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(Best) PCLN, ORLY, WFMI (Worst) BMRN, SPAR, ITRI from Better Trades
February 20, 2009
Taking in today’s economic data and earnings reports, the major indices plunged at the opening bell, but pared back some of their losses as the NASDAQ was fighting to remain in the green. The Dow slipped to a six-year low by the close on Thursday, as investors continue to maintain a selling mentality due to uncertainty about the economy appears hard to overcome.
Top 3 Stocks
RRGB – Red Robin Gourmet Burgers Inc.
Red Robin Gourmet Burgers Inc. (RRGB) operates as a casual dining restaurant chain focused on serving an imaginative selection of high quality gourmet burgers in a family-friendly atmosphere.
Benefiting from quarterly earnings coming in above-analysts’ projections, Red Robin also gained in today’s trading from an analysts’ increase in their price target.
After the close on Thursday, RRGB posted net income of $5.8M, or $0.38 per share, albeit down from last year’s earnings of $10.1M, or $0.60 per share. Results, however, did come in higher than projected, as analysts were looking for quarterly earnings of $0.33 per share. Meanwhile, overall revenues increased year-over-year, advancing from $183.8M to $198.6M, an increase in sales of more than 8%.
Another boost to the company’s daily stock performance came from an analyst from Thomas Weisel Partners who believed that despite the current economic conditions saw RRGB reporting better-than-expected earnings in 2009. The analyst then raised RRGB’s price target from $13 to $15 and increased the company’s expected yearly earnings from $1.60 to $1.65 per share.
With the close of trading approaching, shares of RRGB were up over 14.1%, adding $1.86, to trade at $15.02 per share. Since this time last year, the company’s stock has traded in a range between $7.49 and $43.58 per share.
INTU – Intuit Inc.
Another company trading higher after reporting quarterly results is Intuit Inc. (INYU), which provides business and financial management solutions for small and medium sized businesses, financial institutions, consumers, and accounting professionals in the U.S., made it known late Thursday that results for the 2Q came in below the previous year’s tally, but adjusted earnings came in higher than expectations.
Designer of Quicken and TurboTax, Intuit posted quarterly net income of $85M, or $0.26 per share, in contrast to the prior year’s earnings of $115.2M, or $0.34 per share, a decrease in profits of more than 26%. Revenues, in the meantime, decreased as well, falling from $834.9M to $791M, a decline of more than 5%. The silver lining of the company’s statement came from the exclusion of one-time items. However, for the exclusion, INTU would have posted net earnings of $0.34 per share, well-above expectations.
As for the analysts, they were looking for the tax preparation and personal finance software maker to post quarterly earnings of $0.27 per share on overall sales of $796.2M. For the fiscal year, ending in July, Intuit is anticipating yearly earnings to come in between $1.32 to $1.43 per share, down from a previous forecast of $1.38 to $1.45 per share.
Despite a lowered yearly forecast, investors jumped into the stock, pushing shares of INTU up more than 13%, adding $2.79, to trade at $24.07 per share. Within the past year, shares of Intuit have ranged between $20.18 and $32.00 per share.
CECO – Career Education Corp.
Lastly, posting some of the biggest percentage gains on the day, Career Education Corp. (CECO) viewed its stock jump more than 20% in trading heading into the close. As a provider of private, for-profit post-secondary education with campuses throughout the United States and Canada, the United Kingdom and the United Arab Emirates, CECO announced their earnings after the close on Thursday, which showed an increase in profits, despite a decline in overall revenues.
For the 4Q, CECO booked a profit of $31.2M, or $0.35 per share, up more than three-and-a-half times last year’s profit of $8.8M, or $0.10 per share. Total sales, however, were down during the period, slipping from $455.3M to $431.8M, a decrease in revenues of more than 5%. During the quarter, CECO took a $7.1M one-time charge related to severance packages that cut into the company’s bottom-line.
On average, analysts were looking for education provider to post earnings of $0.20 per share on total sales of $435.5M. Following a nearly 12% jump in price in after hours trading last night, shares of CECO headed into the close of Friday’s session up $3.44, or 17.4%, to trade at $23.10 per share. Earlier in the day, the stock established a new 52-week high of $23.90 per share.
Worst 3 Stocks
FSLR – First Solar Inc.
With many people concerned about the environment and global warming, alternative energy, such as solar power, has taken hold in today’s markets. One of the leading innovators within the industry is First Solar Inc. (FSLR), which manufactures solar modules with an advanced thin film semiconductor process that significantly lowers solar electricity costs. By providing renewable electricity at affordable prices, First Solar offers an economic alternative to conventional electricity and the related fossil fuel dependency.
With the stimulus package signed into the law earlier this week, the president included a $42B provision to invest in energy-related programs. As solar power becomes more efficient and less costly, alternative energy should be more competitive with other forms of energy, such as fossil fuels. However, today’s trading was less-than-promising for FSLR.
In a report from Lux Research Inc., analysts believe that with plenty of players within the solar industry, that supply will outpace demand in 2009, leading to a correction in the solar markets. The report also showed that the overall market itself could shrink from $36B to $29B. With supply increasing as the market continues to wane, suppliers will have to discount their products leading to lower profit margins.
Heading into the final hour of trading, shares of First Solar were down more than 2%, losing $3.50 to trade at $127.80 per share. Over the past year, FSLR’s stock has traded in a range between $85.28 and $317.00 per share.
WFC – Wells Fargo & Co.
As the nation’s banks continue to struggle through our country’s recession, investors try to grasp the severity and challenges facing these financial institutions. One of the largest percentage losers within the sector was Wells Fargo & Co. (WFC), which dropped more than 16% today. WFC stands to take massive losses in Obama’s foreclosure prevention program, which may allow homeowners to file for bankruptcy in order to keep their homes. This would lead to banks losing billion on credit card loans.
Wells Fargo, a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services across North America as well as internationally, is in full support of the new administration’s proposal and is willing to work diligently with their customers to put these actions into place.
However, with the current state of the economy, the financial industry is taking massive hits, despite the efforts of the government. Closing Thursday’s session, shares of WFC closed just above their 52-week low of $11.94. Friday’s trading surpassed that mark, as the stock dropped as low as $9.78, before rebounding to trade at $11.05, losing $0.98, or 8.2% leading into the close.
>WMGI – Wright Medical Group Inc.
Wright Medical Group Inc. (WMGI), a global orthopedic device company specializing in the design, manufacture and marketing of reconstructive joint devices and bio-orthopedic materials, watched as its stock price plunged more than 16% in trading today, following yesterday’s earnings report in which the company posted a quarterly loss.
WMGI, which provides reconstructive joint devices used to replace knee, hip and other joints and Bio-orthopedic materials, used to replace damaged or diseased bone in order to stimulate natural bone growth, confirmed late Thursday that the company lost $2.7M, or $0.07 per share for the 4Q. Revenues, meanwhile, increased year-over-year, climbing from $103.2M to $120.1M, an advance of more than 16%.
Having closed Thursday’s session at $21.10, the company reported their financial results after the close, and saw their stock fall more than 13%. Friday’s trading brought much of the same, as shares of WMGI dropped 16.7%, giving up $3.53, to trade at $17.61 per share. Within the last year, WMGI has traded between $15.18 and $33.26 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
