Company Description

Briggs & Stratton is one of the world’s largest producers of air cooled gasoline engines for outdoor power equipment. The company designs, manufactures, markets and services these products for original equipment manufacturers worldwide. These engines are primarily aluminum alloy gasoline engines.

Beat The Street

On Oct 16 Briggs & Stratton announced first quarter of fiscal 2009 results. While the net result was a loss of 4 cents per share, analysts were expecting a loss of 23 cents. The company also guided full-year earnings to between 81 cents and $1.01 for 2009.

Engine sales were $259 million, a 24% year-over-year increase. Power products saw a spike of 36% year-over-year to $256 million.

Briggs & Stratton warned of possible risk involving consumer spending on lawn care and pressure washing products, but also saw a spike in generator sales during the hurricane season.

Strong Growth Projections

Analysts are expecting the company to earn 84 cents per share in 2009, up drastically from the 1 cent loss in 2008. The consensus estimate of $1.00 per share in 2010 would be a 20% increase.

Projected revenue growth for Briggs & Stratton is 25% year-over-year for the first quarter.

Acquisision Down Under

Briggs & Stratton announced the acquisition of Victa Lawncare Ltd on June 30. The Australian manufacturer with similar power lawn and garden products at Briggs & Stratton was purchased for $24.8 million in cash.

Victa posted net sales of $57 million in the 12 months preceding June 30.

The Chart

Shares of BGG have broken out of a long-term down trend. The stock seems to be establishing a level of support near $13 per share. Take a look at the chart below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(BGG) Briggs & Stratton Corp - Projected revenue growth for Briggs & Stratton is 25% year-over-year for the first quarter

Company Description

Techne Corporation develops and manufactures biotechnology products as well as hematology calibrators and controls primarily in the United States and Europe. It is a holding company, operating two subsidiaries, Research and Diagnostic Systems, Inc. (R&D Systems) of Minneapolis, Minnesota and R&D Systems Europe, Ltd. (R&D Europe) of Abingdon, England.

R&D Systems is a specialty manufacturer of biological products. It has two operating divisions, which are Hematology and Biotechnology. The Hematology Division develops and manufactures hematology controls, which are used in hospitals and clinical laboratories to check the accuracy of blood analysis instruments. The Biotechnology Division develops and manufactures biotechnology products including purified proteins (cytokines) and antibodies that are sold primarily to the research market, and assay kits which are sold to the research and clinical diagnostic markets.

Over 95% of TECH’s revenues are derived from products manufactured by R&D Systems.

Solid Income

The Zacks #1 Rank (“strong buy”) company recently declared a quarterly dividend of 25 cents per share thanks to the company’s solid performance. Techne is yielding 1.5%, which is well ahead of the industry average as most of the company’s industry peers pay no dividend.

Strong Quarterly Results

Techne also recently announced fiscal first-quarter results. Consolidated net sales totaled $69.3 million, an increase of 19.6% from year-prior.

Earnings per share of 74 cents topped the previous year’s 58 cents and exceeded the consensus estimate by 12%. The company has been ahead of analyst estimates by an average 9%.

Analysts are upbeat on TECH going forward. For the year ending June 2009, Wall Street forecasts of $2.93 per share were increased from last month’s $2.89.

More Outstanding Fundamentals

Techne’s balance sheet shows no debt, while the company’s return on equity (ROE) of 23% is high above the industry average.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(TECH) Techne Corp - company’s return on equity (ROE) of 23% is high above the industry average

Company Description

NCI, Inc. provides information technology services, specializing in the support and administration of systems and networks. The company primarily services the federal government and has a market cap of $336 million.

Third-Quarter Results

NCI made its shareholders happy on Nov when the company reported solid third-quarter results. Revenue was up to $101 million from $85.2 million last year. Net income came in at $4.4 million, a 33% increase from the same period last year. This produced earnings of 32 cents per share, ahead of analyst estimates by 2 cents.

This was the fourth time in four quarters that NCI has surprised and beaten analyst estimates, having done so by an average of 2 cents, or 6.50%.

Guidance and Estimates

NCI said during its quarterly presentation that it expects fourth-quarter revenue between $101 and $106 million and earnings between 32 and 35 cents.

The analyst community continues to remain bullish on NCI, with the next-year estimate advancing 3 cents in the last 30 days to $1.44 per share, a 17% earnings growth projection.

Valuations

Based upon the current-year estimate, this stock is trading with a forward P/E multiple of 19X, a premium to the overall market.

The Chart

Shares of NCIT have performed admirably in 2008, advancing from just above $13 to current levels right around $25. The 52-week and all-time high is just above $28, take a look at the chart below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(NCIT) NCI, Inc - specializing in the support and administration of systems and networks - primarily services the federal government

Company Description

Zhongpin is a Chinese-based meat and food processing company that handles pork and pork products as well as fruits and vegetables. The company operates in 24 provinces in China through over 2,960 retail outlets and also exports to the European Union, Eastern Europe, Russia, Hong Kong, Japan and South Korea.

Zhongpin has been expanding production. On Nov 7, it announced that its new prepared meat facility in the Henan Province, which was just starting production, would increase annual production capacity for meat products, including sausage and ham, by 114%.

The new facility was built in Zhongpin’s existing industrial park which allows it to take advantage of existing logistics and infrastructure.

Revenue Surged 116% in the Third Quarter

On Nov 10, Zhongpin reported third-quarter earnings that surprised on Wall Street estimates by 13.33%. Net income rose 91% to $10.1 million, or 34 cents, from $5.3 million, or 23 cents per share in the year ago period. Analysts expected 30 cents per share.

Revenues jumped 116% to a record $153.8 million from $71.3 million in the third quarter of 2007. Sales from retail channels climbed 102% to $65.6 million from $32.5 million in the same period in 2007. Retail sales represent 43% of net sales.

The company added 35 new retail outlets during the quarter, including 7 showcase stores, 10 branded retail stores and 18 new supermarket counters.

Zhongpin Confirms 2008 Guidance

Zhongpin is still bullish about the rest of 2008 despite the slowing of the global economy. Pork consumption is expected to continue to grow in China’s rural and urban areas as consumers seek out high quality and safe food products.

he company also believes that China’s recent reforms to improve food safety in the rural areas should also provide it with further growth opportunities.

The company reaffirmed guidance of earnings per share in the range of $1.15 to $1.19 on revenues between $550 million to $570 million.

Consensus Estimates Rise

Given the company’s optimistic guidance, covering analysts have been raising estimates. Fourth-quarter estimates are up 2 cents to 32 cents in the last 30 days. Full-year consensus estimates rose 6 cents to $1.19 in the last month, which is the high end of the company’s guidance range.

Value Fundamentals

Zhongpin is a Zacks #1 Rank (strong buy) stock. It’s trading at 5.7x forward earnings. HOGS price-to-book is 1.27. The company has a strong 1-year return on equity (ROE) of 20.02%.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(HOGS) Zhongpin Inc - Revenue Surged 116% in the Third Quarter

Donald Coxe’s monthly investment report, entitled “Basic Points” (subtitled “Capitalism Faces Its Greatest Challenge” for the November 2008 edition), has just been published. He is Global Portfolio strategist of BMO Financial Group and widely followed for his “big picture” views.

Like many commentators, Donald was caught by surprise by the rapid financial meltdown and plunging commodity prices. He said: “… we certainly didn’t anticipate the sustained earthquakes and hurricanes we have experienced in recent months.” He argues that it will be a long time before complacency returns, but that the “era of fear” will probably end soon.

Donald’s latest investment recommendations are reported in the paragraphs below, but I do recommend you also read the full report (courtesy of Commodity News and Mining Stocks).

1. It is definitely too late to sell stocks, and it is still too early to do more than nibble at bargains. Investors should be opportunistic buyers, because today’s prices for quality stocks will look ridiculously cheap within two years – or less.

2. When the time comes to begin re-accumulating equities, buy banks and diversified financials. If there is going to be a global economic recovery, these former pariahs should perform well – under mostly new management.

3. At the same time, buy commodity-oriented stocks. They are oversold to depths we could not have imagined. When, not if, there is a global economic recovery, these stocks will once again be the winning asset class.

4. While you are waiting, you should be starting to accumulate the bonds – convertible and otherwise – of quality corporations. What could be the trigger for a major equity rally would be a sharp contraction in the near-record yield spread between investment-quality corporates and Treasuries.

5. Buy emerging-market bonds from the fundamentally sound economies, such as China, India, and Brazil. Avoid Eastern European debt.

6. Another group to be included when you are once again accumulating stocks is the leading business-oriented tech stocks. These companies will participate in a global recovery, whereas the consumer-oriented techs may have to wait quite a while.

7. This is also a good time to be looking at the railroad stocks. They benefit from lower energy costs, which may offset a significant percentage of the cutback in top-line revenues during the recession. Coming out the other side, they should be core investments.

8. Gold has been a disappointment. It has outperformed stocks since the S&P’s peaks, but not enough to be profitable. As deflation fears ebb, it will once again be lustrous.

View original at: Investment Postcards from Cape Town

Donald Coxe – Investment Recommendations (November 2008)

Company Description

Compass Minerals is the largest producer of rock, or highway deicing, salt in North America and the United Kingdom and operates the largest highway deicing salt mines in these regions.

The company is also the third largest producer of general trade salt in North America and the second largest in the United Kingdom, serving major retailers, agricultural cooperatives and food producers.

In addition, Compass is the largest producer of sulfate of potash in North America, which is used in the production of specialty fertilizers.

Historic Quarter

Compass Minerals announced the best quarterly performance in company history on Oct 28. Earnings per share more than quadrupled coming in at 87 cents, up from just 20 cents one year ago.

Earnings from salt operations jumped to $237 million, a 47% increase. Sulfate of potash earnings spiked more than 400% to $42 million.

Sales rose an impressive 70%, driven by both price and volume.

A 64% Surprise

The earnings announcement took Wall Street buy surprise, beating the consensus estimate of 53 cents by 64%. It was the third surprise in the past 4 quarters.

Estimates are climbing, following the announcement. The current year estimate is $4.55, more than double the $2.09 earned in 2007. Next year’s consensus estimate is $7.53, a 65% increase of 2008 projections.

Expanding Subsidiaries

On Oct 30 Compass Minerals announced the formation of a new subsidiary, Pristiva Inc., which will focus on the salt water pool market, a $1.2 billion market in the U.S.

Salt water pools are easier on eyes, hair, and skin than standard chlorinated pools. They also require less maintenance and are “greener” than traditional pools. The market is booming as roughly 70% of new pools installed were salt water.

The Chart

The third-quarter earnings announcement acted as a catalyst to break shares of CMP out of its bearish trend. Take a look at the chart below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(CMP) Compass Minerals International - beat the consensus estimate of 53 cents by 64% - the third surprise in the past 4 quarters

Company Description

Strayer Education, an education services holding company, owns Strayer University and certain other assets. The company’s mission is to make higher education achievable and convenient for working adults in today’s economy.

Strayer offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, health care, and public administration to more than 44,000 working adult students at 60 campuses in 12 states, Washington, D.C. and worldwide via the Internet.

Founded in 1892, Strayer University is accredited by the Middle States Commission on Higher Education.

Quarterly Results Reflect Solid Growth

The company posted third-quarter revenue growth of 25% on a year-over-year basis. Net income increased to $11.8 million from $9.3 million last year. This translates into earnings per share of 83 cents, which topped analyst estimates by 2 cents.

This was the fourth time in the last four quarters that Strayer exceeded the consensus estimate by an average of 4 cents or 2.65%.

Strayer also noted that during the quarter enrollment jumped 24% to 44,564.

Guidance Raised

After the solid quarter, Strayer boosted its fourth-quarter guidance, saying it now expects to earn between $1.68 and $1.70 per share. The company expects full-year earnings to be between $5.65 and $5.67 per share.

Both the quarterly and full-year outlook is in line with analyst forecasts.

More Favorable Fundamentals

Strayer boasts a return on equity (ROE) of 43%, surging past the industry average of 11%. Equally as impressive is the fact that Strayer’s balance sheet shows no debt.

Higher Income

Strayer hiked its annual divided to $2 per share from $1.50, which translates into a quarterly dividend of 50 cents per share, an increase from 37.5 cents. The first distribution of the higher dividend will occur on December 10 to shareholders of record as of November 26.

The company added that its board amended a share-buyback program to authorize the repurchase of up to $100 million worth of the company’s common stock over the next 14 months. As of September 30, Strayer had more than 14.2 million common shares outstanding.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(STRA) Strayer Education - boasts a return on equity (ROE) of 43%, surging past the industry average of 11%

Company Description

LHC Group, Inc, through its subsidiaries, provides post-acute, healthcare services primarily to Medicare beneficiaries in rural markets of the United States. The company provides both home and facility based services, and has a market cap of $598 million.

Industry Trend

The healthcare segment of the market has held up well in the choppy economy of the last 12 months, fueled by growing demand from an aging domestic population. This trend was on display when LHC Group reported strong third-quarter results on Oct 29.

Third-Quarter Results

Revenue was up 27% from the same period last year to $98 million. Net income totaled $8 million, a 25% jump from last year’s $6 million. This produced earnings of 45 cents per share, safely ahead of analyst estimates of 36 cents.

Consistent Results

This was the fourth time in the last four quarters that the company has surprised and beaten analyst estimates, having done so by an average of 4 cents, or 13%.

Guidance and Estimates

After the solid quarter, the company went ahead and raised its full-year 2008 guidance, now projecting revenue between $360 and $380 million, up from the previous range between $350 and $370 million. Earnings guidance was lifted to $1.50 to $1.60 per share, up from $1.35 to $1.45.

The analyst community is bullish on the company’s long-term prospects as well, with the next-year estimate pegged at $1.91, a 22% earnings growth projection.

Valuations

Based upon the current-year estimate, the company’s P/E multiple is 21X, a premium to the overall market.

The Chart

Shares of LHCG are trading deep in the green for the year, opening 2008 just over $24 and currently trading above $33 a snappy return of more than 35%. This stock recently gapped open higher and surged in response to the strong quarter, setting a new 52-week and all-time high in the process. Take a look at the chart below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(LHCG) LHC Group, Inc - analyst community is bullish on the company’s long-term prospects

Company Description

Parlux Fragrances is a Florida-based manufacturer of designer fragrances under the brands of Paris Hilton, Jessica Simpson, GUESS?, Nicole Miller, Natori, Queen Latifah, XOXO, Ocean Pacific (OP), Andy Roddick, and Fred Hayman Beverly Hills. The company also has licenses for Paris Hilton watches, cosmetics, sunglasses, handbags and small leather accessories.

Parlux, a Zacks #1 Rank (strong buy), distributes its products in the U.S. through department and specialty stores and internationally to more than 90 countries through department stores and perfumeries.

Recent Events

The company just announced the signing of a worldwide licensing agreement with Marc Ecko Enterprises to develop and market a line of prestige fragrances for men and women.

Parlux management stated that Marc Ecko is the global leader in youth culture, adding that his hip lifestyle brand is remarkably exciting and always innovative. “With the Marc Ecko addition to our fragrance portfolio, Parlux Fragrances, Inc. will target yet another consumer group,” said Neil Katz, Chairman and CEO of Parlux Fragrances. “We see Marc Ecko’s appeal as worldwide and a key part of our strategic plan. We believe Parlux is setting in motion dynamic initiatives by introducing brands that will appeal to a diverse and broad audience of consumers.”

Robust Quarterly Results

Parlux Fragrances saw a solid fiscal second quarter. Earnings per share of 17 cents surpassed the year-prior 10 cents. Sales grew 40% on a year-over-year basis.

Consensus Estimates are on the Rise

Analysts are calling for earnings of 32 cents per share for the year ending March 2009. Three months ago, the consensus estimate was at 28 cents per share.

Value Fundamentals

The company has no debt and offers an attractive forward P/E ratio of 7. The company’s price-to-book is at 0.62, well below the industry average of 1.3.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(PARL) Parlux Fragrances - Sales grew 40% on a year-over-year basis

In Part 1 Rogers gives his outlook for the US dollar and what new financial architecture may evolve post-crisis.

In Part 2 Rogers discusses president-elect Barack Obama’s economic proposals and whether it is the right time to buy back into equities.

In Part 3 Rogers discusses China, his outlook for A shares, and whether the economic stimulus package is enough to reverse the country’s slowing pace of growth.

In Part 4 Rogers recommends holding real assets because the spectre of inflation is still real despite a forced liquidation into cash prompting a decline in prices.

Source: John Authers, Financial Times, November 17, 2008.

View original at: Investment Postcards from Cape Town

Video-o-rama: Jim Rogers on the lie of the land

“The national budget must be balanced. The public debt must be reduced. The arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced. If the nation doesn’t want to go bankrupt, people must learn to work, instead of living on public assistance.” - Cicero, 55 BC.

Is Debt The New Equity?

I have been negative on credit for what seems like an eternity now. I have stated many times that, “if you are not being compensated to take risk, particularly credit risk, do not take credit risk”. And so for a long time we have been void of credit risk and to be frank, remain so. But for those that must take risk, the credit market is starting to seem like a far better bet than do equities.

Before the equity market began its descent this spring, I believed the credit market was sniffing out something that the equity market was not. Please click the link for more on “The Tale of Two Markets“. When asked why I believe the stock market has corrected so swiftly, my answer has been, “it had a lot of catching up to do”.

The big question on my mind these days is whether or not the equity market has corrected enough in order to make equities cheap relative to other asset classes, particularly credit. My answer is a resounding NO!

I have stated and still believe that we are in a secular bear market in equities that will not end until 16-year trailing returns for the Dow Jones Industrial Average and S&P 500 are in negative territory. In other words, this would mean that when we marked the high for the S&P in March of 2000 at approximately 1500, a secular bear low assuming a -4% annualized trailing return for 16 years would place us at around 795 in 2016. Pretty sobering, right?

Looking at the graph below, courtesy of Ned Davis research, we can see that secular lows have been established in the DJIA when the 16-year trailing return range is between -4% and 0%. Considering that the secular bull market party that went on from 1982-2000 was the greatest on record, one must expect the secular bear to accompany it to be the nastiest on record as well.

Notably, in the secular bear market, lows stemming from the Great Depression (the most similar pattern I can come up with for the mess we face today) and the 16-year annualized trailing returns in the range of -4% seem to be the most appropriate level to use. Since this credit unwind may actually be more painful this time around, I think that is the best we can hope for. So, while equities may seem “cheap” to most, I can accept that they will rally from time to time, perhaps fiercely, but the sad truth is that the “buy and hold” approach that has scorched so many during the past eight years is still not the best risk/reward proposition. This leads me to ask, “what is the better proposition?” Debt. Yes, that 4-letter word I have been avoiding for so long.

Click here for Bennet’s full report.

* President of Atlantic Advisors Asset Management, Bennet Sedacca brings with him more than 26 years of securities industry experience. From 1981 to 1997 he worked for several major investment banks, specializing in high-grade fixed-income securities marketing, trading and portfolio management. While working for PaineWebber as a Senior Vice- president, Bennet was a member of the Chairman’s Council for four consecutive years. During his years with Salomon Smith Barney as a Vice-president, he established an institutional fixed income presence in Central Florida.

In 1997, Bennet formed Sedacca Capital Management focusing on portfolio management for high-net worth individuals and small to mid-sized institutions. He is also a contributor to the financial website, www.minyanville.com and is regularly quoted in Wall Street Journal Online, Barron’s and Bloomberg.

Bennet graduated from Rutgers University in 1982 with a degree in Economics and was a member of the International Honor Society of Economics.

View original at: Investment Postcards from Cape Town

DEBT – No Longer a 4-letter Word?

I referred to the characteristics of the so-called descending triangle on the S&P 500 in a post of two days ago (“Stock Markets: Which Way José?”), mentioning that a reversal to the upside often leads to a strong countertrend rally. A move in that direction occurred yesterday on the highest volume in a month. Although one shouldn’t get too fired up about a one-day turnaround, the price and volume action was quite impressive, with the October 27 lows (8,176 on the Dow and 849 on the S&P 500) still intact.

The following daily graph summarizes the market action:

Importantly, the intraday lows of October 10, when the NYSE (red line in the graph below) made an “internal low” with 92.7% of stocks hitting new lows (blue area), have also not yet been violated.

A further positive for the bulls is that, according to Jeffrey Hirsch (Stock Trader’s Almanac), the Dow has been up 12 out of the last 14 years during the week before Thanksgiving.

With the likelihood of further short-term gains a possibility (especially if the major indices record upside reversals on the weekly data by the end of today), it remains too early to tell whether a secular low has been recorded. The chart below shows the long-term trend of the S&P 500 Index (green line) together with a simple 12-month rate of change (or momentum) indicator (blue line). Although monthly indicators are of little help when it comes to market timing, they do come in handy for defining the primary trend. An ROC line below zero depicts bear trends as experienced in 1991, 1994, 2000 to 2003, and again since December 2007.

Stock markets are caught between the actions of central banks, governments and the IMF frantically fending off a total economic meltdown on the one hand, and a worsening economic and corporate picture on the other. This situation has a “no-man’s-land” feel to it. By all means try to play a possible nascent rally, but be cognizant that, failing further technical and fundamental evidence, you are trading against the primary trend. Caution is still warranted!

View original at: Investment Postcards from Cape Town

Is stock market rally “real”?

Company Description

ITC Holding Corp. is involved in several areas of electricity infrastructure. The company’s over all goal is to reduce the costs, for the end user, of delivering energy through improved infrastructure and reducing congestions. ITC is the largest independent electric transmission company.

The Michigan-based company has just over 300 employees and a market cap of $2.2 billion.

Solid Earnings, Raised Guidance

On Nov 5 ITC announced its fourth earnings surprise in the past year. Reported earnings per share were 56 cents, 27% higher than the consensus estimate of 44 cents.

The company also increased its full-year earnings guidance to between $2.10 and $2.12, up from between $2.00 and $2.05.

President and CEO, Joseph L. Welch sited the acquisition of Interstate Power and Light Company as the main driver for the impressive quarterly results.

Expansion Into Oklahoma

An ITC subsidiary, ITC Great Plains, was granted utility status in Oklahoma on Sept 11. The company also received approval in Kansas in 2007. Now ITC will be allowed to construct, own, operate, and maintain electric transmission lines.

Growth at a Discount

The consensus estimate for 2008 is currently $2.11, up from $1.97 with in the past month and 25% higher than 2007.

Using a 17% 5-year growth rate, shares are trading with a PEG ratio of 1.2, a discount compared to the industry average of 2.0.

The Chart

After breaking through a key support level during the early October sell off, ITC set a new 52-week low of $32.35. The stock is still a value after surging following the latest earnings announcement. Take a look at the chart below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(ITC) ITC Holdings Corp - consensus estimate for 2008 is currently 25% higher than 2007

Company Description

Church & Dwight produces sodium bicarbonate, which is popularly known as baking soda, a natural product that cleans, deodorizes, leavens and buffers. The Company’s ARM & HAMMER brand is one of the nation’s most trusted trademarks for a broad range of consumer and specialty products developed from the base of bicarbonate and related technologies.

The company’s consumer products business is organized into two segments: Consumer Domestic, which encompasses both household and personal care products, and Consumer International, which primarily consists of personal care products. About 40% of the Company’s U.S. consumer products are sold under the ARM & HAMMER brand name and derivative trademarks, such as ARM & HAMMER DENTAL CARE Toothpaste and ARM & HAMMER SUPER SCOOP Clumping Cat Litter.

Growth in the Third Quarter

Third-quarter adjusted earnings per share of 73 cents were ahead of the previous year’s 69 cents and topped the consensus estimate by 6%. Net sales jumped 9% on a year-over-year basis.

Management stated that the results reflect continued strong organic revenue growth, an increase in gross margin, tight management of overhead costs and increased marketing spending in support of CHD’s major brands.

The company added that its organic revenue growth was driven by price increases, new products and increased distribution on key brands.

“During the quarter we completed our acquisition of the net assets of the Del Pharmaceuticals, Inc. over-the-counter businesses from Coty Inc. and are pleased so far with the business results and the integration process,” said James R. Craigie, Chairman and Chief Executive Officer. “We expect full year 2008 organic revenue growth to exceed our 3% to 4% goal and the increase in gross margin for the full year to exceed our 100 basis point goal.”

Church & Dwight reaffirmed its previously announced 2008 earnings guidance of $2.83 - $2.85 per share.

Analysts are forecasting $2.85 per share for the 2008 year, which translates into 15% growth for this year, compared to 2007.

More Strong Attributes

CHD has an outstanding record of topping analyst estimates over the past 4 years, exceeding all earnings expectations with the exception of 1 quarter, which was a match.

The company’s earnings per share are expected to grow by 12% over the next 3 – 5 years, which is more bullish than the industry expectation of 10%.

Solid and Consistent Income

Church & Dwight declared its 431st regular quarterly dividend of 9 cents per share. The company noted that the dividend will be payable December 1, 2008 to stockholders of record at the close of business on November 10, 2008.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(CHD) Church & Dwight Co. - declared its 431st regular quarterly dividend of 9 cents per share

Company Description

Fuel Systems Solutions, Inc. designs and manufactures supplies for alternative fuel components for both transportation and industrial uses. The company’s products and systems allow regular cars to operate using either propane or natural gas. Fuel Systems was founded in 1958, carries a market cap. of $588.64 million and is headquartered in Santa Ana, California.

Fuel System’s impressed the Street on Nov 7 when the company reported very impressive third-quarter results. Revenue was up 62% from last year to $106 million. Net income came in at $11.9 million, a big jump from last year’s loss of $395,000. This produced earnings of 75 cents per share, blowing past analyst estimates of 23 cents.

Consistent Earnings

This was the fourth time in the last four quarters that the company has surprised and beaten analyst estimates, having done so by an average of 30 cents, or 147%.

Financial Positioning

The company also said that it now has cash and cash equivalents totaling $34.4 million and working capital of $88.1 million, adding that this will enable it to grow both organically and through acquisition.

Guidance and Estimates

After the solid quarterly results, Fuel Systems raised its 2008 revenue guidance to $385 million from the previous $350 million. Gross margin is expected to 29%.

The analyst community is bullish on the company as well, with the next-year estimate pegged at $2.04, a 13% earnings growth projection.

The Chart

Shares of FSYS have been on an impressive rally for the last month, jumping from just above $22 to a recent high at $40, where some short-term resistance has developed. Take a look at the chart below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(FSYS) Fuel Systems Solutions - analyst community is bullish on the company

Company Description

United Online operates Internet retail and social networking sites. The company runs FTD and Interflora brands and web sites (www.ftd.com and www.interflora.co.uk) both of which use the Mercury Man logo in 45,000 retail floral shops around the world. FTD was just acquired during the third quarter.

United Online also operates social networking site Classmates Media (www.Classmates.com) in North America and Europe and online loyalty marketing (www.MyPoints.com) in North America. The company’s communication services include value-priced Internet access and email providers NetZero and Juno.

Classmates Media Revenue Jumps 18%

On Nov 5, United Online reported third-quarter results that matched Wall Street estimates. Net income increased 29% to $26.4 million from $20.5 million in the third-quarter of 2007. Earnings were 22 cents per share compared to 21 cents in the year ago period.

Revenues fell 5% from the year ago period to $120.9 million from $126.8 million if you exclude the FTD segment which was acquired during the quarter. Including FTD, revenue grew 33.4% to $169.2 million from $126.8 million in 2007.

The Classmates Media segment outperformed with revenue growth of 18% to a record $58.7 million from $50 million. Pay accounts increased 278,000 to more than 4 million Classmates Media pay accounts.

Consensus Estimates for the Fourth Quarter and Full Year Rise

Given the strong revenues in the Classmates Media segment and the acquisition of FTD, United Online was bullish about the 2008 full year. The company raised its revenue guidance to the range of $677.2 to $685.2 million.

Covering analysts followed suit and have been raising estimates for both the fourth quarter and the full year. Fourth-quarter estimates rose 9 cents to 31 cents in the last 30 days.

For the full year, estimates jumped 16% to $1.02 from 88 cents per share.

Value Fundamentals

United Online is a Zacks #1 Rank (Strong Buy) stock. It’s trading at only 5.4x forward earnings. UNTD’s price-to-book is 0.87. The company has an outstanding 5-year return on equity (ROE) of 21.24%.

Additionally, United Online has paid a dividend for 15 consecutive quarters. Recently, the dividend was reduced from 20 cents to 10 cents following the acquisition of FTD. The current dividend yield is 6% and the company, in its third-quarter earnings report, stated its continued support of the dividend.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(UNTD) United Online - Consensus Estimates for the Fourth Quarter and Full Year Rise

The red line in the chart below shows the daily percentage change in the S&P 500 Index, illustrating the severe movements stock markets have seen in recent times.

Turbulence was rife as more data pointed to the world economy facing a longer and more intense downturn than feared. Battle-weary investors were also spooked by continued financial trauma and a bleak corporate earnings outlook for at least the next few quarters, and found little comfort in hints of additional interest rate cuts.

Global stock markets were beset by angst and plunged by more than 6% over the week in the case of the MSCI Word and Emerging Markets indices, with the only safe havens for risk-averse investors being the US dollar, developed-market government bonds and gold bullion. Unsurprisingly, the US one- and three-month Treasury Bills declined to minuscule yields of 0.066% and 0.117% respectively.

Financial markets reacted badly to US Treasury Secretary Henry Paulson’s decision to shelve plans to buy troubled mortgage assets, shifting the focus of the government’s TARP bailout plan to non-bank financial institutions and consumer credit. Priorities going forward are: 1) to strengthen the capital base of the financial system; 2) to provide support for securitization of credit-card receivables, auto loans and student loans; and 3) to explore ways of reducing the risk of foreclosure.

Further dealings in Washington were concerned with the debate over whether to provide government aid to the US auto industry in what looks to be a showdown among the lame-duck US Congress, President Bush and the incoming Obama administration.

According to MarketWatch, Deutsche Bank analyst Rod Lache slashed his price target for General Motors (GM) from $4 to $0. Meanwhile, Richard Russell (Dow Theory Letters) pointed out: “Mattel (MAT) makes toy cars. Mattel is now worth more as a company than General Motors.” It gives one pause for thought.

An end to the credit turmoil does not seem to be in sight as AIG (AIG) and Fannie Mae (FNM) reported huge losses, and renewed strains surfaced in the money markets after the US Treasury’s decision not to buy toxic assets. The three-month dollar Libor rate ended a 23-day run of consecutive falls and edged up from 2.13% to 2.24% on Thursday and Friday.

In the spirit of the tumultuous times, a microbrewery in British Columbia is toasting the economic downturn by launching a special brand of recession-style beer, naming its brew “Bailout Bitter” in honor of the government bailouts, reported CBC News. Truly a “bitter ale for bitter times”!

Next, a tag cloud of the text of the dozens of articles I have devoured during the past week. This is a way of visualizing word frequencies at a glance. As expected, keywords such as “market”, “economy” and “bank” feature prominently. “Gold” has also been receiving a fair bit of publicity as the yellow metal improved in price during the past week.

Back to Richard Russell for more wisdom from the venerable analyst: “This bear market is a bloody brute. I’m not trying to frighten my subscribers. What I am trying to do is to caution subscribers, and notify them that the lows for this bear market may still be far away. We simply do not know, nor do we have evidence to indicate that the bottom is in or near. I continue to believe that the 2002 Dow low will be closely tested, and that the test will fail in that the Dow will break through the 2002 low of 7,286.”

Regarding the shorter-term outlook, Michael Panzer (Financial Armageddon) commented: “It’s been said that markets do whatever is necessary to hurt the most people. That is why prices sometimes shoot higher when news flow, investor sentiment and speculative positions are skewed to the negative, and why rampant euphoria is occasionally the set-up for a violent correction. With that in mind, I still believe the path of least resistance for the equity market over the next month or two is up, in large part because bad news and increasing volatility have so many people worrying and thinking – and betting – otherwise.”

A further positive for the bulls is that, according to Jeffrey Hirsch (Stock Trader’s Almanac), the Dow has been up 12 out of the last 14 years during the week before Thanksgiving.

I summarized my current views in a post (“Is Stock Market Rally ‘Real’”) on Friday: “Stock markets are caught between the actions of central banks, governments and the IMF frantically fending off a total economic meltdown on the one hand, and a worsening economic and corporate picture on the other. This situation has a ‘no-man’s-land’ feel to it. By all means try to play a possible nascent rally, but be cognizant that, failing further technical and fundamental evidence, you are trading against the primary trend. Caution is still warranted!” (Also, read my post of Wednesday: “Stock Markets: Which Way José”.)

I will be donning my winter woollies and visiting New York City from December 3 to 7, 2008. There are still a few gaps on my itinerary for those wishing to meet me to discuss global financial markets, financial blogging or, for that matter, any money-making ideas. If you happen to be in the Big Apple at the same time, let’s get together and share a cup of coffee (or glass of wine).

Before highlighting some thought-provoking news items and quotes from market commentators, let’s briefly review the financial markets’ movements on the basis of economic statistics and a performance round-up.

Economic reports
“Global business confidence continues to evaporate, as sentiment fell again during the first week of November to another new record low,” said the latest Survey of Business Confidence of the World conducted by Moody’s Economy.com. “Sentiment is extraordinarily negative everywhere, including heretofore stalwart Asia. The global financial panic which hit in early September and has yet to abate has been a body blow to global business confidence.” The global economy is now in recession according to the Survey.

Economic reports released in the US during the past week confirmed the severity of the economic recession and included the following:

• Initial claims for unemployment insurance increased by 32,000 to 516,000 for the week ended November 8. This was well above expectations and could be an early indication that labor market slack is beginning to grow more quickly.

• Falling for a fourth consecutive month, total retail sales plunged by 2.8% in October, somewhat more than expected due to tumbling gas station sales and widespread weakness elsewhere. The October drop is the largest since record keeping for the current series began in 1992.

Weak retail sales set a poor foundation for the PCE component of the fourth quarter GDP report. Asha Bangalore (Northern Trust) commented as follows: “It is important to note that the boom in consumer spending has come to a screeching halt after an extended period of spending that began in the fourth quarter of 1991 and ended with the 3.1% annualized decline in real consumer spending in the third quarter (see chart below).

“The drop in net worth of households resulting from declines in prices of homes and equity, the historically high debt levels of households and the debt service burden associated with the debt, the rising trend of the jobless rate, additional likely layoffs, and a serious lack of savings are factors that will hold back consumer spending.”

Elsewhere in the world, economic reports showed an acceleration in the weakening of activity.

Notably, the 15-nation Eurozone entered its first recession since the launch of the single currency in 1999. The region’s third-quarter GDP shrank by 0.2% compared to the previous quarter, following a second quarter that also saw a 0.2% decline.

Europe’s largest economy, Germany, fell into a recession after government data showed that the economy contracted by 0.5% in the third quarter. This is the second consecutive quarter that the economy has shrunk after a 0.4% contraction in the second quarter.

GDP growth in the UK declined by 0.5% during the third quarter – the first official evidence that the economy is heading for recession and the first decline since 1992. The Bank of England’s GDP projection for 2009 was slashed, showing a low point of close to -2.0% year on year from the previous forecast of +0.5%.

Further afield, Hong Kong became the second Asian economy, after Singapore, to officially tip into recession. Economic figures also showed worse-than-expected declines in output growth in China and Japan.

Week’s economic reports
Click here for the week’s economy in pictures, courtesy of Jake of EconomPic Data.

Source: Yahoo Finance, November 14, 2008.

In addition to the release of the minutes of the FOMC’s October meeting on Wednesday, November 19, next week’s US economic highlights, courtesy of Northern Trust, include the following:

Other reports include the NAHB Survey (November 18) and the Philadelphia Fed Survey (November 20).

Click here for a summary of Wachovia’s weekly economic and financial commentary.

Markets
The performance chart obtained from the Wall Street Journal Online shows how different global markets performed during the past week.

Source: Wall Street Journal Online, November 14, 2008.

Equities
Stock markets experienced another wild week on the back of large swings in sentiment as investors focused on a more severe economic downturn and worsening earnings outlook. Developed and emerging markets alike closed a second straight week with significant losses, with the MSCI World Index down by 6.4% and the MSCI Emerging Markets Index losing 6.1%.

Among developed markets, the Nikkei 225 Average (-1.4%) fared the best, whereas some of the US markets such as the Russell 2000 Index (-9.7%) and the Nasdaq Composite Index (-7.9%), Australia (-7.0%) and Canada (-5.6%) were at the bottom end of the performance rankings.

As far as emerging markets are concerned, Russia bore the full brunt of the selling pressure with a decline of 15.3%, taking its losses since the peak of about six months ago to a massive 74.1%. On the other hand, the Philippines (+3.0%) and China (+13.7%) were two of the few markets to register gains.

The Shanghai Stock Exchange Composite Index has bounced by 16.4% off its low of November 4 on the back of the Chinese government announcing a $586 billion economic stimulus package. This makes for an interesting-looking chart with the Index challenging its 50-day moving average and roundophobia 2,000 level. Also, the Chinese trailing price-earnings multiple has fallen from 45.9 to 14.3 – cheap for a country still seen as a top growth situation over the medium term.

The US stock markets all declined over the week as shown by the major index movements: Dow Jones Industrial Index -5.0 (YTD -35.9%) and S&P 500 Index -6.2% (YTD -40.5%). The Dow closed 321 basis points (3.9%) above its October 27 low of 8,176 and the S&P 500 24 basis points (2.8%) above its low of 849.

Click here or on the thumbnail below for a (predominantly red) market map, obtained from Finviz.com, providing a quick overview of the performance of the various segments of the S&P 500 Index over the week.

The bar chart below, also from Finviz, shows the US sector performance for the past week, and specifically how defensive sectors such as utilities and healthcare outperformed on a relative basis.

A reason for Wall Street’s extreme volatility is the great uncertainty regarding the outlook for US companies’ earnings. During the past week, Best Buy (BBY), the leading consumer electronics retailer, and Intel (INTC), the world’s largest semiconductor company, were key contributors to analysts’ concerns as both companies reduced their forecasts sharply.

Putting the stock market outlook in perspective, Jim Rogers was quoted by Bloomberg as saying: “Stocks in the West are still expensive on any historical valuation method, while bonds are going to be a terrible place to be for the next 10, 20 years”. Equities in the West will be “in a trading range for years to come”, he said.

Fixed-interest instruments
Yields on government bonds, especially shorter maturities, declined during the past week as a result of escalating economic woes prompting safe-haven buying.

The two-year US Treasury Note yield declined by 10 basis points to 1.24%, the UK two-year Gilt yield dropped by 39 basis points to 1.86% and the German two-year Schatz yield fell by 18 basis points to 2.23%. However, emerging-market bonds, in general, lost ground as further deleveraging took its toll on risky assets.

But not everybody was enamored with investing in bonds. Bill King (The King Report) posed the question: “Who will buy all the bonds that will be issued throughout the known universe in coming days?”

US mortgage rates edged higher, with the 30-year fixed rate rising by 4 basis points to 6.18% and the 5-year ARM by 6 basis points to 5.98%.

The cost of buying credit insurance for US and European companies increased as shown by the wider spreads for both the CDX (North American, investment grade) Index (up from 188 to 203) and the Markit iTraxx Europe Crossover Index (up from 762 to 813).

The three-month dollar Libor rate edged up on Thursday and Friday, limiting the week’s decline to 5 basis points from 2.29% to 2.24% – 124 basis points (compared to 43 basis points at the start of 2008) above the Fed’s target rate of 1.0%. The TED spread (i.e. three-month dollar Libor less three-month Treasury Bills) also perked up, indicating that credit strains are not quite back to normal yet.

Currencies
The week’s feature among currencies was the dramatic collapse of the British pound as the market factored in further aggressive easing of UK monetary policy and dumped the currency. Sterling dropped to a 13-year low against a basket of currencies and to its lowest level ($1.47) since 2002 against the US dollar.

Over the week the US dollar gained against the euro (+0.9%), the British pound (+5.8%), the Swiss franc (+1.4%), the Canadian dollar (+3.9%), the Australian dollar (+3.7%) and the New Zealand dollar (+3.9%). However, the greenback lost ground against the Japanese yen (-1.2%) as investors liquidated assets previously funded with low-yielding currencies such as the yen.

Emerging-market currencies had a torrid time as investors shunted risky assets. Examples of losses against the US dollar include: the Brazilian real ( 6.2%), the Turkish lira (-4.8%), the South Korean won (-5.3%), the South African rand (-3.2%) and the Russian ruble (-1.2%). The ruble lost 15.4% against the US dollar over the past four months as the downturn in commodity prices negatively impacted the Russian economy.

Commodities
The Reuters/Jeffries CRB Index (-3.6%) witnessed a further decline on the back of an ailing economy and a slump in global demand for commodities.

Gold (+1.1%) bucked the trend and edged higher as some commentators punted the yellow metal as being poised for a rally.

On the other hand, West Texas Intermediate crude declined by a further 5.6% to levels last seen in the first quarter of last year. This has prompted OPEC to call an emergency “consultation” meeting on November 29 to consider a further production cut.

The graph below shows the movements for various commodities since the peak of July 2. Interestingly, the Baltic Dry Index, which is closely correlated with economic growth and demand for commodities, declined by 91.0% over the same period.

Now for a few news items and some words and charts from the investment wise that will hopefully assist in optimally managing our wealth in these troubled times. Also remember what John Kenneth Galbraith said: “The conventional view serves to protect us from the painful job of thinking.”

That’s the way it looks from Cape Town.

Source: McClatchy

Financial Times: Obama set to push “big bang” reform package
“US President-elect Barack Obama intends to push a comprehensive programme of social and economic reform beyond an immediate emergency stimulus package, Rahm Emanuel, the next White House chief of staff, indicated on Sunday.

“Mr Emanuel brushed aside concerns that an Obama administration would risk taking on too much when it takes office in January. He said Mr Obama saw the financial meltdown as an historic opportunity to deliver the large-scale investments that Democrats had promised for years.

“Tackling the meltdown would not entail delays in plans for far-reaching energy, healthcare and education reforms when all three were also in crisis, he said. ‘These are crises you can no longer afford to postpone.’

“Mr Emanuel, Mr Obama’s first appointment after his emphatic victory over John McCain last week, added that Mr Obama would push hard during the 11-week transition before he is inaugurated for early assistance to the collapsing US car industry, which he described as ‘an essential part of our economy’.

“His comments increased pressure on George W. Bush to approve a widely-touted $25 billion emergency package for Detroit – possibly as part of a second emergency stimulus package to stave off further decline in the rapidly deteriorating US economy.

“Sunday’s comments also reinforce the impression that Mr Obama’s transition economic advisory board – which includes leading lights of the Clinton era, such as Lawrence Summers and Robert Rubin – is tilting heavily towards a ‘big bang’ approach that would combine a short-term stimulus with large public investments to raise the longer-term US growth rate.”

Source: Edward Luce, Financial Times, November 9, 2008.

Bloomberg: Paulson shifts focus of rescue to consumer lending

Click here for the full article.

Source: Simon Kennedy, Bloomberg, November 12, 2008.

(more…)

View original at: Investment Postcards from Cape Town

(GM) Words from the (investment) wise for the week that was (November 10 – 16, 2008)

Company Description

Emergency Medical Services Corp. is a leading provider of emergency medical services. The company provides transportation services directly and through outsource staffing. EMSC operates nationwide in over 2,000 areas and is headquartered in Greenwood Village, Colorado.

Earnings Surge Above Estimates

EMSC reported third-quarter results on Oct 31 that included net revenue of $679 million, a 28% year-over-year increase.

Earnings per share were 66 cents, 94% higher than the third quarter of 2007. Net income was 47% higher than the consensus estimate, making it the third consecutive earnings surprise.

The company also raised full-year guidance again and now expect EPS to be between $1.90 and $2.00, up from between $1.70 and $1.75.

Analyts Agree

The consensus estimates have been rising and is now $1.89, but that could change as more analysts update after the announcement. Earnings per share last year were $1.42, meanings that Wall Street is forecasting 33% growth for 2008.

Acquisition Completed

On Oct 20 EMSC announced the completed acquisition of Templeton Readings, LLC. Templeton provides teleradiology services for radiologists in 31 stats. EMSC is forecasting $20 million in additional net revenue per year from the deal.

The Chart

Shares of EMS are surging after the third-quarter announcement. Take a look at the chart below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(EMS) Emergency Medical Services - Net income was 47% higher than the consensus estimate, making it the third consecutive earnings surprise

Company Description

Raytheon Company is the one of the largest aerospace and defense companies in the U.S., with a well-diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.

Raytheon offers investors strong order bookings and order backlog, double-digit organic growth, an improving balance sheet, growing cash flow, above industry average ROE, and one of the highest dividend yields in the industry.

Solid Quarterly Growth

The Zacks #1 Rank (“strong buy”) recently released third-quarter results. Earnings per share of $1.01 eclipsed the year-prior 86 cents and exceeded the consensus estimate by 5%. The company cited operational improvements and lower pension expense as contributors to the higher earnings. Net sales of $5.9 billion jumped 12% year-over-year.

Higher Estimates

Raytheon has seen analysts hike estimates as they forecast year-over-year earnings growth of 22% for 2008. 10 out of 13 covering analysts boosted full-year 2008 earnings estimates to $4.03 per share from last month’s $3.99. For the following year, 12 out of 13 analysts hiked expectations to $4.67 per share from $4.44.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(RTN) Raytheon Company - analysts hike estimates as they forecast year-over-year earnings growth of 22% for 2008

Company Description

AeroVironment, Inc. designs and produces unmanned aircraft systems and alternative energy systems. The company primarily serves the U.S. government but also sells to corporate customers. AeroVironment was founded in 1971 and has a marker cap of $638 million.

Second-Quarter Results

AeroEnvironment’s share price has continued to advance over the last 12 weeks, no doubt helped by the company’s solid second-quarter results, reported on Sep 9.

Revenue was up 9% from last year to $53.6 million. Net income came in at $4.8 million, up 25% from last year’s $3.8 million. This produced earnings of 22 cents per share, 4 cents ahead of analyst estimates.

The company noted that its revenue growth was fueled by its unmanned aircraft systems division, with sales increasing by $4.2 million from last year.

Consistent Results

It was the fourth time in four quarters that the company has surprised and beat analyst estimates, having done so by an average of 3 cents, or 12.5%.

Guidance and Estimates

AeroVironment also reaffirmed its revenue guidance for fiscal 2009, saying it expects growth to fall between 20% and 25%, with operating margins falling between 12% and 14%.

The analyst community is bullish on the company’s long-term prospects, with the next-year estimate pegged at $1.39 per share, a 19% earnings growth projection.

The Chart

Shares of AVAV have been rallying for most of 2008, advancing from just above $18 in March to a recent high at $38.50. A long-term trend line has been in play during this stock’s upward ascent and has continues to provide support. Take a look below.

Content Courtesy: Zacks Investment Research

#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(AVAV) AeroVironment, Inc - reaffirmed its revenue guidance for fiscal 2009

Company Description

Solera Holdings provides software and other services to the automobile insurance claims processing industry in over 50 countries. The company processes nearly $20 billion in claims for 55,000 customers each year.

Revenue Rose 15.1% in the First Quarter 2009

On Nov 5, Solera Holdings announced first-quarter 2009 earnings that beat Wall Street estimates by 24.24%, or 8 cents a share. Adjusted net income rose 67.5% to $28.2 million from $16.9 million in the year ago period. Earnings per share totaled 41 cents compared to analysts’ estimates of 33 cents.

Revenue jumped 15.1% to $143 million from $124.2 million in the first quarter of 2008. Accounting for foreign currency fluctuations, revenues rose about 9.2% year-over-year. Each of the company’s segments saw increases in revenues in the quarter.

Insuran