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(Best) BWLD, ACL, RE (Worst) STRA, EDU, ESI from Better Trades
February 12, 2009
Despite learning of President Obama’s $789B stimulus agreement reached yesterday, investors still remain on the sidelines as more downwardly revised earnings forecasts and the overall health of the banking sector, continues to weigh heavily on the minds’ of traders.
One sector was pummeled today by the market’s freefall, services, which were lead by three educational companies that were battered by the selling pressures, and other related news, heading into the afternoon session.
Top 3 Stocks
Buffalo Wild Wings Inc. (BWLD)
Contradictory to today’s trading sentiment, there were a handful of stocks that bucked the downward trend to post solid gains going into the final hour before the closing bell.
Included in those companies was Buffalo Wild Wings Inc. (BWLD), which is an owner, operator and franchisor of restaurants featuring a variety of boldly flavored, made-to-order menu items including Buffalo-style chicken wings spun in one of their signature sauces.
Shares surged in trading today as the company reported 4Q results, which showed an increase in profits, while maintaining their 2009 guidance. In their earnings report, BWLD recorded net earnings of $7.7M, or $0.43 per share, up more than 28% from last year’s profit of $6M, or $0.34 per share, with revenues jumping more than 32% to $121.2M.
Analysts were looking for the restaurant chain to post quarterly earnings of $0.39 per share on overall revenues of $117.4M. Looking ahead, BWLD is confident that they will be able to achieve a 25% increase in revenues and between 20% and 25% growth in yearly earnings.
On that note, shares of Buffalo Wild Wings gained $7.41, or 33.8%, to trade at $29.32 per share. Over the past 52-weeks, shares of BWLD have traded in a range between $14.50 and $44.98 per share.
Alcon Inc. (ACL)
As the world's leading eye care company, which is dedicated to the researching, development, manufacturing and marketing of pharmaceuticals, surgical equipment and devices, contact lens care solutions and other vision care products that treat diseases, disorders and other conditions of the eye, Alcon Inc. (ACL) viewed their stock jump in trading today, on news of a solid 4Q earnings release.
For the period, ACL booked a profit of $423.6M, or $1.41 per share, up more than 12% from last year’s net income of $376.5M, or $1.25 per share. ACL was also able to increase their overall revenues year-over-year, from $1.47B to $1.5B.
Meanwhile, analysts were looking for the Swiss eye care company to post earnings of $1.32 per share on total sales of $1.47B. The company added in their report that earnings for 2009 were reduced from $6.05 to $6.25 per share, to a range between $6.00 and $6.20 per share. Analysts are expecting yearly earnings of $6.28 per share.
Shares of Alcon shot higher in trading today, adding $7.48, or 9%, to trade at $90.47 per share. ACL shares have traded in a range between $66.64 and $178.56 over the past year.
Everest Re Group Ltd. (RE)
The last company to post huge gains in a down market today was Everest Re Group Ltd. (RE), a world leader in property and casualty reinsurance and insurance, offering innovative products, responsive service and unsurpassed financial strength, announced before the opening bell this morning that the company’s operating profits helped curtail a dire sentiment with the company’s overall quarterly loss.
For the period, RE booked a loss of $16.6M, or $0.27 per share, compared to a profit of $12.2M, or $0.19 per share a year ago. The saving grace for the company was operating income, which more than tripled, from $$62.3M to $179.5M, or $2.93 per share. Operating income excludes capital gains and losses, which amounted to a loss of $196.1M. Analysts were looking for the insurance company to post earnings of $2.84 per share.
With investors looking at the bigger picture, shares of RE surged in trading today, gaining more than 10%, or $6.63, to trade at $71.21 per share.
Worst 3 Stocks
Strayer Education Inc. (STRA)
The first one, Strayer Education Inc. (STRA), which is a regional proprietary institution of higher education offering undergraduate and graduate degree programs to more than 7,000 students at eight campuses in Washington, D.C. and Northern Virginia, and the parent company of Strayer University, fell hard during today’s session, losing more than 15% in value.
Despite posting an increase in quarterly profits, earnings came in for the 4Q at $24.2M, or $1.71 per share, from last year’s profit of $19.5M, or $1.34 per share, an increase of more than 24%, it was the company’s forward forecasting that caused today’s shortfall.
The company’s report also revealed that revenues jumped more than 28% to $114.3M, as more students enrolled, up 22%, in school due to economic stressors. Analysts were looking for the educational company to post quarterly earnings of $1.70 per share on total sales of $113.5M.
Shares plummeted during trading today, as the company revised their upcoming 1Q earnings downward to a range between $1.96 and $1.98 per share. Analysts are looking for earnings to be $1.99 per share for the quarter.
By late afternoon, shares of STRA were down a whopping $39.42, or 17.5%, to trade at $186.43 per share. The stock has traded between $142 and $234 per share over the past year.
New Oriental Education & Technology Group (EDU)
Another educational company, New Oriental Education & Technology Group (EDU), saw their stock’s price plummet more than 20% throughout today’s session, due to lowered revenue guidance in relation to China’s economic downturn.
As the largest provider of private educational services in China based on the number of program offerings, total student enrollments and geographic presence, EDU announce pre-market that the company reduced their 3Q revenue projections from $65.5M to $67.5M, downward to a range between $62M and $65M. Analysts, in the meantime, are looking for revenues of $67.36M.
The company’s CEO, Louis Hsieh, announced, "The economic downturn in China has had a greater than anticipated effect on New Oriental's cash proceeds over the past several weeks and we are therefore revising our third fiscal quarter 2009 revenue guidance downwards to reflect current expectations."
In afternoon trading, shares of EDU lost more than 23% during the session, giving up $12.30, to trade at $40.75 per share.
ITT Educational Services Inc. (ESI)
The final company, which is also in the education realm, is ITT Educational Services Inc. (ESI). ESI is a leading proprietary provider of technical postsecondary degree programs in the U.S. based on student enrollment. The company offers associate's and bachelor's degree programs designed to provide students with the knowledge and skills necessary for entry- level employment in technical positions in a variety of industries.
Coming off a new 52-week high set last week at $133.75, the company’s stock was trading relatively sideways leading into today’s session. Although no major news was released over the past couple of days, shares of ESI were hammered during the session.
Nearing the final hour in trading, ESI was down almost 5%, falling $6.04 to trade at $122.96 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
