Acuity Brands is seeing the light. Strong margins, new products, and pricing power have all helped earnings. Over the past month, this year's earnings estimates have jumped 22 cents to $3.92 per share. All three covering analysts have increased their forecasts as well. The company has posted an average surprise of 7.7% over the past four quarters.
Full Analysis
Acuity Brands, Inc. (AYI), through its subsidiaries, engages in the design, production, and distribution of lighting equipment and specialty products worldwide. Its lighting equipment includes indoor and outdoor lighting fixtures for commercial and institutional, industrial, infrastructure, and residential applications.
The company offers its lighting equipments to electrical distributors, retail home improvement centers, national accounts, electric utilities, utility distributors, municipalities, contractors, catalogs, and lighting showrooms. Acuity Brands sells its lighting products under Lithonia Lighting, Holophane, Gotham, Hydrel, Peerless, Antique Street Lamps, Carandini, American Electric Lighting, SpecLight, Metal Optics, and Mark Architectural Lighting brand names.
Lucid 2nd-Quarter Earnings
In early-April, the company said fiscal second-quarter earnings rose 40%, reflecting a better product mix and more favorable pricing. It earned 82 cents per share, much better than the 68 cents that analysts had expected. Higher prices and favorable exchange rates helped sales rise 9% to $482.6 million, from $444.3 million last year. Analysts expected sales of $470.2 million.
Vernon J. Nagel, Chairman, President, and Chief Executive Officer of Acuity Brands said, "We are very pleased to report record quarter-over-quarter results from continuing operations for the 12th quarter in a row. Our strong second quarter performance reflects the benefits from programs implemented to create greater value for our customers, to invest in our associates to be more customer-focused and productive, and to more effectively deploy our assets to generate greater returns for our stakeholders.”
In a note to investors, Robert W. Baird & Co. analyst Peter Lisnic said Acuity's results were "solidly above expectations," and beat his forecast both on the top- and bottom lines. Lisnic also pointed to Acuity's strong margins, successful new products, and improved pricing as positives.
Outstanding Estimate Picture
Over the past month, this year's earnings estimates have jumped 22 cents to $3.92 per share. All three covering analysts have increased their forecasts as well. The company has posted an average surprise of 7.7% over the past four quarters. The stock is also quite cheap with a PEG ratio of only 0.4. Investors could do well to snap up these shares at such a discount.
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Wednesday, April 16, 2008
AYI - Acuity Brands - All three covering analysts have increased their forecasts
HPQ - Hewlett-Packard - "We are raising our guidance yet again..."
Hewlett-Packard Co. (HPQ) is scheduled to report fiscal second-quarter results on May 15, 2008. The company continues to be a solid Growth and Income pick. HPQ announced first-quarter results in mid-February, setting its non-GAAP full-year 2008 guidance at a range of $3.50 to $3.54. Wall Street has earnings pegged at $3.52 for the year ending October 2008, versus the two months-ago forecasts of $3.36. HPQ sports a dividend yield of 0.7%, a solid yield considering that HP is operating in an industry that is not big on paying dividends.
Full Analysis
Hewlett-Packard provides infrastructure and business offerings that span from handheld devices to some of the world's most powerful supercomputer installations. It offers consumers a wide range of products and services from digital photography to digital entertainment and from computing to home printing.
HP is among the world’s largest IT companies, with revenue totaling $107.7 billion for the four fiscal quarters ended Jan. 31, 2008.
The company is scheduled to report fiscal second-quarter results on May 15, 2008.
Hewlett-Packard recently announced that it was awarded a five-year Blanket Purchase Agreement with the United States Air Force to deploy a breadth of HP single function and multifunction printers, services, supplies and management software.
“HP empowers large businesses and organizations by providing high-performance technology that meets the printing and imaging needs of challenging environments,” said Jackie Wynn, vice president, Public Sector, Imaging and Printing Group, HP. “Being selected by the United States Air Force, an organization that demands the highest standards of performance, is a true testament that we continue to produce and deliver innovative, comprehensive and reliable solutions for our customers around the world.”
Growth
Hewlett-Packard, which continues to be a solid Growth and Income pick, reported fiscal first-quarter results in mid-February, setting its non-GAAP full-year 2008 guidance at a range of $3.50 to $3.54.
"We are raising our guidance yet again, reflecting our confidence in anticipated cost reductions and share gains in key markets," said Mark Hurd, HP chairman and chief executive officer. "We added more than 2,000 sales positions in the past year through acquisitions and hiring. HP remains well positioned for profitable growth as we continue to focus on our numerous cost initiatives and improve our market coverage."
Wall Street has earnings pegged at $3.52 for the year ending October 2008, versus the two months-ago forecasts of $3.36.
The company’s first-quarter report also showed non-GAAP earnings of 86 cents per share, outperforming the previous year’s 65 cents and exceeding the consensus estimate 6%. First quarter net revenue increased 13% on a year-over-year basis.
Income
In addition to experiencing strong growth, this IT giant sports a dividend yield of 0.7%. This is a solid yield considering that HP is operating in an industry that is not big on paying dividends.
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WLT - Walter Industries - analyst community is extremely bullish on the company
Walter Industries Inc. (WLT) shares have been surging forward on the company's ability to increase its metallurgical coal production capacities. Metallurgical coal is a primary component used to produce steel. In addition, the company announced in February that it is initiating a strategic restructuring of its homebuilding and financing division in order to separate that segment from its natural resources segment. This should provide the company with additional financial flexibility in order to better leverage opportunities in its resources division.
Full Analysis
Walter Industries Inc. maintainers three primary business segments, the largest being its coal and natural gas exploration division. The company also engages in low-cost home building and mortgage financing activities. The company was founded in 1946 and is headquartered in Tampa, Florida.
On Feb 19, Walter Industries reported very strong fourth quarter results. Net sales totaled $312.3 million, an increase of $4.1 million from the previous year. The company said the growth in income was driven by higher metallurgical coal sales volumes.
The company's natural resources segment posted very strong growth numbers, reporting revenue of $199.0 million, up $37.1 million from the same period last year. The increase was driven by a significant jump of 0.5 million tons of metallurgical coal sold, to 1.6 million tons total. Metallurgical coal is one of the base components used to manufacturer steel, where as steam coal is used to generate electricity. Walter's ability to boost its coal production capacities is the driving force behind the company's long-term growth strategy.
"Our Natural Resources business continues to deliver outstanding results, with Mine Nos. 4 and 7 both producing record tonnage for the full year," said Jim Walter Resources Chief Executive Officer George R. Richmond. "In 2008, our internal expansion initiatives will drive significant increases in metallurgical coal production."
Strategic Adjustments
On Feb 20, Walter announced that in light of recent developments in both the housing and lending sector, it has made some strategic structural adjustments in order to separate its financing and homebuilding businesses from its energy and natural resources business. The company also announced that it is closing 36 Jim Walter Home sales centers, and cutting the workforce in its financing and homebuilding business segment by 25%. Walter will keep 47 of its best performing sales offices open.
Forward Guidance
Moving forward, Walter is projecting robust growth in its metallurgical coal production capacities, forecasting an increase from the 2007 level of 5.8 million tons to between 6.7 and 7.1 million tons in 2008. In the first and second quarter, coal sales will reflect the previously negotiated price of $101 per metric ton, a reflection of temporarily lower coal prices in 2007. Beyond the expiration of these existing contracts, Walter is forecasting significantly higher prices for coal throughout the rest of 2008.
The analyst community is extremely bullish on the company, and are clearly anticipating strong results from both the restructuring initiative and higher forecast in production capacities and coal prices. The current-year estimate is $4.22 per share, but the next-year estimate is pegged at $7.35 per share.
What About the Chart?
Walter shares have been locked into a very smooth and consistent up trend since finding a temporary bottom on Jan 22. More recently, shares appear to have found support at the previous breakout level at $64.50, and are once again headed toward the 52-week and all-time high just above $72. Beyond that it is into uncharted territory. Walter is scheduled to report its third quarter results on May 6, and this will be a very good indication of how the company has been able to execute its strategic vision.
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WOR - Worthington Industries - In the third quarter, WOR repurchased just over 2 million shares
Worthington Industries is benefiting from the hot steel sector as the company sells to a diverse group of industries, including the expanding agricultural sector. The company has beaten Wall Street estimates in two out of the prior four quarters on average of 7.56%. Worthington has a P/E of 13.73.
Full Analysis
Worthington Industries, Inc. (WOR) is a large independent steel processor of flat-rolled steel. The company operates 68 facilities in 10 countries, including 12 in the United States. WOR manufactures a variety of steel products including acrylic coating, cleaning, cold-rolling, configured blanking, cutting-to-length, dry lubricating, edging, galvannealing, hot-dipped galvanizing, hydrogen annealing, pickling, slitting, stainless steel, temper rolling and tension leveling.
Worthington processes steel for use in the agriculture, automotive, construction, hardware, aerospace and many other industries. WOR has three primary business units and nine joint ventures. For example, Worthington Steel, one of the primary businesses, is a supplier of hot-roll and cold-roll cut-to-length steel sheets to the John Deere Harvester Works in East Moline, Ill., and the John Deere Ottumwa Works in Ottumwa, Iowa, for combine, baler and mower conditioner parts.
Worthington Industries manages its business in a hub and spoke model with Worthington Steel serving as the hub in the model. All the other segments and joint ventures are the spokes and consume flat rolled steel.
Sales Increased By 7% In the Third Quarter
The company reported fiscal 2008 third-quarter earnings on March 20 and met analysts' estimates. Net earnings were $18.3 million, or 23 cents a share, compared to $5.5 million, or six cents a share, in 2007. There was a pre-tax restructuring charge which negatively impacted earnings by two cents per share.
Sales increased 7% to $725.7 million from $677.3 million in the year ago period. New business helped the Steel Processing segment increase volumes by 9% compared to 2007. The Pressure Cylinders segment also had record sales in the third quarter.
The company saw synergies from the restructuring program.
"Our employees are doing a very good job of eliminating or changing the way we work, resulting in permanent reductions in cost and improved efficiencies. We have removed $12 million in costs so far this year. Once the plant closings in Metal Framing are completed and other identified cost reductions are fully implemented, we expect our total cost savings to reach a $39 million annual run rate in 2010," said Chairman and CEO, John McConnell.
Worthington also has an ongoing share repurchase program that was authorized in June 2005. In the third quarter, WOR repurchased just over 2 million shares.
Brokerage analysts are bullish on the company as the steel sector remains hot. For the fourth quarter, three out of three covering analysts raised estimates in the last 30 days to 40 cents from 36 cents per share. Similarly, for the year, three out of five raised in the last month by six cents to $1.22 from $1.16 per share.
Analysts expect earnings to grow year-over-year by 15%.
Worthington has a 2008 P/E of 13.73, under the industry average of 14.21. It's price-to-book is 1.60. The company has a solid five year average return on equity (ROE) of 15.88%. As an added bonus, WOR pays a great dividend with a current yield of 4.10%.
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