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Earnings Season's Early Aces And Letdowns
While we're only two weeks into the thick of earnings season, we're already seeing a lot of upside surprises, and more than a few shortfalls. Here's a closer look at the most important hits and misses so far.
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We Don't Need No Stinkin' Gecko
It's a great time to be an insurer, at least if you're Progressive Corporation (NYSE:PGR). The auto insurance company with memorable - even if slightly annoying - television commercials saw a 27% increase in its first quarter earnings.
Exceeding expectations due to the increase in net premiums, PGR is taking a bite out of the market share historically held by its competitors. This was the third 'beat' in a row, forcing the market to reconsider - for the better - the full year EPS projections.
It's Still Better
Don't let the fact that Corus Entertainment Inc. (NYSE:CJR) fell short of the expected per-share earnings of 33 cents - the company actually earned 30 cents per share - distract you from the fact that revenue was actually up 6% last quarter.
Looking ahead, Corus Entertainment noted that the advertisement revenue recession is over.
Paper and Wood Turning the Corner?
Along with most of the other wood and paper names, Universal Forest Products Inc. (NASDAQ:UFPI) has been working hard to get itself out of a hole and back in the black. And, it actually happened last quarter.
Earnings were only five cents profit per share, versus the expectation of four cents, which is still on the ugly side, but this ray of light is also apt to apply to other wood and paper companies. The company is not heavily levered and maintains a debt-to-equity ratio of only 0.12.
Car Racing Stalled
Interest in car racing isn't recovering as firmly as expected, at least according to last quarter's numbers from International Speedway Corp. (NASDAQ:ISCA). The market was looking for an earnings per share of 53 cents, but the company was 15% shy, attaining a value of only 45 cents. Revenue was down too, by 8.4%.
Despite the weakness on the revenue as well as the profit fronts, CEO Lesa France Kennedy was somehow still pleased, saying "We had a solid quarter of events highlighted by the Hershey's Milk and Milkshakes Speedweeks at Daytona ...With great events and a capacity crowd on hand for the Daytona 500, we exceeded our financial projections. The success of our marquee event gives us tremendous momentum for2010."
Shipping Industry Permanently Reshaped
While Yellow Roadway Corporation has been the industry's focal point of late, J.B. Hunt Transport Services (NASDAQ:JBHT). First-quarter profits were up 22%, while revenue was up 17%. Earnings per share of 29 cents topped analyst estimates of 27 cents.
While shipping volume increases are the obvious and direct reason cited for better numbers, investors need to understand two specific themes at play here for J.B. Hunt, and possibly its competition.
First, intermodal transportation has become the new favorite way of getting goods from point A to point B; it's the cheapest for the those buying or selling certain goods. Fortunately, J.B. Hunt Transport Services just happens to be well organized and equipped for intermodal shipping; the segment grew by 21%. .
Second, two years of struggling for the industry has thinned out the competition quite a bit. With less total capacity, the surviving shippers are splitting up the shipping business pie with fewer players. Indeed, the remaining transportation companies may see 2006-like results (or better) with tighter competition. (Think this career is right for you? Learn more about how to get in - and how to succeed. To find out more, read Becoming A Financial Analyst.)
Bottom Line
With all of the recent earning's season news, investors have plenty of shining companies to choose from, as well as a number of weak companies to avoid.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: Vacation Savings Tips
We Don't Need No Stinkin' Gecko
It's a great time to be an insurer, at least if you're Progressive Corporation (NYSE:PGR). The auto insurance company with memorable - even if slightly annoying - television commercials saw a 27% increase in its first quarter earnings.
Exceeding expectations due to the increase in net premiums, PGR is taking a bite out of the market share historically held by its competitors. This was the third 'beat' in a row, forcing the market to reconsider - for the better - the full year EPS projections.
It's Still Better
Don't let the fact that Corus Entertainment Inc. (NYSE:CJR) fell short of the expected per-share earnings of 33 cents - the company actually earned 30 cents per share - distract you from the fact that revenue was actually up 6% last quarter.
Looking ahead, Corus Entertainment noted that the advertisement revenue recession is over.
Paper and Wood Turning the Corner?
Along with most of the other wood and paper names, Universal Forest Products Inc. (NASDAQ:UFPI) has been working hard to get itself out of a hole and back in the black. And, it actually happened last quarter.
Earnings were only five cents profit per share, versus the expectation of four cents, which is still on the ugly side, but this ray of light is also apt to apply to other wood and paper companies. The company is not heavily levered and maintains a debt-to-equity ratio of only 0.12.
Interest in car racing isn't recovering as firmly as expected, at least according to last quarter's numbers from International Speedway Corp. (NASDAQ:ISCA). The market was looking for an earnings per share of 53 cents, but the company was 15% shy, attaining a value of only 45 cents. Revenue was down too, by 8.4%.
Despite the weakness on the revenue as well as the profit fronts, CEO Lesa France Kennedy was somehow still pleased, saying "We had a solid quarter of events highlighted by the Hershey's Milk and Milkshakes Speedweeks at Daytona ...With great events and a capacity crowd on hand for the Daytona 500, we exceeded our financial projections. The success of our marquee event gives us tremendous momentum for
Shipping Industry Permanently Reshaped
While Yellow Roadway Corporation has been the industry's focal point of late, J.B. Hunt Transport Services (NASDAQ:JBHT). First-quarter profits were up 22%, while revenue was up 17%. Earnings per share of 29 cents topped analyst estimates of 27 cents.
While shipping volume increases are the obvious and direct reason cited for better numbers, investors need to understand two specific themes at play here for J.B. Hunt, and possibly its competition.
First, intermodal transportation has become the new favorite way of getting goods from point A to point B; it's the cheapest for the those buying or selling certain goods. Fortunately, J.B. Hunt Transport Services just happens to be well organized and equipped for intermodal shipping; the segment grew by 21%. .
Second, two years of struggling for the industry has thinned out the competition quite a bit. With less total capacity, the surviving shippers are splitting up the shipping business pie with fewer players. Indeed, the remaining transportation companies may see 2006-like results (or better) with tighter competition. (Think this career is right for you? Learn more about how to get in - and how to succeed. To find out more, read Becoming A Financial Analyst.)
Bottom Line
With all of the recent earning's season news, investors have plenty of shining companies to choose from, as well as a number of weak companies to avoid.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
James Brumley
James Brumley is a freelance writer and registered investment advisor. He began his career as a broker with a major Wall Street firm, where fundamentals and long-term holding periods were core strategies. After that, he switched gears completely, becoming an analyst at a short-term trading newsletter that focused on technical analysis. He now manages client money using the best of both philosophies. His company, Bluegrass Portfolio Management, offers investors an opportunity to reap superior returns with minimized risk.
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