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(Best) FSYS, CGX, ROCK (Worst) ANDE, CVS, PL from Better Trades
November 9, 2009
The start of November’s trading came as welcomed relief for the bulls, as investors fed off an early surge in the markets, following stronger-than-expected economic reports from the housing and manufacturing sectors. Most economic data released last week showed the economy appears to be stabilizing.
The Dow surged 310.69 points, or 3.2%, to close at 10,023.42. The S&P 500 rallied 33.19 points, or 3.2%, ending at 1,069.30. The NASDAQ jumped 67.10 points, or 3.3%, to close at 2,112.21.
Top 3 Stocks
FSYS – Fuel Systems Solutions Inc. ($32.74 to $44.59) +36.2%
Leading the way for one of the top percentage performers for the week ending November 6 was Fuel Systems Solutions Inc. (FSYS). Fuel Systems is engaged in the manufacturing and marketing of products and systems that allow on-highway and off-highway engines to operate on clean burning, gaseous fuels such as propane and natural gas.
With a gain of more than 36% during the week, Fuel Systems’ stock surged on results from the company’s earnings report released on November 5. Results showed that FSYS’ profits jumped year-over-year due to an influx in demand for alternative-fueled vehicles. For the 3Q, FSYS posted a net profit of $15.5M, or $0.88 per share, compared to a profit of $11.9M, or $0.75 per share, a 30% increase over last year’s results.
In the meantime, revenues advanced from $105.5M to $116.2M, a jump in sales of more than 10% year-over-year. Results were affected by a $2M, or $0.11 per share gain from the company’s acquisition of a remaining 50% interest in a Brazilian joint venture.
On average, analysts within the industry were looking for the maker of parts for fuel-delivery systems sold to automakers and bus companies to book a net profit of $0.43 per share on $104.3M in total revenues.
Matthew Beale, CFO at Fuel Systems, commented on the company’s results, "While the soft global economy continues to impact the transportation aftermarket and industrial businesses, OEM/DOEM (delayed original equipment manufacturer) transportation demand has gained momentum during the second half of 2009."
Following the company’s earnings announcement, shares of FSYS jumped more than $10 per share, or 33%, by the close of the November 5 trading session. As a new trading week begins, shares of Fuel System continued with its upward trend, adding $3.11, or 7%, to end the November 9 session at $47.57 per share.
During Monday’s trading, the company’s stock established a new 52-week trading high of $47.70. During the past year, the stock has also fallen to an annual low of $9.83 per share.
CGX – Consolidated Graphics Inc. ($20.06 to $25.82) +28.7%
Included in the list of top percentage gainers was Consolidated Graphics Inc. (CGX), a company that provides general commercial printing services. The majority of Consolidated Graphics’ sales are derived from electronic prepress, printing, finishing, storage and delivery of high quality, custom-designed products.
The company’s stock posted nearly a 30% jump in market value during the course of last week’s trading, despite the fact that the company revealed that earnings for the most recent quarter retreated year-over-year. Announcing for the 2Q, Consolidated Graphics recorded a net profit of $2.08M, or $0.18 per share, compared to the previous year’s earnings of $10.3M, or $0.90 per share, a decrease in net income of nearly 80%.
The quarter’s results included a litigation charge of $2.63M, as well as $1.03M in other charges during the period. Net sales for the quarter fell from $296.95M to $251.63M, a decrease in overall revenues of more than 15% year-over-year. Representative from the company attributed the lack of sales to the current economic turmoil, as well as lower-election related business.
Consolidated Graphics benefited during the period from a decrease in cost of goods sold, which came in at $196.18M, down nearly 13% from last year’s tally of $224.36M. Through the first six months of the year, CGX saw net income fall from $19.92M, or $1.74 per share to $1.77M, or $0.16 per share, a decrease in profits of more than 91% from the same period a year ago.
Total sales during the past two quarters fell from $582.14M to $477.49M, a decrease in revenues of nearly 18%. Looking ahead, the company is looking for more dire results for the 3Q, with expected revenues to come in between $250M and $265M, representing a decrease in quarterly sales between 10% and 15% from last year’s 3Q results.
Despite the less-than-stellar quarterly report, shares of Consolidated Graphics surged during last week’s trading, adding more than $5 per share. Heading into the second week of November’s trading, the company’s stock continued with its uptrend, adding $0.18, or 0.7%, to close the November 9 session at $26.00 per share.
During the past year, shares of CGX have traded within broad range, falling as low as $10.11 per share, while reaching a yearly high of $27.17 per share, which was achieved in late September 2009.
ROCK – Gibraltar Industries Inc. ($10.82 to $13.48) +24.6%
Rounding out the list of top percentage gainers was Gibraltar Industries Inc. (ROCK), which is a leading manufacturer, processor, and distributor of metals and other engineered materials for the building products, vehicular, and other industrial markets. The company’s stock price managed to jump nearly $3 per share during last week’s trading, despite reporting a weakened earnings report for the most recent quarter.
Reporting for the 3Q, Gibraltar confirmed that the company’s net income for the period slipped year-over-year, falling from $19.2M, or $0.64 per share, to $4.9M, or $0.16 per share, a decrease in profits of nearly 75%. Excluding one-time charges, Gibraltar would have posted a net profit from continuing operations of $8.3M, or $0.28 per share, versus a net loss of $0.3M, or $0.01 per share a year ago.
Net sales for the quarter came in at $225.1M, down more than 34% from the previous year’s total revenues of $341.8M. Analysts within the industry were looking for the building materials maker to post a quarterly profit of $0.18 per share based on total sales of $233.4M.
Brian J. Lipke, Gibraltar’s Chairman and CEO, remarked on the company’s results, “We generated a 73 percent improvement in our operating income before special charges with a third-quarter sales increase of four percent compared to the second quarter. In each of the last two quarters, we have seen clear evidence that Gibraltar is able to leverage small increases in sales to drive significant improvements in margins and earnings.”
Lipke further added, “This improved performance was the cumulative result of the many steps we have taken to aggressively restructure our business, cut costs, reduce working capital, conserve cash, and pay down debt. All of these actions are part of our long-term focus to position Gibraltar as the low-cost producer of the products we manufacture.”
Henning N. Kornbrekke, Gibraltar’s President and COO, commented on the company’s outlook, “Looking ahead to the fourth quarter, which is historically our slowest period, we anticipate the normal seasonal slowing of our business, even though conditions have stabilized in many of our markets and some, like automotive and residential building, have begun to show some signs of incremental, albeit modest improvement.”
Adding nearly 25% to their market value during last week’s trading, shares of ROCK resumed their upward trend as the new trading week begins. By the sound of the closing bell on November 9, Gibraltar’s stock gained $0.36, or 2.7%, to conclude the day at $13.84 per share. Over the course of a year, the company’s stock price has dipped as low as $3.41 per share, while reaching a high of $16.00 per share.
Worst 3 Stocks
ANDE – The Andersons Inc. ($31.03 to $26.06) -16.0%
Looking at the downside of the markets, one of the leading percentage losers during last week’s trading was The Andersons Inc. (ANDE), a diversified company that operated in three distinct segments. The first, The Agriculture Group, is engaged in grain merchandising, operating grain elevator facilities, the distribution of wholesale agricultural fertilizer and the operation of retail farm centers.
The other two, which consists of the Processing unit and the Manufacturing Group, includes services pertaining to the processing of lawn and corn-based products, the purchase, sale, repair and leasing of railcars, and the operation of automotive service centers. The company’s woes stemmed from a quarterly earnings release that showed a devastating decline in profits year-over-year.
Reporting for the 3Q, the Andersons posted a net profit of $1.3M, or $0.07 per share, a far cry from last year’s net income of $12.8M, or $0.70 per share, a decrease in earnings of almost 90%. The company attributed the lackluster performance to a decrease in retailer inventories, as well as a lost in its rail segment.
Revenues, meanwhile, tumbled as well, falling from $905.7M a year ago to $601M, a decrease in overall sales of nearly 34%. Analysts, on average, were looking for the diversified agricultural and transportation company to post a net profit of $0.37 per share on $691.6M.
Looking further inside the numbers, the company’s Agriculture unit posted a net loss of $2.8M on revenues of $70M, compared to last year’s profit of $7.2M on $162M in sales. Within the company’s Processing unit, income generated from grain and ethanol sales slipped to $8.9M, down from the previous year’s tally of $9.4M. In its rail segment, the Andersons posted a net loss of $1.1M, compared to a profit of $5.2M a year ago.
Chairman and CEO, Mike Anderson, remarked, "We are disappointed overall with this quarter's results, which we would characterize as a mix of areas of continued concern, and some positive developments. Most significantly, our Rail Group continued to be seriously impacted by the overall weak economy. To a lesser extent, our Retail Group was also impacted by the economic decline. Conversely, while our Grain & Ethanol Group's results for the quarter were lower than that of the prior year it was nice to see decent margins return to the ethanol business and Lansing Trade Group return to profitability.”
Anderson later added, “Within the grain business, while our quarterly results were well below the prior year, our year to date result is a record, which reflects our solid position in the grain business. In addition, the current ethanol trading environment, which allowed the third quarter results for the ethanol business to be markedly improved over recent quarters, has allowed us to lock in profitable margins for a significant portion of the fourth quarter sales and for some of the sales during the first half of 2010.”
By the end of last week’s trading, shares of ANDE lost nearly $5 per share. As the new week’s trading kicks off, the downward trend continued. Shares of the Andersons slipped by the close of the November 9 session, losing $0.58, or 2.2%, to conclude the day at $25.48 per share. During the past year, the stock has traded between $10.65 per share and $37.56 per share.
CVS – CVS Caremark Corp. ($35.50 to $29.79) -15.6%
As one of the nation's premier integrated pharmacy services providers, which combines one of the nation's leading pharmaceutical services companies with the country's largest pharmacy chain, CVS Caremark Corp. (CVS) was included in the list of percentage losers during last week’s trading. The nearly $6 loss per share for the week was a result of the company’s loss of a multi-billion dollar contract in its pharmacy benefits management business.
The company also revealed quarterly performance results in which CVS posted a net profit of $1.02B, or $0.71 per share, compared to last year’s earnings of $732.5M, or $0.50 per share, a 39% increase in net income year-over-year. Furthermore, the company’s net revenues advanced as well, climbing from $20.86B to $24.64B, an increase in sales of more than 18%.
On average, analysts within the industry were looking for the drugstore operator and pharmacy benefits manage CVS to record a quarterly profit of $0.64 per share, based on total revenues of $24.61B.
Investors were swayed by news from CVS that the company’s Caremark division will lose nearly $5B in revenues generated from contracts for next year. CVS announced a month ago that Caremark expected to lose about 500K member of their Medicare Part D drug benefits who are also eligible for Medicaid. This loss will amount to nearly $2B in revenues lost.
Throughout the year, CVS Caremark has had several contracts lost, including health insurer Coventry Health Care Inc. (CVH) and retired employees of automaker Chrysler, who turned elsewhere for coverage. Caremark also lost contracts with the states of New Jersey and Ohio as well.
Tom Ryan, Chairman, President, and CEO of CVS Caremark, remarked, "I'm very pleased with our performance across the enterprise this quarter. The quarter was characterized by continued industry-leading performance in our retail business, solid performance in our PBM, and record results from MinuteClinic. Our integrated pharmacy care offerings are contributing to results across the company at a growing pace. We achieved solid revenue growth, healthy earnings growth and significant free cash flow."
By the conclusion of the previous week’s trading, CVS shares dipped nearly 16%. With a new week beginning, the company’s stock managed to reverse its downward spiral. By the sound of the closing bell on November 9, shares of CVS were higher by $1.11, or 3.7%, to end the session at $30.90 per share.
During the past 52 weeks, the stock has managed to reach a yearly high of $38.24 per share, while falling as low as $23.19 per share.
PL – Protective Life Corp. ($19.25 to $16.48) -14.4%
Last but not least, the last company listed on the biggest percentage losers for the week was Protective Life Corp. (PL). Protective Life is a holding company, whose subsidiaries provide financial services through the production, distribution, and administration of insurance and investment products. The company operates seven divisions whose principal strategic focuses can be grouped into three general categories: life insurance, specialty insurance products, and retirement savings and investment products.
The nearly $3 per share loss during last week’s trading came despite the company’s turning a profit during the most recent quarter. Reporting results for the 4Q, Protective Life announced that the company posted a net profit of $27.6M, or $0.32 per share, in contrast to last year’s net loss of $100M, or $1.41 per share. The recent period included a net charge of $20.3M, or $0.23 per share in conjunction with investment losses compared to last year’s charges of $162.5M, or $2.29 per share.
Excluding this charge, Protective Life would have posted a net profit of $47.9M, or $0.55 per share. Overall revenues for the period advanced as well, climbing from $510.1M to $691.1M, an increase in overall sales of more than 35%. On average, analysts were looking for the insurance and investment products provider to post a quarterly profit of $0.76 per share on total revenues of $787M.
John D. Johns, Protective’s Chairman, President and CEO commented, “Earnings in the quarter were negatively impacted by the substantial amounts of excess liquidity that we continued to carry, less favorable mortality, some consolidation and other unusual expense items and impairments in the investment portfolio. We are moving cautiously to deploy excess liquidity and expect earnings to be impacted by lower yields on short term investments into next year.”
Although the company managed to post a profit over last year’s loss, results were still well below analysts’ expectations, which ultimately resulted in the company’s stock price falling nearly 15% by the end of the week. However, despite that, the stock managed to rebound from its freefall by gaining more than 5% by the close of the November 9 session, adding $0.89 to end the day at $17.37 per share.
During the past year, shares of Protective Life have traded within an expansive range, reaching an annual high of $24.15 per share, while dipping as low as $2.81 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
