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%.
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%. During that time, current year earnings estimates have risen 18 cents to $1.78 per share. Analysts expect a further increase of 11% in earnings growth next year.
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Friday, May 09, 2008
BIG - Big Lots - Over the past four quarters, it has posted an average surprise of 39.7%
SNA - Snap-on -Four out of five covering analysts hiked full-year 2008 earnings forecasts
Snap-on, Inc. (SNA), which is trading very close to a 52-week high, declared a quarterly dividend of 30 cents per share in late April. The company's dividend yield of 2.0% sits well above the industry average of 0.7%. Prior to declaring a dividend, this solid Growth & Income pick announced a robust first quarter with higher earnings and sales, which included 44% of the sales from outside the United States. SNA said it expects full year 2008 sales and earnings to exceed 2007 levels. Wall Street is also bullish on the company's future, pegging current full-year 2008 earnings forecasts at $3.93 per share, versus last month’s $3.72.
Full Analysis
Snap-on, Inc. manufactures and markets tools, diagnostics, equipment, software and service solutions for professional users. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as customers in industry, government, agriculture, aviation and natural resources.
Income
The company declared a quarterly dividend of 30 cents per share in late April. The dividend is payable on June 9, 2008 to shareholders of record on May 19, 2008. Snap-on noted that it has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939. SNA’s dividend yield of 2.0% sits well above the industry average of 0.7%.
Growth
In late April, the tool maker put up solid numbers for the first quarter, which helped bring the company's share to a current level that is just slightly below a 52-week high. Earnings per share of 97 cents topped the consensus estimate by 20% and outperformed the year-prior quarter. On a year-over-year basis, net sales increased by $15.9 million to $721.6 million, which included $33.2 million from currency translation thanks to SNA's continued geographic diversification initiatives. The company pointed out that 44% of its first quarter sales came from outside the United States.
"Snap-on’s first quarter results clearly reinforce the strategic importance of our global scope and customer diversification initiatives, particularly in light of the more challenging economic environment in the United States," said Nick Pinchuk, Snap-on’s president and chief executive officer. "Our broad and expansive product portfolio and global customer base, combined with the essential nature of the productivity solutions we provide to professional users, has us well-positioned to achieve a strong and sustainable platform for profitable growth."
Estimates Climbing Higher
Snap-on said it expects full year 2008 sales and earnings to exceed 2007 levels. Wall Street is also bullish on the company’s future. Four out of five covering analysts hiked full-year 2008 earnings forecasts from last month’s $3.72 per share to $3.93, with one analyst bumping the projection up one more penny higher. The most accurate estimate is more favorable at $4.01 per share.
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XEC - Cimarex Energy - With all of the optimism on hand the analyst community has boosted their earnings estimates
Cimarex Energy Co. (XEC) just posted another great quarter in which its profit more than doubled from the same period last year. The company's excellent results were driven by higher production and a significant increase in the average selling prices of both gas and oil. Moving forward, Cimarex says its plan to invest $1.1 to $1.3 billion in 2008 in development and production projects, which should lead to a production increase between 8% and 12% on the year. Higher volumes, higher prices, this looks like a virtual formula for another great quarter.
Cimarex Energy Co. operates as an independent oil and gas exploration and production company. It primarily operates in Texas, Oklahoma, New Mexico, Louisiana, and the Gulf of Mexico. Cimarex Energy Co. was founded in 2002, has a market cap. of $5.5 billion and is headquartered in Denver, Colorado.
Awesome First-Quarter Results
In keeping with the trend of oil exploration companies, Cimarex reported excellent first-quarter results on May 6, more than doubling its profit from the same period last year.
Net income jumped to $149.8 million, up from $64.6 million in the same period last year. Revenue was increased to $454.4 million, up from $293.5 million last year. This produced earnings of $1.76, well ahead of last year's results and analyst estimates.
This is the fourth time in the last four quarters that Cimarex has surprised and beaten analyst estimates, having done so by an average of 20 cents, or 17.89%.
Cimarex attributed the increase to higher production and sharply increasing energy prices. First-quarter 2008 gas prices increased 25% to $8.38 per thousand cubic feet (Mcf) and oil rose 71% to $94.38 per barrel from the same period of 2007.
Increased Production
First-quarter 2008 daily oil and gas production grew 8% over last year's first quarter. Gas production in the latest quarter averaged 339.7 million cubic feet per day, an increase of 5% over the first-quarter 2007 and oil production grew 16% to an average of 22,757 barrels per day. Growing production reflects strong results from drilling.
Cimarex was also able to grow its provisional capital for exploration and development to $307 million from $245.5 million last year. Cimarex is projecting 2008 exploration and development expenditures between $1.1 billion and $1.3 billion.
Full-year gas and oil production is projected to increase 8%-12%.
Estimates Rising
With all of the optimism on hand the analyst community has boosted their earnings estimates. Within the last 30 days, the current-year estimate has tacked on 58 cents and advanced to $6.43 per share.
This higher earnings projection makes the company's stock look well priced at $68, carrying a forward P/E multiple of just over 10X.
The Chart
The Cimarex chart looks great. Shares have been on a great run since breaking higher on Feb 14, advancing from just above $43 to their current location just below $69, a very impressive short-term return of more than 55%. More recently, shares once again broke higher, this time from a level of resistance just above $63, creating a new 52-week and all-time high. Moving forward, its into uncharted territory, as this stock is driven by the strength of this company's excellent earnings profile. Take a look below.
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AMKR - Amkor Technology - forward P/E is 8.73, well under the industry average of 28.9
Amkor Technology is benefiting from the growing worldwide demand for consumer electronic devices as sales for the first quarter rose 7.4% year-over-year. The company has surprised on estimates three out of the last four quarters on average of 27.44%. Amkor's forward P/E is 8.73, well under the industry average of 28.9.
Full Analysis
Amkor Technology (AMKR) is a manufacturing resource for many of the world's semiconductor companies including Intel Corp., Texas Instruments Inc. and Infineon Technologies AV.
Amkor, a Zacks #1 Rank (Strong Buy), specializes in a broad array of package solutions, formats and sizes, from traditional, "off-the-shelf" leadframe configurations to leading-edge chip scale, flip chip and system-in-package solutions incorporating highly customized designs. The semiconductors are found in a host of products such as digital cameras, cell phones, laptops, video games and MP3 players.
AMKR also offers a range of test engineering services for RF, mixed signal, logic and memory devices. The company has five million square feet of manufacturing space located throughout Asia's key microelectronic technology corridors in China, Japan, Korea, Philippines, and Taiwan.
Amkor Beats Wall Street Estimates for the First Quarter
On Apr 30, the company reported first-quarter earnings that beat Wall Street estimates by 38.46%, or 10 cents a share. Net income increased 108% to $72 million, or 36 cents per share, from the first-quarter 2007.
The first quarter is seasonally the company's slow quarter. Net sales decreased 6.3% sequentially to $699 million but were up 7.4% compared to the first-quarter 2007.
"We exceeded our sales and profitability targets for the first quarter due to select customer demand in certain wireless communications and networking applications, which partially offset the overall seasonal slowing that we had expected," said James Kim, Amkor’s chairman and chief executive officer.
Guidance for the Second Quarter
Amkor provided guidance for the second quarter of sales up 1% to 3% from the first quarter and gross margin at approximately 25%, compared to 25.2% in the first quarter 2008. The company forecast net income in the range of 32 cents to 36 cents per share.
Consensus Estimates Rise
After the earnings report, brokerage analysts hiked estimates for the quarter and the year in response to the company's forecast. For the second quarter, consensus estimates rose two cents in the last week to 30 cents from 28 cents per share. For the full year, estimates rose five cents to $1.27 from $1.22 per share.
Amkor's 2008 P/E is 8.73. Its price-to-book is 2.76. The company has an excellent one year return on equity (ROE) of 33.60%.
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