FC Stone Group, Inc. (FCSX) is fresh off the heels of a very solid second quarter in which its income more than doubled from the same period last year. The company noted that it is benefiting from increased market volatility, as it customers leverage FC Stones market risk applications to drive profits. FC Stones stock price has been trading in a very tight channel for the last two months.
FC Stone Group, Inc. is a commodity risk services company that provides risk managements and execution tools to commercial customers. The company was founded in 1968 and is headquartered in Kansas City, Missouri.
A Strong Quarter
FC Stone has been cashing in on the increased volumes and volatility in the agriculture markets, as seen but the company's impressive second-quarter results, reported on Apr 10.
Revenue came in at $91.2 million, a 52% increase form the same period last year. Net income more than doubled, jumping to $17.8 million from $7 million last year. This produced earnings of 61 cents per share, far ahead of analyst estimates of 37 cents.
A Pattern of Beating Estimates
FC Stone has been on a roll over the last four quarters, having beaten analyst estimates by an average of 12 cents, or 36.22%.
The company noted that it experienced higher volumes in both its exchange traded and OTC (over-the counter) businesses.
Pete Anderson, President and Chief Executive Officer of FCStone said "This growth across all market segments of the company is being driven by unprecedented volatility in virtually every commodity and financial market around the world. During a period of tightening credit access, this has fostered an atmosphere which has increased the necessity to manage volatility through conservative risk management services, products, platforms and structures offered by FCStone."
The analyst community is bullish on FC Stone, with the current-year estimate advancing to $1.97 per share from $1.68 per share 60 days ago.
The Chart
Shares of FCSX have been locked into a very tight channel for the last two months, oscillating between $36 and $42. This is fairly unusual behavior for this stock from a historical perspective. Based upon the company's growth in earnings, its share price should eventually advance beyond the confines of this channel and accelerate into higher territory.
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Friday, June 20, 2008
FCSX - FC Stone Group - over the last four quarters, having beaten analyst estimates by an average of 36.22%
NUE - Nucor - ROE of 29% reflects solid growth, especially considering that the industry average is at 17%
Nucor (NUE) is a good growth and income play on the robust steel industry. The company recently issued an increased second-quarter earnings guidance, ranging between $1.75 to $1.80 per share, and analysts followed suit. Nucor’s ROE of 29% reflects solid growth, especially considering that the industry average is at 17%. The steel producer also sports healthy income. Its dividend yield of 1.7% is well above the industry average as the majority of the steel industry pays no dividends. NUE recently declared its 141st dividend in the amount of 52 cents per share, which is the sum of a regular quarterly dividend of 32 cents and a supplemental dividend of 20 cents.
Company Description
Nucor and its subsidiaries manufacture steel products, with operating facilities primarily in the U.S. and Canada. The company operates in two segments, Steel Mills and Steel Products. Its products include carbon and alloy steel. Nucor was founded in 1940 and is based in Charlotte, North Carolina.
Acquisition Announcement
The steel maker recently announced today that its wholly owned subsidiary, Harris Steel, signed an agreement to buy all of the issued and outstanding common shares of Ambassador Steel Corporation ("Ambassador"), for a cash purchase price of approximately $185,000,000. Nucor noted that the transaction will also include the shares of Ambassador's affiliate, Delta Erecting, Inc.
"The acquisition of Ambassador continues Nucor's downstream growth initiatives and is an opportunity to enhance Nucor's national footprint in the rebar fabrication market," said Daniel R. DiMicco, Nucor's Chairman, CEO and President.
NUE Hikes Guidance and Analysts Followed Suit
The company stated that strong shipments and higher margins have increased the earnings guidance for its second quarter. Nucor now expects second quarter net earnings to range between $1.75 to $1.80 per share, a substantial boost from its previous outlook of $1.55 to $1.60 per share.
Wall Street is in agreement. Five out of 9 covering analysts have second-quarter earnings projections pegged at $1.79 per share, versus last month’s $1.69.
Full-year estimates have also been on the rise. Seven out of 12 covering analysts are forecasting year 2008 earnings of $6.88 per share, up from last month’s $6.69. One of those analysts bumped up the estimate further to $6.90, and the most accurate expectation is even higher at $7.01.
141st Dividend
NUE recently declared its 141st dividend in the amount of 52 cents per share, which is the sum of a regular quarterly dividend of 32 cents and a supplemental dividend of 20 cents. The company noted that the dividend is payable on August 11, 2008 to stockholders of record on June 30, 2008.
Nucor said the supplemental dividend is based primarily on its continued strong results, adding that the payment of the supplemental dividend in any future period will depend upon many factors, including earnings, cash flows and financial position.
The company’s dividend yield of 1.7% is well above the industry average as the majority of the steel industry pays no dividends.
Strong Growth Compared to the Industry
Nucor’s return on equity (ROE) of 29% reflects solid growth, especially considering that the industry average is at 17%. Earnings per share are expected to grow by 10% over the next 3 – 5 years, versus the industry average of 9%.
Record Results
In mid-April, the company posted record first-quarter net earnings for the fifth consecutive year. Earnings per share of $1.41 improved on last year’s $1.26 and exceeded the consensus estimate by 8%. The company mentioned that the increase in earnings per share from the first quarter of 2007 is partially due to the reduced number of shares outstanding as a result of stock repurchases made in 2007.
Consolidated net sales jumped 32% to a record $4.97 billion from the year-ago level of $3.77 billion.
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CSIQ - Canadian Solar - went ahead and boosted its full-year 2008 guidance just two days ago
Canadian Solar, Inc. (CSIQ) reported very strong first-quarter results on May 13 that included a dramatic turn-around in net income, which advanced to $18.99 million from a loss of $3.85 million in the same period last year. Not to be outdone, just two days ago the company boosted its full-year 2008 revenue guidance, which gave its stock price a very nice jolt. Moving forward, with alternative energy companies generating more attention and business because of sky-rocketing fossil fuel costs, Canadian Solar should be well positioned to cash in on the trend.
Canadian Solar, Inc. develops solar modules that convert sunlight into electricity, and sells its products to a wide variety of international markets such as Germany and China. The company was founded in 2001, carries a market cap. of $1.35 billion and is headquartered in Markham, Canada.
Impressive First-Quarter Results
The alternative energy sector of the market has been very hot for quite some time now, as consumer and investors alike attempt to shield themselves from the sky-rocketing costs of fossil fuels. This trend was apparent when Canadian solar reported excellent first-quarter results on May 13.
Revenue grew to $171.2 million, a 34% increase from the same period last year. Net income was surged ahead to $18.99 million, up from a loss of $3.85 million in the same period last year. This produced earnings of 61 cents, way ahead of analyst estimates of 29 cents.
A Habit of Surprising
Canadian Solar has been making a habit of surpassing analyst expectations, having surprised over the last three quarters by an average of 13 cents.
The company CFO, Mr. Bing Zhu, said that the three primary drivers for revenue growth were strong pricing power, internal cost cutting measures and favorable currency exchanges. While the currency translations may not be sustainable, Mr. Zhu noted that the company believes it can continue to build its margins through cost controls.
Full-Year Guidance Is Up
After recently commencing deliveries of its solar products to two of its key customers, Canadian Solar went ahead and boosted its full-year 2008 guidance just two days ago, on June 17. The company is now projecting revenues between $750 and $870 million, up from the previous range between $650 and $750 million.
Attractive Solar Valuations
With the increased revenue guidance in hand, this company's valuations are more attractive. The analyst's current-year estimate does not appear to reflect the increased guidance, but based upon the existing projection, this company carries a forward P/E multiple of 24X. That is pricey compared to the overall market, but when compared to other solar stocks, it actually looks like a bargain. And this is before the current-year estimate has been revised to include the company's recent revenue forecast upgrade.
The Chart
After news of Canadian Solar boosting its revenue guidance hit the street, its share price took-off, advancing from just above $39 to its current price of over $51. This is a new 52-week and all-time high. With Canadian Solar operating in a red-hot sector, and the company focusing on cutting costs in order to boost its margins, its earnings should continue to support its stock price as more money pours into alternative energies.
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TGH - Textainer Group Holdings - company surprised on estimates in the first quarter by 23.68%
Textainer Group Holdings is finding that a weaker dollar and greater export demand means higher utilization rates for its containers. The company surprised on estimates in the first quarter by 23.68%. Its forward P/E is 11.32.
Full Analysis
Textainer Group Holdings Limited (TGH) leases standard and special dry freight marine containers to international shipping lines. The company has 14 regional and area offices worldwide and 350 independent depots in another 130 locations.
Textainer, a Zacks #1 Rank (Strong Buy), leases containers to more than 400 shipping lines and other lessees and sells used containers to over 700 customers. The company has more than 2.1 million TEU in its fleet. Its most common container is the dry freight container.
TGH also sells its used containers, selling an average of more than 53,000 containers per year over the last five years.
Textainer Beats Wall Street Estimates for the First Quarter
Textainer Group Holdings reported first quarter earnings on May 5 that surprised on estimates by 23.68%, or nine cents a share. Net income excluding unrealized losses on interest rate swaps, net(1) for the quarter increased 29% to $22.5 million, or 47 cents per share, from $17.5 million, or 45 cents per share, earned in the prior year quarter. Analysts expected 38 cents per share.
Total revenues rose by 22% to $72.2 million compared to $59.2 million in the first quarter 2007. The company attributed the increase to higher trading container sales proceeds of $13.7 million compared to $3.1 million in the first quarter of 2007.
"I am very pleased with our first quarter 2008 results. Overall demand for our containers through March was strong. Textainer's utilization continued to remain around 93% during the first quarter of 2008," said John A. Maccarone, President and CEO.
The company is bullish about the outlook. Shipping companies are adding more containers as they add vessels to their fleets due to high fuel costs reducing shipping speeds. The shippers have had to add vessels to maintain shipping schedules. The company continues to see demand for in-fleet containers throughout Asia. TGH also expects its resale division to continue to experience relatively high sales volume.
Consensus Estimates Rise for the Second Quarter and the Full Year
Consensus estimates have been rising over the last 60 days for both the second quarter and the year. For the second quarter, estimates are up seven cents to 46 cents from 39 cents per share. For the year, estimates are up 11% in the last two months to $1.72 from $1.55 per share.
Textainer Group Holdings' forward P/E is 11.32, under the industry average of 13.79. Its price-to-book is 2.31. The company paid a 22 cents per share dividend to shareholders on May 22 for the first quarter, one cent higher than the dividend paid in the fourth-quarter 2007. The current dividend yield is 4.40%, well above the industry average of 0.6%.
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