PDL BioPharma has been selling off assets with a vengeance, leading many to believe it is only a matter of time before the whole company gets bought. It would be a good fit to a bigger company. It has an impressive ROE of 14%, head and shoulders above the industry average which is in negative territory. It's price/sales ratio of about 4x is also reasonable.
Full Analysis
PDL BioPharma, Inc. (PDLI), a biopharmaceutical company, engages in the discovery, development, and commercialization of therapies for severe or life-threatening illnesses. The company's products comprise Cardene for short-term treatment of hypertension; Retavase for use in the management of heart attacks in adults; and IV Busulfex, an intravenous formulation of busulfan, a chemotherapeutic agent for use in combination with cyclophosphamide as a conditioning regimen prior to bone marrow transplantation for chronic myelogenous leukemia.
It offers these products through its sales force to the emergency cardiac, neurological, and intensive care units in hospitals in the United States and Canada, as well as sells its IV Busulfex product through distributors in Europe and Asia.
Last month, the company said that it will sell the hypertension drug Cardene, the heart attack drug Retavase and drug candidate ularitide to EKR Therapeutics Inc. for $85 million upfront. The company could also see up to an additional $85 million in development and sales milestone payments for new Cardene formulations.
The sale is a continuation of a previously announced restructuring plan. The company already sold rights to its chemotherapy drug IV Busulfex to Japan's Otsuka Pharmaceutical Co. for $200 million in cash. This could make PDLI a good buyout candidate.
Also, last week the company said it will sell a Brooklyn Park, Minn., antibody manufacturing facility to Denmark-based Genmab A/S for $240 million. Under the deal, Genmab also will acquire land, equipment and access to leased space that houses a development lab. PDL said the facility includes two 1,000 liter and two 10,000 liter bioreactors that can make multiple antibody products simultaneously.
The stock looks attractively valued, especially when compared to its peers. It has an impressive ROE of 14%, head and shoulders above the industry average which is in negative territory. It's price/sales ratio of about 4x is also reasonable. The company posted a 220% surprise in its most recent quarter. It would be a nice addition to a bigger drug company's stable of products.
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Wednesday, March 05, 2008
PDLI - PDL BioPharma - The company posted a 220% surprise in its most recent quarter
ANSS - ANSYS - Three of the four covering analysts have increased their forecasts over the past month
ANSYS, Inc. is enjoying strong organic growth trends, which has enabled it to experience several excellent quarters in a row. Thus far, it seems the tough economic conditions haven't slowed the company. Beating the Street has become old hat for the company as it has posted an average surprise of 19.9% over the past four quarters. This year's earnings estimates have risen six cents to $1.36 over the past week.
Full Analysis
ANSYS, Inc. (ANSS) and its subsidiaries engage in the development and marketing of engineering simulation software and services used by engineers and designers in aerospace, automotive, manufacturing, electronics, biomedical, and defense industries in the United States and internationally.
Its products primarily include ANSYS Multiphysics Solutions, which provide coupled physics technology, combining structural, thermal, computational fluid dynamics, acoustic, and electromagnetic simulation capabilities in a single software product.
Two weeks ago, ANSS said that its fourth-quarter profit more than doubled, boosted by a surge in software license revenue. The company reported income of $29.3 million, or 36 cents per share, compared with $12.3 million, or 15 cents per share, in the year-ago period. Revenue rose 31% to $111.2 million from $85.2 million in the fourth quarter of 2006. Analysts, on average, estimated earnings of 30 cents per share on sales of $101.6 million.
ANSYS also said that it expects first-quarter and full-year results above Wall Street's estimates. The company expects earnings between 33 cents and 34 cents per share. The estimate was for 32 cents.
``We are pleased to report the strongest quarterly and annual performance in our Company's history, including our first quarter of over $100 million in revenue,'' commented ANSYS President & CEO Jim Cashman. ``With solid contributions from all aspects of our business, we exceeded our growth and profitability plans for both the fourth quarter and for the year."
Beating the Street has become old hat for the company as it has posted an average surprise of 19.9% over the past four quarters. This year's earnings estimates have risen six cents to $1.36 over the past week. Three of the four covering analysts have increased their forecasts over the past month. The stock's ROE is 17%, above the industry average of 11%.
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CA - CA, Inc - ROE of 17% vs. industry average of 10%
CA, Inc. (CA) is a Zacks #1 Rank (Strong Buy) company that offers both growth and income. The company’s ROE of 17% exceeds the industry average of 10%. CA recently declared a regular, quarterly cash dividend of four cents per share. The company’s dividend yield of 0.7% is a competitive one within its industry as the technology/software space is not one that normally offers dividends. In late January, CA reported fiscal third-quarter non-GAAP earnings of 36 cents per share, eclipsing last year’s 24 cents and surpassing the consensus estimate by a healthy 44%.
Full Analysis
CA, Inc. is one of the world's largest information technology (IT) management software companies. The company’s software and expertise unify and simplify the management of enterprise-wide IT. With CA’s Enterprise IT Management (EITM™) vision helps organizations manage systems, networks, security, storage, applications and databases securely and dynamically. Customers can benefit by building on their IT investments, rather than replacing them, and do it at their own pace. Founded in 1976, CA is headquartered in Islandia, N.Y., and serves customers in more than 140 countries.
The company recently declared a regular, quarterly cash dividend of four cents per share, which will payable on March 28, 2008 to stockholders of record at the close of business on March 14, 2008. CA’s dividend yield of 0.7% is a competitive one within its industry as the technology/software space is not one that normally offers dividends.
In addition to offering income when many of its competitors do not, the Zacks #1 Rank (Strong Buy) company is solid growth pick. One sign of the company’s strong growth is its return on equity (ROE) of 17%, which is better that the industry average of 10%. The company also sports a net profit margin of 9.7%, exceeding the industry’s average of 7%.
In late January, CA reported fiscal third-quarter non-GAAP earnings of 36 cents per share, eclipsing last year’s 24 cents and surpassing the consensus estimate by a healthy 44%. Revenue for the third quarter totaled $1.100 billion, versus $1.002 billion in the year-ago quarter.
“CA has recorded another solid quarter – our fifth in a row,” said John Swainson, CA’s president and chief executive officer. “Most importantly, we remain on course to finish the year with revenue and earnings per share exceeding the updated annual outlook provided at our financial analyst day last December.”
This Growth & Income company increased its revenue guidance for 2008 to a range of a $4.25 billion to $4.28 billion from its previous outlook of $4.15 billion to $4.2 billion. CA also upped its fiscal 2008 non-GAAP earnings projection to a range of $1.22 to $1.26 per share from a prior guidance of $1.06 to $1.10 per share.
Wall Street boosted forecasts as well. Earnings estimates of $1.22 per share were increased from $1.09 over the past 60 trading days for the year ending March 2008. The most accurate earnings expectation is a more bullish $1.26.
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LLL - L-3 Communications Holdings - return on equity of (ROE) of 13% tops the industry’s average of 9%
L-3 Communications Holdings, Inc. (LLL) is a terrific Growth and Income play. Thanks to its strong cash flow, the company upped its dividend by 20% while continuing to invest in growth through internal initiatives and acquisitions. L-3 reported fourth-quarter earnings of $1.63 per share in late January, outpacing the previous year’s $1.37 and exceeding the consensus estimate by three cents. Consolidated net sales grew by 12.4% from the year-ago quarter. Analysts are upbeat on L-3 and have increased full-year 2008 earnings projections over the past 60 trading days.
Full Analysis
L-3 Communications is a prime contractor in aircraft modernization and maintenance, C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems and government services. L-3 is also a leading provider of high technology products, subsystems and systems. The company reported 2007 sales of $14 billion.
The company’s most recent contract was announced in late February. L-3 stated that it was selected by the United Kingdom Ministry of Defence (MoD) as the prime contractor to supply an Integrated Broadcast Service (IBS), providing real-time intelligence capability to the MoD and its operational forces.
“L-3 is providing a superior solution to the MoD in an area that is key to actionable intelligence and the defense of vital interests,” said Tony Smeraglinolo, president of Intelligence Solutions, the L-3 division leading the program. “Our L-3 team looks forward to this exciting opportunity to partner with leading U.K. companies as we work to migrate critical, discriminating technology into a new market space.”
In early February, the company announced an increase in its regular quarterly cash dividend by 20% from 25 cents per share to 30 cents. The dividend is payable on March 17, 2008 to shareholders of record as of the close of business on February 19, 2008. L-3 Communications sports a dividend yield of 1%, which is better than the industry average.
“The strength of L-3’s cash flow gives us the flexibility to pay a higher dividend while continuing to invest in the growth of our company through internal initiatives and acquisitions,” said Michael T. Strianese, president and chief executive officer of L-3. “This increase in our quarterly dividend reiterates our board’s confidence in L-3’s financial performance and our commitment to increasing value for our shareholders through both dividends and share repurchases.”
The company posted fourth-quarter earnings of $1.63 per share in late January, outpacing the previous year’s $1.37 and exceeding the consensus estimate by three cents. Consolidated net sales grew by 12.4% from the year-ago quarter.
L-3 boasts an outstanding record of exceeding analyst earnings expectations with only one miss, dating back May 2003. Analysts are also upbeat on the company’s future prospects and have increased full-year 2008 earnings projections over the past 60 trading days.
“L-3 finished a successful year with a very strong fourth quarter,” said Michael T. Strianese, L-3’s president and chief executive officer. “Sales growth in the fourth quarter was particularly strong and we continued to generate strong gains in operating income, margins, and EPS. We also had excellent cash flow generation, and continued to deploy the company’s free cash flow to increase shareholder value, repurchasing $211 million of our common stock during the fourth quarter.”
The company’s return on equity of (ROE) of 13% tops the industry’s average of 9%. Its net profit margin of 5.4% is also above the industry’s average of 4.9%.
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CMP - Compass Minerals Intl - Sales in its fertilizer division were robust, with sulfate and potash revenue up 35%
Compass Minerals International, Inc. (CMP) reported an awesome quarter on Feb 11 in which revenue more than doubled from the previous year and net income almost posting the same increase. Sales in its fertilizer division were robust, with sulfate and potash revenue up 35%. The company was bullish on its 2008 forecast, saying that it expects strong demand and lowered costs of capital to drive income.
Full Analysis
Compass Minerals International, Inc., through its subsidiaries, produces and markets inorganic mineral products in North America and the United Kingdom. It operates in two segments: Salt and Specialty Fertilizer. The company was founded in 1993 and is headquartered in Overland Park, Kansas.
Compass Mineral shares have been on quite a run lately, accelerating higher from the excellent fourth quarter results that the company reported on Feb 11. Revenue was up 54% to $326.1 million. Net income grew handsomely as well, jumping almost 50% to $50.4 million, producing earnings of 80 cents per share.
The company said that harsh winter weather in North America helped drive its sales. The company said that the season's inclimate weather increased sales by approximately $25 million to $30 million. Sales at the company's fertilizer division also rose, with sulfate and potash sales up 35%.
The company provided a very bullish outlook for 2008, with CEO Angelo Brisimitzakis saying that "the outlook for sulfate of potash is strong as global demand for all crop nutrients remains robust. Assuming normal weather, our salt segment should benefit from stronger pricing, new products and increased rock salt capacity. In addition, we expect our lower cost of capital and improved tax efficiency to help us deliver even better results."
Following the strong quarter, the company announced that it was upping its dividend by 1.5 cents, or 4.7% to 33,5 cents per share. The dividend is payable on March 14 to shareholders on record as of Feb 29.
As previously mentioned CMP shares have been performing exceptionally well in 2008, opening the year at $41 and moving to their current location of over $60, representing a gain of close to 50%.
But recently, shares have gotten into one heck of a bullish mood, advancing very aggressively after CMP reported an awesome quarter on Feb 11. The key to the chart is just above $60, the all-time high, 52-week high and short-term high. With the aggressive upward trend in full force, look for shares to continue to apply pressure to this area and push higher.
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MUR - Murphy Oil - Look for the trend to stay strong and continue to apply upward pressure
Murphy Oil Corporation (MUR) has been cashing in on the big boom in the energy markets. This oil exploration company reported blistering fourth quarter results on Jan 30 that included a 135% jump in income to $206.1 million. The company's average selling price of a barrel of oil grew from $46.24 last year to $76.11. The CEO offered positive guidance moving forward, saying that he expects continued strong demand and pricing power to drive the company first quarter results to $1.80-$2.00 per share, which would mark a very nice improvement from current earnings.
Full Analysis
Murphy Oil Corporation engages in the exploration, production, refining, and marketing of oil and gas worldwide. It operates in two segments, Exploration and Production, and Refining and Marketing. The company was founded in 1950 and is based El Dorado, Arkansas.
Murphy Oil is yet another company operating in the energy sector that has experienced windfall profits in light of sky-rocketing crude and natural gas prices. This was evident when Murphy reported excellent fourth quarter results on Jan 30.
Revenue jumped 67% to $5.61 billion from $3.36 billion last year. Net income surged ahead to $206.1 million from $88.4 million last year, producing earnings of $1.07 per share, which would have easily outpaced analyst expectations if not for certain-onetime deductions.
One-time items, including $59.5 million in costs stemming from Murphy's acquisition of the Milford Haven refinery in Wales, reduced the bottom line by 21 cents a share.
This marks the third time in the last three quarters that Murphy has surprised and beaten estimates, having done so by an average of 24%, a very impressive distinction.
The company made some very nice improvements in its pumping capacities which enabled it to improve production and fuel its growth. On average, Murphy pumped 113, 341 barrels of crude-oil and natural gas liquids a day, up 36% from 83,105 barrels a day last year.
Murphy also noted that its natural gas sales jumped significantly, growing to 71 million cubic feet a day from 56 million last year.
Refining margins have become a source of concern for the company, and many others like it, as Murphy posted a $27.4 million loss in the quarter compared to a gain of $29.3 last year. "Crude oil prices have eased a bit in January and we have experienced very tight refining margins into the new year," Murphy President and Chief Executive Officer Claiborne Deming said in a statement.
The guidance provided by the company was very bullish, with the CEO Deming saying that for the first quarter of 2008, it expects to pump 125,000 barrels of oil a day. He continued to say that this should yield an estimated profit of $1.80 to $2.00 per share, depending on fluctuations in the underlying spot prices.
Shares of MUR have been locked into a very nice upward trend that begins from the low of Feb 7 and continues upward to support current prices. The key short-term level is just above $83, which has been tested couple of times but has yet to be breached. Beyond this level is the 52-week high, just above $87. Look for the trend to stay strong and continue to apply upward pressure.
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FDP - Fresh Del Monte Produce - company surprised on fourth-quarter estimates by 65.85%
Fresh Del Monte Produce is turning increasing worldwide demand for fresh fruit and vegetables into profits. The company surprised on fourth-quarter estimates by 65.85%. With a P/E of only 10.60, FDP is also an attractive value play in the agriculture sector.
Full Analysis
Fresh Del Monte Produce, Inc. (FDP) produces and transports fresh and fresh-cut fruit and vegetables as well as fruit juices, beverages, snacks and desserts around the world.
Del Monte is a full-service fruit company involved in all segments from planting, harvesting, designing the packaging and shipping the products to distribution facilities across the globe. The company owns 700 trucks and 23 vessels outright, and charters 18 other vessels to handle the worldwide demand.
The company has recently moved into the health-conscious category for both adults and children, especially in the dessert segment. Del Monte manufactures several new fruit bars including the Pineapple Lolly which is made with 87% real fruit juice.
For those watching their calories, the company recently rolled out the Strawberry Fruit Double which is a strawberry fruit ice with a soft strawberry center. It has only 63 calories, less than 2% fat and fruit content of 41%.
The new healthy initiatives, along with favorable exchange rates, have helped Del Monte's bottom line. On Feb 26, the company surprised on analyst's consensus estimates for the fourth-quarter by 65.85%.
FDP reported fourth-quarter earnings of $34.4 million, or 56 cents per share, compared with a loss of $58.8 million, or $1.02 per share, in the prior year. Net income was 68 cents per share, excluding special charges, compared with a loss of 3 cents per share for the year-ago period. Analysts' consensus estimates called for 41 cents per share.
The company reported that price increases, strong product sales, higher banana demand and favorable foreign exchange rates pushed revenue up 15% to $848.2 million from $737.6 million in 2006.
The company also was profitable for the year, reporting $179.8 million, or $3.06 per share, compared with a loss of $142.2 million or $2.46 per share in 2006.
Brokerage analysts responded to the earnings surprise by raising estimates for the first quarter and the full year. One out of four covering analysts raised first quarter estimates in the last week by an average of one cent to 97 cents from 96 cents.
The analysts were more aggressive on raising for the full year. Three out of four covering analysts raised full-year estimates on average of 16 cents to $3.13 from $2.97 per share. Despite struggling in 2006, which Mohammad Abu-Ghazaleh, FDP's CEO, called "the most challenging year in a decade", FDP still sports a five-year average return on equity of 13.05%.
The company has beaten on estimates the last four quarters on average of 1,368%. That number is skewed higher by its third-quarter 2007 surprise of 51 cents per share compared to estimates of a loss of one cent. However, in the first and second-quarters of 2007, the company beat by 110% and 100%, respectively.
FDP is still cheap. The company has a P/E of only 10.60, well-below the industry average of 20.6. Its price-to-book is 1.52.
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FOSL - Fossil - In the last week, two out of three covering analysts raised estimates
Fossil is bucking the trend in the struggling retail sector by making a niche for itself in fashionable watches in the United States and Europe. The company surprised on estimates for the fourth-quarter by 10.29% and guided higher on first quarter sales by 12% to 14%.
Full Analysis
Fossil, Inc. (FOSL) designs fashion accessories, including handbags, belts, jewelry, sunglasses and watches under its own brand, Fossil. It also produces watches through licensing agreements with Burberry, DKNY, Marc by Marc Jacobs and Michael Kors. Watches are its bread-and-butter product.
Fossil, a Zacks #1 Rank (Strong Buy), sells its lines through department stores and through approximately 240 company-owned stores in malls throughout 90 countries around the world.
The company has a strong retail presence in Europe, especially within its watch segment.
Despite calls that retail is dead, Fossil continues to operate on all cylinders.
On Feb 19, the company reported its fourth-quarter earnings and easily beat analysts' estimates by seven cents earning $53.1 million, or 75 cents per share, compared to estimates of 68 cents per share. That is compared with $35.1 million, or 51 cents in the year-ago period. Profit was up 51 percent compared to a year ago.
The company had record sales for the quarter, rising 18.5% to $463.1 million. The international division is on fire. For the first time, international wholesale revenue made up 50.2% of net sales in the quarter.
The company said net sales growth in Europe was primarily driven by sales volume growth in licensed brand watches and Fossil watches and jewelry, while other international net sales growth was principally the result of sales volume increases in watches.
Domestic sales were strong as well. Net domestic sales increased 9.1% as a result of an 11.9% increase in watch sales and a 4.7% increase in sales of other accessories.
Fossil gave guidance for the first quarter 2008 of 39 cents per share and sees first-quarter sales increasing between 12% and 14%.
For the full-year 2008, Fossil forecast earnings in a range of $2.12 to $2.18 per share with net sales growth in the low to mid-teens. The guidance reflects the current rate of the U.S. dollar as compared primarily to the Euro and the Pound.
FOSL also continues to buyback shares pursuant to the plan it announced in November 2007. As of Feb 19, the company had repurchased 1.1 million out of the two million shares announced in the buyback plan. The repurchases should be completed by mid-April 2008.
After the company issued full-year guidance, brokerage analysts raised estimates to be in-line with the range. In the last week, two out of three covering analysts raised by seven cents to an average of $2.15 per share from $2.08, or right in the middle of the company's guidance.
Fossil has attractive financials for the retail sector. Its 2008 P/E is 14.88, below the industry average of 19.1. The company's price-to-book is 2.88. Fossil has an outstanding five year average return on equity of 16.63%. Additionally, FOSL has beaten consensus estimates on average of 22.79% over the last four quarters.
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