Big Lots, Inc. is growing operating profits and generating ample cash flow despite a difficult retailing environment. It's recently reported fourth quarter produced a nice earnings surprise. Over the past four quarters, it has posted an average surprise of 39.7%. All four covering analysts have lifted their numbers for this year over the past month.
Full Analysis
Big Lots, Inc. (BIG), through its subsidiaries, operates as a broadline closeout retailer in the United States. The company offers its products under four merchandising categories: consumables, home, seasonal and toys, and other.
The consumables category includes food, health and beauty, plastics, paper, and pet departments. The home category includes domestics and home decor departments. Seasonal and toys category includes toys, lawn and garden, trim-a-tree, and various holiday-oriented departments. The other category primarily includes electronics, apparel, home maintenance, small appliances, and tools.
The shares rose a few weeks ago as an analyst said the closeout retailer is poised for growth and initiated coverage with a "Buy" rating. Soleil Securities Group analyst Jeffery Stein said in a note to investors that Big Lots, which specializes in buying closeout items from other retailers and selling them at a discount, has streamlined its business model to grow earnings even in a weak consumer spending environment.
In early March, the company reported fourth quarter net income of $92.0 million, or $1.04 per diluted share, for the 13 week fourth quarter of fiscal 2007. This compares to net income of $104.3 million, or $0.94 per diluted share for the 14 week fourth quarter of fiscal 2006. For the 52 week fiscal 2007 ended February 2, 2008, net income was $158.5 million, or $1.55 per diluted share, compared to net income of $124.0 million, or $1.11 per diluted share, for the 53 week fiscal 2006. Analysts expected $0.83 per share.
BIG estimated fiscal 2008 income from continuing operations will be in the range of $1.70 to $1.80 per diluted share compared to income from continuing operations (on a non-GAAP basis) of $1.41 per diluted share for fiscal 2007. This guidance for EPS growth in the range of 21% to 28% compared to last year is based on an expected increase in comparable store sales of approximately 1% to 2% and continued expense leverage.
Commenting on fiscal year 2007 results, Steve Fishman, Chairman and Chief Executive Officer stated, "Our continued focus on our WIN strategy enabled us to drive record EPS performance at Big Lots in 2007. We expanded our operating profit rate, turned our inventory faster, and generated nearly $250 million of cash flow in what most people have described as a very difficult economic environment."
The company has an awesome history of beating estimates. Over the past four quarters, it has posted an average surprise of 39.7%. All four covering analysts have lifted their numbers for this year over the past month. During that time, current year earnings estimates have risen 14 cents to $1.74 per share. Analysts expect a further increase of 12.5% in earnings growth next year.
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Wednesday, April 02, 2008
BIG - Big Lots - All four covering analysts have lifted their numbers for this year over the past month
LLL - L-3 Communications Holdings - return on equity of (ROE) of 13% tops the industry’s average of 7%
L-3 Communications Holdings, Inc. (LLL), which is scheduled to release its first-quarter results on April 24, is a great pick for investors who are in search of both growth and income. On the income side, it offers a quarterly dividend that was increased by 20% in early February. The new dividend of 30 cents per share translates into a dividend yield of 1%, which is better than the industry average. Growth is reflected in the company’s share price, which is very close to a 52-week high, and in its fundamentals as evidenced by a strong fourth quarter.
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 March. The company was awarded a one-year, $36 million contract to provide aircraft and manufacturing services to the U.S. Army under a logistics support program at the Corpus Christi Army Depot.
"We're pleased to extend our successful relationship with the U.S. Army and continue to provide the superb services for which L-3 Vertex Aerospace is known," said Ed Boyington, president of L-3 Vertex Aerospace. "We're prepared to provide our expertise and support to the Army as it continues its depot maintenance activities, while simultaneously working to repair and refurbish helicopters that have been engaged in the Global War on Terror."
L-3 Communications, which is scheduled to release its first-quarter results on Thursday, April 24, 2008, is a great pick for investors who are in search of both growth and income.
On the income side, the company offers a quarterly dividend that was increased by 20% in early February. The new dividend of 30 cents per share translates into a dividend yield of 1%, which is better than the industry average.
Growth is evident in the company’s share price, which is very close to a 52-week high, and in its fundamentals. 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 been increasing full-year 2008 earnings projections. Three out of 12 covering analysts upped the 2008 estimates to $6.59 per share from last month’s $6.57. The most accurate forecast is a more bullish $6.73.
The company’s return on equity of (ROE) of 13% tops the industry’s average of 7%. Its net profit margin of 5.4% is also above the industry’s average of 4.3%.
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CVS - CVS Caremark Corp - company also provided bullish guidance moving forward
CVS Caremark Corporation (CVS) has been delivering solid gains to its shareholders in the very challenging environment of 2008. The company's stock price has been driven higher by very solid fourth quarter results, reported on don Jan 31, that included significant gains in both revenue and income. CVS has officially closed its acquisition of Caremark and is now leveraging that relationship to create synergies and cost-saving strategies.
Full Analysis
CVS Caremark Corporation operates retail pharmacy and pharmacy benefit management businesses in the United States. The company, through its stores, offers prescription drugs, generic drugs and general merchandise. CVS was founded in 1892 and is headquartered in Woonsocket, Rhode Island.
CVS Caremark is operating in the consumer staples sector, and this is a slice of the market that has typically been less susceptible to downward pressure when the overall market has displayed signs of weakness. But in spite of this attractive component, CVS is providing very solid returns to its shareholders.
Shares of CVS have delivered solid returns this year, driven by the company's very solid fourth quarter results, reported on Jan 31. Revenue for the quarter jumped 80% to $21.9 billion, up from $12.1 billion in the same period last year. Net income increased 95.3% to $815 million, up from $417.2 million in the same period last year. This produced diluted earnings of 58 cents per share, ahead of the 55 cents that the analyst community was expecting.
Full-year revenue increased 74.2% to a record $76.3 billion, compared to $43.8 billion in 2006.
Same store sales in the CVS/pharmacy division increased 5.3% for the year. CVS opened 139 new retail pharmacy stores for the year.
The company also provided bullish guidance moving forward, saying that it expects profit to grow between 27% and 31%. Revenue is projected to rise 13% and 16% across the company, a byproduct of synergies and cost savings created from the 2007 merger between CVS and Caremark.
Shares of CVS got off to a tough start this year, opening a few dollars short of where they closed for the year in 2007. But after the fourth quarter results hit the street, the company's share price has rebounded very nicely and is now trading in positive territory for the year.
The company's share price is currently pressuring a very key level just above $41 which has contained prices for the last week. Beyond this level is the 52-week and all-time high just above 42.50. Looks for the trend to stay strong and drive prices beyond these two previously mentioned levels.
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OXY - Occidental Petroleum - After the bullish report for the fourth quarter and the full-year, analysts responded by raising estimates
Occidental Petroleum is expanding exploration in the Middle East by entering into partnerships with Middle Eastern oil companies and re-establishing its historic relationship with Libya. The company has surprised on estimates the last four quarters on average of 8.53%. OXY has a 2008 P/E of 10.88.
Full Analysis
Occidental Petroleum Corporation (OXY) is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America. OXY is the fourth largest U.S. oil and gas company, based on equity market capitalization.
Occidental, a Zacks #1 Rank (Strong Buy), is the largest oil producer in Texas and the largest natural gas producer in California. The company has additional operations in Kansas, Oklahoma and New Mexico.
OXY is also a big player in the Middle East and North Africa. It has assets in Libya, Oman, Qatar, Yemen and is a partner in the transborder Dolphin Project supplying natural gas from Qatar to markets in the United Arab Emirates.
The company also has operations in Latin America, specifically in Columbia and Argentina.
In addition to crude production, Occidental has a large chemical division, OxyChem, which manufactures vinyls and other specialty chemicals in addition to chlorine and caustic soda.
On Mar 10, Occidental and Abu Dhabi's state oil company, International Petroleum Investment Co., announced that they agreed to jointly develop oil and natural gas projects in various Middle East and North Africa locations. The two companies have already developed a natural-gas project in Qatar and are engaged in an exploration venture in Libya.
"This agreement is a natural extension of our existing strategic partnership with Abu Dhabi which currently includes the highly successful Dolphin project, development of the giant Mukhaizna Field in Oman, and an exploration joint venture in Libya," said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental Petroleum Corporation.
The company has been buying back shares. On Feb 14, the Board of Directors increased the number of shares authorized for repurchase by 20 million. Since October 2005, the company has repurchased approximately 52.4 million shares.
With near record crude prices and high natural gas prices, OXY has been running on all cylinders. On Jan 29, the company reported a record 2007 with net income of $5.4 billion, or $6.44 per share, compared to $4.191 billion, or $4.87 per share, in 2006.
The company surprised on estimates by seven cents, or 4.19%. Net income for the fourth quarter of 2007 was $1.452 billion, or $1.74 per share, compared with $930 million, or $1.09 per share, for the fourth quarter of 2006. Analysts expected $1.67 per share.
After the bullish report for the fourth quarter and the full-year, analysts responded by raising estimates.
For the first quarter, three out of 12 covering analysts raised consenus estimates in the last thirty days, with one raising in the last week, by eight cents to $1.77 from $1.69 per share. For 2008, consenus estimates have risen in the last 30 days by 30 cents to $6.83 from $6.53 per share. Ninety days ago consensus estimates were at $6.09 per share.
OXY has a 2008 P/E of 10.88, under the industry average of 11.4. Its price-to-book is 2.66. The company has an outstanding five year average return on equity of 24.87%. OXY reports first quarter earnings on Apr 24.
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