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(Best) PCLN, ORLY, WFMI (Worst) BMRN, SPAR, ITRI from Better Trades
February 23, 2009
With the major indices coming off weekly losses of more than 6% each, Monday’s trading session started strong, but once again, could not hold its positive momentum heading into afternoon trading. News within the financial industry of more infused capital into the banking system opened the markets on high hopes, a reversal shortly ensued, as investors were not swayed by the proposal and tech stock losses offset the financial stock gains.
Top 3 Stocks
GLF – Gulfmark Offshore Inc.
Bucking the overall trend of the markets today, Gulfmark Offshore Inc. (GLF) surged in today’s session, following stellar earnings released earlier this morning. Providing offshore marine services primarily to companies involved in offshore exploration and production of oil and natural gas, Gulfmark posted quarterly earnings that were more than four-times last year’s earnings.
In their report, Gulfmark posted a net profit of $59.3M, or $2.35 per share, up from last year’s total of $12.7M, or $0.55 per share. Revenues also advanced during the quarter, jumping from $91.5M to $121.9M. Analysts, on average, were looking for the transport company to post earnings of $1.64 per share on total revenues of 125.6M.
For the year, profits nearly doubled for the company, coming in at $183.8M, or $7.56 per share, up from the previous year’s earnings of $99M, or $4.29 per share in 2007. Revenues for 2008 jumped 35% to total $411.7M.
During Monday’s trading session, shares of Gulfmark gained more than 5%, adding $1.08 to trade at $22.07 per share. Over the course of a year, shares of GLF have ranged between $20.51 and $70.98 per share.
NCX – Nova Chemicals Corp.
Surging nearly 300% in stock price today, shares of Nova Chemicals Corp. (NCX) entered into an agreement with International Petroleum Investment Co., a wholly-owned enterprise of the government of the Emirate of Abu Dhabi, for $2.3B cash, including all debt obligations.
Nova Chemicals, focused primarily on the manufacturing and marketing of ethylene, polyethylene, styrene, polystyrene and expandable polystyrene, was offered $6 a share for the buyout, as the plastics maker was in financial trouble due to their high debt.
Under the agreement, Nova will remain as an independent chemical and plastic company. The deal will allow the company to strengthen their balance sheet as International Petroleum has granted them $250M to help improve their liquidity. In addition, Nova received a $150M line of credit with Export Development Canada that will allow them to keep up with previous debt commitments.
Bearing in on the close of the session, shares of NCX skyrocketed, jumping 285.8%, or $3.83, to trade at $5.17 per share. Since this time last year, shares of Nova Chemical have ranged between $1.05 and $32.46 per share.
GEOY – GeoEye Inc.
Lastly, trading in opposite directions of the markets, the world's largest commercial satellite imagery company, delivering highest of quality and the most accurate imagery to better map, measure, monitor and manage the world, GeoEye Inc. (GEOY), viewed their stock surge more than 19%, on positive news relating to one of the company’s satellites.
Earning a certificate from the National Geospatial-Intelligence Agency (NGA) for a fully functional imaging satellite, GeoEye will now be able to deliver images to the agency starting February 23 that will generate more than $12M in monthly revenues.
If the satellite is able to generate that kind of revenue monthly, or $150M over the course of a year, that would amount to more sales than all of the company’s revenues for 2008. With a more predictable revenue stream, GeoEye will be able to improve their margins and profitability that will develop the company’s overall business model as a whole.
By the final hour of trading, shares of GEOY were up $3.72, or 19.8%, to trade at $22.46 per share. Within the past year, shares of GeoEye have traded in a range between $14.75 and $35.14 per share.
Worst 3 Stocks
HUM – Humana Inc.
As the markets turned negative, one of the leading health services companies that facilitates the delivery of health care services through networks of providers to its medical members, Humana Inc. (HUM), saw their stock plummet in trading, losing more than 23% by late afternoon.
In reaction to news from the government this morning, that the proposed payment rates for Medicare plans in 2010 were highly questionable. The health insurer issued a statement that it "finds certain assumptions behind the preliminary 2010 rates to be unusual and inconsistent with decades of experience and with past government practice.”
If the proposed rates were to become finalized, they would have a significantly adverse impact on premiums and benefits for Medicare in 2010. Although Humana sees the rate increase as high, many analysts believe that the increases are less than they had projected.
Today’s news overshadows Humana’s recent reassurance of their 2009 earnings forecast, which is expected to come in between $5.90 and $6.10 per share. In the meantime, analysts are looking for yearly earnings from Humana to come in at $5.93 per share, with a range between $5.77 and $6.10 per share.
Heading into the final hour of Monday’s trading session, shares of Humana were down $9.35, or 23.1%, to trade at $31.19 per share. Over the past year, shares of HUM have traded in a range between $22.33 and $72.75 per share.
DCO – Ducommun Inc.
Damaged by net loss in the 4th quarter, Ducommun Inc. (DCO), which manufactures components and assemblies principally for domestic and foreign commercial and military aircraft and space programs, confirmed this morning that the company’s performance was hurt by impairment charges totaling $8M, or $0.76 per share.
As a subcontractor to Lockheed Martin (LMT) and a supplier of components for the Space Shuttle, as well as for the International Space Station, Ducommun posted a net loss for the quarter of $4.24M, or $0.40 per share, in sharp contrast to a profit of $5.42M, or $0.51 per share from a year ago. Revenues, in the meantime, were up more than 8% for the period, increasing from $93.5M to $101.4M.
Analysts were looking for the aerospace and defense product supplier to post earnings of $0.44 per share on overall revenues of $95.66M. For the upcoming year, Ducommun could not offer any forward-looking guidance figures due to the current economic conditions, yet indicated that the next year or two could be trying for the company.
With that, shares of Ducommun plunged more than 14% as the final trading hour approached, losing $2.35 to trade at $13.51 per share. Drawing nearer to the company’s 52-week low of $12.63, shares of DCO have also traded as high as $35.00 per share over the past year.
>LECO – Lincoln Electric Holdings Inc.
Another company hurt in today’s trading from poor quarterly results was Lincoln Electric Holdings Inc. (LECO), which announced early Monday morning that profits for their 4th quarter diminished as the global economy weighed heavily on their performance.
As a full-line manufacturer of welding and cutting products and integral horsepower industrial electric motors, LECO acknowledged that the company’s quarterly earnings were down due to one-time charges and lower sales. Recording a profit of $19.5M, or $0.46 per share, results came in more than 60% lower than last year’s profit of $49M, or $1.13 per share.
LECO was hurt by an $18.3M charge that resulted in a $0.42 per share loss. Excluding that, the company would have posted net earnings of $37.8M, or $0.88 per share, albeit still below last year’s earnings. Revenues, in the meantime, were also lower for the period, falling from $580.3M to $526.2M, a decrease in sales of more than 9%.
Meanwhile, analysts were looking for the welding product manufacturer to post quarterly earnings of $0.88 per share on overall sales totals of $539.6M. With the global and domestic economies in peril, LECO stated earlier this month that the company was reducing more than 10% of their international workforce and offer volunteer buyouts of nearly 3,000 workers in their Cleveland plant.
For the 1st quarter in 2009, LECO sees charges already totaling between $10M and $12M for these cost cutting measure. With less than an hour left in trading, shares of Lincoln Electric were down more than 9%, falling $3.50, to trade at $34.84 per share. Just $0.60 off their yearly low, LECO has traded as high as $86.97 per share over the past year.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
