• Stocks and Oil Diverge
    Posted by on October 24th, 2012 at 12:29 pm

    Stocks and the price of oil had tracked each other closely until earlier this year as oil prices fell and stocks continued to rise.

  • Is Something Up at the New York Times?
    Posted by on October 24th, 2012 at 10:58 am

    Somebody somewhere somehow knows something. Or at least they think they do. The put-call ratio for the New York Times‘ ($NYT) stock has soared 30-fold in the last 48 hours:

    Two New York Times Co. (NYT) option trades pushed bearish wagers to the highest level ever after the publisher of the third-biggest U.S. newspaper by weekday circulation rallied to a 20-month peak.

    The ratio of outstanding puts to sell the stock versus calls increased almost 30-fold in two days to 4.1-to-1 on Oct. 22, an all-time high, according to data compiled by Bloomberg. A block of 8,500 January $10 puts changed hands that day after 10,000 traded at the end of last week, the data show. Times Co.’s shares climbed 37 percent this year through yesterday and touched its highest price since February 2011 last week.

    “The stock has had a nice run which you may want to hedge,” Boniface “Buzz” Zaino, a money manager at Royce & Associates LLC in New York, said yesterday via phone. His firm manages about $36 billion including shares of the publisher. “You could get a near-term bearish case based on concerns about the economy for the next six months and what’s going to happen to advertising dollars.”

    The stock has had an impressive run since May. At one point, NYT was at $5.88 on May 4th. Last week, the shares got as high as $11.07. The stock certainly appears to be over-priced here. Earnings are due out tomorrow.

  • CR Bard’s Earnings Guidance
    Posted by on October 24th, 2012 at 10:53 am

    Seeking Alpha has the transcript for CR Bard‘s ($BCR) earnings call. There are lots of good details about their business, but I wanted to highlight Bard’s guidance for Q4.

    Moving to financial guidance. For Q4, we are expecting constant currency sales growth between 0% and 2%. Obviously, the sales environment is pretty challenging, particularly in the U.S. and we’re trying to be appropriately cautious in this tough environment. Our Q4 sales expectations would put our full year constant currency sales growth between 3% and 4%.

    From an EPS standpoint, excluding items affecting comparability, we see the fourth quarter in the range of $1.64 to $1.68, reflecting the $0.05 of dilution from Neomend that Tim mentioned. So with the deterioration in the U.S. market that we’ve seen during the year, we’re now aiming at the low end of our original EPS growth target for the year, excluding the new dilution from the Neomend acquisition. As for the renewal of the R&D tax credit, we likely won’t have clarity on that until the very end of the year. We still estimate that the credit is worth about $4 million, or just less than 1% of EPS.

    Q4 guidance of $1.64 to $1.68 per share is frankly lower than I was expecting, even adjusting for the five cents for Neomend.

    Before, Bard said it was expecting 3% to 4% growth for this year. Using the $6.40 per share they made last year as a base, that comes to $6.59 to $6.65 per share. Now they see full-year earnings at $6.56 to $6.60 per share not including the costs of Neomend.

    This is disappointing but still within the range of decent business operations.

  • Hudson City Earns 12 Cents Per Share
    Posted by on October 24th, 2012 at 9:55 am

    It’s almost irrelevant at this point, but Hudson City ($HCBK) reported third-quarter earnings of 12 cents per share which was two cents below expectations. No matter. M&T is still going through with the merger plans.

    Hudson City Bancorp, Inc., the holding company for Hudson City Savings Bank (the “Bank”), reported today net income of $55.9 million for the quarter ended September 30, 2012 as compared to net income of $84.2 million for the quarter ended September 30, 2011. Diluted earnings per share amounted to $0.11 for the third quarter of 2012 as compared to diluted earnings per share of $0.17 for the third quarter of 2011. Included in the 2012 third quarter earnings was $6.1 million of expenses related to the previously announced merger with M&T Bank Corporation (“M&T”). Operating earnings for the third quarter of 2012, which excludes merger-related expenses, amounted to $59.6 million or $0.12 per diluted share (non-GAAP measures).

    HCBK will also pay out another dividend of eight cents per share. The stock is currently up this morning.

  • Morning News: October 24, 2012
    Posted by on October 24th, 2012 at 5:50 am

    German Ifo Business Confidence Unexpectedly Fell in October

    Enter the Dragon

    Despite Push for Austerity, European Debt Has Soared

    China Industry Gauge Rises as Easing Prospects Abate

    Brazil Soybean Crop Estimated 47% Sold by Soybean & Corn Advisor

    Dow Falls 234 Points As Corporate Earnings Disappoint Investors

    The Fraught Fed-Chairman Choice

    Facebook Posts A Loss But Makes Gains On Mobile Ad Revenue

    Ford to Shut Belgian Plant in Shift to Spain, Union Says

    Peugeot Gets French State Backing as Debt Load Increases

    LG Electronics Posts 3rd-Quarter Profit on Phone Earnings

    Netflix Tumbles After Subscriber Growth Trails Estimates

    CFPB Issues Rules For Governing Debt Collectors

    Cullen Roche: Who Should Replace Ben Bernanke and Timothy Geithner?

    Joshua Brown: Where Did All The Finance Bloggers Go? My Theories.

    Be sure to follow me on Twitter.

  • AFLAC Beats, Guides Higher and Raises Its Dividend for the 30th Year in a Row
    Posted by on October 23rd, 2012 at 5:21 pm

    AFLAC’s ($AFL) earnings are out and they were very good. The company is raising full-year guidance and implying an increase to next year as well. If that isn’t enough, AFLAC raised its dividend for the 30th year in a row.

    Now let’s look at some numbers.

    Revenues rose 14.4% to $6.8 billion. Operating earnings, which is what we want to watch for with insurance companies, rose to $831 million which is $1.77 per share. Wall Street had been expecting $1.66 per share, so this was an impressive beat. Interestingly, the yen/dollar rate had no impact on operating earnings. Three months ago, AFLAC told us to expect earnings to be between $1.64 and $1.69 per share, so Q3 was much better than expectations.

    The quarter was helped by two items:

    In the quarter, the company revised its estimate of the full-year effective tax rate, which increased operating earnings by $17.5 million, or $.04 per diluted share. In addition, the company recognized an income tax benefit of $29.5 million, or $.06 per diluted share, primarily resulting from the favorable outcome of a routine tax exam for the years 2008 and 2009. Together, the impact from these items benefited operating earnings by $47 million, or $.10 per diluted share.

    For the first three quarters of this year, revenues were up 17.3% to $19.0 billion, and operating earnings were $2.4 billion or $5.12 per share.

    AFLAC is also raising its quarterly dividend by two cents per share or 6.1%. The dividend will rise from 33 cents to 35 cents per share. This is the 30th year in a row the company has increased its dividend. Going by today’s close, AFL yields 2.82%.

    AFLAC expects Q4 operating earnings (assuming no impact from currency) to range between $1.46 and $1.51 per share. That means the full-year number will range between $6.58 and $6.63 per share. The previous full-year guidance was for $6.45 to $6.52 per share.

    The company also revised higher its full-year sales forecast for AFLAC Japan to a growth rate of 30% to 35%.

    AFLAC expects operating earnings for 2013 to rise by 4% to 7% (on a currency neutral basis). Working off the higher base for 2012, that implies $6.84 to $7.09 for next year. Wall Street currently expects 2013 EPS of $6.88.

  • CR Bard Earns $1.64 Per Share
    Posted by on October 23rd, 2012 at 4:12 pm

    One of the few stocks that was up today, CR Bard ($BCR) just reported Q3 earnings of $1.64 per share. That beat the Street’s forecast by one penny per share. Three months ago, Bard told us to expect earnings to range between $1.60 and $1.64 per share.

    C. R. Bard, Inc. today reported 2012 third quarter financial results. Third quarter 2012 net sales were $722.9 million, an increase of 1 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, third quarter 2012 net sales increased 3 percent over the prior-year period.

    For the third quarter 2012, net sales in the U.S. were $483.4 million, a decrease of 1 percent from the prior-year period. Net sales outside the U.S. were $239.5 million, an increase of 3 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, third quarter 2012 net sales outside the U.S. increased 11 percent over the prior-year period.

    For the third quarter 2012, net income was $129.3 million and diluted earnings per share available to common shareholders were $1.50, a decrease of 1 percent and an increase of 3 percent, respectively, as compared to third quarter 2011 results. Adjusting for items that affect comparability between periods as detailed in the tables below, third quarter 2012 net income was $141.4 million and diluted earnings per share available to common shareholders were $1.64, a decrease of 2 percent and an increase of 1 percent, respectively, as compared to third quarter 2011 results.

    Timothy M. Ring, chairman and chief executive officer, commented, “We delivered adjusted earnings per share at the top end of our guidance range this quarter, despite significant headwinds in the United States. Our international investments are shifting the mix of our portfolio to faster growing markets, which remains a key focus for us as we continue to improve our growth profile by investing in geographic and product markets with superior growth opportunities.”

  • “Stocks Are Hammered.” Really?
    Posted by on October 23rd, 2012 at 3:42 pm

    I noticed this story from the AP which announces that “Stocks are hammered by weak earnings reports.”

    Hammered?

    The S&P 500 is currently down 1.31%. That’s the second-worst day in nearly four months. Last Friday was worse.

    But how soon we forget. Today is on track to be the 10th worst day of the year. But today’s loss would only rank as the 36th worst of 2011.

    That’s how much daily volatility has dried up since last year.

  • Life Imitates The Onion
    Posted by on October 23rd, 2012 at 12:53 pm

    Five years ago, The Onion reported:

    Even CEO Can’t Figure Out How RadioShack Still In Business

    Despite having been on the job for nine months, RadioShack CEO Julian Day said Monday that he still has “no idea” how the home electronics store manages to stay open.

    “There must be some sort of business model that enables this company to make money, but I’ll be damned if I know what it is,” Day said. “You wouldn’t think that people still buy enough strobe lights and extension cords to support an entire nationwide chain, but I guess they must, or I wouldn’t have this desk to sit behind all day.”

    The retail outlet boasts more than 6,000 locations in the United States, and is known best for its wall-sized displays of obscure-looking analog electronics components and its notoriously desperate, high-pressure sales staff. Nevertheless, it ranks as a Fortune 500 company, with gross revenues of over $4.5 billion and fiscal quarter earnings averaging tens of millions of dollars.

    “Have you even been inside of a RadioShack recently?” Day asked. “Just walking into the place makes you feel vaguely depressed and alienated. Maybe our customers are at the mall anyway and don’t feel like driving to Best Buy? I suppose that’s possible, but still, it’s just…weird.”

    Reality is finally catching up to Radio Shack ($RSH). In December 1999, the stock was close to $80. This morning, it gapped down to $2. The company just reported another terrible quarter:

    RadioShack reported a larger-than-expected loss for its third quarter as the electronics retailer’s revenue slipped.

    The struggling company has seen its profits erode over the past two years and in September it announced the departure of CEO James Gooch. The chain’s troubles are partly due to wider problems in the brick-and-mortar electronics industry and add fuel to the notion that selling consumer electronics in brick-and-mortar stores is becoming less and less viable.

    Interim CEO Dorvin Lively said that RadioShack had raised $175 million in new financing during the quarter and used those proceeds and some available cash to repay some debt.

    After falling in premarket trading, RadioShack shares rose 10 cents, or 4.2 percent, to $2.49 in midday trading.

    For the three months ended Sept. 30, RadioShack Corp. lost $47.1 million, or 47 cents per share. That compares with a net income of $300,000, or breakeven results, a year earlier.

    I don’t see how the company can survive.

  • Chipotle Continues to Fall
    Posted by on October 23rd, 2012 at 10:56 am

    In May, I listed 13 stocks to avoid. Since then, most of the stocks have dropped. The biggest loser is Chipotle ($CMG) which is off over 41% since I first listed it.

    The sell-off has brought the stock back closer to reality. In my opinion, a fair value for CMG is $195.