Perfect World Co. is living up to its name in terms of the last two quarters' results. It has averaged an 85.5% surprise over that time. New game launches are driving revenue and earnings growth as is a growing Chinese economy. Two of the six covering analysts have lifted their numbers over the past month. The stock is very attractively valued at a PEG ratio of 0.7.
Full Analysis
Perfect World Co., Ltd. (PWRD) operates as an online game developer and operator in China. It primarily develops three-dimensional (3D) online games based on its proprietary Angelica 3D game engine and game development platform.
Its 3D massively multiplayer online role playing games (MMORPG) include Perfect World, an adventure and fantasy game with traditional Chinese settings; Legend of Martial Arts, which is based on a TV drama series with the same Chinese name and is an adventure story of Chinese swordsmen set in an ancient kingdom.
Strong 4th-Quarter Profits
In late-February, the company said that it swung to a fourth-quarter profit and beat analysts' estimates as online game operation revenue jumped, aided by the launch of some game expansion packs. For the quarter that ended Dec. 31, Perfect World earned RMB 146.2 million ($20.1 million), or RMB 2.48 (34 cents) per ADS. This compares with a loss of RMB 11.1 million, or RMB 0.43 per ADS, in the same quarter last year. The EPS of 34 cents beat estimates by 11 cents.
Perfect World's online game operation revenue rose to RMB 230.2 million ($31.6 million) from RMB 59.8 million, while the company's overseas licensing revenues grew to RMB 28.2 million ($3.9 million) from RMB 1 million. The company also said the number of active paying customers for games that follow its item-based revenue model rose to 1.6 million -- up 159.9% from the year-ago quarter.
Guiding Higher
PWRD said that its first-quarter revenue will beat analysts' projections due to anticipated growth from the launch of new games and revenue from current games. Revenues should come in around $39 million, versus views of $32 million. The company added that it intends to launch open "beta" testing for the new game "Hot Dance Party" by the end of the first quarter. Beta testing is an initial testing period that a game goes through before its official commercial release.
"2007 was a great year for us and our fourth quarter results came in well ahead of our expectations," commented Mr. Michael Chi, Chairman and Chief Executive Officer of Perfect World. "I believe our achievements were driven by our ability to successfully develop and operate new games while maintaining user interest in our portfolio of existing games. This demonstrates our commitment to deliver solid results and maximize shareholder value."
The company has posted an average surprise of 85.5% over the past two quarters. Current-year earnings estimates have increased 19 cents to $1.56 per share over the past 90 days. Two of the six covering analysts have lifted their numbers over the past month. The stock is very attractively valued at a PEG ratio of 0.7.
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Thursday, April 10, 2008
PWRD - Perfect World - very attractively valued at a PEG ratio of 0.7
CA - CA, Inc - ROE of 17% exceeds the industry average of 11%
CA, Inc. (CA) is a solid company that offers both growth and income. The company’s ROE of 17% exceeds the industry average of 11%. CA declared a regular, quarterly cash dividend of four cents per share in late February. 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 completed its fiscal fourth quarter and will soon release earnings results. Earlier in March, CA’s president and chief executive officer, John Swainson, had upbeat things to say about the way the fourth quarter was unfolding. According to Reuters, he said, "We are optimistic about our ability to close this quarter ... all of the big deals."
The company declared a regular, quarterly cash dividend of four cents per share in late February. The dividend was paid out on March 28, 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 software maker 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 11%.
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 Swainson. “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.
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SCHN - Schnitzer Steel Industries - analyst community is bullish on the company - a significant increase from the most recent quarter
Schnitzer Steel Industries, Inc. (SCHN) shares are flying high from the momentum of the company's second quarter. Revenue was up 24% and profit was up 29%. Moving forward, the company said that it expects sales volumes to remain strong and prices to increase up to 10%.
Full Analysis
Schnitzer Steel Industries, Inc. collects scrap metal and used cars in order to recycle raw materials and parts. The scrap metal is used to produce new steel products and some of the used car parts are re-sold to end consumers on a retail level. The company was founded in 1946 and is headquartered in Portland, Oregon.
Schnitzer reported very strong second quarter results on Apr 3, in which both revenue and profit were up sharply. Revenue was up more than 24% to $751.5 million. Profit increased 29% to $35.9 million, producing earnings of $1.25 per share, well ahead of analyst estimates, who were looking for $1.00.
Schnitzer said that revenue at the metals recycling business, which comprises 80% of the company's business, rose 23% to $597, driven by high demand, higher volume, and higher prices. Revenue at the company's auto parts business increased 29% to $77 million. Revenue at its steel manufacturing business rose 45% to $143 million.
Average net ferrous (which means metals that contain iron) selling prices were $326 per ton, up 38% from last year.
Schnitzer provided bullish guidance moving forward. The company expects third-quarter ferrous processing sales volumes in its metals recycling business to remain strong. Schnitzer also said it expects average selling prices to increase 10%.
The analyst community is bullish on the company as well, with the current-quarter consensus estimate projecting quarterly earnings of $1.68 per share. This would mark a significant increase from the most recent quarter in which earnings totaled $1.25.
The current-year estimate has been gained 69 cents in just the last seven days, as two covering analysts boosted their projections. The consensus estimate now stands at $5.33 per share.
After finding a short-term bottom on Mar 10, shares of Schitzer have been in a very steady up trend, moving from $57 to a high point of over $82. This enabled shares to eclipse the old 52-week and all-time high just above $77. Moving forward, if shares should slow down and take a breather, this should be an area of support. Beyond that, the trend is strong and this company has shown it knows how to capitalize on industry growth trends, which should translate nicely into share value appreciation. Take a look at the chart below.
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PERY - Perry Ellis - Consensus estimates are rising for the quarter and the year
Perry Ellis is defying conventional wisdom that retail is all doom and gloom. On Mar 17, the company reported a record full-year 2008 and forecast a strong 2009 in spite of the uncertain economy. Perry Ellis beat Wall Street estimates two out of four quarters in 2008. The company trades at a P/E of 11.30.
Full Analysis
Perry Ellis International, Inc. (PERY) is a designer, distributor and licensor of men's and women's apparel, accessories, and fragrances. The company owns or licenses 27 brands including Perry Ellis, Jantzen, Laundry by Shelli Segal, Grand Slam, Natural Issue, Pro Player, Tricots St. Raphael, Gotcha, and Girl Star.
Perry Ellis, a Zacks #1 Rank (Strong Buy), licenses its trademarks from third parties including Dockers for outerwear, Nike and JAG for swimwear, and PING and PGA TOUR for golf apparel.
The company's distribution channels include regional, national and international department stores, national and regional chain stores, mass merchants, green grass (i.e., golf related) through the United States, Puerto Rico and Canada. Its largest customers include Wal-Mart Stores, J.C. Penney, Mervyn's, Kohl's, and Sears Roebuck & Co.
The company is firing on all cylinders, bucking the gloomy retail trend. On Mar 17, the company reported record results for the full-year 2008 and raised estimates for 2009.
Full-year revenues increased 4.1% to $863.9 million compared to $829.8 million for 2007. PERY said the increase was driven by growth in the Perry Ellis Collection, Swim, Gold, Hispanic, Licensing and Retail businesses. Gross margin rose 0.52% to 33.8% from 33.2% in 2007.
For the fourth quarter, the company surprised on analysts' estimates by 3.17%, or 2 cents a share. PERY reported 65 cents per share compared to analysts' consensus estimates of 63 cents per share. Revenue was $212.3 million compared to $231.6 million for 2007, a 8.3%.
Revenue was impacted by a $20 million reduction in the bottoms platform due to a previously announced deceleration in replenishment programs as well as the exit from a large mass merchant private label program. On the positive side, these reductions positively impacted gross margins, which improved to 35.4%, up from 34.1% in the year ago period.
The record year was such a boost to the bottom line that it allowed Perry Ellis to completely pay-off its revolving credit facility as of Jan 31, 2008. This reduced its debt to total capital ratio to 39% from 49% in Jan 31, 2007.
Perry Ellis provided bullish full-year guidance for the year ending Jan 31, 2009 which is fiscal 2009. It anticipates revenue growth in the range of 5 - 7% to $910 - $925 million and earnings growth in the range of 8% - 11% to $1.95 - $2.00 per fully diluted share.
"We believe it is prudent to remain conservative in our business outlook for fiscal 2009, yet we are optimistic that we can expand our business in a difficult environment, given the strengths of our brands and offerings, as well as added growth from our recent acquisitions of C&C of California and Laundry. We look forward to updating you as to our progress as the year advances," said George Feldenkreis, Chairman and CEO.
Estimates Are Rising
Consensus estimates are rising for the quarter and the year. Consensus estimates are up for the first quarter in the last 30 days, up 2 cents to 56 cents from 54 cents per share. One analyst also lowered estimates in the last month.
Given PERY's guidance for fiscal 2009, one out of two covering analysts raised estimates in the last 30 days by an average of 19 cents to $1.99 from $1.80, putting consensus estimates towards the high end of the company's forecast range.
Perry Ellis has a forward P/E of 11.30, under the industry average of 13.06. Its price-to-book of 1.24 is also under the industry average of 1.36. The company has a solid five year average return on equity of 11.24%. Analysts forecast 2009 year-over-year growth at 10.28%.
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