Archive for July, 2010

  • What Really Moves the Markets
    , July 27th, 2010 at 7:18 pm

  • Fiserv Beats By Four Cents, Reaffirms Full-Year Guidance
    , July 27th, 2010 at 5:22 pm

    This is good news. Fiserv (FISV) made $1.00 a share last quarter. They see full-year earnings ranging between $3.96 and 4.07 per share.

  • Dividends Are In
    , July 27th, 2010 at 5:09 pm

    So far this year, 142 stocks in the S&P 500 have increased their dividends while just one stock has lowered it.
    Last year at this time, 93 stocks had raised their dividends while 61 had lowered them.
    Ten stocks have initiated dividends compared with just one at this time last year.

  • AFLAC Beat By Two Cents
    , July 27th, 2010 at 4:14 pm

    AFLAC earns $1.35.

    Operating earnings in the second quarter were $639 million, compared with $562 million in the second quarter of 2009. Operating earnings per diluted share rose 12.5% to $1.35 in the quarter, compared with $1.20 a year ago. The stronger yen/dollar exchange rate increased operating earnings per diluted share by $.02 during the second quarter. Excluding the impact from the stronger yen, operating earnings per share increased 10.8%.

    And going forward:

    “With half of the year complete, we believe we are in a very good position to meet our earnings objectives and extend our record of growth. Our objective for 2010 is to increase operating earnings per diluted share by 9% to 12%, excluding the impact of the yen. Within that range, we expect operating earnings to increase approximately 10% for the full year to $5.34 per diluted share before the impact of foreign currency. If the yen averages 90 to the dollar for the remainder of the year, we would expect full-year reported earnings to be about $5.44 per diluted share. Using that same exchange rate assumption, we expect third quarter operating earnings of $1.35 to $1.38 per diluted share. Our objective for 2011 of increasing operating earnings by 8% to 12% before the impact of foreign currency also remains unchanged.”

  • But Why?
    , July 27th, 2010 at 2:51 pm

    Ladies and gentleman, it is with deep regret that I inform you that Nassim Nicholas Taleb has blocked me from his Twitter feed.
    Therefore, I will no longer be privy to insights such as:

    Giving businessreaders my book: like giving vintage Bordeaux to drinkers of Diet Coke and listening to their comments about it

  • Credit Cards — Robin Hood In Reverse
    , July 27th, 2010 at 2:23 pm

    The Federal Reserve Bank of Boston found that credit card fees and reward programs have the net effect of transferring wealth from the poor to the rich:

    U.S. consumer finance data shows that people on a low income are less likely to have a credit card, and those who do, spend less a month on average, than higher earners. High-income consumers are also 20 percentage points more likely to receive credit card rewards — be they frequent flier miles, cash back or other enticements.
    “What most consumers do not know is that their decision to pay by credit card involves merchant fees, retail price increases, a nontrivial transfer of income from cash to card payers, and consequently a transfer from low-income to high-income consumers,” Scott Schuh, Oz Shy and Joanna Stavins wrote.
    They found that about 83 percent of banks’ revenue from credit card fees is obtained from cash payers “and disproportionately from low-income cash payers.”
    After accounting for rewards paid by banks, households who earn more than $150,000 annually receive a subsidy of $756 on average every year, while the households earning $20,000 or less pay $23.

  • Jersey Shore Rings the Opening Bell
    , July 27th, 2010 at 1:57 pm

    Visit for breaking news, world news, and news about the economy

  • My Earnings Forecast for Nicholas Financial
    , July 27th, 2010 at 12:03 pm

    On Thursday morning Nicholas Financial (NICK) will release its fiscal first-quarter earnings. My view is that NICK will do pretty much what it’s been doing, only more so.
    My ballpark estimates are as follows:
    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%
    None of these numbers is a surprise. For the bottom line, I think NICK should make 25 cents a share for the quarter. But a precise estimate really doesn’t matter much. Even if they earn, say 22 cents a share or 24 cents a share, it still confirms the reason why I like Nicholas.
    Here’s how I see it: NICK’s earnings report only needs to confirm two things—one, that’s it’s a thriving business and two, that it’s in zero danger of financial distress. In my opinion, these two points are unarguably true. I’d also add that they’re pretty obvious to anyone who has looked at the company. NICK’s portfolio is clearly improving and the company is pulling in a decent amount of money. It’s almost like a 13% bond that’s selling for less than par.
    Still, the stock market doesn’t seem to agree. NICK is still trading below its book value, and by my estimate, it’s going for about seven to eight times forward earnings. That’s not just, it’s almost absurdly cheap.
    Bear in mind how panicked the market can be. Just 16 months ago, NICK got down to $1.80 a share. I expect NICK to earn about $1.10 a share for this calendar year (note that their fiscal year ends on March 31). So the stock was trading at a forward P/E Ratio of less than two.
    I’m confident that NICK will deliver the goods. The major concern I have is how the market will react. On this subject, well…you just never know. I’d like to think the market can see the facts right in front of its face. We’ll know more on Thursday.

  • Wright Express Earns 68 Cents a Share
    , July 27th, 2010 at 10:41 am

    This morning, Wright Express (WXS) came out with a nice earnings report. The company earned 68 cents a share which was three cents more than estimates. For Q3, they see earnings between 65 cents and 70 cents per share. For all of 2010, Wright sees earnings-per-share ranging between $2.47 and $2.57.
    That’s pretty good news. Three months ago, Wright said to expect Q2 EPS between 61 cents and 66 cents, and full-year between $2.39 and $2.54. The previous full-year range was $2.26 to $2.46. In other words, the high end of the old range is now below the low end of the current range.
    There’s just one problem. The stock is taking a hit today. Currently, the shares are off by about 4.5%. I think a little pullback can be expected since WXS rallied over 22% in the previous three weeks. Wright Express is still an excellent stock.

  • The Textbook Bubble?
    , July 27th, 2010 at 10:26 am

    The NYT hosts a fascinating debate on the market for textbooks. On July 1, a new set of federal rules come into effect in an effort to lower prices for textbooks. As an investor, I always take notice when the government enters a market because prices and profits can soon get very screwy.
    By any standard, the market for textbooks is dysfunctional. James V. Kock writes:

    The textbook market is like the pharmaceutical market: the people who have the most influence over what is purchased (doctors and professors) don’t have to pay for their choices. Students do.
    Further, several studies indicate that most professors don’t even know the cost of the textbooks they recommend, or that this is a minor factor in their choices. This makes the demand for textbooks “price inelastic” — student buyers are insensitive to price increases.