" that billions of dollars would be paid out in Merrill bonuses. The SEC said Bank of America was wrong to withhold information from shareholders, but called the $33M settlement a fair balance between deterrence and not punishing shareholders any further. BAC +0.9% premarket (7:00 ET).
  • SEC casts an eye on Goldman's huddles. After reports surfaced about Goldman Sachs' (GS) "trading huddles," weekly meetings in which preferred clients sometimes received short-term stock tips different from the long-term recommendations given to regular clients, sources say regulators are preparing to investigate the matter. Officials at the SEC and the Financial Industry Regulatory Authority [FINRA] want to examine several aspects of the huddles, including whether they violated securities laws that require Goldman to engage in "fair dealing with customers" and that prevent analysts from issuing opinions at odds with their true beliefs about a stock.
  • Chinese exports edging Germany's. China's exports in H1 narrowly surpassed Germany's during the same period, underscoring China's rapid ascendance during the recent crisis and putting Germany's position as world's largest exporter at risk. China exported $521.7B worth of goods in the first half of the year vs. $521.6B from Germany.
  • Opel still hanging in the balance. As German officials wait impatiently for an Opel bidder to be declared winner, General Motors' board is reportedly considering keeping the unit. Union leaders in Germany are increasing pressure on GM to make a choice, while Obama has promised to stay out of GM's decisions on the matter.
  • Fannie, Freddie soar on no news. Fannie Mae (FNM) climbed nearly 42% in trading yesterday and Freddie Mac (FRE) gained 18.5%, adding to the rally both stocks have seen this month. No major news was released yesterday to warrant the gains, which may (or may not) have been connected to Friday's report that the Federal Reserve bought a record $5.6B in housing-agency debt to help push mortgage rates down. Trading in the two companies accounted for nearly 20% of the trading on the New York Stock Exchange yesterday. FNM +2.9%, FRE +5.8% premarket (7:00 ET).
  • Santander ready to buy back MBS. Banco Santander (STD) offered to buy back €16.5B ($23.65B) in mortgage-backed and asset-backed securities at discounts of 4.5-39%, marking the largest repurchase offer of its kind in Europe. Analysts said the move could help get the secondary market going again after a nearly two-year freeze. (Read Santander's offer (.pdf))
  • Charlotte Russe to go private. Mall retailer Charlotte Russe (CHIC), which has been exploring a possible sale since January, agreed to be acquired by Advent International for $17.50/share in cash, or around $380M. The valuation is significantly higher than the unsolicited $9.00-9.50 per share offer the company received, and rejected, last November from KarpReilly and H.I.G. Capital. (Read Charlotte Russe's press release)
  • Taylor Bean succumbs to bankruptcy. Mortgage lender Taylor, Bean & Whitaker formally filed for bankruptcy protection. The move comes as no surprise, coming less than three weeks after it was suspended from making FHA loans and its warning that bankruptcy is imminent. The company has over $1B in both assets and liabilities, and 1,000-5,000 creditors.
  • Israel leads the way with rate hike. The Bank of Israel became the first central bank during the current crisis to raise its interest rate, and results of the hike will potentially impact the timing of rate increases elsewhere. The bank raised its key rate to 0.75% from 0.5% on signs the global economy may be recovering.
  • Yahoo upgrades online offerings. Yahoo (YHOO) unveiled a series of changes to its email, instant messaging and search services, aiming to make its web offerings more attractive to users and boost falling ad sales. The company is also trying to better integrate social networking tools in light of the growing popularity of sites like Facebook. Shares +1% premarket (7:00 ET).
  • Data mixed on consumer credit woes. The rate at which consumers fell behind on their credit card payments was worse in Q2 2009 (at 1.17%) than in Q2 2008 (1.04%), but there was a marked improvement from the high delinquency levels seen in Q1 2009 (1.32%), indicating consumers are handling their credit better despite mounting job losses. On the other hand, homeowners who fall behind on their mortgage payments are becoming increasingly less likely to catch up again.
  • Chicago Fed index improves. The Chicago Federal Reserve's National Activity Index improved in July, climbing to -0.74 from -1.82 in June. All four indicators improved, though three remained in negative territory.

Earnings: Tuesday Before Open

  • Big Lots (BIG): Q2 EPS of $0.35 beats by $0.05. Revenue of $1.1B (-2%) in-line. (PR)
  • Burger King (BKC): FQ4 EPS of $0.43 beats by $0.10. Revenue of $630M (-2%) vs. $632M. (Burger King's SEC filing (.pdf))
  • Chico's FAS (CHS): Q2 EPS of $0.10 in-line. Revenue of $420M (+4%) vs. $417M. Shares +5.1% premarket (7:40 ET). (PR)
  • Corinthian Colleges (COCO): FQ4 EPS of $0.31 beats by $0.07. Revenue of $353.5M (+29%) vs. $343M. Issues upside guidance: sees Q1 EPS of $0.26-0.29 vs. $0.17 consensus, Q1 revenue of $375-385M vs. $348.8M consensus, FY '10 EPS of $1.30-1.36 vs. $1.14 consensus, FY '10 revenue of $1.58-1.6B vs. $1.51B consensus. Shares +15% premarket (8:00 ET). (PR)
  • Medtronic (MDT): FQ1 EPS of $0.79 in-line. Revenue of $3.9B (+6%) vs. $3.8B. (PR)
  • Staples (SPLS): Q2 EPS of $0.16 in-line. Revenue of $5.5B (+9%) in-line. (PR)

Today's Markets

Asian markets drifted lower, and European markets are following a similar pattern. U.S. futures are in positive territory, but just barely.


Complete Story »]]> BAC BIG BKC CHIC CHS COCO DIA FNM FRE GLD GS MDT QQQQ SPLS SPY STD USO YHOO SA Editor Rachael Granby Earnings Preview: Staples http://seekingalpha.com/article/158027-earnings-preview-staples?source=feed 158027 Staples (SPLS) is expected to report Q2 earnings before the market open on Tuesday, August 25 with a conference call scheduled for 8:00 am ET.

Guidance

Analysts are looking for a profit of 16c on revenue of $5.54B. The consensus range is 13c-19c for EPS, and revenue of $5.17B-$5.75B, according to First Call. In May, Staples said it sees synergies related to the Corporate Express acquisition building to $300M over the three year integration period. Staples is among the retailers reducing laptop prices and giving consumers more laptops to choose from as the back-to-school shopping season kicks off, according to a Bloomberg report on July 31.

]]> Mon, 24 Aug 2009 17:24:53 -0400 theflyonthewall.com Staples (SPLS) is expected to report Q2 earnings before the market open on Tuesday, August 25 with a conference call scheduled for 8:00 am ET.

Guidance

Analysts are looking for a profit of 16c on revenue of $5.54B. The consensus range is 13c-19c for EPS, and revenue of $5.17B-$5.75B, according to First Call. In May, Staples said it sees synergies related to the Corporate Express acquisition building to $300M over the three year integration period. Staples is among the retailers reducing laptop prices and giving consumers more laptops to choose from as the back-to-school shopping season kicks off, according to a Bloomberg report on July 31.


Complete Story »]]> SPLS theflyonthewall.com Back to School Shoppers Hit the Web Early http://seekingalpha.com/article/156267-back-to-school-shoppers-hit-the-web-early?source=feed 156267 As a child, I remember the final weeks of summer meant only one thing: the first day of school was near. Students across the country will soon be forced to say goodbye to their carefree days of summer and return to the classroom. While children typically dread this time of the year, parents may be anxious for an entirely different reason: the expenses of back-to-school shopping. In these tough economic times, parents must stretch their dollar to cover the cost of new clothes, shoes, school supplies, and much more. Given the doomsday predictions about this year’s back-to-school spending, I decided to take a look at the online behavior of back-to-school (BTS) shoppers for the month of July, and see how their actions compared to this time last year.

First of all, I tracked some popular back-to-school search terms. I saw significant increases in the number of these searches this year, and many websites saw a jump in traffic based on these searches. I focused on five sites that cater to school shopping needs: Office Depot (ODP), Office Max (OMX), Staples (SPLS), Target (TGT), and Walmart (WMT).

]]> Sun, 16 Aug 2009 04:42:05 -0400 Compete Compete submits:

As a child, I remember the final weeks of summer meant only one thing: the first day of school was near. Students across the country will soon be forced to say goodbye to their carefree days of summer and return to the classroom. While children typically dread this time of the year, parents may be anxious for an entirely different reason: the expenses of back-to-school shopping. In these tough economic times, parents must stretch their dollar to cover the cost of new clothes, shoes, school supplies, and much more. Given the doomsday predictions about this year’s back-to-school spending, I decided to take a look at the online behavior of back-to-school (BTS) shoppers for the month of July, and see how their actions compared to this time last year.

First of all, I tracked some popular back-to-school search terms. I saw significant increases in the number of these searches this year, and many websites saw a jump in traffic based on these searches. I focused on five sites that cater to school shopping needs: Office Depot (ODP), Office Max (OMX), Staples (SPLS), Target (TGT), and Walmart (WMT).


Complete Story »]]> ODP OMX SPLS Compete Retail Outlook: Don't Expect Substantial Improvement for Back-to-School 2009 http://seekingalpha.com/article/152902-retail-outlook-don-t-expect-substantial-improvement-for-back-to-school-2009?source=feed 152902 After a summer of unseasonably cool and wet weather, retailers hope they can woo shoppers back to the stores in time for the all important back-to-school season. However, if recent surveys are any indication, results will most likely be disappointing for the second largest shopping season behind Christmas.

Back-to-School season officially kicks off this weekend with sales tax holidays in Georgia and Mississippi, to be followed by 13 other states throughout August. Most states offer exemptions on clothing, school supplies, books, computers and peripherals up to a certain dollar amount. This year, many states grappled with the balance between giving consumers a break and further weakening their own perilous financial situations. As a result of economic conditions, Washington D.C., Florida, Maryland, and Massachusetts decided not have tax holidays for back-to-school this year.

]]> Fri, 31 Jul 2009 12:21:22 -0400 RetailSails RetailSails submits:

After a summer of unseasonably cool and wet weather, retailers hope they can woo shoppers back to the stores in time for the all important back-to-school season. However, if recent surveys are any indication, results will most likely be disappointing for the second largest shopping season behind Christmas.

Back-to-School season officially kicks off this weekend with sales tax holidays in Georgia and Mississippi, to be followed by 13 other states throughout August. Most states offer exemptions on clothing, school supplies, books, computers and peripherals up to a certain dollar amount. This year, many states grappled with the balance between giving consumers a break and further weakening their own perilous financial situations. As a result of economic conditions, Washington D.C., Florida, Maryland, and Massachusetts decided not have tax holidays for back-to-school this year.


Complete Story »]]> ARO BKE DG FDO JCP KSS OMX ROST SPLS TJX WMT RetailSails Bond Expert: Wednesday Wrap http://seekingalpha.com/article/149063-bond-expert-wednesday-wrap?source=feed 149063 Prices of treasury coupon securities plummeted today and the yield curve steepened significantly as a reborn appetite for risk dulled demand for risk-free Treasury assets. The increased appetite for risk is exemplified by the surging equity market as well as the resumption of spread tightening for investment grade corporate bonds.

Economic data released today played into this same theme as the Empire Survey moved higher and Industrial Production fell less than anticipated.

]]> Wed, 15 Jul 2009 16:20:54 -0400 John Jansen John Jansen submits:

Prices of treasury coupon securities plummeted today and the yield curve steepened significantly as a reborn appetite for risk dulled demand for risk-free Treasury assets. The increased appetite for risk is exemplified by the surging equity market as well as the resumption of spread tightening for investment grade corporate bonds.

Economic data released today played into this same theme as the Empire Survey moved higher and Industrial Production fell less than anticipated.


Complete Story »]]> BAC SPLS John Jansen Earnings Quality: An Important Indicator http://seekingalpha.com/article/145598-earnings-quality-an-important-indicator?source=feed 145598 The Applied Finance Group’s (AFG’s) Earnings Quality variable is an important indicator of companies that may be more likely to have negative earnings surprises and underperform due to high amounts of accruals. With many firms under pressure to meet sales expectations in the current environment, it is important to watch out for those firms that may be trying to pad their sales numbers, ie. Channel stuffing (sending excess inventory to stores that cannot sell their products).

The EQ score ranges from 1 to 100, 1 being the best EQ score resulting from the lowest accruals, and 100 being the worst EQ score indicating the highest accruals. Because high EQ score companies (bad Earnings Quality) are more likely to have negative earnings surprises, you may want to avoid these firms. Our back-test indicates that the EQ variable works well as an exclusionary variable coupled with AFG’s valuation model.

]]> Fri, 26 Jun 2009 09:35:25 -0400 Value Expectations Value Expectations submits:

The Applied Finance Group’s (AFG’s) Earnings Quality variable is an important indicator of companies that may be more likely to have negative earnings surprises and underperform due to high amounts of accruals. With many firms under pressure to meet sales expectations in the current environment, it is important to watch out for those firms that may be trying to pad their sales numbers, ie. Channel stuffing (sending excess inventory to stores that cannot sell their products).

The EQ score ranges from 1 to 100, 1 being the best EQ score resulting from the lowest accruals, and 100 being the worst EQ score indicating the highest accruals. Because high EQ score companies (bad Earnings Quality) are more likely to have negative earnings surprises, you may want to avoid these firms. Our back-test indicates that the EQ variable works well as an exclusionary variable coupled with AFG’s valuation model.


Complete Story »]]> AAPL AMZN BMC COG DRI EK IR LIFE MTW NOV ORLY RSG SII SPLS XTO Value Expectations Cramer's Stop Trading! The Most Egregious Industry (6/23/09) http://seekingalpha.com/article/144941-cramer-s-stop-trading-the-most-egregious-industry-6-23-09?source=feed 144941 Stocks discussed on Jim Cramer's Stop Trading! TV Segment, Tuesday June 23.

Humana (HUM), WellPoint (WLP), Boston Scientific (BSX), Aetna (AET), Staples (SPLS), Office Depot (ODP), United Health (UNH)

]]> Tue, 23 Jun 2009 21:03:43 -0400 SA Editor Miriam Metzinger Stocks discussed on Jim Cramer's Stop Trading! TV Segment, Tuesday June 23.

Humana (HUM), WellPoint (WLP), Boston Scientific (BSX), Aetna (AET), Staples (SPLS), Office Depot (ODP), United Health (UNH)


Complete Story »]]> AET BSX HUM ODP SPLS UNH WLP SA Editor Miriam Metzinger Office Depot: Ending the Dumpster Dive http://seekingalpha.com/article/140044-office-depot-ending-the-dumpster-dive?source=feed 140044 A couple of months ago, I wrote a favorable article about Office Depot (ODP), based on increasing free cash flow and a recent price turn. The stock was trading just above a dollar at that time, and is now at 4.20, a four bagger.

In my personal portfolio I took profits a while ago but thought I would state my reasons to question the stock at its current valuation.

]]> Thu, 28 May 2009 03:26:42 -0400 Tom Armistead Tom Armistead submits:

A couple of months ago, I wrote a favorable article about Office Depot (ODP), based on increasing free cash flow and a recent price turn. The stock was trading just above a dollar at that time, and is now at 4.20, a four bagger.

In my personal portfolio I took profits a while ago but thought I would state my reasons to question the stock at its current valuation.


Complete Story »]]> ODP SPLS Tom Armistead Staples, Inc. F1Q09 (Qtr End 05/02/09) Earnings Call Transcript http://seekingalpha.com/article/139945-staples-inc-f1q09-qtr-end-05-02-09-earnings-call-transcript?source=feed 139945 Staples, Inc. (SPLS)

F1Q09 Earnings Call

May 27, 2009 8:00 am ET

]]> Wed, 27 May 2009 15:49:30 -0400 Staples, Inc. (SPLS)

F1Q09 Earnings Call

May 27, 2009 8:00 am ET


Complete Story »]]> SPLS Downward Correction Could Be in Store for the Markets http://seekingalpha.com/article/139747-downward-correction-could-be-in-store-for-the-markets?source=feed 139747 Despite some intra-week volatility, we closed out last week near unchanged on the major indices. Earnings reports this week are heavy in the retail/consumer sector, with names such as DLTR, RL, SPLS, BIG, COST, HNZ & TIF due in the coming days. On the economic calendar is Home Sales, Crude Inventories, and Preliminary GDP among other reports. Also in the news is an upcoming GM restructuring plan and North Korea military activities.

Stocks have been faltering a bit, but the underlying uptrend in place since the March 9th bottom has not yet been breached. On the S&P 500 Index (SPX) Daily chart below, you can see that Percent R has failed to complete another bullish re-test ... however, we currently remain in the top half of Acceleration Bands and above key exponential moving averages; so it may be premature to call an end to uptrend at this time. In addition, Daily Percent R has yet to break below the key 50 mid-level.

]]> Wed, 27 May 2009 07:34:25 -0400 Price Headley Despite some intra-week volatility, we closed out last week near unchanged on the major indices. Earnings reports this week are heavy in the retail/consumer sector, with names such as DLTR, RL, SPLS, BIG, COST, HNZ & TIF due in the coming days. On the economic calendar is Home Sales, Crude Inventories, and Preliminary GDP among other reports. Also in the news is an upcoming GM restructuring plan and North Korea military activities.

Stocks have been faltering a bit, but the underlying uptrend in place since the March 9th bottom has not yet been breached. On the S&P 500 Index (SPX) Daily chart below, you can see that Percent R has failed to complete another bullish re-test ... however, we currently remain in the top half of Acceleration Bands and above key exponential moving averages; so it may be premature to call an end to uptrend at this time. In addition, Daily Percent R has yet to break below the key 50 mid-level.


Complete Story »]]> BIG COST DLTR HNZ RL SPLS SPX SPY TIF TNX Price Headley