Devry Inc. is educating shareholders on how to make money. Its acquisitive strategy has paid off nicely and earnings are robust. It even announced a dividend in late-2006. A look beneath the numbers reveals a clean bill of health. Over the past month, this year's earnings estimates have risen nine cents to $1.79 per share. 10 of the 13 covering analysts have risen their forecasts.
Full Analysis
DeVry, Inc. (DV) is a provider of post-secondary education in North America. The company is the holding company for DeVry University (including the Keller Graduate School of Management), Ross University, Chamberlain College of Nursing, Becker Professional Review, and Advanced Academics.
DeVry University offers associate's, bachelor's and master's degree programs in technology, healthcare technology, business, and management. Ross University offers doctoral degree programs through its schools of Medicine and Veterinary Medicine while Chamberlain College of Nursing offers associate and bachelor's degree programs in nursing. and Stalla Review for the CFA Exams, provides professional education and test preparation services to candidates of the Certified Public Accountant (CPA) and Chartered Financial Analyst (CFA) professional certification examinations.
The company continues to benefit from strong enrollment growth and increased enrollment of online students. Undergraduate enrollment growth for the 2007 spring and summer terms increased 5.5% and 9.8%, respectively. Online coursetakers increased 22.5% and 26.0% in the 2007 spring and summer terms, respectively.
DV is benefiting from strong demand. A strong motivation for postsecondary education is the expected income increase that comes with a college degree. According to the U.S. Census Bureau, the average income of U.S. employees with a bachelor's degree was $51,550, an 80% increase over employees with only a high school education.
Acquisitions have played a major role in the company's top-line growth. Management has embarked on an acquisition strategy that is diversifying the company's educational program offerings. In 1996 the company acquired Becker CPA Review in order to diversify into professional education and training for accounting and finance professions.
In order to demonstrate the company's turnaround, long-term growth prospects, and expectations for strong cash flow generation, on November 15, 2006, the Board of Directors adopted a dividend policy, declared the company s first dividend, and approved a stock repurchase program. The Board's policy is to declare dividends on a semi-annual basis and the initial annual dividend rate was $0.10 per share.
A look beneath the numbers reveals a clean bill of health. Over the past month, this year's earnings estimates have risen nine cents to $1.79 per share. 10 of the 13 covering analysts have risen their forecasts. The average surprise over the past four quarters is a robust 33.7%. The stock is attractively valued at a PEG ratio of 1.3.
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Thursday, May 08, 2008
DV - Devry Inc - 10 of the 13 covering analysts have risen their forecasts
APH - Amphenol Corp - All nine covering analysts have raised their earnings estimates for the current year
Amphenol Corporation did the classic "beat and raise" when it announced its first-quarter results. Results were driven by growth in several segments, including the mobile device, wireless infrastructure, military and commercial aerospace markets. Beating estimates has become old hat to APH. The average surprise over the past four quarters is 5.6%.
Full Analysis
Amphenol Corporation (APH) designs, manufactures, and markets electrical, electronic and fiber optic connectors, interconnect systems, and coaxial and flat-ribbon cable worldwide.
The company produces a range of interconnect products and assemblies primarily for voice, video, and data communication systems; commercial aerospace and military systems; automotive and mass transportation applications; and industrial and factory automation equipment.
Earnings Bonanza
In mid-April, the company reported strong first-quarter profits that rose 25%, beating the Street. Earnings rose to $97.5 million, or 54 cents per share, from $77.7 million, or 43 cents per share, in the year-ago period. Analysts expected 51 cents per share. Revenue rose 18 percent to $770.7 million from $651.1 million. The effect of converting strong foreign currencies to dollars boosted sales by about $22 million, the company said.
Results were driven by growth in several segments, including the mobile device, wireless infrastructure, military and commercial aerospace markets. Additionally, Amphenol completed the acquisition of a French manufacturer during the first quarter. The company, which makes interconnect and electronic packaging products for the aerospace market, has annual sales of $28 million and expands Amphenol's product offerings in the aerospace market.
Increased Guidance
APH lifted its full-year profit guidance as well. The company now expects earnings between $2.26 and $2.31 per share on sales of $3.21 billion to $3.26 billion. Analysts, on average, anticipate full-year earnings of $2.23 per share on sales of $3.15 billion.
Amphenol Chairman and CEO, Martin H. Loeffler, stated: “We are very pleased to report a strong start to 2008 with first quarter sales of $771 million and earnings per share of $.54. Sales grew 18% over last year. Growth was broad based reflecting the benefits of a diverse market footprint with particular strength in the mobile device, wireless infrastructure, military and commercial aerospace markets."
Beating estimates has become old hat to APH. The average surprise over the past four quarters is 5.6%. All nine covering analysts have raised their earnings estimates for the current year over the past month. During that time, estimates have increased nine cents to $2.32 per share.
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CA - CA, Inc - ROE of 17% exceeds the industry average of 13%
CA, Inc. (CA) continues to offer solid growth and income. The company is scheduled to release fiscal fourth-quarter and full-year results on May 22, 2008. CA recently announced that it will move its stock exchange listing from The New York Stock Exchange to The NASDAQ®. The company's ROE of 17% exceeds the industry average of 13%. 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.
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. 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.
Recent Events
The company's report date for fiscal fourth-quarter and full-year results is right around the corner on May 22, 2008.
In mid-April, CA announced that it will move its stock exchange listing from The New York Stock Exchange to The NASDAQ® Global Select Market, effective April 28, 2008. The company noted that its shares will be traded on NASDAQ under the ticker symbol CA.
"As one of the world's leading software companies, our move to NASDAQ demonstrates further our commitment to enhance value for our shareholders," said Joseph Doncheski, vice president, Investor Relations for CA, Inc. "Our decision was made after careful and thorough consideration as to which market alternative was best aligned with our company's growth strategy. While we have enjoyed our 20-plus year partnership with The New York Stock Exchange, we believe that NASDAQ's multiple market makers provide a variety of benefits and support for our shareholders."
Income
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.
Growth
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 13%.
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.
The company stated that this was another solid quarter, its fifth in a row. CA added that it remains on course to finish the year with revenue and earnings per share exceeding the updated annual outlook provided at its financial analyst day in 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 estimates are in line with the company’s outlook.
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BTU - Peabody Energy - Income per share soared past the consensus estimate by 44%
Peabody Energy Corp. (BTU) is a coal company that is also a burning hot Growth & Income pick. The company recently declared a regular quarterly dividend of six cents per share, which translates into a yield that matches the industry average at 0.4%. Peabody posted first-quarter results. Quarterly revenues increased 15% to a record $1.28 billion on a year-over-year basis. Income from continuing operations of 26 cents per share soared past the consensus estimate by 44%. The company’s ROE of 16% signals growth and is higher than the industry average of 15%.
Full Analysis
Peabody Energy is the world's largest private-sector coal company. Its coal products fuel approximately 10 percent of all U.S. electricity generation and 2 percent of worldwide electricity.
Last year Peabody shipped 238 million tons of coal. The company has 340 electricity generating and industrial customers in nearly 40 states and 19 countries.
Income
BTU recently declared a regular quarterly dividend of six cents per share. The dividend is payable on May 29, 2008 to holders of record on May 8, 2008. The company is yielding 0.4%, which is in line with the industry average.
Growth
A couple days before the dividend declaration, in late April, the company posted first-quarter results. Quarterly revenues increased 15% to a record $1.28 billion on a year-over-year basis. Income from continuing operations of 26 cents per share soared past the consensus estimate by 44%
"Peabody's strategy to expand our global platform and target high-growth, high-demand markets is delivering significantly improved performance based on very strong coal markets and recent international price settlements," said Peabody Chairman and Chief Executive Officer Gregory H. Boyce. "We believe that the outstanding global fundamentals for coal are resulting from structural changes in the supply-demand balance. Growing economies are being fueled by coal and world coal expansion cannot keep pace with demand."
The company’s return on equity (ROE) of 16% signals growth and is higher than the industry average of 15%.
Growth should continue to be the theme for BTU as its earnings per share are expected to grow by 18%, which is in line with the industry average.
Higher Estimates
Peabody increased its full-year 2008 targets, pegging income from continuing operations at $2.20 to $3.00 per share.
Wall Street lifted forecasts to be in line with the company’s outlook. Ten out of 14 covering analysts upped full-year 2008 estimates to $2.43 per share from last month’s $1.91. The most accurate projection is a more bullish $2.50.
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FDG - Fording Canadian Coal Trust - Current-year earnings estimates have almost doubled in just the last 30 days
Fording Canadian Coal Trust (FDG) reported disappointing first-quarter results on Apr 21, but the company quelled investor concerns by providing a very bullish forecast for the rest of the year. With a substantial number of its contracts for 2008 negotiated, Fording is expecting its average selling price for coal to be more than twice the level from 2007. Current-year earnings estimates have almost doubled in just the last 30 days.
Fording Canadian Coal Trust operates as an open-ended mutual fund trust in Canada, and makes quarterly distributions to its shareholders. The company holds a 60% interest in Elk Valley Coal, which produces and sells metallurgical coal that is used for making coke by integrated steel mills. Elk Valley Coal is the world's second largest exporter of metallurgical coal and owns interests in six operating coal mines. Fording Canadian Coal Trust offers its products in Asia, Europe, North America, and South America. The company was founded in 1991 and is based in Calgary, Canada.
A Bullish Projection
Although Fording's first quarter results were down sharply from the same period last year, the company is anticipating increased demand and very strong pricing power in the next year that should significantly effect the company's revenue and profitability.
Elk Valley Coal, a primary constituent of Fording, has completed negotiations for more than two-thirds of its anticipated coal sales for the 2008 coal year that began on Apr 1. The company is projecting the average coal price for the 2008 calendar year to be in the range of $195 to $205 per tonne. This would mark a significant increase from 2007 levels, in which the average selling price was $95.70.
Fording also noted that the substantial increase in coal prices over 2007 levels reflects the extreme tightness in the metallurgical coal market.
Estimates Rising
With the projection of a very favorable environment for this coal producer, the one covering analyst has significantly boosted earnings estimates. Within just the last 30 days, the current-year estimate has almost doubled, advancing to $9.40 per share from $5.99 per share. That is a serious jump.
With this bullish earnings projection, this stock looks very attractively priced, trading at just above 7X the current-year estimate.
The Chart
Shares of FDG have been in rally formation for most of the year, beginning from the low of Jan 22 just below $32. Since then this stock has advanced beyond the $68 mark, a hefty 100% return in less than four months. There is a very nice level at $65 that should provide support if this stock takes a breather. But with the fundamentals aligning, and bullish projections abound, this stock looks well positioned to continue its upward ascent.
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SPSX - Superior Essex - fourth time in four quarters that the company has surprised and beaten analyst estimates
Superior Essex, Inc. (SPSX) shares have been on a fierce rally over the last week, jumping from just above $31 to their current location of over $39; a very impressive short-term return of over 30%. This price spike comes on the heels of the company's first-quarter results, reported on May 1, in which adjusted earnings per share were up close to 50% from the same period last year.
Superior Essex, Inc. manufactures and supplies wire and cable products for various industries in Europe, North America, and the Asia Pacific. The company was founded in 1996 and is based in Atlanta, Georgia.
First Quarter Results
Superior reported solid first-quarter results on May 1. Revenue was up to $757 million from $696 million last year. Earnings were effected by a one-time restructuring charge of $9.6 million. Excluding this item, earnings would have been 69 cents per share, up from 45 cents per share last year.
Superior also noted that core business revenue at constant copper, one of the company's business segments, was up 12% from last year. This increase includes the benefits from acquisitions and favorable currency translations.
The successful quarter marks the fourth time in four quarters that the company has surprised and beaten analyst estimates, having done so by an average of 14 cents, or 26%.
Bullish Outlook
CEO Stephen Carter mentioned that even though the company has been vulnerable to global economic slowdowns in North America and Europe, he believes the company is well positioned to successfully traverse these obstacles. "For the second quarter of 2008, we expect economic conditions in Europe and North America to remain generally unchanged. Nonetheless, we should continue to benefit from the 2007 magnet wire acquisitions on a year-over-year basis."
In reaction to Superior's solid quarter and favorable outlook, the analyst community has upgraded their earnings projections. Within just the last seven days, the current-year estimate has tacked on 30 cents and advanced to it current projection of $3.48 per share.
With the recent boost in earnings, the company's valuations look even more attractive. Based upon current-year projected earnings, Superior's P/E multiple is a scant 10X.
The Chart
As previously mentioned, Superior shares have been rallying with force. The key to the formation on the chart is this stock's ability to hold itself in the much higher territory. Since the big surge, shares have been able to consistently creep higher and establish higher highs. This is definitely a bullish signal. The next target is the 52-week and all-time high just above $40. Take a look at the chart below.
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WLL - Whiting Petroleum - Profit soared as crude and natural gas prices rose
Whiting Petroleum is reaping the benefit of sky high oil prices as the company reported a record first quarter and saw net income increase five-fold over 2007. Whiting has surprised on earnings in the last four quarters by an average of 21.69%. The company's 2008 P/E is 14.73.
Full Analysis
Whiting Petroleum Corporation (WLL) is an independent oil and gas company that explores primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast and Michigan regions of the United States.
The company's strategy is to increase reserves and production through acquisitions and exploration. From 2003 to 2006, Whiting has increased its reserves per share at a compound annual growth rate of 20% and production per share at a growth rate of 8%.
On May 5, Whiting announced its latest acquisition. It will acquire gas wells and development acreage in the Flat Rock Natural Gas Field in Uintah County, Utah for a purchase price of $365 million. The deal is expected to close on May 30. WLL will finance the deal through its existing credit facility.
The company expects the acquisition to compliment existing gas fields in the Colorado and Greater Green River Basin of southwestern Wyoming. Whiting estimates that continued development may cause an approximately 70% increase in the company's net Flat Rock production in 2009 over 2008 and could double the current rate in 2010.
Whiting Reports Record Quarter
On May 5, Whiting Petroleum reported first-quarter earnings that beat Wall Street estimates by 16.67%, or 21 cents per share. Net income was $62.3 million, or $1.47 per share, compared to $10.7 million, or 29 cents per share, in the first quarter of 2007. Cash flow more than doubled in the quarter to $161.4 million compared to $74.1 million a year ago.
Profit soared as crude and natural gas prices rose. Whiting saw a 64% increase in the realized oil price, a 25% increase in the realized gas price and increased production by 6% over the year-ago period.
Production consisted of 69% crude oil and 31% natural gas.
Outlook for Second Quarter and Full-year 2008
Given the increase in cash flow and the continued strong crude and natural gas prices, the company announced they were increasing the exploration and development budget by $100 million in 2008 to $740 million from $640 million.
Whiting also said production guidance will be reduced by 190,000 BOE and 725,000 BOE for the second quarter and full-year 2008 as a result of the recently completed Whiting USA Trust I public offering.
The company will also update production guidance after the closing of the Utah acquisition on May 30.
Consensus Estimates Move Higher for the Second Quarter and Full Year
Brokerage analysts have been raising estimates on the second quarter and the full year in the last 30 days in anticipation of rising profits. For the second quarter, consensus estimates are up 35 cents to $1.29 from 94 cents per share. For the full year, estimates rose 85 cents to $5.26 from $4.41 per share.
Whiting, a Zacks #1 Rank (Strong Buy), has a forward P/E of 14.73. Its price-to-book is 2.20, under the industry average of 2.43. The company's five year average return on equity (ROE) is 14.06%.
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B - Barnes Group - Barnes Aerospace increased sales by 23%
Barnes Group reports a record quarter as the 151-year old aerospace and industrial company takes advantage of globalization to grow sales. The company has surprised on estimates three out of the last four quarters on average of 7.37%. Barnes Group has a forward P/E of 12.04.
Full Analysis
Barnes Group, Inc. (B) is an international aerospace and industrial components manufacturer and full-service distribution company that was founded in 1857 as a single metal parts shop and has grown to 65 locations around the globe.
The company, a Zacks #1 Rank (Strong Buy), has three business segments: Barnes Aerospace, Barnes Distribution and Barnes Industrial.
Barnes Aerospace produces precision machined and fabricated components and assemblies for original equipment manufacturer turbine, airframe and industrial gas turbine builders.
Barnes Aerospace also provides jet engine component overhaul and repair services for many of the world's commercial airlines and military applications.
Barnes Distribution is a distributor of maintenance, repair, operating and production supplies. It provides a wide variety of high-volume replacement parts and other products, as well as inventory management and logistics services, to a diverse customer base.
Barnes Industrial is an industrial components manufacturer of a broad range of products for an assorted customer base. The Barnes Industrial business segment consists of six divisions: Precision Forming; Retention Rings; Nitrogen Gas Products; Precision Valves; Engineered Springs; and Plastics.
Barnes Reports Record Net Income and Sales for the First Quarter
On May 2, Barnes Group reported first-quarter earnings and surprised on estimates by 7 cents a share, or 13.21%, reporting 60 cents compared to analysts' estimates of 53 cents per share. Net income rose 20.9% to a record $33.4 million compared to $27.7 million in the first quarter 2007.
Sales increased 7.7% to a record $388.6 million from $360.7 million in the year ago period. All three segments saw sales gains for the quarter.
Barnes Aerospace increased sales by 23%, Barnes Distribution was up 1% and Barnes Industrial rose 4% over 2007. Barnes Industrial's sales were favorably impacted by strong local currencies as reported in U.S. dollars.
Globalization is fueling the company's results. Barnes attributed the rise in net income to 8% revenue growth which the company said was driven by strong demand in the international industrial and aerospace manufacturing sectors.
Full-Year Guidance Raised
Given the increase in demand, the company raised earnings forecasts for the year to the range of $2.30 to $2.39 per share from $2.20 to $2.30 per share. Barnes is anticipating an increase of 31% to 36% from 2007's reported results.
Barnes expects the Aerospace segments's operation margins to rise to the range of 20.0% to 21.0%, up from 18.9% in 2007. The recently announced delays of the Boeing 787 Dreamliner have also been considered in the 2008 outlook.
Analysts Raise Estimates for the Second Quarter and 2008
In response to the record first quarter, brokerage analysts raised estimates for the quarter and the full year. Consensus estimates rose two cents in the last week to 61 cents compared to 59 cents per share. For the year, consensus estimates rose to match the company's guidance. Estimates moved up 13 cents to $2.38 from $2.25 per share.
Barnes' 2008 P/E is 12.04. Its price-to-book is 2.26. The company's average five year return on equity (ROE) is a solid 13.58%. In addition, Barnes Group has a dividend yield of 2.00%.
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