Archive for July, 2010

  • Well, At Least Someone Is Making Money
    , July 31st, 2010 at 9:07 pm

    Bernanke made some coin last year:

    Federal Reserve Chairman Ben Bernanke’s personal finances recovered in 2009, disclosure forms released by the central bank on Friday showed.
    Bernanke listed assets in a range of $1.2 million to $2.5 million. They had slipped to between $822,011 to $1.8 million in the previous year, from $1.7 million and $2.5 million in 2007.
    Bernanke’s assets included annuities, mutual funds and money market funds. His two largest holdings were annuities from the TIAA-CREF financial services company worth between $500,001 and $1 million each.

  • Moog Beat By a Penny
    , July 30th, 2010 at 8:39 pm

    One more Buy List stock report. Moog (MOG-A) earned 64 cents per share which beat Wall Street’s estimates by a penny a share.
    In 2008, Moog earned $2.75 per share and that dropped to $1.98 per share last year. Last November, Moog said to expect EPS for this fiscal year (ending in September) between $2.15 and $2.35. They reiterated that in February. Then in May, Moog said to expect $2.35 per share which they reiterated today. On top of that, they gave an estimate for FY 2011 of $2.70 a share.
    The CEO also had something interesting to say:

    With third-quarter profits up 83.6 percent and earnings per share rocketing 73 percent, respectively, Robert Brady, the chairman of Moog, declared the recession is over for the aerospace and defense manufacturer.

    The stock was up 2.8% today and it’s our third best-performing stock this year.

  • Mad Men: Lie Vs. Lay
    , July 30th, 2010 at 1:29 pm

  • Recession Receded Worst Than Previously Thought
    , July 30th, 2010 at 11:15 am

    Today’s Q2 GDP report came out and it was ugly. The economy grew by just 2.4% in real terms for the second three months of the year. That was below the Street’s forecast of 2.6%.
    The Commerce Department also revised the GDP numbers going back to Q4 of 2006 and it turns out that the recession was even worse than they thought.
    Check out the old numbers versus the new ones:
    Nothing is as surprising as the past.

  • NICK’s ROE 14.5%
    , July 30th, 2010 at 10:47 am

    Here are still more stats from NICK’s earnings report.
    The beginning and ending shareholder equity figures for the last quarter were $101,361,000 and $97,437,000. That averages to $99,399,000. NICK earned $3,425,500 for the quarter so that comes to a quarterly ROE of 3.45%. Annualized that comes to 14.51%.
    So this stock is almost like a 14.5% subprime bond that’s going for less than par and it’s credit quality is improving.
    That’s not a perfect analogy but it does place the stock in some context.

  • 96 Years Ago, the NYSE Shuts Down
    , July 30th, 2010 at 10:09 am

    On July 30, 1914, the Dow plunged 6.9% — from 56.20 to 52.32. There apparently were some difficulties in Europe. The NYSE then decided to shut down. Gary Alexander explains it:

    The Federal Reserve was finally formed in 1913 – in the nick of time, right before one of the scariest bank crises of the 20th Century. Early in the morning of Friday, July 31, 1914, the London Stock Exchange announced that it would suspend trading until further notice, the first time it had done so in its centuries-long heritage. World War I was beginning all over Europe, and stock markets had already closed in Vienna, Rome and Berlin. The U.S. stock market was in a state of panic, with blue chip stocks falling 20% or more on July 30, on record volume. If the New York Stock Exchange opened for trading on July 31, it would be the only open stock market in the world. Since markets were then connected by undersea cables, all the world’s sellers would converge on Wall Street. In fact, the overnight sell orders “at any price” were lined up for the opening bell, so the NYSE governors decided to close for only the second time in its history.
    The NYSE was effectively closed from July 31, 1914 to the middle of April, 1915. But on that fateful Friday, July 31, 1914, U.S. banks stayed open, and the rush to convert cash to gold wiped out many banks. From July 27 to August 7, $73 million in gold was withdrawn from New York banks alone. But the presence of the Federal Reserve insured that most of those banks survived.

    Here’s the NYT‘s story.

  • AFLAC’s Dividend Streak Is in Jeopardy
    , July 29th, 2010 at 10:31 pm

    When AFLAC (AFL) reported earnings on Tuesday, the company also declared a dividend for the third quarter of 28 cents per share. This news caught my attention because AFLAC hasn’t raised its dividend all year, and the company is famous for its yearly dividend increases.
    AFLAC has raised its dividend every year for the past 27 years so if they’re taking this year off, it’s big news. They now have just one quarter to go to keep the streak alive.
    Fortunately, CEO Dan Amos said on the conference call that a fourth-quarter increase is probably on the way:

    As I have conveyed over the last several quarters, we would like to return to that policy, when we believe it’s prudent to do so, extending our lengthy record 27 consecutive annual increases in the cash dividend that it is important to us and to our owners.
    Along those lines, I fully expect the Board of Directors to approve a modest increase in the cash dividend effective with the fourth quarter of this year. Additionally, we continue to believe that share repurchase is an effective means for enhancing shareholder value.

    Personally, I can do without the share repurchase. But getting back to the dividends, what’s especially impressive is that AFLAC has not only raised its dividend consistently, it’s done so by a lot. According to my numbers, AFLAC has raised its dividend by at least 12% every year since 1991. That’s as far back as my data goes so the streak may be even longer.
    I’m almost positive (say 99% confident) that this is the longest current double-digit dividend increase streak going. I’ve searched and searched and haven’t found one exception.
    What’s peculiar is that AFLAC is financially strong enough that it can easily raise its dividend. The company earned $1.35 last quarter so the 28-cent dividend translates to a modest payout ratio of 20.7%. What are they afraid of?
    I think it’s that the simply want to build up capital and show the market that they’re in strong financial shape. It’s odd that a move like this could only happen after a crisis, not before.

  • NICK Earns 29 Cents a Share
    , July 29th, 2010 at 10:34 am

    Earnings just came out and they’re outstanding:

    Nicholas Financial, Inc. (Nasdaq:NICK – News) announced that for the three months ended June 30, 2010, net earnings, excluding change in fair value of interest rate swaps, increased 65% to $3,426,000 as compared to $2,081,000 for the three months ended June 30, 2009. Per share diluted net earnings, excluding change in fair value of interest rate swaps, increased 61% to $0.29 as compared to $0.18 for the three months ended June 30, 2009. See reconciliations of the Non-GAAP measures on page 2. Revenue increased 9% to $14,952,000 for the three months ended June 30, 2010 as compared to $13,694,000 for the three months ended June 30, 2009.
    According to Peter L. Vosotas, Chairman and CEO, “We are pleased to report record 1st quarter revenue and earnings. Our results were primarily impacted by an increase in revenues, a reduction in the net charge-off rate and an increase in the cost of borrowed funds. During the first quarter we have added four branch offices to our 12 state branch network, bringing the total to 54 locations. The Company continues to evaluate additional markets for future branch locations and subject to market conditions, could open additional branch locations during the year. The Company remains open to acquisitions should an opportunity present itself.”

    I knew NICK was doing well but these results are even better than what I expected. Here are the estimates I made earlier:
    Receivables: $235 million to $240 million
    Gross yield: 24% to 25%
    Interest Expense: 3% to 4%
    Provision for Credit Losses: 4%, maybe less
    Pre-Tax Yield: 9%
    And here are the results:
    Receivables: $238.3 million
    Gross yield: 25.08%
    Interest Expense: 2.58%
    Provision for Credit Losses: 2.68%
    Pre-Tax Yield: 9.43%
    A few months ago, I said that NICK could earn $1.10 a share this calendar year (the fiscal year ends in March, I used calendar year simply for market comparison).
    That must have seemed wildly optimistic but now it seems easy. NICK has made 57 cents a share for the first six months of this year. The stock’s book value is up to $8.57.
    Here’s something to think about: NICK’s net yield and pre-tax yield are the highest since Q2 of 2007. Also, the provision for credit losses is the lowest since then. The major difference is that receivables are now 28% higher and net revenues are 27% higher.
    So the stock is 27% higher, right? No! NICK was as high as $12.55 in May 2007!

  • Becton, Dickinson Kills It
    , July 29th, 2010 at 9:35 am

    Becton, Dickinson (BDX) had a great earnings report this morning. They earned $1.29 per share for the quarter which was five cents more than estimates.

    “We are pleased with our results this quarter, with each of our three segments contributing to our growth. We delivered earnings per share from continuing operations of $1.29, which is in line with the Company’s expectations,” said Edward J. Ludwig, Chairman and Chief Executive Officer. “Despite the challenging global economy, we expect to deliver bottom-line growth of approximately 9 percent foreign-currency neutral, which is in line with our previously communicated range of 8 to 10 percent for the full fiscal year 2010. Profits and cash flows continue to improve as a result of operational efficiencies. We are also pleased to announce that we are increasing our share repurchases to $700 million from $550 million, which supports our ongoing commitment to return value to shareholders.”

    They also raised full-year EPS guidance to $5.10 to $5.15. The stock is higher in this morning’s trading.

  • $837 Billion in Cash
    , July 28th, 2010 at 9:19 am

    That’s how much cash that non-financial companies in the S&P 500 are currently sitting on. That’s worth about 10% of their market value which is much higher than normal.
    The odd thing about this gigantic cash pile is that these companies are barely being paid any interest by keeping this money in cash. It shows you just how scared they are.
    Matt Krantz points out that the amount of cash is up 26% in the last year. By contrast, dividends are only up 5.9% and M&A spending is down -9.5%. If the economy can avoid a double dip, then there might be enough fuel already to power a rally.